Tag: Motley Fool Australia

The Suncorp Group Ltd (ASX: SUN) share price will be on watch today after the banking and insurance giant released a trading update.

How is Suncorp performing?

This morning Suncorp released a comprehensive update on how the coronavirus pandemic is impacting its businesses.

According to the release, the significant market volatility seen over recent months has resulted in $205 million mark-to-market losses on its investments portfolio to March 31.

It would have been worse had the company not had hedging strategies put in place.

In addition to this, the company’s Insurance business has been impacted both positively and negatively by the pandemic. It has been negatively impacted by landlord loss of rent claims, but positively impacted by motor claims frequency.

In respect to landlord claims, Suncorp expects there to be an increase in claims frequency and severity for loss of rent claims.

However, it advised that the precise impact is hard to predict given the legislative responses at Federal and State levels. The company is hopeful that many landlords and tenants will reach amicable arrangements, which would not trigger their policies.

Whereas with motor claims, the company notes that the introduction of restrictions in March has led to a reduction in claims lodgements in the consumer motor portfolio. This dynamic is also evident in commercial motor, albeit to a lesser extent.

However, with restrictions easing, it has already observed a discernible rise in lodgements over the last two weeks.

Finally, the company is expecting a modest drag on its gross written premium (GWP) growth in FY 2020. This is a result of take-up of hardship relief options, and the weaker operating environment.

Suncorp Bank.

In response to the pandemic, Suncorp Bank has included a $133 million management overlay within the third quarter collective provision. This also includes appropriate amounts for its exposure to commercial segments.

This takes the total collective provision balance to $234 million, more than double the equivalent number in the first half.

Management advised that this is underpinned by its view of unemployment reaching 11.5% and an 11% reduction in house prices, with property prices remaining depressed for a prolonged period of time.

Positively, management notes that the company is currently well capitalised, with capital levels in excess of what is required to cover the expected deterioration due to the pandemic.

What about dividends?

Suncorp advised that it will consider any final dividend in its normal year end process.

Though, consistent with maintaining a robust balance sheet, management and the board will adopt a conservative mindset when making decisions about any final dividend. This will involve consideration of its capital position, the outlook for the economy, and APRA’s guidance on dividends.

More reading

• These ASX shares booked the biggest gains last week
• Where I’d invest $1,000 into ASX shares right now
• Is Santos the best ASX 200 energy share?
• These ASX 200 shares are up over 1,000% in just 3 years
• ASX 200 Weekly Wrap: New ASX bull run continues

Motley Fool contributor James Mickleboro 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 Suncorp share price on watch after trading and dividend update appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2xQ2dsO

If I had $1,000 to invest into ASX shares right now, I’d go for Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). The Soul Patts share price looks really good to me right now.

About Soul Patts

Soul Patts is an investment conglomerate that has been going since the early 1900s. It’s invested in a variety of different industries and businesses such as TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Clover Corporation Limited (ASX: CLV).

It’s also invested in a number of unlisted businesses such as swimming schools, agriculture and resources. I really like that it may be about to expand into data centres.

Why I’d invest $1,000 at this Soul Patts share price

There are few investments listed on the ASX that have outperformed the ASX index as consistently over the long-term as Soul Patts. Its investment diversification strategy has been very good. It means that management can look at almost any potential investment.

At the time of writing the Soul Patts share price is down by 23% since 20 February 2020. I think that’s a sharp fall for a business that’s defensive and has a promising long-term future.

I’m a big fan of the company investing in small caps on the ASX. Its investments in shares like TPG and New Hope Corporation Limited (ASX: NHC) were tiny at the start, but they have grown tremendously. Soul Patts may be able to find the next opportunity with these investments.

I think it’s important to remember that interest rates are now incredibly low. With share prices a lot lower I think it makes sense to invest in shares. Soul Patts has a grossed-up dividend yield of 4.8% and it has increased its dividend every year since 2000. 

At this share price, I think Soul Patts looks like a very solid buy under $18. I’ll probably be buying shares next time trading rules allow.

