Tag: Motley Fool Australia

The old saying about ‘all boats rising on an incoming tide’, applies equally when it comes to listed shares. Even ‘not so good stocks’ get a leg up when the bulls are running, and the opposite also tends to be true.

The fundamentals have been thrown out the window in response to the COVID-19 crisis. As a result, we’ve seen that many ASX shares have become beneficiaries of JobKeeper, Jobseeker, plus central bank policies, and other government stimulus measures.

Depending on sector, some ASX shares are more directly riding the coattails of the measures to prop up our ailing economy. Revelations of further stimulus measures, including the continuation of JobKeeper well into next year, represents more ‘pennies from heaven’ for some ASX shares.

Australians are spending more on the basics

Recent Australian Banking Association figures show that 429,900 mortgages had been deferred, totalling $153.5 billion, since mid-May. But during this time, a number of measures have also turbocharged household spending. These measures include JobKeeper and JobSeeker payments. Adding further stimulus to spending, 1.4 million people have tapped into $10,000 of super, while a selected cohort of Australians have also received a $750 lump sum payment from the federal government.

As a result, during the pandemic we’ve seen food delivery, hardware, and online electronics retailers receive the strongest kickers of all the ASX sectors, aside from healthcare. For example, based on data gathered by AlphaBeta Australia, spending on food delivery was 230% higher than normal in the week of 11 to 17 May. It has also been 200% above normal for 3 consecutive weeks. With people spending so much more time at home, spending on DIY jobs is up to 40% above normal.

I’ve identified 2 ASX shares that I believe will continue reaping the benefits of these stimulus measures.

Reject Shop Ltd (ASX: TRS)

The Reject Shop share price has bounced from a low of $2.40 on 27 March to its current price of $6.10, after soaring as high as $8.28 per share in early July. Sales during the height of coronavirus pandemic (nationally), between 24 February and 15 March were up 15.1% compared to the same period in 2019. Cleaning, groceries, toiletries and pet care proved to be the strongest categories.

The $64,000 question is whether the discount variety retailer can continue to sustain this growth over the longer-term. All eyes will be on the 2021 guidance that accompanies its full year result.

While Reject’s 351 stores across Australia have combined annual sales of $900 million, a slide in earnings over the last 3 years can be attributed to the overstocking of too many low-margin items that simply haven’t been moving off the shelves fast enough. New CEO Andre Reich plans to staunch this slide in earnings by shrinking the product range by as much as 75%, and cutting inventories by a third.

The share’s recent upgrade by Morgan Stanley to overweight is encouraging, and based on Morningstar’s analysis the Reject Shop share price is undervalued, with fair value set at $8.28.

Wesfarmers Ltd (ASX: WES)

Unlike a lot of stores, Wesfarmers kept its 4 retailers Kmart, Bunnings, Target and Officeworks open for trading during the coronavirus pandemic. That didn’t stop the Wesfarmers share price from tumbling from $47.25 on 20 February to a COVID-19-induced low of around $31.02 per share on 23 March.

But it has since regained virtually all its lost ground to trade at $46.23.

In testimony to its resilience during the worst of the pandemic, the iconic Australian retail group’s Bunnings and Officeworks stores experienced significant sales growth. They recorded 19.2% and 27.8% jumps, respectively, in the quarter ended June 2020. Equally important, Kmart and online marketplace Catch, also recorded growth in the second quarter.

Only Target registered a (minor) drop in sales. Management expects nearly half of its Target stores to close or be converted into the more successful Kmart model. It’s also using the COVID-19 opportunity to renegotiate lease terms around Australia.

Wesfarmers has already tipped the market to expect its full financial year report on online sales across all of its brands – on a fiscal year-to-date basis – to be up 60% to $1.9 billion. Confirmation of this result when it reports its full year result on 20 August, plus any supporting commentary outlining future plans for Kmart and Catch could push the share even higher.

Trading at a price-to-earnings ratio of around 24x, Wesfarmers shares aren’t cheap. Yet there I think there are some drivers of future share price appreciation. These include: a) additional upside from a continued improvement of its existing businesses; and b) the launch of Bunnings’ full digital offering in 2020, which is likely to significantly boost margins and sales.

