Tag: Motley Fool Australia

The National Australia Bank Ltd. (ASX: NAB) share price closed today’s trade at $15.75.

Sure, this share price isn’t quite as low as the levels we saw in March when NAB shares reached $13.20. But it’s still not far from a level that, until March, we hadn’t seen this century. That’s right, you have to go back to 1996 to find a time when NAB shares plumbed the depths they found 2 months ago.

Even during the global financial crisis, which hit bank shares particularly harshly, NAB shares didn’t see a share price with a 13 at the beginning.

So we already know this ASX bank has been a lousy investment over the past two and a half decades, even with the healthy dividends NAB used to pay. It’s not often you can say you bought a company that went backwards over 25 years.

But it’s still one of the largest companies in Australia, has a virtual government guarantee and a formidable market share in the ASX financials sector.

So is the NAB share price in the buy zone today?

Are NAB shares in the bargain bin?

Well, the first thing to note is that no one should be expecting much in the way of dividend payments in 2020.

Yes, unlike NAB’s compatriots Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Limited (ASX: ANZ), NAB will be paying a 30 cents per share interim dividend in July.

But NAB’s past payments make this look like a pittance. Shareholders were treated to an annual dividend of $1.98 per share in 2018. Last year, investors received $1.66 per share in payments. This year, it looks as though NAB shareholders will be lucky to receive 60 cents per share. That’s a 66.7% cut over 2 years – although I’m not blaming NAB entirely for this, due to the impacts of the coronavirus on the economy.

Still, if an investor bought in at the current NAB share price, this new dividend would translate into an annualised yield of 3.8%, which isn’t really anything to write home about.

However, these dividends are likely to recover somewhat over time. It’s hard to say how much though – that depends on consumers returning to the credit markets in the months and years ahead, as well as what interest rates end up doing.

One investor who’s bullish on NAB shares is Nab’s own CEO, Ross McEwan. Mr McEwan recently picked up 47,500 shares worth around $731,500 (at the time) earlier this month. It’s always nice seeing a CEO put their money where their mouth is.

Foolish takeaway

In time, I think the NAB share price will recover from the lows we see today. However, I’m not in a rush to add to my existing NAB shares alongside Mr McEwan, even at these depths. There’s a lot of uncertainty in the future of the ASX banks, and I’m not confident that the heavy headwinds the sector is facing have a clear end in sight. Thus, I think there are better places to put your money in this market.

More reading

• These are the latest ASX shares to be upgraded by brokers to buy
• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high
• ASX 200 Weekly Wrap: ASX rallies on mining highs
• Where to invest $5,000 in ASX 200 shares immediately
• Is the NAB share price a buy today?

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) jumped higher today, it rose by more than 2% to 5,616 points.

Whilst the country continues to argue about the $60 billion jobkeeper miscalculation, Treasurer Josh Frydenberg spoke to the ABC to say that the travel sector could receive more support because of the ongoing lockout of international tourists.

ASX travel shares jump

As you can imagine, the potential for support of the travel industry was warmly greeted by investors of ASX travel shares.

The top performers within the ASX 200 were travel shares. The Webjet Limited (ASX: WEB) share price rocketed 15.6% higher and the Flight Centre Travel Group Ltd (ASX: FLT) share price grew 15.2%.

Other travel shares also rose. The Qantas Airways Limited (ASX: QAN) share price went up 7.2% and the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price climbed 3.9%.

Afterpay Ltd (ASX: APT) hits new heights

Last week the ASX 200 buy now, pay later business announced that it had reached 5 million active customers in the US, adding one million customers during this period.

Investors can’t get enough of the company with the Afterpay share price rising by almost 9% to another all-time high today.

Today saw the Afterpay share price finish at $48.50. It has been a huge turnaround from a few weeks ago when the share price was as low as $8.90.

Court win for IOOF Holdings Ltd (ASX: IFL)

ASX 200 financials business IOOF announced that it has reached an agreement for the class action with no order as to costs. IOOF won’t be paying anything to the plaintiff, the lawyers (Quinn Emanuel) or the litigation funder (Regency).

The company said it was very pleased with the outcome.

More reading

• Top brokers name the latest ASX 200 stocks to sell today
• These ASX 200 share prices were cut in half. Where are they now?
• Why Flight Centre and Webjet shares are zooming higher today
• The Afterpay share price just hit a new record high: Should you invest?
• Leading brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (Index:^AXJO) may have jumped by more than 20% since hitting the bear market low in March, but there are still value buys to be had.