More reading

• 2 ASX shares that every investor should own
• 3 ASX dividend shares raising dividends like clockwork
• Why I’m even more confident about the Soul Patts share price
• How to make a $1 million share portfolio by investing $1,000 a month
• 2 ASX shares to build a diversified dividend portfolio

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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 Where I’d invest $1,000 into ASX shares right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2SQ7rw8

Last year, S&P/ASX 200 Index (INDEXASX: XJO) energy share Santos Ltd (ASX: STO) announced an agreement to purchase the Australian west LNG assets of ConocoPhillips (NYSE: COP). For US$1.39 billion, the company would acquire an estimated ~16% earnings per share accretion in 2020.

But then everything went wrong. Santos has been buffeted on both sides during the past 2 months through no fault of its own. The pandemic has effectively killed off demand while the Saudi-Russian oil price war has created a supply glut. A perfect storm that would have killed off a less well-managed company.

Nevertheless, Santos is well placed to weather this storm. It has used the current crisis to drive a transformative action plan. 

A disciplined ASX energy share

On 23 March 2020, Santos announced a $550 million (38%) reduction in 2020 capital expenditure. Santos also announced a $50 million reduction in 2020 cash production costs and is targeting a free cash break-even point of US$25/bbl. For a large scale capital intensive company, this is an outstanding effort. 

Even with the strains of coronavirus, Santos has produced the highest Cooper Basin gas production in 9 years. The company also generated $265 million of free cash flow in Q1 of CY2020. 

Strong balance sheet

The company is carrying more than US$3 billion in liquidity. This comprises US$1.15 billion in cold hard cash and US$1.9 billion in committed yet undrawn debt facilities.

In a wise tactical move, Santos unloaded a 25% stake in the Darwin LNG facility and the Bayu-Undan gas field to South Korean energy group SK E&S. It also has a letter of intent signed to sell-down a 12.5% interest in Barossa to JERA. This will allow Santos to pay for the ConocoPhillips acquisition in cash and $750 million 2-year debt.

Santos has also managed to sustain consistent pricing amid these turbulent times. The company has ~70% of volumes tied to prices via fixed price domestic gas sales, and oil hedged at an average floor price of US$39/bbl.

Add to this Santos has full control over current capital expenditure decisions with all major capital projects yet to take final investment decisions.

Foolish takeaway

The oil and gas sectors remain the blood of nations. For this reason, they remain the main industry globally to be protected by private armies. Oil and gas are likely to stay that way for the foreseeable future until genuine scalable alternatives emerge in the energy markets.

While the oil price is low now, it will rise again over time. Santos is, in my view, the best-placed ASX energy share to emerge from the pandemic structurally stronger than it was in January 2020. Its share price remains 41% down year-to-date.

More reading

• These ASX 200 shares are up over 1,000% in just 3 years
• ASX 200 Weekly Wrap: New ASX bull run continues
• 5 things to watch on the ASX 200 on Monday
• Which is the cheapest ASX bank stock on the market?
• 3 ASX 200 shares to buy before the market rebounds

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 Is Santos the best ASX 200 energy share? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/35MPL9T

Due to the market crash this year, the S&P/ASX 200 Index (ASX: XJO) has recorded a 7.5% decline over the last three years.

While this is disappointing, not all shares on the market are down over the period. In fact, some have generated mouth-watering returns over the three years.

Three top ASX 200 shares that are up over 1,000% in three years are listed below:

Afterpay Ltd (ASX: APT)

The Afterpay share price is up a remarkable 1495% over the last three years. The driver of this strong gain has been the success of its buy now pay later offering in the ANZ market and particularly the US market. Over the three years Afterpay has grown its active customer numbers at an extraordinary rate. For example, as of the end of March, Afterpay had 8.4 million active customers. This was up 122% over the 12 months and comprised 3.2 million customers in the ANZ market, 4.4 million customers in the US, and 0.8 million customers in the UK. From these customers the company delivered quarterly underlying sales of $2.6 billion. As a comparison, just under three years earlier on June 30 2017, Afterpay had 840,000 active customers and was generating quarterly underlying sales of $271 million.

