Tag: Motley Fool Australia

It seems that everyone is attempting to invest like Warren Buffett in recent months. To be fair, there are worse investors to mimic than the ‘Oracle from Omaha’.

The S&P/ASX 200 Index (ASX: XJO) is down 17% in 2020 amid the coronavirus pandemic and a Saudi Arabia-Russia oil price war. Broad market share price falls can present the perfect opportunity to try your hand at value investing, but there are some drawbacks.

So, before you dive in and try to invest like Warren Buffett in 2020, here are a couple of things to consider.

Not everyone can invest like Warren Buffett

There’s a reason Warren Buffett is a billionaire. Apart from the fact he’s been investing since his younger years, he’s also been perhaps the greatest value investor of our time.

If everyone could invest like Warren Buffett, they would! It’s easy to say why ASX 200 shares have climbed after the fact, but it’s much harder to predict where they’re headed. Even if you think you know, the final step of investing your hard-earned cash is often the hardest.

While there are definitely buying opportunities amongst ASX 200 shares right now, it can be risky to start stock picking on a whim.

Trust your investment strategy

The current climate could be a great time to invest like Warren Buffett but it’s not without its challenges. ASX 200 share prices have been extremely volatile in recent weeks. There’s a good chance that investors have oversold and overbought many companies amid the pandemic panic.

Furthermore, it’s also hard to pick stocks for long-term value. No one can accurately forecast the next 6 months, let alone the next 5 years. That means finding undervalued ASX 200 shares with long-term prospects could be beyond your average investor.

I think a pandemic is the worst time to change your investment strategy. And anyway, you’re not investing like Warren Buffett if you’re buying and selling in the short-term. I believe the best way to navigate any share market storm is by sticking to your tried and true investment strategy.

Foolish takeaway

There’s no point having an investment strategy if you change it at the first sign of trouble. This means that while you could invest like Warren Buffett in 2020, sticking to your original plan is likely to payoff in retirement.

More reading

• Why is the Telstra share price being left behind?
• Are ASX 200 REIT shares a dividend trap?
• 5 things to watch on the ASX 200 on Friday
• The “most profitable” ASX airline stock you probably never heard of
• ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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.

The post Can you still invest like Warren Buffett in 2020? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Zy2KLg

The Wesfarmers Ltd (ASX: WES) share price looks set to end the week in the red following a big announcement.

At the time of writing the conglomerate’s shares are down 1% to $38.46.

What did Wesfarmers announce?

This morning Wesfarmers provided an update on its plans for the struggling Target business.

According to the release, the first phase of its Target review has identified actions to address the unsustainable financial performance of Target and accelerate the growth of its Kmart business.

These actions include converting suitable Target stores into Kmart stores, the closure of a number of Target stores, and the restructuring of the Target store support office.

The company plans to convert between 10 to 40 large format Target stores to Kmart stores and 52 Target Country stores to small format Kmart stores. It will then close between 10 to 25 large format Target stores and the 50 remaining Target Country stores.

These actions are expected to be implemented over the next 12 months, with the majority occurring in calendar year 2021.

In respect to the remaining store network, Wesfarmers is continuing its assessment of strategic options for a commercially viable Target.

Wesfarmers’ Managing Director, Rob Scott, believes the actions will result in a stronger Kmart business and enhance the overall position of the Kmart Group, which oversees both businesses.

He commented: “For some time now, the retail sector has seen significant structural change and disruption, and we expect this trend to continue. With the exception of Target, Wesfarmers’ retail businesses are well-positioned to respond to the changes in consumer behaviour and competition associated with this disruption.”

“The actions announced reflect our continued focus on investing in Kmart, a business with a compelling customer offer and strong competitive advantages, while also improving the viability of Target by addressing some of its structural challenges by simplifying the business model,” he added.

What now?

These actions will come with a cost. The restructuring costs and provisions in the Kmart Group are expected to be approximately $120 million to $170 million before tax in FY 2020. This reflects Target store closure costs, inventory write-offs, and a restructure of the Target store support office.

Non-cash impairment charges in the Kmart Group are expected to be higher at approximately $430 million to $480 million before tax. This includes an impairment of the Target brand name.

Outside this, Wesfarmers will also be making a non-cash impairment in the Industrial and Safety division of approximately $300 million before tax. This relates primarily to the impairment of goodwill.

Some of this will be offset with a pre-tax gain on sale of its 10.1% interest in Coles Group Ltd (ASX: COL) of $290 million. It will also recognise a one-off pre-tax gain of $221 million on the revaluation of its remaining Coles investment.