Speculation that the federal government has another $60 billion to use as stimulus due to its forecasting bungle is triggering excitement.

It was originally thought that the Morrison government’s JobKeeper program would cost $130 billion proved to be well off the mark – but in a good way.

The extra support for our economy could keep our market well supported as we head into the new financial year, and it isn’t too late to buy these ASX shares as brokers have only just upgraded them to “buy”.

Good connection

The latest stock to be upgraded by Morgans is the TPG Telecom Ltd (ASX: TPM) share price as the broker mulled over its looming merger with Vodafone Australia.

“On a stand-alone basis and in constant accounting terms, EBITDA [earnings before interest, tax, depreciation and amortisation] for both TPM and Vodafone is in decline,” said Morgans.

“So, this merger is all about the economies of scale required to have a profitable and free cash generative #3 player.”

Upside from synergies

It’s worth noting that David Teoh, who will be the chairman of the merged entity, has a strong track record of achieving cost savings.

“We see the largest area of cost saving as TPM using mobile to partially bypass the NBN,” added Morgans.

“Without mobile, TPM would pay ~$1bn pa to the NBN, so the ability to bypass some of this using wireless technologies will likely save $150m pa in the medium term.”

While the broker is forced to guess what the capex requirement is for the group, Morgans believes the new entity will be able to generate around $800 million a year in free cash flow.

Morgans lifted its rating on the stock to “add” from “hold” with a price target of $9.14 a share.

The stock to bank on

Meanwhile, the National Australia Bank Ltd. (ASX: NAB) share price got a boost after Bell Potter upgraded the stock to “buy” from “hold”.

The stock had been under pressure due to its larger exposure to small and medium business lending. Many of these businesses are expected to fold due to the COVID-19 shutdown.

But despite the risks, the stock is now looking too cheap to ignore, according to Bell Potter.

Risks are priced in

“Looking past the COVID-19 noise, NAB exhibited good operational resilience in 1H20,” said the broker.

“Business and Private Banking cash earnings were stable due to solid lending volumes, steady NIM [net interest margin], cost discipline, better impairment outcomes and higher asset productivity.”

Bell Potter was also impressed with management’s cost discipline as underlying expenses were flat at $4.1 billion with NAB forecasting around $1 billion in extra savings by the end of this financial year.

Bell Potter lifted its price target on the stock to $17.30 from $17 a share.

More reading

• NAB’s CEO is buying shares at decade low prices. Should you take the hint?
• 3 strong ASX 200 shares to buy for a retirement portfolio
• Top brokers name the latest ASX 200 stocks to sell today
• These ASX 200 share prices were cut in half. Where are they now?
• Leading brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor Brendon Lau owns shares of National Australia Bank Limited and TPG Telecom Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ANZ region may only have a small tech sector in comparison to the United States, Europe, and China, but it is home to a good number of quality companies which I believe are worthy of a spot in most portfolios.

Three of my favourites are listed below. Here’s why I like them:

Altium Limited (ASX: ALU)

Altium is easily one of my favourite tech shares on the Australian share market. It is a software-as-a-service company that provides an award-winning printed circuit board (PCB) design platform. PCBs are the small boards you find in almost all electronic devices. Given the proliferation of electronics, demand for its software has been growing at a very strong rate in recent years. The good news is that management doesn’t expect this demand to ease any time soon. In FY 2020 it expects to have 50,000 software subscriptions. It is then targeting market domination and 100,000 subscriptions by FY 2025. Given the quality of its software and its leadership position in the industry, I believe Altium will achieve its goals.

Bigtincan Holdings Ltd (ASX: BTH)

Another tech share to consider buying is Bigtincan. It is a provider of enterprise mobility software that enables sales and service organisations to increase sales win rates. It has a number of blue chip clients using its software, which I believe is a testament to its quality. One of these is Australia and New Zealand Banking Group (ASX: ANZ). The banking giant has been able to streamline its processes for capturing client information through the use of tablets and a custom Bigtincan build. Bigtincan revealed that this cutting-edge approach to optimising its frontline workers’ processes has helped the bank differentiate itself and increase customer satisfaction. With demand growing strongly, Bigtincan is expecting another strong result in FY 2020. It expects to deliver a 30% to 40% increase in organic revenue growth despite the pandemic.