Appen Ltd (ASX: APX)

The Appen share price has zoomed 1028% higher since this time in 2017. Investors have been fighting to get hold of the artificial intelligence company’s shares due to its explosive earnings growth. This has been driven by the increasing demand for its data services due to the growing importance of machine learning and artificial intelligence models for big business. Appen is exposed to these growing markets as its million-strong crowd-sourced team prepare the high quality data used in these models. Many of the largest tech companies in the world such as Facebook and Microsoft have been customers during the period.

Polynovo Ltd (ASX: PNV)

The PolyNovo share price is up a massive 1059% during the last three years. The driver of this strong gain has been the enormous promise of the medical device company’s NovoSorb product. It is a dermal scaffold for the regeneration of the skin when lost through extensive surgery or burn. The company is also looking to extend the use of NovoSorb into the hernia device and breast augmentation markets. Combined, these three markets have an addressable opportunity worth an estimated $7.5 billion per year.

More reading

• Is Santos the best ASX 200 energy share?
• ASX 200 Weekly Wrap: New ASX bull run continues
• 5 things to watch on the ASX 200 on Monday
• Which is the cheapest ASX bank stock on the market?
• 3 ASX 200 shares to buy before the market rebounds

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen 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 These ASX 200 shares are up over 1,000% in just 3 years appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3dCYOwR

The S&P/ASX 200 Index (ASX: XJO) has continued its recent form and delivered investors another week of bumper gains last week with a 2.78% rise. It’s the second week in a row that the ASX 200 has risen, although last week was a much more enthusiastic performance than the week prior.

It comes off the exciting news that governments around the country are beginning to ease restrictions surrounding the coronavirus, with cafes and restaurants reopening for in-room dining as soon as last Friday and small social gatherings now permitted in many states.

We also had some positive news on the share markets that added to the bullish sentiment.

Macquarie Group Ltd (ASX: MQG) reported its earnings for the 12 months to March 31. Although the company announced a 10% drop in earnings per share, an 8% decline of net profits and a 25% haircut to its dividend, investors were in a very forgiving mood, pushing Macquarie’s share price up 5.67% to $105.19 on Friday and up 9.57% for the week.

Afterpay Ltd (ASX: APT) was also (once again) the star of the weekly ASX show. After it emerged last weekend that Chinese conglomerate Tencent Holdings had built up a ~5% stake in Aftrpay over March and April, investors were bracing themselves for some of that volatility that Afterpay is famous for. And it didn’t disappoint.

Afterpay shares opened 30% higher last Monday morning before briefly falling over 8% after the bell, before again rocketing back nearly 5% afterwards. All in all, it was a 37% week for the buy now, pay later pioneer. What’s more, last week’s moves mean that Afterpay shares are up close to 400% since the lows we saw in March. Got FOMO yet?

We also heard from Westpac Banking Corp (ASX: WBC) last week when it delivered its half-year earnings result on Monday. Investors had been expecting the worst and the bank didn’t disappoint. Westpac reported a 70% collapse in cash earnings and an interim dividend ‘deferral’. Investors must have been bracing for even worse numbers though – Westpac shares ended up over 3% higher for the week on Friday.

How did the markets end the week?

As we’ve already alluded, the markets had a very healthy week. The ASX 200 opened last week at 5,245.9 points and ended the week at 5,391.10 points – pinning this week’s gains at 2.78%.

Monday and Tuesday were the strongest days last week, with 1.4% and 1.6% rises respectively. Wednesday and Thursday both saw mild falls, and a mild rise of 0.5% followed on Friday.

Meanwhile, the ALL ORDINARIES (INDEXASX: XAO) had an even better week than the ASX 200, rising from 5,325 points on Monday to 5,488 points on Friday – up 3.06% for the week.

Which ASX shares were the biggest winners and losers?

As always, let’s have a look at the biggest ASX winners and losers for the week. Let’s take the bins out and get rid of the bad news first with the losers:

Worst ASX losers	% loss for the week
Orocobre Limited (ASX: ORE)	6.5%
Inghams Group Ltd (ASX: ING)	6.5%
Alumina Limited (ASX: AWC)	6.2%
Qantas Airways Limited (ASX: QAN)	6.1%

As you can see, lithium miner Orocobre topped the losers last week. There were no major announcements or news out of Orocobre that might easily explain this share’s wooden spoon, but Orocobre did recently report some delays with capital works at one of its mines due to the coronavirus.

