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Motley Fool Australia Chief Investment Officer Scott Phillips joined Weekend Sunrise on Sunday to discuss the big pay rises expected for some jobs, Commonwealth Bank of Australia (ASX: CBA) plans to add cryptocurrencies to its app, and tries to explain Bitcoin (CRYPTO: BTC) to a 9-year-old!

The post Big pay rises on the cards? And what about Bitcoin? Scott Phillips on Weekend Sunrise appeared first on The Motley Fool Australia.

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• Why has the ANZ (ASX:ANZ) share price dropped 2% today?
• CBA (ASX:CBA) share price gains amid Silicon Valley AI partnership
• The Bitcoin (CRYPTO:BTC) price is still leaping higher, and so is its energy use
• Could ANZ be the next ASX bank to jump on the crypto bandwagon?
• Own NAB shares? Here’s the bank’s proposal to stop crypto mania getting ‘really ugly’

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Today, the S&P/ASX 200 Index (ASX: XJO) broke its three-day green streak with a red start to the week. At the end of the day, the benchmark index finished 0.06% lower at 7,452.2 points.

It was a mixed performance among the sectors today. However, the negative pressure was too much for the market to handle, as losses were seen in some of our bigger companies. Breaking it down, the tech sector was the worst of the bunch, falling nearly 2%. Meanwhile, the energy sector provided some support as oil and gas companies climbed.

The question is: which shares delivered the biggest returns to investors on the ASX today? Here are the ten stocks that rose to the occasion:

Top 10 ASX shares countdown today

Looking at the top 200 listed companies, Flight Centre Travel Group Ltd (ASX: FLT) was the biggest gainer today. Shares in the travel agent company rose 5.36% as the United States reopens to vaccinated travellers for non-essential reasons. Find out more about Flight Centre Travel Group here.

The next biggest gaining ASX share today was Webjet Ltd (ASX: WEB). Shares in the online travel booking company climbed 4.44% likely also riding the momentum of the US international borders reopening. Uncover the latest Webjet details here.

Today’s top 10 biggest gains were made in these ASX shares:

ASX-listed company	Share price	Price change
Flight Centre Travel Group Ltd (ASX: FLT)	$21.05	5.36%
Webjet Ltd (ASX: WEB)	$6.58	4.44%
Beach Energy Ltd (ASX: BPT)	$1.3325	4.10%
Evolution Mining Ltd (ASX: EVN)	$3.86	3.76%
Qantas Airways Ltd (ASX: QAN)	$5.83	3.74%
Woodside Petroleum Ltd (ASX: WPL)	$23.28	3.10%
Northern Star Resources Ltd (ASX: NST)	$9.895	3.07%
Santos Ltd (ASX: STO)	$7.035	3.00%
Scentre Group (ASX: SCG)	$3.17	2.92%
Sydney Airport (ASX: SYD)	$8.46	2.80%

Our top 10 ASX shares today countdown is a recurring end-of-day summary to ensure you know which companies were making big moves on the day. Check-in at Fool.com.au after the market has closed during weekdays to see which stocks make the countdown.

The post Here are the top 10 ASX shares today appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• AFIC (ASX:AFI) shares have a net tangible asset backing of $7.51 each. What does this mean?
• Why API, Evolution, Flight Centre, and Sydney Airport shares are pushing higher
• Why is the Webjet (ASX:WEB) share price taking off on Monday?
• Why the Qantas (ASX:QAN) share price is flying 4% higher today

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The market is taking a break from pushing ASX-listed lithium shares higher on Monday. A few notable lithium producers in the S&P/ASX 200 Index (ASX: XJO) are in the red today. This is despite optimistic projections being shared for electric vehicles (EVs) at the Australian Financial Review‘s 2021 infrastructure summit.

Presently, some of the worst-performing companies in the materials sector today include lithium names. Specifically, Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS) finished the day down 3.57% and 2.97% respectively.

Today’s positive remarks were shared by the CEO of EV fast-charging company Tritium.

Let’s unpack what was said.

What’s making news in ASX lithium shares today?

ASX lithium shares have grown to be highly topical in 2021. As the green push continues, bolstered by research indicating plenty of runway for growth in EV adoption, the material that lends itself to battery production has become increasingly valuable.

However, share price momentum in lithium companies has mostly slowed since August. Since then, many ASX-listed lithium shares have traded sideways, awaiting the next catalyst – for better or for worse. It seems comments from Tritium CEO Jane Hunter weren’t enough to spur the sector forward today.