Xero Limited (ASX: XRO)

A final tech share to consider buying is this cloud-based business and accounting software provider. It has been growing at an explosive rate over the last few years thanks to the rapid adoption of its software by small businesses across the globe. The good news is that management estimates that less than 20% of the global English-speaking target market is using cloud-based accounting software at present. Given the overwhelming benefits of cloud-based software over alternatives like an Excel spreadsheet, I believe more and more businesses will make the switch in the coming years. This should provide Xero with a significant runway for growth over the next decade.

More reading

• Should you invest $1,000 in Altium shares today?
• 3 ASX dividend shares to buy today
• 3 ASX 200 growth shares I want to buy for my portfolio
• How to make a $50,000 passive income with ASX shares
• Have $500 to invest? Then buy these 5 ASX 200 shares immediately

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 stellar ASX tech shares to buy and hold for decades appeared first on Motley Fool Australia.

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Finding top dividend-paying ASX shares is a hard ask these days. We’ve already seen dozens of ‘blue chips’ cut, defer or cancel dividend payments in 2020, including Transurban Group (ASX: TCL), Westpac Banking Corp (ASX: WBC) and Sydney Airport Holdings Pty Ltd (ASX: SYD).

I’m sure we’ll see a lot more by the end of the year, too.

So with this in mind, here are 3 ASX dividend shares that I think will make excellent choices for income in 2020.

Australia Foundation Investment Co Ltd (ASX: AFI)

AFIC is a listed investment company (LIC) that has been around since the 1920s. Since then, it has developed a reputation for conservative, broad-based investing with a focus on delivering fully franked dividends.

I think AFIC is well positioned to continue this tradition in 2020. Management has rotated away from ASX bank shares in recent months, with only Commonwealth Bank of Australia (ASX: CBA) appearing in the company’s top 5 holdings. Replacing them are shares like CSL Limited (ASX: CSL) and BHP Group Ltd (ASX: BHP)

On current prices, AFI shares are offering a trailing dividend yield of 4.16%, or 5.94% grossed-up.

Coles Group Ltd (ASX: COL)

Coles is another ASX blue chip that I expect to deliver strong dividend payments in 2020 and beyond. We all saw the rush on Coles and other supermarkets in the early stages of the coronavirus pandemic.

This ended up leading to a 12% sales bump for Coles in the quarter ending 31 March 2020. Coles has a dividend payout policy of 80–90% of earnings, so these sales should somewhat underpin its dividend payments for the rest of the year.

On current prices, Coles shares are offering a trailing dividend yield of 2.75%, or 3.93% grossed-up.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

This exchange-traded fund (ETF) is designed to maximise exposure to the ASX’s best dividend-paying shares. As such, it holds a basket of 62 shares that service this goal.

Much like AFIC, VHY’s portfolio has recently adapted to 2020 conditions by transitioning away from the ASX banks into more reliable dividend shares. I think this flexibility is a great asset during these uncertain times, and I like that management has been agile in this respect. Its top holdings now include BHP and Wesfarmers Ltd (ASX: WES).

The trailing dividend yields from ETFs can be a little more unreliable than individual ASX shares, but VHY brings it in at 6.7% for the trailing 12 months. Vanguard estimates VHY’s forward yield at 5.6% or 7.7% grossed-up.

More reading

• 3 strong ASX 200 shares to buy for a retirement portfolio
• ASX 200 Weekly Wrap: ASX rallies on mining highs
• How to reduce your work to part-time using ASX shares
• Why I would buy these quality ASX dividend shares today
• 3 super strong ASX 200 blue chip shares to buy right now

Sebastian Bowen owns shares of Vanguard Australian Shares High Yield Etf. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s why these 3 ASX dividend shares are top income choices today appeared first on Motley Fool Australia.

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I think that high yield dividend shares could be the answer for income during these times.

The problem for some investors is that solid dividend shares like APA Group (ASX: APA) have seen the yield compressed as the share price rises.

Dividend shares with high yields may be able to boost your portfolio’s overall yield enough to get through this period.

Here are three ideas:

WAM Leaders Ltd (ASX:WLE)

This is a listed investment company (LIC) which invests in the larger businesses on the ASX.