More reading

• ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery
• 3 high yield ASX dividend shares you can buy right now
• 3 ASX retail shares to own for the next 20 years
• Is the Wesfarmers share price in the buy zone?
• Down 10% in 2 months. Are Coles shares a buy today?

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 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 Wesfarmers share price lower after announcing major Target overhaul appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2LNN3aV

Has China banned Australian coal? There may be another step in the pressure that China is exerting onto Australia.

According to the Australian Financial Review, some power plants in China have been told to stop importing Australian coal. If that’s the case then perhaps China has indeed banned Australian coal. 

It may be as simple as China wanting to support its own coal industry. But it comes at a time when China has already hit Australian barley. Australian beef and perhaps even Australian iron ore could be in the firing line. Basically, most of Australia’s main commodity exports to China is looking like it’s under pressure from the Asian superpower.

What will the share prices of Australian coal miners drop?

We’ll see this morning. There are several large coal miners on the ASX including BHP Group Ltd (ASX: BHP), Whitehaven Coal Ltd (ASX: WHC), Yancoal Australia Ltd (ASX: YAL) and New Hope Corporation Limited (ASX: NHC).

Some coal miners sell more coal to China than others, so it doesn’t affect them all the same. For example, a lot of Whitehaven’s customers are based in Japan. Places like Taiwan and India are also customers of Australian coal. Indeed many Asian countries buy Australian coal. 

It’s concerning to see that China is pressuring Australia over the coronavirus inquiry, particularly if China has entirely banned Australian coal. But in terms of what effect this might have on ASX coal miners, it’s not as much as what a ban on iron ore would do.

Coal miners are certainly priced cheaply at the moment. The coal price isn’t as high as it once was and coal usage in most countries is expected to fall over the next couple of decades.

I’m not looking to buy shares of coal miners, but brave investors who don’t mind owning coal shares may be able to make a decent return if coal prices rise.

More reading

• ASX 200 drops 0.4%, Chinese threat to Australian iron
• Is China about to blow up the dividends of BHP, Rio and Fortescue?
• Why ASX 200 iron ore miners are your best bet for dividends right now
• Here’s why the Fortescue share price hit an all-time high today
• Macquarie picks the best stocks to buy for the post COVID-19 rebound

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

The post Has China banned Australian coal? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2LOvasz

The Telstra Corporation Ltd (ASX: TLS) share price could be in the buy zone right now. The Aussie telco’s shares have slumped 13.93% lower in 2020 while the S&P/ASX 200 Index (ASX: XJO) is down 17.57% at 5,550.40 points.

That means that Telstra has actually outperformed this year, so, what’s the big deal? These numbers don’t tell the full story.

What’s been happening to the Telstra share price?

The ASX 200 fell to 4,546.00 points on 23 March at the bottom of the bear market. The index has since recovered 22.09% in the months since, but the Telstra share price hasn’t had the same performance.

Telstra shares fell to $3.09 on 23 March after climbing as high as $3.90 in mid-February. But Telstra has since been left behind in the share market rally that followed the crash, and is currently trading back where it was on 23 March. So, has Telstra lost its blue-chip status or is there something else going on?

The only major announcement from Telstra since 23 March was its Foxtel impairment news. Telstra announced a $300 million impairment charge against its 35% stake in Foxtel. The move wrote down the value of Telstra’s stake in the business from $750 million to $450 million.

However, the Telstra share price didn’t fall sharply after the 8 May announcement. That makes me wonder if there’s a secret buying opportunity in the Aussie telco today.

Telstra has a market capitalisation of $36.75 billion right now with a 3.24% dividend yield. The company does have a history of dividend cuts, which makes me wary of investing based on potential income.

So, what’s the good news for the telco?

I think there are plenty of short-term headwinds for the Telstra share price. However, a shift towards more working from home should increase demand for mobile infrastructure in Australia.

Telstra is arguably leading the 5G network race and is well-placed to take on the NBN in coming years. That could mean earnings stabilise and dividends pick back up in the medium to long-term.

More reading

• Are ASX 200 REIT shares a dividend trap?
• 5 things to watch on the ASX 200 on Friday
• The “most profitable” ASX airline stock you probably never heard of
• ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery
• 2 ASX 200 dividend shares to buy for income in 2021

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 Why is the Telstra share price being left behind? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/36lCXaE

ASX 200 real estate investment trusts (REITs) have been smashed in 2020. While the S&P/ASX 200 Index (ASX: XJO) is down 17.57% this year, many of the Australia’s corporate landlords have lost billions in value.