More reading

• My top retail ASX 200 share to gift right now
• Analysis: Is the Woolworths share price good value in August?
• 7 ASX shares to watch this reporting season
• The rocketing Aussie is shaping up as a new threat to the profit season
• Coles and Wesfarmers share prices reach for new highs. Should you invest?

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

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The ASX banking sector is leading the S&P/ASX 200 Index (Index:^AXJO) lower this morning on fears of a bad debt blowout.

Even though the top 200 index is recovering from the early sell-off and is trading just under breakeven at the time of writing, big bank stocks are still deep in the red.

The hard lockdown of Victoria is souring sentiment towards these big lenders. The Victorian Premier Daniel Andrews is expected to announce widespread business closures in the state later this afternoon.

Bad debt risks just got worse

Investors are “selling the rumour” on speculation that many more businesses are unlikely to survive the strictest COVID lockdown in the country.

The National Australia Bank Ltd. (ASX: NAB) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price are the worst hit of the big four. They have shed close to 4% each.

The Westpac Banking Corp (ASX: WBC) share price is faring a tat better with a loss of 3.1%, while the Commonwealth Bank of Australia (ASX: CBA) share price declined 2.2%.

This is probably because NAB has the largest exposure to small and medium business (SMB) lending. Meanwhile, APRA data showed ANZ Bank is leading the group in growing its business lending business in the past three months. Talk about bad timing!

Looming fiscal cliff

Even before stage four restrictions were imposed, experts were divided on whether ASX banks held enough capital to buffer their balance sheets from the first wave of the COVID-19 fallout.

While the big four are well capitalised, investors (and probably the banks themselves) are having a tough time quantifying the risk of the looming fiscal cliff.

This cliff represents the withdrawal or tapering of the support measures to support the economy runs out in October.

State of disaster

The latest Victorian defeat by coronavirus will exacerbate the chances that more businesses and mortgagees will default on loans.

The Victorian economy represents around a quarter of Australia’s GDP. If most businesses are force to shutter for six weeks, the fallout will be felt well beyond the state’s borders.

But before you hit the “sell” button on ASX banks, there’s a chance the industry could dodge a bullet.

Should you sell ASX bank stocks now?

Daniel Andrews is pushing the federal government to offer extended support for the state – maybe by keeping the JobKeeper and JobSeeker at current levels till next year instead of tapering both programs.

There are reports that federal Treasurer Josh Frydenberg isn’t keen on changing the rate. He may instead make it easier for Victorian businesses to qualify for the scheme.

Victoria is also expected to pump additional stimulus to keep households and SMBs from going to the wall.

There’s still too much we don’t know, so it’s probably better to wait for more details before deciding on what to do with your ASX bank holdings.

One thing I do believe though is that CBA’s share price will keep outperforming its peers in this fast-moving environment.

Most brokers have a “sell” rating on the stock as its valuation is significantly ahead of its peers. But the reason for this is because it’s the safest of the big four.

At this point in time, it’s worth paying more for safety.

More reading

• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• Is the Transurban share price a buy right now?
• Why ANZ, Flight Centre, SEEK, & Tabcorp shares are dropping lower
• Analysis: Is the Woolworths share price good value in August?
• How these ASX investors made 60% in three months

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

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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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has fought back from a poor start and is edging higher. The benchmark index is currently up 0.1% to 5,933.1 points.

Here’s what is happening on the market today:

Victoria’s “State of Disaster” weighs on shares.

On Sunday the Victorian state government declared a “State of Disaster” and locked down the state. This has put a lot of pressure on certain areas of the market on Monday such as the banking and travel sectors. For example, the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price and the Flight Centre Travel Group Ltd (ASX: FLT) share price are down 3.5% and 6%, respectively.

No final dividend for SEEK shareholders.

The SEEK Limited (ASX: SEK) share price has dropped lower on Monday after it announced that it would be cancelling its final dividend for FY 2020. The job listings giant made the move as it believes it is better to preserve capital in an uncertain environment to fund its long-term growth strategy. This means the 13 cents per share interim dividend paid last month, will be the only dividend paid in FY 2020.

Tabcorp’s billion-dollar impairment charges.