Investors weren’t too wild about poultry producer Inghams last week either. The company did deliver a market update on Monday in which it warned that the current economic environment would make it difficult for the company to issue accurate guidance in 2020.

Former dividend heavyweight Alumina also made the list, as did Qantas. Regarding the latter, perhaps investors were spooked after Warren Buffett revealed Berkshire Hathaway has sold out of all its US airline holdings last weekend.

Now we’ve discussed the losers, let’s now take a look at which stocks made investors the happiest last week.

Best ASX gainers	% gain for the week
Afterpay Ltd (ASX: APT)	37%
EML Payments Ltd (ASX: EML)	28.7%
Polynovo Ltd (ASX: PNV)	28.1%
Appen Ltd (ASX: APX)	18.3%

As we have discussed earlier, Afterpay was the clear ASX winner of the week with an eye-watering 37% gain. Investors are clearly very excited to have a company of the size and reputation as Tencent throwing its weight behind the company.

It was a great week for payment stocks across the board, with the smaller EML Payments also seeing a healthy surge in buying. There was no major news out of EML this week, so it’s possible that investors were getting a bit carried away with Afterpay and some of this sentiment has spilled into EML. The coronavirus is also seeing a big surge in cashless payments, so this paradigm might also be adding some fuel to EML’s fire.

Healthcare wunderkind Polynovo and WAAAX investing favourite Appen also saw healthy bumps this week.

What is this week looking like for the ASX?

The news of potential further easing of coronavirus restrictions is clearly an exciting news piece for investors to contemplate and it’s possible that this might translate into higher ASX share prices this week. We are starting to get a clearer insight into how the ASX’s biggest companies are being affected by the coronavirus lockdowns with earnings trickling through, which is certainly helping ease some of the fears of the unknown (although I maintain it’s far too early to ascertain all of the damage just yet).

Over in the US, we got some awful news on Friday. According to reporting in the Australian Financial Review (AFR), 20.5 million Americans lost their jobs in April and the US unemployment rate now stands at 14.7% – a level not seen since the Great Depression almost 100 years ago. We’ll have to see if this news flows through to US investor sentiment on Monday night (our time).

Back home, there’s a third-quarter update from Commonwealth Bank of Australia (ASX: CBA) due out on Wednesday. CBA is the only ‘Big 4’ bank that hasn’t yet reported any post-coronavirus earnings, so that will certainly be interesting viewing and one most ASX investors will be keeping an eye on this week.

Before we go, here’s how the major ASX blue-chips are looking as we start a new week:

 

 

 

 

 

 

 

 

 

 

And finally, here is the lay of the land for some leading market indicators:

•     S&P/ASX 200 (XJO) at 5,391.1 points
•     ALL ORDINARIES (XAO) at 5,488 points
•     Dow Jones Industrial Average at 24,331.32 points
•     Gold (Spot) is swapping hands for US$1,700.60 per troy ounce
•     Iron ore is asking US$87.18 a tonne
•     Crude oil (Brent) is trading at US$30.97 a barrel
•     Crude oil (WTI) is going for US$24.74 a barrel
•     Australian dollar buying 65.29 US cents

Foolish takeaway

The strong momentum the ASX has shown since late March was on full display last week. Although I am just as excited as every other Australian at the prospects of restrictions being lifted, I am still cautious that the current levels we are seeing on the ASX boards are not leaving a lot of wiggle room if the economy rebounds in any other fashion than a sharp ‘V’. Therefore, I would still recommend investing with caution in the current market, with one eye ever on the horizon.

As always, stay safe, stay rational and stay Foolish, fellow investors!

Returns as of 7/4/2020

Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Emerchants Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths 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.

More reading

• 3 top ASX dividend shares to buy right now
• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday
• Which is the cheapest ASX bank stock on the market?
• 3 ASX 200 shares to buy before the market rebounds

The post ASX 200 Weekly Wrap: New ASX bull run continues appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2YQgHE9

According to the latest weekly economic report by banking giant Westpac Banking Corp (ASX: WBC), its economics team continues to believe that the cash rate will remain on hold until at least the end of 2023.