It’s not necessarily a longer-term investor, so it may not matter that many of the biggest shares are cutting their dividends due to the coronavirus. WAM Leaders can make money from just the capital gain profits.

It can then turn those capital gains into a growing dividend for shareholders. It’s run admirably by lead portfolio manager Matthew Haupt.

WAM Leaders qualifies as a high yield dividend share because it has a grossed-up dividend yield of 8.8%.

WAM Research Limited (ASX: WAX)

This is another LIC operated by the investment team at Wilson Asset Management. This one is looking for small and medium growth shares on the ASX.

Again, most of the profits generated will come from capital growth rather than dividends from its owned shares.

Prior to the coronavirus sell-off, it was one of the best-performing LICs out there over the long-term. I think it could be one of the best again in the 2020s. 

I can’t think of many high yield dividend shares that would have paid out as much as WAM Research over the past decade. It started with a high yield and it has increased the dividend every year since the GFC.

WAM Research qualifies as a high yield dividend share because it has a grossed-up dividend yield of 10.4%.

Challenger Ltd (ASX: CGF)

Challenger is the Australian market leader of annuities. If someone takes out an annuity in Australia it’s likely to be a Challenger one, or at least a white label Challenger product.

The ageing demographics are on Australia’s side as more people are heading towards retirement over the next couple of decades.

Challenger is a high yield dividend share. But remember that a dividend is not an annuity, it’s not guaranteed. But Challenger did maintain its dividend during the GFC and with its normalised profit seemingly stable, Challenger may be able to keep paying its grossed-up dividend of 10.5%.

Foolish takeaway

All three of these shares have high dividend yields and could really boost your income. The low interest rate is probably problematic for Challenger for the longer-term, so with that in mind I’d probably go for WAM Research at this stage for its large dividend yield, the focus on growth and good portfolio diversification.

More reading

• Replace your term deposit with these dividend shares
• How I would build a $130,000 ASX dividend portfolio right now
• Here are 2 ASX dividend shares with yields over 10%
• My 3 best ASX dividend shares to buy right now
• These are the ASX blue chips I’d buy today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of APA Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Joe Rogan has the hottest podcast in entertainment media. Last week, we learned it would be hosted exclusively on Spotify’s platform. Its share price jumped immediately. Today, the Foxtel Binge streaming service launched here in Australia. The tectonic plates of the media industry are shifting again, and not everyone is going to make it through.

There are 3 major ASX entertainment media shares that generate and distribute news: News Corp (ASX: NWS), Nine Entertainment Co Holdings Ltd (ASX: NEC), and Seven West Media Ltd (ASX: SWM). Whichever is the first mover will be the better investment. 

Replacement revenue

When REA Group Limited (ASX: REA) and SEEK Limited (ASX: SEK) started to eat into classified revenues, it was News Corp that acted first. Today, News Corp owns 62% of REA Group, which is one of the better value companies on the ASX, in my opinion.

Fairfax also launched and spun off Domain Holdings Australia Ltd (ASX: DHG), which is also a real estate classifieds service. Nine Entertainment holds 52.9% of Domain through its acquisition of Fairfax. Domain is a far more lacklustre version of REA, however. Today it is 1/11th of the size by market capitalisation. There is a lot of market share it can capture, but it just doesn’t seem interested at the moment.

None of the major ASX entertainment media shares have a significant stake in car classifieds online company Carsales.Com Ltd (ASX: CAR). Given recent history, this would appear to be a mistake. 

Seven West Media is in the early stages of a range of online and technology investments. None, however, can challenge the revenue replacement streams of Nine or News Corp. 

Entertainment media diversity

All entertainment media companies own newspapers, television channels and radio stations. However, News Corp stands out as the 65% owner of Foxtel, and the 100% owner of 24-hour news channel Sky News. This provides it with exposure through Foxtel to the new Binge streaming service, should it prove successful.

In the realm of radio, Nine Entertainment has both 3AW in Melbourne and the revenue juggernaut of 2GB in Sydney. It has recently lost revenue generator Alan Jones as a presenter, but he will be replaced by the affable and popular Ben Fordham. 

Seven West has launched an innovative product in its new morning podcast The West Live with Jenna Clarke. This has had a monster reception in the West and has sidestepped local radio. They regularly have the Premier, state ministers, federal ministers, local mayors, as well as local entrepreneurs and billionaires. I listen to it daily and already many of my colleagues and friends have discovered it by themselves.

