Tag: Motley Fool Australia

In the past month, Orbital Corporation Ltd. (ASX: OEC) has seen its share price rise by an amazing 38.4%.

This is part of an evolution in military technology towards drones and unmanned defence systems. Moreover, since the government announcement of $270 billion in defence spending, investors have become aware of the advanced technologies of ASX shares underpinning this transformation.

I think a range of companies in this sector are likely to grow significantly over the next 3–5 years. Many now have mature technologies, ongoing sales and significant growth opportunities ahead of them. Orbital is one of 4 leading ASX shares in this sector.

More drone propulsion systems

Orbital is a global leader in propulsion systems for tactical unmanned aerial vehicles (UAVs). The company recently announced an unaudited FY20 result of $33.8 million. This was within its guidance of $25–$35 million despite the interruptions of coronavirus in Australia and client countries. I am very bullish on this company. Partly because their current client base includes subsidiaries of Boeing, Northrop Grumman, and an unnamed large Singaporean Defence Company. 

FY21 is going to be about consolidating Orbital’s current situation and expanding client base. FY21 revenue guidance for this ASX share is for $40–$50 million. In particular, 3 of the company’s existing clients have been selected as providers for the Australian Defence Force (ADF) Land 129 program. 

More unmanned aerial systems

Xtek Ltd (ASX: XTE) makes small unmanned aerial systems (SUAS) among many other products. In particular, it supplies the AeroEnvironment WASP AE SUAS, produced in the United States.

At present, the ADF has more than 50 of these aircraft and Xtek recently announced an additional order for $2.8 million for this model, boosting the company’s existing SUAS supply contract.

In FY20, the supply of SUAS parts and maintenance to the ADF was worth $8 million. In addition, Xtek manufactures lightweight body armour, and is the primary provider to the Department of Defence for portable X-ray equipment and demolition remote firing systems.

FY20 guidance is for revenue of $42 million, an increase on $37.9 million in FY19. This ASX share has increased its production capability and can produce its patented lightweight composite materials to support $40 million per year revenue. This is planned to double during FY21.

ASX shares for drone protection

Two ASX shares are active in this area. The first is DroneShield Ltd (ASX: DRO), a company that provides protection against drones. Droneshield sells multiple sophisticated devices that are just starting to gain traction. For example, it has the Drone Gun MKIII for soldiers in the field. At the more extreme end, the Drone Node disables drones within a 1km radius.

In the past month, the DroneShield share price has risen by 15.38%. Moreover, the company has made 3 positive announcements in the past 2 weeks. First, a $100,000 order from the European Ministry of Defence. Second, a US$200.000 contract with the US Air Force. And third, the successful completion of a trial in a mid-tier European airport. The company expects the implementation tender in Q4 CY20.

The other ASX share in this space is Electro Optic Systems Hldg Ltd (ASX: EOS), which focuses on sophisticated sensor technology. This came from the privatisation of the  Commonwealth of Australia space activity, and the technology has been at the forefront of satellite tracking for more than 35 years.

Electro Optic Systems has also used this technology to build vehicle-mounted, remote-operated weapons that are battle-tested against drones. It is currently in negotiations with the Australian Government for the acquisition of 251 of these weapons. 

Foolish Takeaway

These four companies are just part of our very capable defence contracting industry. Out of all of these ASX shares, I am most interested in Orbital Corporation because I think the time has arrived for this technology, in particular. However, it is clear that we have multiple mature drone technologies capable of servicing the ADF and countries throughout the world.

More reading

• Orbital share price defies a falling market
• Short-sellers are targeting these ASX stocks ahead of the reporting season
• 3 surging ASX defence shares to buy next week
• 2 fast-growing mid cap ASX shares that could be destined for big things.
• DroneShield share price soars 12% on European order

Daryl Mather owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited and Orbital Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings 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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Do you have $3,000 to invest into ASX blue chips? I think the three shares I’m going to mention in this article could be good picks.

I’m going to pick from shares from the ASX 100. I think one of the 100 biggest businesses on the ASX count as blue chips.

Here are three ASX blue chips I think that could be good long-term ideas:

A2 Milk Company Ltd (ASX: A2M)

A2 Milk is one of the most promising growth shares within the ASX 100. The infant formula business has been growing impressively over the past five years and it’s doing well even during the COVID-19 pandemic. Families still need nutrition. 