It commented: “We do not expect the cash rate to be increased before end 2023 with our forecast for an unemployment rate still holding around 6% by that time.”

In light of this, I continue to believe the Australian share market is the best place to go to earn a passive income.

Three dividend shares that I would buy are listed below. Here’s why I like them:

Accent Group Ltd (ASX: AX1)

Accent Group is the footwear focused retail group behind store brands such as HYPE DC and Platypus. The company’s FY 2020 result is likely to be impacted greatly from store closures and its final dividend may be cancelled in August. However, I’ve been impressed with its online sales growth during the pandemic, which just goes to show that demand is still there. As a result, I’m confident that its retail stores will bounce back strongly in FY 2021 when trading conditions return to normal. Based on this, I estimate that its shares offer a fully franked 5.5% FY 2021 dividend yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

I think the current crisis and the impact it has had on dividend payments by many companies shows that it pays to maintain a diverse portfolio. For this reason, I think the Vanguard Australian Shares High Yield ETF would be a good option for income investors. This is because it provides investors with exposure to many of the highest yielding blue chip shares on the ASX through a single investment. At present I estimate that its units offer a forward dividend yield of at least 5%.

Wesfarmers Ltd (ASX: WES)

A final dividend share I would buy is Wesfarmers. I like the conglomerate due to its high quality portfolio, solid growth potential, and sizeable cash balance. The latter is likely to be used by the Bunnings owner to bolster its portfolio in the coming years and drive further growth. For now, I estimate that Wesfarmers’ shares will provide a dividend yield of approximately 4% in FY 2021.

More reading

• Which is the cheapest ASX bank stock on the market?
• Top broker urging you to buy this ASX 200 retail stock next week
• 2 high yield ASX dividend shares to hold for a decade
• Highlights from the week: ASX 200 rises 2.75%
• The first personal finance thing Warren Buffett would do

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent 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 3 top ASX dividend shares to buy right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fBxiBB

At the start of each week I like to look at ASIC’s short position report in order to find out which shares are being targeted by short sellers.

This is because I believe it is worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Myer Holdings Ltd (ASX: MYR) remains the most shorted share on the ASX with short interest of 14%. Short sellers may regret not closing their positions sooner. The Myer share price rocketed 52% higher last week amid optimism that stores will reopen soon.  
• Galaxy Resources Limited (ASX: GXY) has seen its short interest fall week on week to 13.4%. The lithium miner has been one of the most shorted shares for some time due to concerns over supply outstripping demand for the battery making ingredient.
• Speedcast International Ltd (ASX: SDA) has short interest of 13.2%. Things look very bleak for the communications satellite technology provider. Last month it revealed plans to declare itself bankrupt after failing in its efforts to recapitalise.
• Orocobre Limited (ASX: ORE) has seen its short interest drop lower again to 11.9%. As with Galaxy, short sellers have been targeting Orocobre due to a collapse in the price of lithium. In addition to this, Orocobre recently advised that its development plans at its Argentine operation have been delayed by the pandemic.
• JB Hi-Fi Limited (ASX: JBH) has seen its short interest reduce week on week to 10.2%. Unfortunately for short sellers, last week the retailer released an update which revealed that its sales were very strong during the third quarter.
• Pilbara Mineral Ltd (ASX: PLS) has short interest of 9.5%, which is down slightly week on week. As with the other lithium miners, short sellers have been going after Pilbara Minerals due to weak lithium prices and concerns that a recovery could be delayed because of the pandemic.
• Zip Co Ltd (ASX: Z1P) has seen its short interest remain flat at 9.4%. As with Myer, short sellers may be regretting this one. Last week the buy now pay later provider’s shares jumped 50% higher after positive industry news and a strong April update.
• Inghams Group Ltd (ASX: ING) has short interest of 9.3%, which is down sharply week on week. With the country on the verge of reopening, short sellers may believe the worst is behind the poultry company.
• Clinuvel Pharmaceuticals Limited (ASX: CUV) has seen its short interest slide to 9.3%. The biopharmaceutical company’s shares trade at a significant premium to the market average. Short sellers may believe Clinuvel won’t be able to deliver the level of growth that justifies this.
• Super Retail Group Ltd (ASX: SUL) has seen its short interest fall to 8.8%. Short sellers may be concerned that some of the retailer’s brands, such as Macpac, will not fare well during the coronavirus crisis.

