Tag: Motley Fool Australia

Is there any price better than free?

I mean, seriously: Free!

Costless.

Gratis.

$0.

It has to be the best deal going around, right?

Right?

You’re onto me, aren’t you.

You know that there’s a ‘but’ coming.

A huge ‘but’.

Maybe not. Maybe…

Just kidding. You’re right. 

Free is good.

But!

Nothing is truly free. 

There’s always a catch. Or a cost. Or a trade-off.

Sure, Facebook is free. Except that in return you become the product that’s sold to advertisers. And preyed on by apps and advertisers who use what they know about you to mess with you. Exhibit A: Cambridge Analytica. Exhibit B: Targeted (fake) election ads.

Enough said.

Air is free, too. I mean, not clean air — just whatever air polluters choose to leave us with. But of course there’s a cost. You just can’t measure it, so we all, as a group, pretend it’s free to pollute. Some freedom.

And then there are free share trades.

Yet another brokerage mob is offering commission-free trades for Australians who want to trade on the US exchanges.

Free!

What could possibly go wrong?

Well, — and from here on, for the avoidance of doubt (and to placate any lawyers reading), I’m talking generically, and not about any particular current or future broker! — there’s the not-free stuff:

Like inactivity fees.

Or withdrawal fees.

There’s the often-unknown-or-hidden cost of converting your Aussie dollars to greenbacks.

What happens to your email address?

What will you be cross-sold?

Do you have to pay a subscription fee?

What interest will you lose out on by holding your cash with that broker?

Are you covered by CHESS (on the ASX) or the insurance scheme run by SIPC (in the US)?

Free isn’t quite so ‘free’ any more, is it?

Now, I’m not saying the trade-off mightn’t be worth it.

For all I know it’s still a stonking great deal.

Or maybe it’s not.

See, our brains go into meltdown when ‘free’ is mentioned.

If you don’t believe me, consider the foreign exchange mob (I can’t remember who, and I didn’t bother Googling) that markets its services as ‘no commission’.

See if you can get there before me… how could they possibly do it without fees?

Yep, by giving an inferior exchange rate. 

They’re 100% right that no fees are charged, but would you rather:

1. Pay no fees, and get $620 for your $1,000; or 

2. Get $650 for your $1,000 and pay a $10 fee for the privilege?

(Hint, if you answered #1, I have a bridge I’d like to sell you)

And if you reckon no-one would fall for such a deal, ask yourself why the FX dealer uses that pricing mechanic (and marketing strategy).

It’s not quite ‘bait and switch’, but it’s a pretty good case of misdirection, huh?

Want another example? 

I haven’t seen the ad recently, but one Big 4 bank was advertising a ‘cashback’ home loan a while back. All you had to do is sign up to their loan, and they’d throw you a few gorillas ($3,000 from memory) for the deal.

Tempted? Of course you are.

I dare say it was a pretty effective campaign.

I also bet — I’d almost guarantee — that loan had a relatively unattractive interest rate.

It’s almost certainly a dumb financial decision — get a few grand now, pay much, much more over the life of the loan.

But people did it, because our brains short-circuit really quickly on this stuff.

(If they didn’t, the Big 4 Bank and the foreign exchange company wouldn’t waste their time and money on these types of products or marketing campaigns!)

So, when someone offers you something for free, it pays to wonder why — what’s in it for them?

Again, it’s not necessarily a bad thing… but unless you know what the deal is, you’re bringing a knife to a gunfight.

And you know what? That mightn’t even be the worst of it.

Because you know what else free brokerage does?

It lowers the barriers to action… removing what economists call ‘friction’.

When you had to pay $150 to buy or sell shares, it required two things. You needed to save more money (assisting and rewarding discipline) and you needed to trade less frequently (because buying, then selling and buying something else cost $450!)

You had to be thoughtful. Careful. Diligent. Slow. 

Now?

Average holding periods have fallen precipitously. And that was before zero-dollar brokerage exploded in the USA.

If it’s costless (or close enough), then where’s the friction? Where’s the mental handbrake? Where’s the ‘Maybe I’ll think about this for a bit’ response?

Gone? Just about, yeah.

Why not buy today, sell tomorrow morning, buy something else at lunch and then sell it before the end of the day?

Why stop and think? Why be long-term when there’s just no need to.

It’s free!

Or is it?

My old man used to say ‘you get what you pay for, and you pay for what you get’. 

That’s not always true, of course, but it’s a good yardstick.