At the AFR’s infrastructure summit, Hunter highlighted the forecast of electric vehicles being cheaper than internal combustion vehicles by 2025. This would represent a significant milestone for the EV industry, as it seeks to gain widespread adoption.

Speaking on the potential turning point, Hunter said:

BloombergNEF is saying 2025 for light vans and 2026 for passenger vehicles and SUVs. If you think of the battery as the single most expensive part of the EV… It has been at 50% of the cost of the EV in 2016. I think that it’s coming down and it’s closer to 30% now.

Notably, BloombergNEF’s Electric Vehicle Outlook 2021 report suggests passenger EV sales will increase from 3.1 million in 2020 to 14 million in 2025. Such a spike in demand over a short period has resulted in many investors flocking to ASX lithium shares, expecting to cash in.

Could hydrogen be stealing some of the thunder?

As we covered earlier today, Fortescue Future Industries (a subsidiary of Fortescue Metals Group Limited (ASX: FMG)) has managed to produce the world’s first hydrogen-powered mining truck. The company plans on ushering in an age of plentiful green hydrogen-use cases, which might mean competition against battery electric vehicles.

At this stage, hydrogen is more expensive to produce. However, if Fortescue Future Industries manages to reduce this cost, perhaps the future demand for lithium could be less than expected.

The post ASX lithium shares are in the red today despite 2025 EV prediction appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why did the Orocobre (ASX:ORE) share price leap 6% today?
• These 3 ASX 200 shares are topping the volume charts this Wednesday
• ASX 200 (ASX:XJO) midday update: CBA enters crypto market, AMP jumps
• Is the Pilbara Minerals (ASX:PLS) share price a buy today?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Treasury Wine Estates Ltd (ASX: TWE) share price has still not recovered to its pre-pandemic levels.

Over the course of 2020, the Treasury Wine share price fell from a high of $17.80 in January to a low of $7.87 in November.

As of Monday’s close, the Treasury Wine share price is $11.76. That’s 33% lower than its highest point of 2020.

So, what’s the winemaker and distributor’s plan to push towards recovery? Let’s take a look.

A quick refresher

The Treasury Wine share price survived a disastrous 2020.

It tumbled as the pandemic set in, as did many ASX shares. However, the company’s stock’s slip was made worse when it lowered its guidance for financial year 2020.

Then, just as the market began to grapple with its ‘COVID normal’, the Chinese Ministry of Commerce implemented tariffs on Australian wine.

As The Motley Fool Australia reported at the time, exports to China represented 30% of the group’s financial year 2020 earnings.

While the Treasury Wine share price has managed to scrabble back 23% so far this year, it’s still well below its now-historic levels.

Treasury Wines share price’s recovery mission

The market was recently treated to insight from the company’s bosses who explained their plan to grow the business in the post-pandemic world.

At Treasury Wines’ annual general meeting, the company’s CEO Tim Ford outlined its objectives for financial year 2022.

Treasury Wine’s Penfolds business will be looking to attract more customers and expand its distribution. Ford stated the company was working towards buying a new winery and vineyards in Bordeaux to help it do so.

Meanwhile, Ford stated Treasury Americas will focus on increasing its “premiumisation” and expanding its portfolio. Part of that plan will include searching for bolt-on acquisitions.

In the United States, the company’s continuing to divest its non-priority brands.

As a whole, the company will be working to “elevate [its] culture and talent”, improve its sustainability practices, invest in technology, and prioritise innovation.

However, Ford commented:

Globally, our underlying business is performing in line with expectations, however the pandemic related factors will continue to have a bearing on our performance in the short term, both with respect to the timing and pace with which key sales channels re-open and recover across key markets.

Such “pandemic related factors” include a slower than predicted return to luxury spending in the United States and disruptions to luxury spending in Asia.

Additionally, Australia’s extended lockdowns closed the company’s on-premise channel and delayed execution plans.

Finally, Treasury Wines is battling against shipping and supply chain disruptions. It expects such battles will continue.

The post The Treasury Wine (ASX:TWE) share price is still 33% lower than its pre-COVID level. What’s next? appeared first on The Motley Fool Australia.