More reading

• 3 top ASX growth shares to buy with $3,000 after the market crash
• Top broker urging you to buy this ASX 200 retail stock next week
• These are the star ASX shares of the week
• ASX shares and investing trends that could boom post COVID-19
• These were the worst performing ASX 200 shares last week

James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Super Retail 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.

The post These are the 10 most shorted ASX shares appeared first on Motley Fool Australia.

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

On Friday the S&P/ASX 200 Index (ASX: XJO) finished the week on a high. The benchmark index climbed 0.5% to 5,391.1 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to edge higher.

The ASX 200 looks set to continue its positive form on Monday. Current SPI futures are pointing to a 3 point gain at the open. This follows a strong end to the week on Wall Street despite record U.S. job losses. On Friday the Dow Jones rose 1.9%, the S&P 500 climbed 1.7%, and the Nasdaq index pushed 1.6% higher.

Oil prices jump.

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices jumped higher on Friday night. According to Bloomberg, the WTI crude oil price rose 5% to US$24.74 a barrel and the Brent crude oil price jumped 5.15% to US$30.97 a barrel.

Gold price drops lower.

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could come under pressure today after the gold price tumbled lower. According to CNBC, the spot gold price fell 0.7% to US$1,713.90 an ounce after improving investor sentiment led to a switch to risk on assets.

Macquarie rated as neutral.

The Macquarie Group Ltd (ASX: MQG) share price could be close to peaking according to analysts at Goldman Sachs. Following the release of its full year results last week, the broker has retained its neutral rating and put a $127.32 price target on the investment bank’s shares. It notes that Macquarie has a strong balance sheet, but expects a lot of uncertainty in FY 2021.

GrainCorp on watch.

The Graincorp Ltd (ASX: GNC) share price will be on watch this morning after China threatened to slap an 80% import tax on Australian barley. China claims that the Australian government is subsidising farmers and allowing them to dump barley into China at cheaper prices than those offered by Chinese farmers.

Returns as of 7/4/2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie 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.

More reading

• Which is the cheapest ASX bank stock on the market?
• 3 ASX 200 shares to buy before the market rebounds
• 2 bargain ASX shares to buy with $2,000
• 3 ASX shares to buy as a beginner
• Top brokers name 3 ASX 200 shares to sell next week

The post 5 things to watch on the ASX 200 on Monday appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2WLS3BN

It’s a tough time to be an ASX bank investor! These popular but embattled stocks are being pulled apart by bulls and bears trying to work out the right valuations for these shares.

The impending COVID-19 depression is turning the valuation exercise into nothing more than a guessing game.

It’s the fog of war! No one knows how bad the economic implosion will be as the ranks of the unemployed swell around the world and loan defaults grow.

Perhaps the easier strategy is to buy the cheapest ASX bank stock instead of trying to pick the bottom.

Value is a defensive quality

We know that the COVID-19 pandemic will come to an end and the banking sector will rebound. Buying the best value bank stock will provide some downside protection as more bad news is reflected in the price, but yet will generate the best return when confidence returns.

That makes sense on paper. But the usual tools used to value ASX banks, such as dividend yield, have proven to be as credible as alchemy in this coronavirus climate!

Experts have increasingly turning to the price-to-book (P/BV) value multiple as a yardstick to value banks, and one bank in particular stands out as being very cheap.

Valuing ASX bank shares

Before I get into which bank this is, it’s important to understand what P/BV is measuring. This multiple takes the market cap of a company and divides it by the firm’s net assets, that is its total assets minus all its liabilities.

To put it in another way, it’s the value that is left in the company after it sells all its assets and paid off its liabilities. The smaller the P/BV, the more value there is in the company. A multiple of under 1 is usually well regarded.

There is a reason why P/BV is favoured over the more commonly used price-earnings (P/E) multiple during times of extreme uncertainty. Working out the “E” for the next year in the midst of a crisis is too difficult.