Management

Of all of the 3 ASX entertainment media shares, the financial history of News Corp Australia is the most compelling. Seven West Media and Nine Entertainment are the least compelling – across all major valuation metrics they have gone backwards for 10 years. News Corp, on the other hand, has been able to grow cashflow at a compound annual growth rate of 13.4% for the past 7 years. 

Foolish takeaway

I am a big believer in the future of the news business in all of its forms. In my view, Spotify’s Rogan deal, The West Live podcast, and the move to streaming shows there is the potential for one of the incumbent ASX entertainment media shares to make very big strides into the future. It depends which one moves first. 

More reading

• Is the REA Group share price a buy?
• 3 super strong ASX 200 blue chip shares to buy right now
• Got $10,000 to invest? I would buy these ASX shares right now
• How to become a millionaire with a $5,000 investment in ASX 200 shares each year
• Investing $1,000 in these 3 ASX shares would be a smart move

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited, Nine Entertainment Co. Holdings Limited, REA Group Limited, and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re approaching retirement, then now might be the time to start focusing on capital preservation and income rather than chasing gains.

But which shares should you buy? I believe the three shares listed below could be great additions to a well-balanced retirement portfolio. Here’s why I like them:

Coles Group Ltd (ASX: COL)

The first company I would consider adding to a retirement portfolio is Coles. I think the supermarket operator is one of the most defensive shares on the ASX. This is because the bulk of its earnings come from its supermarkets which, as we have witnessed this year, traditionally perform well regardless of that is happening in the rest of the economy. Another reason for retirees to consider buying Coles is its dividend. With management aiming to pay out upwards of 90% of its earnings to shareholders, I believe its dividend can grow materially over the next decade or two

Goodman Group (ASX: GMG)

Another option to consider for a retirement portfolio is Goodman Group. It is an integrated commercial and industrial property group which owns, develops, and manages industrial real estate in 17 countries. I like the company due to the diversity of its operations and its exposure to quick growing markets such as ecommerce. Overall, I believe it is well-positioned to deliver solid earnings and distribution growth for a long time to come.

Woolworths Limited (ASX: WOW)

This retail conglomerate could be another good option for a retirement portfolio. I like Woolworths due to its strong brands, entrenched customer base, and defensive qualities. Combined, I believe they have positioned the company perfectly to deliver robust earnings and dividend growth over the next decade and beyond. And while its shares don’t provide the biggest dividend yield, a fully franked 2.9% yield is not to be sniffed at in this low interest rate environment.

More reading

• Top brokers name the latest ASX 200 stocks to sell today
• These ASX 200 share prices were cut in half. Where are they now?
• Leading brokers name 3 ASX 200 shares to buy right now
• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high
• Telstra share price down 21% since February. Is it now in the buy zone?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The threat of a new cold war between China and US allies aren’t enough to dent the positive mood on our market.

The S&P/ASX 200 Index (Index:^AXJO) jumped 1.5% during lunch time trade as confidence about the post-coronavirus recovery grows.

But rebounding share prices might be an opportunity to take some profit off the table or to lock in tax-losses to offset FY20 capital gains. Here are the latest sell ideas from top brokers.

Losing bet

One stock in the firing line is Tabcorp Holdings Limited (ASX: TAH) as Citigroup initiated coverage on the lottery and wagering group with a “sell” recommendation.

The broker believes the stock is facing a growth challenge as the run of big lottery jackpots that have driven past sales is running out of puff.

The closure of wagering outlets due to the COVID-19 pandemic and an uncertain sports betting outlook are other factors weighing on the stock.

Lottery earnings aren’t that stable

The view that Tabcorp’s lottery business deserves to trade at a big premium to the market as it’s seen to be as dependable as infrastructure assets is also misguided, according to Citigroup. This is because lottery sales fluctuate with discretionary spending, surge and ebb with jackpots and have no inflation protection.

If the group wants to break out of its low growth rut, it will need to either expand into the US sports betting market, enter Western Australia lotteries, open new wagering outlets in WA and New Zealand and internalise online lotteries.

That last point will be especially worrying for Jumbo Interactive Ltd (ASX: JIN), in my view. It suggests Tabcorp might stop Jumbo from selling lotteries so it can monopolise the channel.