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• Could the Treasury Wine (ASX:TWE) share price hit $14 by the end of 2021?
• Why Harvey Norman, IAG, Pendal, and Treasury Wine are dropping
• ASX 200 (ASX:XJO) midday update: Rio Tinto cuts guidance, Treasury Wine disappoints
• Why the Treasury Wine (ASX:TWE) share price is tumbling 6% on Friday
• Treasury Wine (ASX:TWE) share price on watch after first-quarter update

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in real estate media giant Domain Holdings Australia Ltd (ASX: DHG) are sliding deep into the red today, and are currently trading 5.86% lower at $5.62.

Domain shares are on the down despite there being no market-sensitive information out of its corner for a while now.

Although, when zooming out and scoping out a wider time frame, the Domain share price has climbed over 23% in the last 3 months.

Analysts at investment bank UBS aren’t so rosy on the company’s outlook, which it feels may bode in poorly for Domain’s share price.

Read on to find out what the broker has to say on its outlook for Domain investors.

What’s up with Domain shares lately?

Domain shares have been gaining serious field position ever since the release of its FY21 results back in August.

There the company recognised a 21% gain in EBITDA to $102 million which carried through to a 66% jump in net profit to $38 million.

From there the Domain share price rallied to a high of $5.78 in late September, after some market turbulence, as well as after it announced the acquisition of Insight Data Solutions.

Aside from this, investors appear to be piling into ASX real estate shares this past month, with the S&P/ASX 200 Real Estate index (XRE) climbing 7.3% off its low in mid-October.

These strengths are shared with growth in the broad Australian property sector. For instance, new home sales in Australia have increased by 12% per month on average since April this year.

Some experts even think a corresponding boost in home building will flow through to the second half of 2022. This could bode in well for Domain’s share price, as more properties will be available for listing on its websites.

However, not all those covering the real estate marketing and media company are as positive on the outlook for investors into the near future.

Why did UBS downgrade the Domain share price?

Analysts at UBS don’t appear to have as an encouraging outlook on the housing market in Australia, amid uncertainties from the impact of COVID-19 lockdowns in Melbourne and Sydney.

The broker reckons it is difficult to accurately forecast the impact of these lockdowns on real estate listing volumes in Australia.

Moreover, UBS finds it equally as challenging to gauge the market’s reaction to government policy in rolling back the restrictions, further clouding its forward estimates.

In fact, the broker reckons that real estate listing volumes won’t return to pre-pandemic levels until FY23 for Domain.

However, it does acknowledge that this could all change if planned reforms to stamp duty turn out to be a positive catalyst for the sector.

For reference, the proposed changes would see the tax of stamp duty replaced with a property tax based on unimproved land value (ULV).

Even though the broker remains cautious by replacing its buy rating with a neutral recommendation on Domain’s shares, it has still upgraded its price target by 1.8% to $5.80.

Domain share price snapshot

The Domain share price has spent the entire year to date in the green, having climbed 25% in that time.

This extends its gain over the last 12 months to 28.5%, a step ahead of the S&P/ASX 200 index (ASX: XJO)’s return of around 20% in that time.

The post Why did UBS just downgrade the Domain (ASX:DHG) share price to neutral? appeared first on The Motley Fool Australia.

More reading

• AMP (ASX:AMP) share price climbs despite ratings downgrade
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why is the QBE (ASX:QBE) share price outperforming IAG lately?
• For most of the last four years, shares went nowhere. But…
• AFIC (ASX:AFI) shares have a net tangible asset backing of $7.51 each. What does this mean?

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The AMP Ltd (ASX: AMP) share price is on the rise during Monday afternoon. This comes despite the financial services company receiving a ratings downgrade from a bond credit rating agency.

At the time of writing, AMP shares are fetching for $1.195 apiece, up 1.27%. That’s a sharp contrast from when they were trading for as little as 88 cents in late September.

Moody’s lowers AMP rating

The AMP share price is showing little despair on the negative update that came in late Friday night.

In a statement to the ASX, AMP advised it received notice that Moody’s lowered its ratings on its group entities.

As such, AMP Group Holdings and AMP Group Finance Services were graded from Baa2 to Baa3. The rating assigned to AMP Bank by Moody’s remained unchanged at Baa2.

Bond rating agencies are firms that evaluate the creditworthiness of both the debt securities and the issuing company. These agencies provide ratings, commentary, and research on businesses. The ratings are then used by investment professionals to determine the likelihood of the debt being repaid.