The Tabcorp Holdings Limited (ASX: TAH) share price has recovered from a sharp early decline and is trading almost flat at lunch. This morning the gambling company announced that it expects to incur non-cash goodwill impairment charges in the range of $1,000 million to $1,100 million in FY 2020. These charges relate to its Wagering & Media and Gaming Services businesses, which have been impacted by the pandemic. Tabcorp also revealed that it expects to report a net profit before tax and significant items in the range of $267 million to $273 million. This will be a 31% to 32.5% decline year on year.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Cochlear Limited (ASX: COH) share price. The hearing solutions company’s shares are up 5% despite there being no news out of it. The worst performer has been the Monadelphous Group Limited (ASX: MND) share price with a decline of over 7%. This morning it was hit with legal action by Rio Tinto Limited (ASX: RIO). The mining giant is seeking $493 million in lost earnings and damage for a fire incident in Cape Lambert.

More reading

• Why ASX bank stocks are the worst performing group today
• Is the Transurban share price a buy right now?
• Why ANZ, Flight Centre, SEEK, & Tabcorp shares are dropping lower
• Analysis: Is the Woolworths share price good value in August?
• SEEK share price tumbles after cancelling its FY 2020 final dividend

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd., Flight Centre Travel Group Limited, and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Domain Holdings Australia Ltd (ASX: DHG) share price closed 2.9% lower on Friday, but could it be headed lower?

Why is the Domain share price under pressure?

There have been no new ASX announcements from the real estate media and technology group since July 1.

However, investors were keen to sell down their holdings with the Domain share price down 10.5% for the year.

I would think there is a strong correlation between housing market expectations and Domain’s value. A bull market for residential property is good for property listings as buyers and sellers are keen to interact.

However, there are signs that the Aussie housing market could be under pressure.

One article in the Australian Financial Review (AFR) caught my eye on the weekend.

Weak auction clearance rates have some commentators expecting a housing market correction later this year and in early 2021.

Domain recorded just 285 Melbourne homes listed for sale this week, down 36% from the previous week. That’s also the lowest number in two months with a preliminary clearance rate of just 58%.

The numbers were higher in Sydney with 508 auction listings at a clearance rate of 66%. Of course, listings and clearance rates are not the be-all and end-all of housing market strength.

These numbers do, however, provide some food for thought. The Domain share price dropped 2.9% on Friday but I think it’s worth looking ahead to the August earnings result.

CoreLogic data suggested home prices values to be down an average 1.1% in Melbourne and 0.8% in Sydney.

That could mean sellers think twice before listing their property in the current market. There’s also the coronavirus impact to consider as buyers consider their job security and ability to take on leverage right now.

What can we expect in August?

Despite some question marks, there is still strong support for Aussie property in 2020.

The government stimulus package continues to roll out, which is good for construction, renovation and the property market as a whole.

That, combined with homeowners wanting to sell near the top, could be good for Domain’s August result.

With the Domain share price down 10.8% this year, I think investors are bracing for some more bad news.

However, any signs of market strength or medium-term earnings growth could see the property group’s value climb in August.

More reading

• A top ‘coronavirus share’ to buy this August
• Why Domain, OceanaGold, Praemium, & TechnologyOne are tumbling lower
• ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide
• These were the worst performing ASX 200 shares last week
• ASX 200 down 0.5%: Afterpay completes placement, big four banks tumble

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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On Friday, the Transurban Group (ASX: TCL) share price fell 2% to $13.81 per share. The stock broadly followed the S&P/ASX 200 Index (ASX: XJO), which also lost 2% Friday.

The Transurban share price is down in morning trade today, and is currently sitting at $13.67 per share with a market capitalisation of $37.39 billion. Transurban shares have bounced back sharply from their 19 March low (up by 36.15%), but the Transurban share price still down 8.3% year-to-date.

Transurban has an annual dividend yield of 3.4% and will pay its next dividend of 16 cents on 14 August. It’s too late to get in on that payment now, but while its dividends have fallen since the onset of national lockdowns, the company has a long track record as a reliable yield stock.

What does Transurban do?

Transurban is one of the world’s largest toll road operators. It also designs and builds new road projects. The company is Australian owned and active in Melbourne, Sydney and Brisbane. It also operates in Montreal, Canada, and Greater Washington in the United States (US).