A few months ago the company announced that its revenue for the three months to 31 March 2020 was above expectations as consumers increased buying due to pantry stocking. Revenue for FY20 is expected to be in the range of NZ$1.7 billion to NZ$1.75 billion.

The revenue growth was so strong that it caused the expected earnings before interest, tax, depreciation and amortisation (EBITDA) margin to be higher than previous guidance. It’s now expected to be in the range of 31% to 32%. Management haven’t adjusted either the margin guidance or the margin guidance since it was given.

Even if the final quarter of FY20 isn’t that strong, as was the case with Bubs Australia Ltd (ASX: BUB), I think A2 Milk has a very strong future as an ASX blue chip.

The company continues to steadily build its market position in Asia and the US. I’m pleased that the company will soon be making money from Canada after announcing an exclusive licensing agreement with Agrifoods. Canada is another big potential growth market over the long-term. 

A2 Milk is trading at 30x FY22’s estimated earnings.

Altium Limited (ASX: ALU)

Altium has been one of my long-term preferred ASX growth shares because I think it has such a promising long-term future. It has grown into an ASX blue chip and I think it can continue to grow over the long-term.

The tech business is aiming to become the world’s leading electronic software business – akin to how Microsoft dominated the office software space.

Altium has already built an impressive customer base including Qualcomm, Broadcom, Microsoft, HP, Lenovo, ABB, Siemens, Google, Bosch, Proctor & Gamble, John Deere, Tesla, Space X, Boeing and NASA.

Over the next five years the ASX blue chip is aiming for US$500 million of revenue and 100,000 Altium Designer subscriptions. The company has taken a short-term revenue hit due to COVID-19 by lowering prices to ensure that it could continue to build its customer base. Lower revenue in one year is worth it to gain multiple years of revenue from that client. Altium’s software is sticky, clients are unlikely to move away once they’re using it. 

Altium is trading at 50x FY22’s estimated earnings.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts may not be the biggest business on the ASX, but I definitely think it fits the description of being an ASX blue chip.

When I think of a ‘blue chip’ I would expect that business to have been around for a while. Soul Patts was listed in 1903. It’s one of the oldest listed businesses in Australia.

It’s an investment house that owns a variety of different businesses. It owns unlisted ones like resources, agriculture and swimming schools.

The ASX blue chip also owns stakes in listed businesses like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT). I really like the diversification on offer by Soul Patts. 

Soul Patts invests in long-term business investments, so it itself can be described as a long-term focused share. It’s defensively positioned, many of its investments are essential for our society.

I think this ASX blue chip will be around for a long time after I check my portfolio for the last time. That’s the type of investment I want to hold in my portfolio.

Foolish takeaway

I think these three ASX blue chips can produce strong returns over the long-term. Soul Patts would be my pick for income investors. A2 Milk may be the better pick for medium-term growth. I’d probably want Altium to be a bit cheaper before buying shares, under the current conditions.

More reading

• Why I would invest $50,000 into these excellent ASX shares
• 3 top ASX tech shares to buy right now
• Top ASX Stock Picks for August 2020
• Smart investors should buy these ASX growth shares
• 3 five-star ASX dividend shares to buy in August

Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of and has recommended Brickworks, BUBS AUST FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of A2 Milk. 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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Have you looked at the interest rates you’re receiving on your savings accounts right now?

The majority of savings accounts offered by Australia and New Zealand Banking GrpLtd (ASX: ANZ) and the rest of the big banks are offering base rates of just 0.05% per annum.

This means that if you are lucky enough to have $50,000 sitting in a savings account, it would yield just $250 in interest per year.

As a comparison, over the last 30 years the Australian share market has generated an average annual return of approximately 9.2%. If it were to do this again over the next 12 months, your $50,000 would turn into $54,600.

That’s a $4,600 return, compared to just $250 from the aforementioned savings account.

In light of this, I would sooner put my money to work in the share market than leave it to gather only paltry interest in a savings account.