Bond ratings range from an investment grade of ‘AAA’ meaning a very strong capacity to meet financial commitments and minimal credit risk. The speculative grade of ‘C’ or ‘D’ indicates likely payment default on financial commitments and bankruptcy.

It’s worth noting that this is in the mid-range of the bond credit ratings, representing “adequate capacity to meet financial commitments, moderate credit risk”.

The outlook was changed based on AMP having a smaller capital and earnings base after the private capital markets demerger. This is expected to follow through sometime in the first half of FY22.

All credit ratings assigned to AMP by other ratings agencies such as Standard & Poor’s were not altered.

About the AMP share price

Founded in 1849, AMP provides superannuation and investment products, financial advice, and banking products including home loans and savings accounts.

Headquartered in Sydney, the company operates in both Australia and New Zealand.

Over the last 12 months, AMP shares have fallen almost 30% and are down 23.5% year-to-date. The company’s share price has lost about 80% of its wealth from early 2018, reflecting negative investor sentiment.

Based on today’s price, AMP presides a market capitalisation of roughly $3.9 billion, with approximately 3.27 billion shares on issue.

The post AMP (ASX:AMP) share price climbs despite ratings downgrade appeared first on The Motley Fool Australia.

More reading

• So far, so good for the AMP (ASX:AMP) share price in November. Here’s why
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts this Wednesday
• Why AMP, Eclipx, Paradigm, and Praemium shares are surging higher
• AMP (ASX:AMP) share price leaps 9% on life insurance sale

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is kicking off the week’s trading on the wrong foot this Monday. At the time of writing, the ASX 200 is down by 0.22% at 7,440 points. But rather than dwelling on that miserly figure, let’s instead check out the ASX 200 shares that are currently topping the ASX trading volume charts, according to investing.com.

3 most active ASX 200 shares by volume this Monday

Incitec Pivot Ltd (ASX: IPL)

Fertiliser and explosives manufacturer Incitec Pivot is our first ASX 200 share to check out today. Incitec has seen a hefty 8.69 million of its shares bought and sold so far this Monday. This might be related to the ASX announcement the company put out early this morning.

Incitec told investors that it would be closing manufacturing at its Gibson Island fertiliser plant by the end of next year due to rising gas prices. The Incitec share price is currently down by 1.27% at $3.11 a share. The combination of these factors is probably why we are seeing some elevated trading volume here.

Pilbara Minerals Ltd (ASX: PLS)

ASX 200 lithium producer Pilbara is next up today. So far this Monday, Pilbara has seen a sizeable 10.25 million of its shares changing owners. With not much in the way of news or announcements out of Pilbara today, this is probably a consequence of the nasty 3.18% drop to $2.285 Pilbara shares have suffered so far today. It’s this steep fall in value that has likely prompted this surge in trading volume for Pilbara.

Sydney Airport (AS:X SYD)

And last but certainly not least today, we have the ASX 200 infrastructure stalwart Sydney Airport. A whopping 48.46 million SYD shares have swapped hands so far this Monday. Of course, it’s not too hard to see why this is occurring.

This morning, Sydney Airport announced that it has accepted a bid to acquire the $22.86 billion company for a price of $8.75 a share and will recommend shareholders vote in the affirmative in the absence of any superior offers. Sydney Airport shares are currently up 2.86% at $8.46 each so far today.

The post Here are the 3 most heavily traded ASX 200 shares on Monday appeared first on The Motley Fool Australia.

More reading

• AFIC (ASX:AFI) shares have a net tangible asset backing of $7.51 each. What does this mean?
• Why API, Evolution, Flight Centre, and Sydney Airport shares are pushing higher
• Sydney Airport (ASX:SYD) share price lifts off following takeover news
• Why has the ANZ (ASX:ANZ) share price dropped 2% today?
• ASX 200 (ASX:XJO) midday update: Sydney Airport agrees to takeover, Wesfarmers’ strikes API deal

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The QBE Insurance Group Ltd (ASX: QBE) share price has performed relatively well over the last 6 months.

However, the insurance company’s competitor, Insurance Australia Group Ltd (ASX: IAG), hasn’t been so lucky.

The QBE share price is currently $11.98, 12% higher than it was 6 months ago. In the same timeframe, the value of IAG’s stock has slid 7% to $4.71.

Additionally, over the last 30 days, the IAG share price has dropped 9% while QBE’s has recorded a 2% dip.