Citi’s price target on Tabcorp is $2.80 a share.

Time to sell

Meanwhile, the surge in the Afterpay Ltd (ASX: APT) share price to a new record high today could be a signal to sell, if you believe UBS.

The broker reiterated its “sell” recommendation on the buy now, pay later group even after management reported having five million active customers in the US.

The COVID-19 shutdown that is driving a spike in online sales provides an additional tailwind to Afterpay as 76% of its Australia and New Zealand sales were done via the web in 1HFY20.

“While we think COVID-19 could accelerate positive structural changes for APT, we are cautious to extrapolate the magnitude of recent growth in online’s share given the recent forced closures of shops,” said the broker.

Priced beyond perfection

Further, while the latest update from Afterpay is better than most were expecting, UBS thinks the good news is more than priced into the stock.

The broker is assuming Afterpay will secure 9.7 million active users by June, which is higher than management’s withdrawn guidance of 9.5 million.

Even on the more optimistic projection, UBS reckons fair value for Afterpay is $14 a share. That is a long drop from the nearly $48 level the stock is currently trading at.

More reading

• 3 strong ASX 200 shares to buy for a retirement portfolio
• These ASX 200 share prices were cut in half. Where are they now?
• The Afterpay share price just hit a new record high: Should you invest?
• Should ASX 200 investors want share buybacks or dividends?
• Leading brokers name 3 ASX 200 shares to buy right now

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Between 20 February and 23 March 2020 the S&P/ASX 200 Index (ASX: XJO) plummeted over 36%. Many ASX 200 shares have since rebounded considerably, however, and the index is now trading at around 5,590 points. Notwithstanding this partial recovery, current levels still represent a 22% discount to the February high.

Some of the biggest ASX 200 share price declines

Certain industries and individual ASX 200 shares have seen significantly greater declines than the index overall. Many of these declines were directly attributable to the economic fallout resulting from coronavirus. For example, with no certainty around international and domestic travel, it wasn’t surprising to see travel stocks like Sydney Airport Holdings Pty Ltd (ASX: SYD) down more significantly than the ASX 200 average.

Following are 2 further stocks that have garnered much attention for their colossal decline during the recent bear market. We’ll look at why they were down so much and where they are now. It’s interesting to observe the extent of these market swings which, in hindsight, often indicate that investors were overly pessimistic at the time. Having said that, only time will eventually tell whether those bears were, indeed, right or wrong.

Afterpay Ltd (ASX: APT)

There’s no denying Afterpay’s market darling status in recent years. For those growth investors savvy enough to jump on board, it has delivered highly impressive returns. During the bear market, Afterpay’s shares fell from $40.50 to $8.90, representing an immense 78% decline! 

As a highly valued, consumer facing company undergoing an international expansion, investors were concerned retail spending would fall off a cliff and fees wouldn’t be recoverable due to COVID-19 restrictions across Afterpay’s markets.

To date, however, investors’ fears surrounding the company are yet to materialise. Afterpay is helping both retailers and consumers weather the coronavirus restrictions via online sales and its share price hit an all-time high of $49 today. Currently trading at $48.14 at the time of writing, this represents a massive 441% above the 23 March low!

Webjet Limited (ASX: WEB)

With virtually no travel occurring either domestically or internationally, Webjet has seen its business fly away. Shares fell from $10.44 on 23 January to as low as $2.25 on 22 April. A 78% decline! 

Webjet went to the capital markets early, and at a significant 55% discount, in order to shore up its balance sheet. The company raised a combined $346 million from a retail and institutional capital raising at $1.70 per share. 

Since then, with COVID-19 restrictions slowly lifting, investors have been gradually bidding up the Webjet share price. Shares are currently trading at $4.12 each, an impressive 83% above last month’s low.

Foolish takeaway

When the market is facing angst and uncertainty, the likes of which we have experienced recently, many ASX 200 shares decline far more significantly than is warranted by their long-term fundamentals. This can provide amazing investment opportunities if you have the means and the stomach to be bullish while others are retreating in fear. 

More reading

• 3 strong ASX 200 shares to buy for a retirement portfolio
• Top brokers name the latest ASX 200 stocks to sell today
• Why Flight Centre and Webjet shares are zooming higher today
• The Afterpay share price just hit a new record high: Should you invest?
• Leading brokers name 3 ASX 200 shares to buy right now

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