With that in mind, I have picked out three top ASX shares which I think could provide strong returns for investors over the coming years. Here’s why I would invest $50,000 into them:

a2 Milk Company Ltd (ASX: A2M)

This New Zealand-based fresh milk and infant formula company has been growing its earnings at an explosive rate over the last few years. The good news is that I remain confident this strong form can continue for the foreseeable future thanks to the growing demand for its infant formula products in the massive China market. This will be supported by its expanding fresh milk footprint and potential earnings accretive acquisitions.

Altium Limited (ASX: ALU)

Another ASX share to invest $50,000 into is Altium. It is an award-winning printed circuit board (PCB) design software provider. Over the last decade it has carved out a leading position in the electronic design market. This is a big positive given the proliferation of electronic devices thanks to the massive IoT and AI markets. I believe this is likely to lead to increasing demand for its software over the next decade.

Appen Ltd (ASX: APX)

Another ASX share to consider investing $50,000 into is Appen. It is a leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI). Appen prepares or creates the data for the machine learning models of some of the largest tech companies such as Facebook and Microsoft. It also assisted in the creation of Apple’s Siri. I expect demand for its services to grow strongly in the coming years and drive above-average earnings growth.

More reading

• Want to invest $3,000 into ASX blue chips?
• Why ASX bank stocks are the worst performing group today
• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• 3 top ASX tech shares to buy right now
• Why ANZ, Flight Centre, SEEK, & Tabcorp shares are dropping lower

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 and recommends Altium. The Motley Fool Australia owns shares of A2 Milk 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.

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ASX supermarket shares have performed strongly in 2020. While the S&P/ASX 200 Index (ASX: XJO) was plummeting lower in the March bear market, the Coles Group Ltd (ASX: COL) share price pushed higher.

While that share price growth has slowed, supermarket shares have held their gains. The Coles share price is up 22.9% this year while Metcash Limited (ASX: MTS) shares have climbed 8.6%.

So, what do tightening coronavirus restrictions mean for the Coles share price in August?

What could move the Coles share price in August?

There are a couple of big factors here. First of all, let’s look at the tightening restrictions.

Victoria has implemented tougher lockdown restrictions until at least 13 September while other states are also on high alert.

That means that non-discretionary and ‘essential’ services like supermarkets could do well. Given supermarket shopping is one of the few permitted reasons to leave the home, Coles’ earnings could climb.

On top of the current restrictions, Coles is expected to release its full-year result on 18 August.

That FY20 result will only reflect the period up to 30 June 2020. However, I think we’ll still see some bumper earnings numbers with signs that could persist into FY21.

That means the Coles share price is one to watch this month. If we see better than expected earnings, I’d expect it to be climbing higher.

However, if investors think that this result is just a once-off, I would expect a decent share price fall. After all, investors are interested in the present value of future cash flows, not what’s happened in the past.

Should you invest in Coles?

There does appear to be some good benefits from holding Coles shares in 2020.

For one, the company’s earnings are non-cyclical and should remain steady. That could be good news for the Coles share price stability and maybe even a dividend.

If COVID-19 restrictions continue to drag on, next year’s earnings could even receive a boost.

I’m not sure if the Coles share price is cheap after climbing 8.6% higher this year but I won’t be betting against it in the current climate.

More reading

• Why the Reliance Worldwide share price is one to watch today
• 5 things to watch on the ASX 200 on Tuesday
• The ASX stocks hit by Victoria’s stage 4 forced shutdowns
• ASX stock of the day: Catapult share price leaps 15% on US college football contract
• The ASX small cap benefitting from COVID that you’ve probably never heard of

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Most investors are quite familiar with both Netflix (NASDAQ: NFLX) and Amazon.com (NASDAQ: AMZN), not only as far as their products and services go, but also their stocks. After all, both Netflix and Amazon have become truly massive long-term winners over the past decade, with Amazon up 2,490% and Netflix up an even more stunning 3,220% over the past 10 years. Their outperformance has earned them the title of being 40% of the famed FAANG cohort of leading U.S. consumer-facing internet stocks.

Data source: YCharts.

In general, industry leaders and winners tend to keep on winning, and both Netflix and Amazon still look like strong long-term picks today. But if you’re looking to add to one of these two pillars of the U.S. tech industry or even buy shares for the first time, which is the better bet today?