While there are some variables you need to forecast for P/BV, it’s a more conservative way to measure value when risks are high.

Throwing the book at the banks

Three of our four big banks are trading at around 0.8 times P/BV and that’s encouraging for the bulls. These banks are Australia and New Zealand Banking GrpLtd (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB).

Commonwealth Bank of Australia (ASX: CBA) is the exception with a P/BV over 1, but you have to pay a premium for quality, and CBA is clearly the best of the big four.

But if you want to buy deep value, UK-focused lender V MONEY UK/IDR UNRESTR (ASX: VUK) may be your answer.

Is this the most undervalued ASX bank stock?

The bank’s P/BV multiple only stands at little more than 0.2 times, according to Macquarie Group Ltd (ASX: MQG).

This makes V Money, or better known as Virgin Money, cheaper than almost all of its UK peers too.

What’s more, the broker believes V Money’s balance sheet is more defensive than its UK competitors.

Macquarie is recommending the stock as “outperform” (which means “buy) with a 12-momth price target of $2.15 a share.

This suggests a near 50% upside to the stock’s Friday closing price of $1.44. It’s hard to imagine our big four banks generating that kind of return over the same period.

Another thing, you don’t have to worry about V Money disappointing the market with a dividend cut or suspension. The stock doesn’t pay a dividend and the market isn’t pricing one in – at least not in the foreseeable future.

Who would have thought not ever paying a dividend would be seen as a defensive trait?

More reading

• 3 ASX 200 shares to buy before the market rebounds
• 2 bargain ASX shares to buy with $2,000
• 3 ASX shares to buy as a beginner
• Top brokers name 3 ASX 200 shares to sell next week
• Top brokers name 3 ASX 200 shares to buy next week

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie 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.

The post Which is the cheapest ASX bank stock on the market? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3dtkVpp

Due to the coronavirus pandemic, the S&P/ASX 200 Index (ASX: XJO) has fallen heavily over the last three months.

And while it has rebounded notably from its lows, it is still a long way off the highs it reached in February.

Although this is disappointing for investors, I remain optimistic that the share market will bounce back strongly once the crisis blows over.

In light of this, I think now is the time to look for the shares to buy before the market rebounds. Three that I would buy are listed below:

EML Payments Ltd (ASX: EML)

EML Payments is a payments solutions company with a focus on digital gift cards and pre-paid cards. In respect to the latter, the company provides branded cards that can store customer account credit. This includes the cards that online bookmakers like Ladbrokes, Neds and BetEasy often use to transfer betting winnings to their customers. It also provides the cards for a number of large salary packaging companies. EML has been growing at a very strong rate over the last few years and looks well-positioned to continue this trend once the crisis passes. Especially following the acquisition of Prepaid Financial Services. This will allow the company to enter the emerging field of banking as a service (BaaS) and could be a key driver of growth in the coming years. So with its shares down 25% year to date, now could be an opportune time to take a closer look.

Ramsay Health Care Limited (ASX: RHC)

It has been a difficult couple of years for this private healthcare company and its 480 global facilities. Unfortunately, the coronavirus pandemic isn’t making things any easier and more tough times lie ahead. However, I believe its shares have more than priced in this short term headwind. As a result, I think it would be well worth focusing on its long term outlook, which remains very positive thanks to its world class global network and expansion/acquisition opportunities.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price has come under significant pressure in 2020 and is down 37% year to date. Investors have of course been selling the airport operator’s shares due to the coronavirus pandemic and the impact this is having and will continue to have on passenger numbers. While the short term is admittedly bleak, I don’t think it will take too long for it to bounce back. Barring a second wave, it looks as though domestic travel will start its recovery in July. International travel will take longer, but a recovery will come in time. This could make it worth being patient with Sydney Airport’s shares and holding them with a long term view.

More reading

• 3 ASX dividend shares for income investors to buy next week
• 2 bargain ASX shares to buy with $2,000
• 3 ASX shares to buy as a beginner
• Top brokers name 3 ASX 200 shares to sell next week
• 3 ASX dividend shares raising dividends like clockwork

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 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.

The post 3 ASX 200 shares to buy before the market rebounds appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2WjKyU0