If you’ve popped onto the major freeways in New South Wales, Victoria or Queensland, you’ve probably paid Transurban for the privilege.

What’s next for the Transurban share price?

With the coronavirus crisis shifting on an almost daily basis, it’s impossible to say what the short-term impact will be on any Aussie stocks.

But if you’re looking for a share to add to your long-term holdings, I think Transurban should be near the top of your list.

Social distancing and lockdowns in the US, Canada and Australia have had a major impact on the company’s 2020 revenues. The company’s 2020 financial year results will be released on 12 August, so stay tuned. And with Victoria entering the most restrictive lockdown measures in Australian history, the coming months will likely see more pain ahead for its toll revenues.

But longer term, which is where I think investors should be concentrating, the impact of this virus should see people in the major cities turning away from public transport and more inclined to use their own cars, in my view. There’s nothing like your boot and bonnet to maintain a safe distance.

More reading

• Analysis: Is the Woolworths share price good value in August?
• How these ASX investors made 60% in three months
• AMP and 2 other ASX 200 shares to watch this week
• 5 things to watch on the ASX 200 on Monday
• These were the worst performing shares on the ASX 200 in July

Motley Fool contributor Bernd Struben 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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The Australian technology sector is growing rapidly. It is home to a growing number of ASX tech shares, many with an expanding international presence.

Here we look at why these three ASX tech shares are all currently on my buy list.

3 ASX tech shares to buy now

Altium Limited (ASX: ALU)

Altium designs software that enables engineers to produce printed circuit boards for a broad range of devices. This includes a growing number of interconnected devices that make up what is known as as the ‘internet of things’ (IoT).

Altium’s recent financial performance has been very strong, despite subdued market conditions due to the coronavirus pandemic. Altium achieved a very solid 10% increase in revenue to US$189 million during FY 2020. Its customer base also grew strongly, up by 17% during the 12 month period.

The Altium share price was hit hard in the first phase of the pandemic, before which it was trading at levels above $40. Since then, however, it has only made a partial recovery and is currently trading at $32.99. This in my mind, offers investors a good buying opportunity.

Bravura Solutions Ltd (ASX: BVS)

Bravura provides mission-critical enterprise software solutions to the wealth management and funds administration industries.

The Bravura share price has risen strongly since the beginning of 2018, rising from $1.73 to now be trading at $4.22. However, like Altium, this ASX tech share has only partially recovered from its initial sharp fall during February/March bear market. Investors are therefore offered the opportunity to purchase shares in this high quality fintech provider at a more attractive price.

I believe Bravura is well place for strong growth over the next few years, driven by an expanding product set and market-leading position in its operating niche.

Audinate Group Ltd (ASX: AD8)

Another ASX tech share on my buy list right now is Audinate. This locally-based company provides audio networking solutions that are used in the production of a range of professional audio equipment.

A recent capital raising set to deliver $40 million will strengthen Audinate’s balance sheet. It will also increase its engineering and R&D capabilities to support future growth opportunities. 

I believe that, despite current challenges, this ASX tech share is now well positioned for long-term growth, driven by its market leading audio solutions. The Audinate share price is currently trading more than 43% below its pre-pandemic levels which provides investors with a good, long-term buying opportunity.

Foolish takeway

Altium, Bravura and Audinate are three high quality ASX tech shares that have seen falls in their share prices this year. With long runways for future growth, astute long-term investors now have the opportunity purchase shares at more attractive prices.

More reading

• Top ASX Stock Picks for August 2020
• Smart investors should buy these ASX growth shares
• 3 exciting small cap ASX shares to put on your watchlist immediately
• Fund managers have been buying these ASX shares
• Buy these fantastic ASX tech shares for potential market beating returns

Phil Harpur owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia has recommended AUDINATEGL 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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The S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a decline due largely to weakness in the banking sector. In late morning trade the benchmark index is down 0.45% to 5,901.9 points.

Four shares that are falling more than most today are listed below. Here’s why they are dropping lower:

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is down almost 4% to $17.27. Investors have been selling the big four banks on Monday after the Victorian state government declared a state of disaster. This has seen it lock down the state for six weeks in an effort to control the spread of coronavirus.