The case for Netflix

Netflix is up a whopping 50% on the year, as the government shelter-in-place order spurred an acceleration in net subscriber adds in both the first and second quarters. Netflix has long operated with low profits and actually negative free cash flow, since it must invest ahead of content coming out. Therefore, analysts have long looked at subscriber additions as a key metric. In just the first half of the year, Netflix has already added an additional 26 million subs versus just 12 million additions in the first half of 2019.

As the first mover and leader in global streaming, Netflix proved a go-to during the pandemic, proving its customer value proposition even after price increases for its standard plan in 2014, 2015, 2017, and 2019. The ability to increase subscribers while also raising prices is one of the reasons Netflix’s valuation has skyrocketed over the years.

While Netflix has rapidly grown to almost 193 million members as of last quarter, Jefferies analyst Alex Giaimo thinks Netflix can continue growing strongly for years, even though the U.S. is nearly fully penetrated. Gaimo believes that when taking into account both broadband households and mobile-only customers on a global basis, Netflix has an addressable market of 850 million.

Netflix is currently at around 65% penetration in the U.S, so applying that to the entire globe, Netflix could potentially rack up 550 million subs over time. Though the rest of the world is likely to be lower-penetration and perhaps lower pricing than the U.S., Netflix could still feasibly double its subscriber count over the long-term. Add in a few price increases along the way, and it’s not difficult to see Netflix generating serious cash flow five or 10 years out.

The case for Amazon

Not only does Amazon have a rival streaming service to Netflix, which is grouped with its Prime Video offering, but it’s also the undisputed leader in U.S. e-commerce and enterprise cloud computing, and it’s an ascendant force in digital advertising as well. In fact, you could say that Amazon doesn’t really operate in a single industry; it’s more of a business concept, dedicated to customer convenience, low prices, and continuous innovation on many fronts.

By design or coincidence, most of Amazon’s segments not only survived but also benefited from the COVID-19-related quarantines in the recently reported second quarter:

Segment	Q2 2020 Revenue Growth (YOY, excluding FX)
Online stores	48%
Physical stores	(13%)
Third party sellers	52%
Subscription services	29%
Amazon web services	29%
Other (mostly advertising)	41%
Total	40%

Data source: Amazon Q2 2020 earnings release. YOY=year-over-year.

Not only has Amazon been growing at a white-hot pace despite its already-massive size, but it’s also beginning to show some of the profit potential investors have wondered about for years. Despite an extra $4 billion in COVID-19 related costs, operating income surged a whopping 89% on a constant currency basis last quarter to $5.8 billion. Even the perpetually loss-making international segment, encompassing e-commerce operations in Japan, Europe, India, Brazil, the Middle East, and others, swung to an operating profit for the first time. While AWS actually decelerated to “just” 29% growth, as Amazon offered cost breaks to clients in beleaguered industries, AWS operating income grew at double that rate at 58%, as AWS appears to be generating huge operating leverage off its fixed cost base.

Amazon has traditionally reinvested all of its profits into improving its service, such as the introduction of one-day shipping last year, as well as innovating in new areas, such as the recent acquisition of electric autonomous vehicle-maker Zoox; however, it appears the company is now making so much money that it can’t seem to spend it all — at least, not last quarter! Once Amazon’s various businesses reach “maturity,” which, from the looks of it, appears a long, long ways off, its profit potential looks to be enormous.

How to decide?

Investing in either Netflix or Amazon is rarely a bad idea. However, there are a few elements that make me choose Amazon over Netflix at the current moment.

The biggest factor is that Amazon is truly diversified across many high-growth segments of the digital economy, whereas Netflix is hyper-focused on being the best streaming video subscription service in the world. Both diversified or hyper-focused business strategies can be very successful, but in today’s market, in which stock prices are fairly high and there is a great amount of uncertainty, I’d go for the more diverse company in Amazon.

After all, while Netflix is the leader in streaming, there is also an influx of competition coming in the form of both traditional media companies as well as tech giants launching their own streaming services, just in late 2019 and into 2020. While I don’t think any of these streaming services will overtake Netflix, they could crimp either Netflix’s subscriber growth or margins in competitive markets, making Netflix’s ultimate profitability a bit of a question mark.