The other truism is that we value more highly that which we pay for, compared to that we get for free.

Don’t get me wrong — in general, I’m all for lower cost for investors, across the board, including fees paid to fund managers and financial planners.

But remember the examples, above.

Just because the transaction is free, doesn’t mean it doesn’t cost you anything.

For investors, the hidden costs might be the most insidious of all. The temptation to day-trade. To sell on a whim, and buy on another whim. To forget all about the value of ‘long term, buy to hold’ investing, and, hell, just break loose!

And lest you think this is only about brokerage (and I’d be happy if I’ve made you think twice), it’s only partly about that.

Mostly, it’s about the one thing that even those who accept the premise tend to underrate: the overwhelming importance of behavioural psychology.

And, for investors, behavioural finance.

A good stock pick will make you money once. Learning the principles of a good investment will make you money many times. But a thorough and increasingly instinctive understanding of behavioural finance will pay off more times in your life than you can possibly imagine.

That’s the lesson I want you to take from this, to become a better investor (and manager of your own money) by understanding how our brains instinctively work.

Then taking control, and making better decisions.

Fool on!

More reading

• ASX 200 down 0.2%: Big four banks lower and TPG announces demerger plans
• Positive signs for Australia’s jobs market as ABS data points to a recovery
• Why AP Eagers, Lendlease, Pushpay, & ResMed shares are sinking lower
• 2 ASX shares in the firing line of trade tensions with China
• Where I would invest $5,000 into ASX shares immediately

Motley Fool contributor Scott Phillips 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 Just because it’s free, doesn’t mean it won’t cost you appeared first on Motley Fool Australia.

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It has been a very positive day of trade for the Clover Corporation Limited (ASX: CLV) share price.

This morning the infant formula ingredients producer’s shares stormed as much as 14% higher to $2.55.

Why did the Clover share price storm higher today?

The catalyst for today’s strong share price gain has been a trading update which revealed that it has recently experienced a surge in demand.

Since the release of its half year results at the end of March, Clover has benefited from strong demand from customers globally. Pleasingly, the company is anticipating a further increase in the fourth quarter from infant formula manufacturers.

This news won’t be surprising for followers of A2 Milk Company Ltd (ASX: A2M) and Bubs Australia Ltd (ASX: BUB). They have both revealed exceptionally strong growth during the pandemic.

Demand is above expectations.

Management notes that this forecast demand is above expectations and is primarily being driven by the market’s reaction to COVID-19. It believes consumers are buying additional infant formula products, which has depleted the pipeline fill into distribution warehouses and retail outlets. It feels this will also have been exacerbated by company and country isolation activities.

Another positive is that the company is benefiting from the depreciation of the Australian dollar. This is because the majority of its sales are transacted in U.S. dollars.

And while it does also make purchases in U.S. dollar, its inventory position at the end of the half year was particularly strong. This has reduced the need to purchase large volumes of oils and should lead to an increase in its gross margins.

Outlook.

Management has warned that it is too early to judge how long this heightened demand will be sustained. It also notes that several positive influences, such as COVID-19 demand and favourable currency movements, are likely to be one-off events.

Nevertheless, it expects a stronger than expected second half performance. This assumes forecast demand results in fulfilled orders and the global situation remains in the current state.

More reading

• 3 Warren Buffett ASX dividend shares to buy right now
• These mid cap ASX shares could grow into large caps in the future
• Where I’d invest $1,000 into ASX shares right now
• 2 ASX shares that every investor should own
• 2 ASX shares to hold forever

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 BUBS AUST FPO and Clover Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST 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 this ASX infant formula share is surging 14% higher today appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) may be tumbling lower today, but that hasn’t stopped the EML Payments Ltd (ASX: EML) share price from racing higher.

At the time of writing the payments company’s shares are up over 12% to $3.70.

Why is the EML Payments share price racing higher today?

Investors have been buying EML Payments’ shares on Wednesday after the release of a trading update.

According to the release, the company remains on course to deliver a solid full year result in FY 2020 despite the pandemic.

Although it experienced a deterioration in its Retail Malls segment in March, revenue for the nine months ending March 31 was up 20% on the prior corresponding period to $87.1 million.

And thanks partly to an expansion in its gross profit margin from 73.7% to 75.9%, the company’s EBITDA grew at the quicker rate of 24% over the nine months to $27 million.