The Flight Centre Travel Group Ltd (ASX: FLT) share price has sunk 5% lower to $10.00. The travel sector has come under pressure on Monday after the aforementioned lockdowns in Victoria. In addition to this, more new coronavirus cases in New South Wales may be a concern for investors. All in all, the recovery of the domestic travel market looks likely to take a lot longer than first expected.

The SEEK Limited (ASX: SEK) share price is down 2.5% to $21.15. Investors have been selling the job listings giant’s shares after it announced that it would be cancelling its final dividend for FY 2020. Management advised that it believes it is better to preserve capital in an uncertain environment in order to fund its long-term growth strategy. This means the 13 cents per share interim dividend paid last month (which was down 46% on the prior corresponding period), will be the only dividend paid in FY 2020.

The Tabcorp Holdings Limited (ASX: TAH) share price is down 1.5% to $3.50. This morning the gambling company announced that it expects to incur non-cash goodwill impairment charges in the range of $1,000 million to $1,100 million in FY 2020. It also revealed that it expects to report a net profit before tax and significant items in the range of $267 million to $273 million. This is a 31% to 32.5% decline year on year.

More reading

• SEEK share price tumbles after cancelling its FY 2020 final dividend
• Tabcorp share price sinks lower on $1 billion impairment and FY 2020 profit guidance
• 7 ASX shares to watch this reporting season
• ASX 200 drops 2%, ASX banks fall, Super Retail jumps
• Brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Afterpay Ltd (ASX: APT) share price. It’s right up there with the coronavirus pandemic on what is dividing investors in 2020.

There’s no doubt Afterpay’s growth trajectory has been impressive. Steady operational expansion and consistently low bad debts have been hallmarks of Afterpay’s growth.

The Afterpay share price has enjoyed similarly strong growth this year. In fact, shares in the buy now, pay later leader are up 128.5% in 2020.

But, ahead of the company’s August earnings result, is Afterpay set to be an ASX boom or bust?

Why investors are split on the Afterpay share price

One article in the Australian Financial Review (AFR) looked at exactly this issue.

According to the article, a Morgan Stanley report on US payments company had Afterpay at 23rd by market share of the 477 merchants in the US.

What that means for the Afterpay share price really depends on your perspective. On the one hand, Afterpay could have a lot more market to capture in the coming years.

On the other, Afterpay is in a crowded market and may not have the growth that its share price is pricing in.

I think the key for further capital gains is strong customer acquisition and retention.

One potential area of concern is slowing growth in Afterapy’s home market. Australia and New Zealand merchant numbers have slowed in recent months despite strong growth in the United States and the United Kingdom.

The other big factor is keeping bad debt expenses low. One potential area of concern for buy now, pay later is a rising bad debts expense.

That hasn’t been the case so far, with Afterpay’s bad debts remaining low. Investors have been bullish about the company’s growth trajectory and that’s reflected in the Afterpay share price this year.

Foolish takeaway

I don’t like to invest in companies that I don’t understand. The underlying business is simple and has proven to be effective.

However, I don’t understand the Afterpay share price valuation right now. The company has a lot of further growth required to make its current valuation a reasonable buy.

If the current growth trajectory continues, we could see Afterpay hit $100 per share in 2020. But just one slight stumble could see the company’s value plummet this year.

ASX tech shares have rocketed but I don’t want to be caught chasing gains that I don’t understand. That means I’ll be steering clear until I can make sense of the fundamental value being priced in.

More reading

• How these ASX investors made 60% in three months
• Is the Afterpay share price a buy?
• Here’s how to start investing with $5k
• US tech shares deliver massive results – what does it mean for ASX tech shares?
• Will the coronavirus kill cash?

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

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ASX growth shares typically don’t pay huge dividends, however they tend to produce strong share price growth over the longer term. This is because a large proportion of company profits are normally re-invested back in to the company to support long-term growth initiatives.

Here we look are two ASX 200 growth shares, both of which I believe would make solid additions to your ASX share porfolio.

2 ASX 200 growth shares to buy and hold

CSL Limted (ASX: CSL)

CSL has evolved over the past few decades to become a global market leader in blood plasma research and disease treatment. It currently has a market capitalisation of $123.55 billion and now now reaches more than 60 countries outside of its home base in Australia.