What’s the attraction of ASX 200 REIT shares?

The “trust” part of real estate investment trust is the key here. The Aussie REITs are setup in a way that requires them to distribute 90% or more of their profits each year. That means ASX 200 REIT shares often have some of the highest dividend yields on the market.

A dividend yield is calculated by dividing the latest full-year dividend by the current share price. Here’s where things get interesting after the recent bear market.

Many of the largest REITs have been hammered lowered in 2020. Scentre Group (ASX: SCG) shares are down 41.49% in 2020 while the Stockland Corporation Ltd (ASX: SGP) has fallen 35.12% in the year to date. The news isn’t much better for Mirvac Group (ASX: MGR) shareholders who’ve watched the ASX 200 REIT share fall 32.09% this year.

But if you didn’t know about COVID-19, you might think the Aussie REITs are solid buys. Scentre, Stockland and Mirvac shares are yielding 8.46%, 9.11% and 5.69%, respectively. Those are some handy numbers when times are tough and income is tight.

However, ASX 200 REIT shares may be a dividend trap. Rental income is likely to slump for these property owners and developers in the current climate. Many retail stores will close and tenants are already threatening not to pay. That’s bad news for the Aussie REITs and their FY 2020 distributions.

Is it all bad news for the Aussie REITs?

I don’t think ASX 200 REIT shares are the best buy for income in 2020. However, that doesn’t mean they still can’t be a good investment.

If you’re investing for the long-term, the Aussie REITs could still be a stable income option. I wouldn’t bank on any ASX dividend share income in 2020 given the circumstances, but the long-term prospects for REITs could still be intact.

More reading

• 5 things to watch on the ASX 200 on Friday
• The “most profitable” ASX airline stock you probably never heard of
• ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery
• 2 ASX 200 dividend shares to buy for income in 2021
• This ASX 200 stock has rocketed 63% in 2 months. Is the Ansell share price still a buy?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre 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.

The post Are ASX 200 REIT shares a dividend trap? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2WPnEUu

Although the S&P/ASX 200 Index (ASX: XJO) ended its winning run on Thursday, that didn’t stop a number of shares from charging higher.

Some even managed to climb to multi-year highs or better during yesterday’s trade.

Three that achieved this milestone are listed below. Here’s why they are flying high:

Afterpay Ltd (ASX: APT)

The Afterpay share price continued its positive run and stormed to a record high of $45.17 on Thursday. The catalyst for this latest gain was a business update which revealed that it has now reached 5 million active customers in the U.S. market. This was driven by the addition of 1 million active customers during the pandemic. Also supporting its share price in 2020 has been strong third quarter sales growth and the arrival of Tencent Holdings as a substantial holder. In respect to the latter, investors appear optimistic the WeChat owner will be the key to unlocking the Asia market.

Evolution Mining Ltd (ASX: EVN)

The Evolution Mining share price climbed to a multi-year high of $6.20 yesterday. Investors have been buying Evolution’s shares this year due to a significant jump in the gold price. Falling interest rates and economic concerns have placed a rocket under the gold price in 2020, putting Evolution in a position to deliver a strong profit result in FY 2020 and FY 2021. At the end of March, the gold miner’s all-in sustaining cost was US$652 an ounce. This compares to the current spot gold price of ~US$1,725 an ounce.

Kogan.com Ltd (ASX: KGN)

The Kogan.com share price was on form again and reached a record high of $9.56 on Thursday. This ecommerce company’s shares have been on fire over the last couple of months after it revealed stellar sales growth during the pandemic. In April, for example, Kogan grew its sales by more than 100% and its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) by more than 200%. The latter means its EBITDA is now up 40% financial year to date. Investors appear confident its strong form will continue thanks to the shift to online shopping.

More reading

• ASX 200 drops 0.4%, Chinese threat to Australian iron
• If you invested $10,000 in the Kogan IPO, this is how much you’d have now
• 3 mid cap ASX growth shares to buy for monster returns
• 5 dark horse ASX shares that have tripled in the last 2 months
• 1 ASX growth company I’d buy with $2,000

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Why Afterpay and these ASX shares just hit multi-year highs appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2TtKGhM

On Thursday the S&P/ASX 200 Index (ASX: XJO) had a poor day of trade and ended its winning streak. The benchmark index fell 0.4% to 5,550.4 points.

Will the market be able to bounce back from this on Friday? Here are five things to watch:

ASX 200 expected to edge lower.