Operating cash flow over the period was strong at $27.3 million. This represents an EBITDA conversion rate of 101%. This was due partly to breakage receipts from gift cards sold in prior years.

April update.

Although the Retail Malls segment continued to struggle in April because of mall closures, the company’s Salary Packaging business and its online gaming vertical performed strongly.

This has led to unaudited group EBITDA of $2.7 million during the month of April, inclusive of its PFS acquisition which was consolidated on April 1.

Management appears confident that it is onwards and upwards from here. It commented: “We expect to see a gradual opening of malls in various countries during May and June 2020 onwards which should represent an improvement to the trading conditions experienced in April 2020.”

Though, if trading conditions took longer than expected to improve, the company is exceptionally well-positioned to weather the storm.

At the end of April EML Payments had in excess of $125 million in cash. It also expects further breakage on gift cards sold 12 months ago to bolster its cash flows.

Management explained: “EML will continue to generate operating cash inflows from breakage on gift cards sold 12 months ago as the contract asset of $36.8M converts to operating cash inflows. Approximately 75% of the contract asset will be released into operating cash within 12 months. EMLs’ contract asset derives from breakage on approx. 11M gift cards previously sold reflecting individually small amounts per card which gives us a reasonable expectation that breakage rates will remain consistent with prior trends.”

Director sales.

The company also advised that its chairman, Peter Martin, intends to sell between 300,000 and 400,000 shares in the coming days or weeks.

Mr Martin is a long-term investor in EML, having acquired his initial stake in 2012. He now holds 7,718,992 fully paid ordinary shares, which means this is only a small portion of his holding he is selling.

The company explained that given his stage of life, family and other needs, he is likely to sell some shares each year.

More reading

• These were the top 10 ASX 200 shares over the last year
• These ASX shares booked the biggest gains last week
• ASX 200 Weekly Wrap: New ASX bull run continues
• 3 ASX 200 shares to buy before the market rebounds
• These were the best performing ASX 200 shares last week

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 Emerchants Limited. The Motley Fool Australia has recommended Emerchants 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 the EML Payments share price is rocketing over 12% higher today appeared first on Motley Fool Australia.

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It’s not the 98% plunge in traffic through Australia’s once-bustling airport that will be keeping shareholders in Sydney Airport Holdings Pty Ltd (ASX: SYD) on edge.

It’s the battle between state premiers on boarder restrictions that will be a bigger sentiment driver for the airport as investors grapple with the fact that the company’s income isn’t as diversified as management claims it to be.

I’ll explain more of this later.

Clipped wings

The near-total freeze on domestic and international air travel due to the COVID-19 pandemic meant that only 92,000 passengers moved through Sydney Airport in April this year.

In contrast, 3.7 million flowed through its terminals during the same month in 2019.

Of the total numbers last month, 49,000 were domestic travellers, representing a 98% drop from April 2019.

Caught in the crossfire

The pressure is building on state premiers to allow Australian visitors from beyond their borders to return. This could happen in June although Queensland is the holdout.

Businesses and the federal government are pressuring Queensland Premier Annastacia Palaszczuk. She’s warning against restarting the tourism industry while our two most populous states of Victoria and New South Wales continue to report cases of community transmission, reported the Australian Financial Review.

The sunshine state indicated it may not welcome travellers from the southern states until at least September.

Meanwhile, NSW will allow its residents to holiday anywhere within the state from June 1, although that isn’t going to help Sydney airport or airlines like Qantas Airways Limited (ASX: QAN).

“New normal” for travel stocks

The airlines have flagged their own “new normal” for when services eventually resume. As a safety precaution, Qantas and Virgin Australia Holdings Limited will issue masks to passengers but won’t make wearing them compulsory.

The airlines will also stagger boarding and disembarkation (sounds like more bad news for cattle class passengers!), do more cleaning and have hand sanitisers in readily accessible places.

What they won’t do is leave empty seats for social distancing as Qantas’ boss Alan Joyce warned this will force ticket prices to surge nine-fold.

“L” not “V” shape recovery

It will be a long time before things go back to anything resembling pre-coronavirus, especially for Sydney Airport.

I am not even talking about the return of international travellers either as that will take many more months through a multi-stage comeback.

Eggs in different baskets but same trolley

Airport management boasted about its diverse income streams during its February results. Passenger traffic was flat but underlying earnings before interest tax depreciation and amortisation (EBITDA) jumped 4%.

This was due to rents it collects from retail, hotel and car hire companies. But even as domestic traveller return, the airport may have to contend with a second battle front.