Meanwhile, I like that Amazon dominates in both e-commerce and cloud computing, each of which has extremely high barriers to entry. I also like that Amazon is challenging the digital advertising leaders now, and that it continues to experiment and innovate, with the Zoox acquisition being a prime example, giving investors more “call options” on future potential products. 

Though it’s probably a good idea to own both stocks, and I own both today, Amazon is actually my largest position, whereas Netflix is much, much smaller. That’s due to Amazon’s unique culture, business model, and mix of both defensive and offensive characteristics, making it my choice today even after its post-earnings bump.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Billy Duberstein owns shares of Amazon and Netflix. His clients may own shares of  the companies mentioned. The Motley Fool owns shares of and recommends Amazon and Netflix and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why Amazon’s share price is set to leap on the opening bell
• US tech shares deliver massive results – what does it mean for ASX tech shares?
• Are the big US tech companies about to be broken up?
• Goodman share price hits record high. Is it too late to invest?
• Why the Emmys say ‘buy Netflix shares’

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Billy Duberstein owns shares of Amazon and Netflix. His clients may own shares of  the companies mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Netflix and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon and Netflix. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Marley Spoon AG (ASX: MMM) shares have been hot property in 2020.

Shares in the food delivery company are up a whopping 1,103.6% this year. The coronavirus pandemic has been a boon for the industry and investors have been keen to buy.

With Victoria and other states tightening restrictions, could Marley Spoon shares be headed even higher this year?

Why Marley Spoon shares have rocketed 

The company’s primary business centres around food delivery services. Marley Spoon delivers fresh ingredients with easy-to-follow recipe cards to the door.

That convenience and reliability have seen demand for Marley Spoon’s services rocket in recent years. That’s also triggered a surge in the Marley Spoon share price, particularly amid coronavirus concerns in 2020.

More people across the globe are looking at alternative ways to access food. Door-to-door delivery services for Marley Spoon have provided a ready-made solution.

It’s not just investor sentiment driving the company’s value higher. In fact, Marley Spoon has posted some seriously impressive growth numbers this year.

Marley Spoon shares rocketed up last week on the back of a strong quarterly update.

The company upgraded its full-year guidance to at least 70% revenue growth in 2020, up from 30% previously.

That has been driven by strong results across its global operations in 8 countries. Australian revenue climbed 103% for the quarter while United States (+171%) and Europe (+83%) also delivered a strong result.

What can we expect for the rest of the year?

If that quarterly trading update is anything to go by, Marley Spoon shares could be headed higher.

It’s important to remember the global perspective. Of course, Australia is still a big market for the company.

However, Europe and the United States are looming as potential value makers. If we see second waves, combined with food delivery being a permitted service, that could be good for earnings.

The risk with stratospheric growth is a company can quickly become out of its depth. That’s certainly a risk but one that I think is being managed well.

Given the recent successes, it looks like we could see more growth in 2020.

I think there’s a good chance Marley Spoon shares will hit a new record high in August. Whether this valuation at nearly $600 million is sustainable is another question altogether…

More reading

• Why Sezzle and these ASX shares recorded huge gains in July
• Is the Woolworths share price in the buy zone?
• 3 coronavirus ASX shares to buy as consumer preferences change
• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• Results: Marley Spoon share price surges 40% on market update

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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The BWP Trust (ASX: BWP) share price will be on watch this morning following the release of its full year results.

How did BWP perform in FY 2020?

During the 12 months ended 30 June 2020, the Bunnings Warehouse landlord reported a 0.3% decline in revenue to $155.8 million. Over the period, the company reported like-for-like rental growth of 2.4% and an occupancy rate of 98%.

On the bottom line, thanks partly to lower finance costs, the property company delivered a 1% increase in profit before gains on investment properties to $117.1 million.

Including property gains, BWP’s profit was up 24.4% to $210.6 million. This was driven by a 75.1% or $93.6 million increase in the gains in fair value of its investment properties. Management notes that this reflects the continuing strong market support for Bunnings Warehouse properties from an investment and risk perspective.

In light of this positive form, the company is in a privileged position to be able to increase its distribution in FY 2020 despite the pandemic.

The BWP board has declared a final distribution of 9.27 cents per unit, which brings its full year distribution to 18.29 cents per unit. This represents a 1% increase on FY 2019’s distribution. Shareholders will be paid this final distribution on 21 August 2020.

What were the drivers of this result?