CSL is playing an important role during the coronavirus pandemic. It has entered into a new agreement to accelerate the development of a COVID-19 vaccine candidate.

The CSL share price has risen very strongly over the past decade, however it has lost some ground in recent months. Since mid-February, the CSL share price has fallen from $341 to now be trading at $273.48. This, in my mind, offers investors a reasonably good share buying opportunity.

I remain optimistic about CSL’s long-term future. I believe that a strong new product development pipeline will lead to above average share price growth over the next five years for CSL.

Blackmores Limited (ASX: BKL)

Blackmores develops and sells a broad range of healthcare products including vitamins, minerals and herbal and nutritional supplements. Its market reach now extends throughout retailers in Australia, New Zealand and Asia.

Blackmores’ success over the past decade has been underpinned by a very strong brand. The company invests significantly in research, development and marketing to grow its brand image.

The Blackmores share price has not performed strongly over the past 12 months, and the company’s recent financial performance has been below market expectations.  Blackmores’ operations in China, in particular, have underperformed. However, I believe that Blackmores’ new Asian expansion strategy is placing the company back on the right track for future growth. The company in injecting more funds into its South East Asian business, which is now growing strongly.

Foolish takeaway

CSL and Blackmores are both ASX 200 growth shares that are in my buy zone right now. With both now trading at share prices well below their pre-COVID-19 levels, I believe this offers investors a reasonably good buying opportunity.

Of the two, CSL would be my top pick right now, due to stronger recent financial performance and a more solid track record over the past 3 years.

More reading

• Top ASX Stock Picks for August 2020
• Top brokers name 3 ASX shares to buy next week
• Is the Woolworths share price in the buy zone?
• Brokers name 3 ASX 200 shares to buy right now
• 3 underloved ASX healthcare shares with strong comeback potential

Phil Harpur owns shares of Blackmores Limited and CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Blackmores 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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Over the weekend, hackers carried out an attack on Telstra Corporation Ltd (ASX: TLS), creating connection issues for some home internet users across Brisbane, Melbourne and Sydney. With so many people working from home, especially in stage four locked down-Melbourne, there is a question of whether this could impact on the Telstra share price and present a buying opportunity.

As a Telstra investor, should you care about the Telstra outages?

In short, I don’t think so. Whilst the news of the hack isn’t a positive for both the business and its share price, over the long term, I don’t think it should have a material impact on the Telstra share price. The main reason for this is that Telstra has indicated no personal data was compromised in the attack.

As technology becomes more accessible globally, and more and more money and data is tied up with technology, it’s reasonable to expect an increase in cyber attacks. This will likely lead to increased cyber security costs for the likes of Telstra, but shouldn’t affect your decision on investing, in my view.

What to consider when buying Telstra shares

Telstra is the market leader in its industry. Because of this, the potential for the company to grow is somewhat limited, despite it having some pricing power from its superior coverage. With that said, competitors such as Optus have done a good job in recent years to increase their coverage nationally.

5G is the 5th generation mobile network meant to deliver faster data speeds, lower latency and a more reliable and available experience. 5G is probably Telstra’s greatest opportunity for growth in the coming years. The technology will support the growth of the Internet of Things (IoT) and thus the number of devices connected to the network. Telstra was the first to enable standalone 5G in Australia.

About the Telstra share price

The Telstra share price currently trades on a trailing price-to-earnings (P/E) ratio of 19x earnings and a dividend yield of 3%, plus franking credits. I’d say the Telstra share price is fairly valued at present. Investors will, however, gain a better insight into the company’s recent operations when it reports FY20 full year results on 13 August 2020.

Foolish bottom line

Telstra’s strong mobile division should benefit from the rollout of 5G, but I don’t expect the Telstra share price to produce life changing growth from here. However, ASX investors who need more regular income should consider the share for its solid dividend yield.

If you are looking to invest in fast growing companies that could increase by 3, 5 or even 10 times in the next decade or so, check out these compelling ASX shares instead.

More reading

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• Telstra and 2 more ASX shares I’d like to buy with $5,000

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

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