Retailers are gearing up for a bitter fight with shopping centre landlords and structural change is in the air!

If retailers manage to secure significantly lower rents and change how mega malls charge for space, as I suspect, then I believe tenants at the airport will expect a similar treatment.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 climbs 1% in positive start to the week
• 2 high yield ASX dividend shares to buy for 2021
• 3 industries that may never recover from COVID-19
• Virgin narrows its shortlist down to 4 suitors

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 Why investing in these COVID-19 stricken ASX shares won’t be the same again for a very long time appeared first on Motley Fool Australia.

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If you’re looking for market-beating returns over the long term, then I think the healthcare sector is a great place to start.

This is because there are a number of quality options in the space which look well-placed for strong long term growth thanks to favourable sector tailwinds and their leading products.

Three ASX healthcare shares I would buy and hold are listed below:

CSL Limited (ASX: CSL)

CSL is a biotherapeutics company which I think would be a great long term investment. It is made up of two businesses – CSL Behring and Seqirus. CSL Behring is the global leader in plasma therapies and Seqirus is the second largest influenza vaccines company globally. I believe both businesses are well-positioned for growth over the next decade thanks to their leading products and burgeoning research and development pipelines. Combined, I expect CSL to deliver solid earnings growth for the foreseeable future.

Nanosonics Ltd (ASX: NAN)

Another healthcare share to consider with a long term view is Nanosonics. I’m a big for the infection control specialist due to its trophon EPR disinfection system for ultrasound probes and its upcoming product launches. While not a lot is known about these new products, management notes that they have similar market opportunities to the trophon EPR system. If they are anywhere near as successful, they could underpin strong earnings growth for a long time to come.

Ramsay Health Care Limited (ASX: RHC)

Times have been hard for Ramsay Health Care and things are unlikely to get easier in the immediate term. However, the market already understands this and has priced this into its shares. In light of this, I think now could be an opportune time to make a long term investment. After all, Ramsay’s long term outlook looks very positive due to increasing demand for its services globally because of ageing populations and increasing chronic disease burden. In addition to this, I suspect the company could bolster its growth with further acquisitions in the future. All in all, I expect its shares to be market beaters over the next decade or two.

More reading

• 3 ASX 200 blue chip shares I would buy today
• If you invested $10,000 in the Ramsay Health Care IPO, this is how much you’d have now
• How you can get very rich with ASX 200 shares
• How to invest $10,000 in ASX 200 shares today
• Should ASX investors just buy ETF index funds for better returns?

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. and Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and Ramsay Health Care 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 crude oil price has risen by 30% since last Monday, 11 May. The easing of restrictions across large swathes of the world has raised hope of gradual increases in demand. Chinese oil demand, in particular, has risen to pre-pandemic levels. 

Moreover, the Saudi Arabia-Russia crude oil price feud has come to an end. Add to this the positive news related to a potential COVID-19 vaccine and oil and gas investors believe they can breathe freely again.

The damage has been done, however. On Monday, the US Energy Information Administration stated that US shale oil production would drop by record levels in June. Well economics and the continuing ravages of the coronavirus continue to batter the industry. While this is unfortunate for US shale oil producers, it will likely drive further short-term rises in the crude oil price on futures contracts.

Who stands to gain?

The Santos Ltd (ASX: STO) share price has already jumped by 11% this week since Monday. At present, Santos’ price-to-earnings ratio (P/E) is still at 10.26. I believe this is still a reasonable ratio given the company is very well managed. It has a strong LNG hedge and is targeting break-even cash costs of less than the current crude oil price. 

The Origin Energy Ltd (ASX: ORG) share price has had an upward burst of 5% since Monday. Origin recently announced a strategic move to structurally lower operating costs. It also has a $100 million additional cost out program in place and has defensive qualities as Australia’s largest gas retailer. At a P/E of 9.84, this is 6 points below its 10-year average.

As with Origin, the Woodside Petroleum Limited (ASX: WPL) share price has jumped up 6% since Monday. The largest of the 3, Woodside has a current P/E of 39.53 reflecting the company’s forward growth plans. This is lower than the company’s 10-year average P/E. However, it doesn’t matter so much with Woodside. The market clearly sees this company as a growth opportunity.

In truth, Australia owes a debt of gratitude to the Woodside management teams over the past 2 decades in particular. After inventing the LNG industry in Australia, this company is the driving reason why our country has become the world leader in LNG production in January of this year. 