The ASX 200 index looks set to edge lower on Friday. According to the latest SPI futures, the benchmark index is expected to open the day 1 point lower. This follows a weak night on Wall Street which saw the Dow Jones drop 0.4%, the S&P 500 fall 0.8%, and the Nasdaq tumble 1% lower.

Sydney Airport AGM.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price will be on watch today when it holds its (virtual) annual general meeting. The airport operator may provide investors with an idea of when it expects travel markets to recover. Investors will also no doubt be seeking clarity on its dividend plans for the near term.

Oil prices rise again.

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could be on the rise after another positive night of trade for oil prices. According to Bloomberg, the WTI crude oil price is up 1.4% to US$33.97 a barrel and the Brent crude oil price has risen 0.95% to US$36.09 a barrel. Oil prices hit their highest levels since March thanks to recovering demand and lower U.S. inventories.

Gold price sinks lowers.

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could end the week with a day in the red after the gold price sank lower. According to CNBC, the spot gold price fell 1.45% to US$1,726.80 an ounce. This was driven by traders taking profit and switching to cash.

Goldman Sachs keeps Telstra on its conviction buy list.

The Telstra Corporation Ltd (ASX: TLS) share price could be heading higher according to analysts at Goldman Sachs. This morning the broker has retained its conviction buy rating and trimmed the price target on its shares slightly to $4.05. Goldman has been looking into the sustainability of its 16 cents per share dividend and concluded that it sees little risk of a cut in the next three years.

More reading

• The “most profitable” ASX airline stock you probably never heard of
• ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery
• 2 ASX 200 dividend shares to buy for income in 2021
• This ASX 200 stock has rocketed 63% in 2 months. Is the Ansell share price still a buy?
• 3 strong ASX dividend shares with fully franked yields

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 5 things to watch on the ASX 200 on Friday appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2LQsgDv

Profits are nosediving for our ASX listed airlines as the COVID-19 pandemic grounded nearly all air travel.

But there’s one in the sector that’s made a big profit upgrade, and chances are you haven’t heard of the stock before.

The airline is Alliance Aviation Services Ltd (ASX: AQZ), which issued a trading update yesterday and forecasted a FY20 profit before tax (PBT) that is excess of $40 million.

This is a big step-up from its March guidance of less than $33 million.

Best performing ASX airline

Most would have missed the good news as Qantas Airways Limited (ASX: QAN), Regional Express Holdings Ltd (ASX: REX) and the defunct Virgin Australia Holdings Limited (ASX: VAH) dominated headlines.

While much is written about the Qantas share price surging 50% since the bear market trough in March, it’s the Alliance Aviation share price that takes the crown for the sector as it flew 155%.

Credit Suisse calls Alliance “Australia’s most profitable airline” and management’s profit upgrade is well above the broker’s $24 million PBT estimate for the current financial year.

Earnings taking off

“Some of the significant tailwinds in the 4Q are one-off (namely more FIFO [fly-in, fly-out] flights post social distancing rules),” said the broker.

“However, of more relevance are medium-term contracts with new customers won as AQZ steps into the breach vacated by other RPT operators.”

Alliance operates Regular Public Transport (RPT), leases aircraft and provides other aviation services.

One of its customers was Virgin Australia, which went into voluntary administration but may be brought back to life by new owners.

Virgin to provide second tailwind

Regardless of what happens to Virgin, Credit Suisse believes Alliance is well placed to benefit in the new post COVID-19 world order.

If Virgin is revived, the new operators will likely continue to or expand aircraft leasing from Alliance to contain costs. On the other hand, should Virgin be permanently shuttered, Alliance is best placed to fill the RPT and FIFO hole left by Virgin, explained Credit Suisse.

“The second scenario would obviously require additional fleet (particularly given AQZ’s upgraded FIFO presence post recent events) and the market for aircraft presently favours the buyer,” said the broker.

More upside in the wings

Credit Suisse reiterated its “outperform” recommendation on the stock and upgraded its 12-momth price target to $3.20 from $1.90 a share.

But the valuation may prove to be too conservative. The price target assumes that wet lease (short-term aircraft leases) hours returns to pre-coronavirus levels in FY23. There’s a real possibility that this will rebound sooner.

More reading

• ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery
• 2 ASX 200 dividend shares to buy for income in 2021
• This ASX 200 stock has rocketed 63% in 2 months. Is the Ansell share price still a buy?
• The Qantas share price is up 76% from its low: Is it too late to invest?
• 5 dark horse ASX shares that have tripled in the last 2 months

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. 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.