Management notes that its main tenant, Bunnings Warehouse, was able to operate on an unrestricted basis during the financial year. As did the significant majority of its other tenants.

This meant that just $435,886 of rent abatements were granted during the period, which means 98.8% of rent was collected as normal during the months of March to June. This is likely to be materially better than what the likes of Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) will report later this month.

FY 2021 outlook.

For the year ahead, the trust’s primary focus is on filling any vacancies in the portfolio, progressing store upgrades, extending existing leases with Bunnings through the exercise of options, completion of market rent reviews, and the continued rollout of energy efficiency improvements at its properties.

CPI reviews will apply to 48% of the base rent, with leases subject to a market rent review comprising 19% of the base rent, and with the balance of 33% reviewed to fixed increases of 3% to 4%.

However, due to the uncertain economic environment, management is being cautious with its distribution guidance. At this stage it expects its FY 2021 distribution to be in line with the one it has paid in FY 2020.

Though, it warned that the distribution may be reviewed in the event that COVID-19 impacts are more severe or prolonged than anticipated.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Beat interest rate cuts with BHP and this ASX dividend share
• 5 things to watch on the ASX 200 next week
• These ASX dividend shares could be perfect for retirees
• 3 quality ASX dividend shares to buy in August

Motley Fool contributor James Mickleboro 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.

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I’ve got my eye on the Reliance Worldwide Corporation Ltd (ASX: RWC) share price today. This comes after a key ASX announcement from the Aussie manufacturer regarding coronavirus restrictions in Victoria.

What was in the ASX announcement?

The manufacturer said it was assessing the impact that Victorian government restrictions may have on its manufacturing and distribution facilities.

Reliance Worldwide manufactures products in its 4 Melbourne plans to supply into the Australian and Asia-Pacific region. There are also some products that are exported to the company’s North American operations.

These products are key to the maintenance and construction of hot and cold water sanitary systems, particularly for domestic housing.

The Reliance Worldwide share price will be one to watch in early trade following the announcement.

What is this in response to?

This comes after the Victorian Government introduced sweeping Stage 4 lockdowns for the Melbourne region until at least 13 September.

That means an estimated further 250,000 Victorians could lose their jobs under the latest restrictions.

Positively, the company said it maintains “sufficient” inventory levels that will substantially mitigate any supply disruptions. Reliance Worldwide does not anticipate any short-term impact on its North American sales.

How has the Reliance Worldwide share price performed this year?

Shares in the Aussie plumbing and heating company fell off a cliff in mid-February.

That coincided with the start of the recent bear market as the Reliance Worldwide share price fell 63.0% in the space of one month.

However, Reliance Worldwide shares have climbed 48.9% since March 24 to coincide with a rise in the S&P/ASX 200 Index (ASX: XJO).

The company’s market capitalisation currently sits at $2.1 billion with a price-to-earnings (P/E) ratio of 17.4.

The manufacturer is set to report its full-year results on Monday 24 August. I think that’s another day to watch the Reliance Worldwide share price, given the current uncertainty.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• The ASX stocks hit by Victoria’s stage 4 forced shutdowns
• ASX stock of the day: Catapult share price leaps 15% on US college football contract
• The ASX small cap benefitting from COVID that you’ve probably never heard of
• My top retail ASX 200 share to gift right now

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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 Reliance Worldwide share price is one to watch today appeared first on Motley Fool Australia.

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On Monday, the Monadelphous Group Limited (ASX: MND) share price plummeted 10.33% to $7.99 after the company announced that it was the subject of a legal claim by Rio Tinto Limited (ASX: RIO).

What was in the announcement?

The claim was related to a fire which occurred on 10 January 2019 at a Rio Tinto iron ore processing facility at Cape Lambert, Western Australia. A wholly owned subsidiary of Monadelphous was contracted to perform shutdown maintenance services prior to the time the fire occurred. Rio alleged that the Monadelphous subsidiary was in breach of its maintenance contract and that this breach was the cause of the fire. 

Rio Tinto have informed Monadelphous that they intend to make a claim for $493 million in loss and damages. This is comprised of $458 million from the cost of finding a temporary operating solution and business interruption arising from an alleged inability for Rio to process iron ore at the facility during the disruption. The additional $35 million of the claim was for material damage associated with reconstruction at the processing facility affected by the fire. 