Foolish takeaway

While oil price futures have started to rebound significantly, this is somewhat divorced from the reality of the physical oil market. The world still has a glut of oil. Moreover, the US is still far from pre-pandemic activity.

Since March, trying to forecast market trends is a fool’s errand. Nonetheless, positive sentiment within the market is likely to continue the crude oil price rise at least over the remainder of May, possibly into early June. Even so, of the 3 major energy ASX shares I favour Santos. It benefits directly from a higher oil price; far more than Woodside or Origin. 

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Should you invest $1,000 in Woodside Petroleum shares?
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX 200 shares to watch this week
• Why Aristocrat Leisure, Newcrest, Santos, & Zip Co shares are charging higher

Motley Fool contributor Daryl Mather 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 3 ASX 200 energy shares to buy before crude oil price rises appeared first on Motley Fool Australia.

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Is the Transurban Group (ASX: TCL) share price a buy with traffic returning to the roads around Australia’s capital cities?

Life is starting to return to normal around Australia and one of those elements is that road traffic is starting to return.

The last couple of months have been tough for Transurban. There’s a reason why the Transurban share price fell 38% in around a month. Traffic was expected to fall heavily and it did.

In the week of 26 April 2020 Transurban saw a 44% decline of traffic across its entire network because of the coronavirus. But restrictions are starting to lift and schools are opening up again.

Is the Transurban share price a buy?

Since that low on 19 March 2020 the Transurban share price has actually risen 37.6% so it has recovered more than half of the lost ground.

Will it keep going and get back to its pre-coronavirus level? There’s two big factors to consider.

The first is that interest rates are now incredibly low. That should, theoretically, push asset prices up higher than they would have otherwise been. This should help boost Transurban’s fair value share price. 

But most importantly – what are the traffic numbers going to be over the next 12 months? Will there continue to be a big reduction of traffic with people working at home? Other drivers may want to save a few dollars and avoid toll roads if they’re being cautious with spending.

Or will life somehow miraculously get back to normal before the end of 2020?

Obviously these considerations are very important for the Transurban share price and traffic is key for the Transurban distribution.

Foolish takeaway

At this stage it’s hard to say which way things are going to go for Transurban and its traffic numbers. That’s why I’m happy to leave it on the sidelines for now.

More reading

• ASX 200 Weekly Wrap: Gold miners help edge ASX ever higher
• 3 top ASX dividend shares to buy next week
• 2 high quality ASX dividend shares for patient investors to buy now
• In a post-COVID world, could Australia be the next superpower?
• 3 ASX 200 pandemic winners and 3 losers

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban 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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Despite still trading lower than its 52-week high, the Newcrest Mining Limited (ASX: NCM) share price has been climbing higher in 2020 as investors flock to ASX 200 gold shares. But while investors have been snapping up the Aussie gold miner, is it still in the buy zone?

Why the ASX 200 gold miner’s shares are soaring

While the S&P/ASX 200 Index (ASX: XJO) is down 16.83% this year, Newcrest’s value has surged 5.79%. That means the Aussie gold miner has outperformed the ASX 200 benchmark by an impressive 22.62% in 2020.

The main factor driving the Newcrest Mining share price higher is the global gold price. The value of gold has surged this year amid the COVID-19 pandemic, rising geopolitical tensions and an oil price war.

Investors don’t like uncertainty, and there’s been plenty of that in 2020. This means the gold price has reached multi-year highs above the US$1,750 per ounce mark on the back of strong demand. That’s good news for the Newcrest Mining share price which has climbed to $32.00 per share.

Is the Newcrest Mining share price in the buy zone?

Newcrest is a solid large-cap ASX share at the best of times. It’s worth $25.9 billion at the moment and is well inside the ASX50. However, the perceived safety of gold has supported the gold miner’s share price so far this year.

Having said that, I won’t be buying Newcrest shares. While the Aussie gold miner could continue to outperform this year, I like to invest for the long-term. It’s easy to get distracted by short-term share price movements, but it pays to remember your investment strategy and avoid the day-to-day noise.

Foolish takeaway

There are plenty of investors looking to invest in ASX gold shares right now. While a soaring gold price could support the Newcrest Mining share price in the short-term, buying shares only makes sense as part of a longer-term investment strategy.