The post The “most profitable” ASX airline stock you probably never heard of appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2WReHtX

The S&P/ASX 200 Index (ASX: XJO) dropped 0.4% today after investors realised there was a potential threat to Australian iron ore miners from China.

Potential problems for the Australian iron ore sector

According to reporting by the Australian Financial Review, China is changing the supervising rules for inspecting iron ore.

The worry is that China could cause major disruptions to Australia’s iron ore exports. It could mean Australian iron ore gets checked but Brazilian imports don’t have the same checks. That could be bad for ASX 200 miners like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). 

But BHP isn’t worried about it and actually thinks it could lead to a quicker process. Fortescue also confirmed it was part of a process that has been in the works for years.

Plenty of people are linking Australia’s support for a coronavirus inquiry to a potential backlash by China. We have already seen the Asian superpower put tariffs onto Australian barley.

Service Stream Limited (ASX: SSM) share price drops 6%

The company warned there are negative impacts. Those impacts largely relate to delivering safe field-based operations. Also, some clients are temporarily pausing some work programs and some individual minor projects have been delayed.

The company is now expecting earnings before interest, tax, depreciation and amortisation (EBITDA) from operations to be $108 million. It would still be a record operating result for the company.

Service Stream said its balance sheet, cashflow and liquidity remains “very strong”. Management still expect the company to pay a dividend, unlike some other ASX 200 shares.

Afterpay Ltd (ASX: APT) keeps growing in the US

Afterpay said that Afterpay US has now reached 5 million active customers.

In reaction to this news the Afterpay share price rose by 2.6% to finish the day at $44. But at one point the Afterpay share price went up to $45. Today saw a new all-time high for the ASX 200 share.

However, investors also learned that global ecommerce giant Shopify is planning to launch a buy now, pay later service for customers.

Aristocrat Leisure Limited (ASX: ALL) releases its result

The ASX 200 gambling business announced its half-year result today.

Operating revenue rose by 7% to $2.25 billion and normalised net profit fell 14.2% to $305.9 million. However, reported net profit rose 277.2% to $1.3 billion which included the recognition of a $1 billion deferred tax asset.

But no interim dividend was declared so that liquidity remains as strong as possible.

More reading

• Why the share price of this top dividend share just sank 6%
• Is China about to blow up the dividends of BHP, Rio and Fortescue?
• 5 dark horse ASX shares that have tripled in the last 2 months
• A global tech giant wants to challenge Afterpay
• These ASX payments shares could be long term market beaters

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Service Stream 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 ASX 200 drops 0.4%, Chinese threat to Australian iron appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2XkHNkk

I’ve been looking at IPOs recently to see how you would have fared if you had invested in them.

One of the most successful has been the CSL Limited (ASX: CSL). As I revealed here, a $10,000 investment in the biotherapeutics company’s IPO would have left you very wealthy.

A more recent IPO was undertaken by ecommerce company Kogan.com Ltd (ASX: KGN). Let’s have a look and see how successful investing in this would have been.

The Kogan IPO.

Kogan listed on the Australian share market just under four years ago on 30 June 2016. The company’s shares were listed at $1.80 per share, giving it a market capitalisation of $168 million.

This means that if you invested $10,000 into its IPO, you would have ended up with approximately 5,556 shares.

At that point Kogan was generating sales of $200 million and was targeting an increase to $240 million in FY 2017. Fast-forward to today and Kogan is now generating more than both these in just one half. In the first half of FY 2020 the company delivered gross sales of $322.9 million.

And given its strong performance in the third quarter and in April, it looks set to smash records and deliver bumper sales growth this year.

Kogan share price hits a record high.

Unsurprisingly, this strong performance has been reflected in its share price. Earlier today’s Kogan’s shares stormed to a record high of $9.56.

When its shares hit that level, it meant they had gained an impressive 431% since their IPO in June 2016.

This means those 5,556 shares you would have picked up at the IPO would have a market value of ~$53,515. I think that’s an excellent return in such a short space of time.

And let’s not forget that the Kogan story is only really starting. Given the rise of online shopping and the growing popularity of its offering, I suspect there could be more strong returns to come over the next decade.

In light of this, I wouldn’t be cashing in my shares any time soon if I invested in the IPO.

More reading

• 3 mid cap ASX growth shares to buy for monster returns
• 1 ASX growth company I’d buy with $2,000
• 3 ASX retail shares to own for the next 20 years
• $2,500 invested in these 3 ASX shares could make you a fortune in 10 years
• 2 millionaire-maker ASX internet growth shares

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. 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 If you invested $10,000 in the Kogan IPO, this is how much you’d have now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2TqPioP