According to the announcement, the Monadelphous subsidiary that is facing the allegation denies Rio Tinto’s claim and the losses claimed, which according to the subsidiary have not been substantiated.

Mondelphous intends to defend the claim and states that the contract between Rio Tinto and its subsidiary, which was allegedly breached, contains exclusions and limitations of liability which the subsidiary would rely on in its defence.

The announcement set out that the subsidiary, referred to as MEA, which is facing the allegations has public liability insurance in place with a total limit of $150 million. This insurance provides cover for property damage claims and associated losses. Monadelphous stated that it is “unaware of any reason why the insurance policies would not respond to indemnify MEA for liability it may have to Rio Tinto.”

About the Monadelphous share price

A joint venture in which Monadelphous owns a 55% stake announced on Monday that it had secured a contract with General Electric International Inc. The contract relates to the construction of a wind farm in Victoria with the joint venture expecting to receive around $80 million from the works to be completed.

In the half year to December 2019, Monadelphous had revenue of $852 million and a net profit after tax of $28.5 million. 

The Monadelphous share price is up 0.5% from its 52 week low of $7.95, however, it has fallen 51.98% since the beginning of the year. The Monadelphous share price is down 55.31% since this time last year.

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Motley Fool contributor Chris Chitty 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 Monadelphous share price plunges 10% on legal action from Rio Tinto appeared first on Motley Fool Australia.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

On Wednesday afternoon, Apple (NASDAQ: AAPL) made a surprise announcement alongside its second-quarter results. On Aug. 24, the company will execute a 4-for-1 stock split.

Some investors may be wondering: Is the stock a buy ahead of its stock split next month? After all, more investors will be able to afford Apple stock, and shares will be more liquid since they can be bought and sold at a lower price.

While shares of Apple may be attractive today, an upcoming stock split isn’t the reason why.

Understanding Apple’s 4-for-1 stock split

Apple’s upcoming stock split will be its fifth since going public. The tech company split its stock on a 2-for-1 basis in 1987, 2000, and 2005. Then it split its stock on a 7-for-1 basis in 2014. Its 2020 split will occur on a 4-for-1 basis, meaning every investor will receive four shares for every one share they own. Those shares will each be equal to one-fourth of the value of the former share.

Apple’s 2020 4-for-1 stock split will occur on Aug. 28.

The reason for the stock split? To make the stock available to a large base of shareholders, Apple says.

A timely opportunity?

While on the surface it might seem like Apple stock may be a buy because of a planned share split, this doesn’t make sense upon closer examination. For instance, even if there is increased demand for the stock because of its lower price after the split, other investors may capitalize on an irrational move higher in the stock price and sell their shares just as quickly as new demand arises.

Furthermore, no one knows what news could drop on a given day. There’s no telling how Apple stock will trade between now and the stock split, as economic or company-specific news could have more influence on supply and demand for the stock than the stock split itself.

In short, investors should never buy a stock simply because it is about to be split.

The real reason Apple stock is a buy

Nevertheless, Apple stock does look compelling today. But the reason it looks like a good stock to buy has nothing to do with the upcoming stock split. Instead, it has to do with the company’s impressive resilience during uncertain times.

Apple’s fiscal third-quarter revenue rose 11% year over year and its earnings per share climbed 18%. Analysts, on average, were expecting revenue to fall 3% and earnings per share to decline 6% over this same timeframe, respectively.

“Our June quarter was a testament to Apple’s ability to innovate and execute during challenging times,” said Apple CFO Luca Maestri in the company’s fiscal third-quarter earnings call on Wednesday. “Our results speak to the resilience of our business and the relevance of our products and services in our customers’ lives.”

Posting growth across every segment, the company’s fiscal third-quarter results during these challenging times speak to the company’s upside potential when the economy recovers. It’s this strong business — not the tech company’s upcoming stock split — that makes Apple stock a buy for investors willing to hold for the long haul.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

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• Apple smashes revenue forecasts
• US tech shares deliver massive results – what does it mean for ASX tech shares?
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• ASX investors have been buying Tesla and these international shares

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia has recommended Apple. 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 Apple stock a buy ahead of its stock split? appeared first on Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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