More reading

• Are ASX bank shares worth buying despite dividend cuts?
• 5 things to watch on the ASX 200 on Wednesday
• Top brokers pick the latest ASX stocks to buy today
• Here’s why the Fortescue share price hit an all-time high today
• Is the ASX 200 getting too far ahead of itself?

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 Is the Newcrest Mining share price in the buy zone? appeared first on Motley Fool Australia.

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Some shares are still trading at crazy cheap prices because of the coronavirus. I think it’s worth considering if they are buys today or not.

The best time to buy shares is when they’re at much cheaper prices, which is what has happened to plenty of businesses.

Here are three shares at crazy cheap prices that could be worth looking at:

Challenger Ltd (ASX: CGF) 

The Challenger share price is down 57% from where it was at 21 February 2020. The annuity provider has seen a painful hit, but the company is still predicting that it can hit its profit before tax guidance in FY20 which is reassuring.

Over the long-term I do think that the lower interest rates could be harmful to Challenger as it needs to generate a return to pay the annuities. A lot of its investments are currently in bonds, which are earning a very small return. But the demographics are still in its favour. 

At the current crazy cheap share price Challenger offers a trailing grossed-up dividend yield of 11.4%.

Brickworks Limited (ASX: BKW) 

The Brickworks share price is down 34% since 20 February 2020. I think this is a crazy cheap price for a reliable share that has already been around for many decades.

Construction is clearly going to be affected this year as projects finish and new ones are delayed (or cancelled). However, I believe this is just a shorter-term problem and projects will return sometime next year.

In the meantime, Brickworks receives reliable cashflow from its other assets being its ‘investments’ division and 50% stake in an industrial property trust which should be able to fund the grossed-up dividend yield of 6.25% fore the foreseeable future.

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price is down 38% from a year ago. The drought and other one-off issues caused a lot of hurt to Australia’s biggest horticultural player.

I think a share price under $3 is a crazy cheap price considering food prices are rising and Costa continues to have attractive global growth aspirations.

There has even been a bit more rain recently which could help the company as well. Whilst it doesn’t have a large dividend, it is still paying one which hopefully shows the confidence of the board in the company’s future.

Foolish takeaway

I think each of these shares are trading at crazy cheap prices for what profit they may be generating in two or three years. If I had to pick one of the three it would be Brickworks for its defensive assets and US growth prospects.

More reading

• Is the ASX 200 getting too far ahead of itself?
• 3 Warren Buffett ASX dividend shares to buy right now
• 3 ASX 200 dividend shares I’d buy today
• The 5 ASX shares that were last week’s biggest fallers
• Meet the ASX 200 company that just posted a 90% surge in profit

Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended Brickworks, Challenger Limited, and COSTA GRP 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.

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ASX bank shares have been tumbling lower in 2020, but could they be back in the buy zone?

Why are ASX bank shares trading cheaply today?

The biggest factor hammering the S&P/ASX 200 Index (ASX: XJO) lower in 2020 is the coronavirus pandemic. COVID-19 has brought the global economy to a standstill as borders have shutdown and people have been forced indoors.

But the Aussie banks have been hit particularly hard this year. In fact, ASX banking shares are underperforming the benchmark index by some margin as loan impairments rise and dividends are slashed.

Initially, APRA was putting pressure on the banks to conserve cash in the current environment. However, investors are now wondering if earnings could suffer and dividends could continue to fall due to lower profits as well.

Is it a good time to buy?

All of these headwinds have spooked investors into selling off the banks in droves. However, the fact is that the ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) remain a pillar of the Aussie economy. While there is the rise of neobanks threatening their business model, many Aussie banks are actually backing their own horses in this race.

For instance, National Australia Bank Ltd. (ASX: NAB) is behind UBank while Bendigo and Adelaide Bank Ltd (ASX: BEN) supports Up. This could mean the increasing popularity of neobanks might not be the death sentence for ASX bank shares that many expect.

Furthermore, despite softer earnings, CBA still posted a half-year cash profit of $4.5 billion. COVID-19 will pass and I think we could see Aussie banks continue to pay strong dividends, albeit at lower levels, well into the future.

Foolish takeaway

No one knows where the ASX 200 is headed in 2020. However, I think the ASX bank shares are still high-quality companies with strong earnings potential. This could mean now is a good time to buy your favourite bank’s shares at a discounted price.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Top brokers pick the latest ASX stocks to buy today
• Is it time to buy ASX banks?
• Here’s why the Fortescue share price hit an all-time high today
• Is the ASX 200 getting too far ahead of itself?

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.

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