So, what’s caused the QBE share price to outperform IAG’s? Let’s take a look.

Federal Court findings

One event that has recently affected both QBE and IAG was a court case brought about by policyholders. The case was the second of a business interruption test case against numerous insurance providers.

The last 6 months have seen the second test case finalised. This time, the Federal Court ruled in favour of the insurance companies in 8 of 9 matters.

It was brought by business owners seeking legal action against insurance companies that didn’t cover pandemic-related business interruptions.

What else has driven the QBE share price lately?

The other major news to drive the QBE share price in the last 6 months was the company’s half-year results, released in August.

Within them, QBE reported its return to profitability. In fact, it boasted an underwritten result of US$642 million for the 6 months ended 30 June – up from a US$189 million loss.

After such a strong result, the company boosted its dividend from 4 cents to 11 cents.

The QBE share price gained 8.1% on the back of its results.

IAG’s struggles

While IAG also reported increased profits in August from its financial year 2021 results, the company’s stock tumbled.

The IAG share price fell 2.6% on the day it released its FY2021 earnings.

IAG’s stock was also hit hard in October when the Australian Securities and Investments Commission (ASIC) announced it was taking IAG’s subsidiary to Federal Court for failing to fully apply some customers’ loyalty and ‘no claim’ discounts.

Finally, the company lowered its financial year 2022 guidance last week after storms caused damage across much of Australia in October.

Thus, IAG’s share price has performed far worse than its ASX peer over the last 6 months.

The post Why is the QBE (ASX:QBE) share price outperforming IAG lately? appeared first on The Motley Fool Australia.

More reading

• Is the IAG (ASX:IAG) share price cheap after hitting a 52-week low?
• These top brokers weigh in on the IAG (ASX:IAG) share price
• Why Bubs, Dalrymple Bay, IAG, and Redbubble shares are dropping
• Top brokers name 3 ASX shares to buy today
• Why Ingenia, IAG, Vulcan, and Westpac shares are dropping

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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I’m a shareholder in Amazon.com, Inc. (NASDAQ: AMZN).

It’s a wonderful business, with a very bright future.

And it’s had an impressive growth story over the past 25 years.

More recently, though?

Not so good.

Since August 2020, Amazon’s share price is up a measly 3.4%.

Not flash.

And between August 2018 and Aprl 2020?

Shares were actually down.

So much for the best ecommerce kid on the block, right?

Well, kind of.

See, over the past 4 years, shares are up three-fold.

Huh?

How is it possible that shares were up a little over one time period, down a little over another, but have tripled in the last four years?

Well, as you may have guessed, I kinda cherry-picked those time periods, above.

But for a good reason.

I wanted to show you how hard it is to time markets.

And how silly it is to use past share price performance to try to guess what’ll come next.

Let’s say you bought Amazon in August 2000?

You’ve made almost nothing. And right now, you might be talking about what a ‘dud stock’ Amazon is.

If you’d bought those shares in August 2018… and held them for 18 months, you’d be cursing the company, your luck, the market…

Now, let me share two other time periods, and show you the full story of the last four years:

November 2017 – August 2018: +81%

August 2018 – April 2020: -5%

April 2020 – August 2020: 78%

August 2020 – November 2021: +3%

Can you imagine being a trader? A short-term buy-and-seller?

Maybe you guessed the right two time periods.

Maybe you got both of the bad ones.

Maybe one of each.

Or, you could have bought and held.

And held.

And held.

In four years, you’d have tripled your money.

You just had to bear long periods of going nowhere, in the process.

Was Amazon a wonderful company when the share price was going up, and then suddenly a dud one when the share price went nowhere?

Of course not.

It’s just that the market is, well, not always sensible.

If you’d have been told in November 2017 that the next four years would triple your money, you’d happily endure long periods of stagnation, right?

So what will you do from here? And not just with Amazon, but in general?

Buy, fret over short (or longer) periods of share price stagnation, and maybe sell?

Or buy shares in quality businesses at decent prices and be patient?

I hope the Amazon example has helped you decide.

Fool on!

The post For most of the last four years, shares went nowhere. But… appeared first on The Motley Fool Australia.

More reading

• Why valuation multiples can be ‘useless’ in assessing ASX shares: expert
• Top 5 global shares held by Aussie investors in Q3 revealed: eToro

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Scott Phillips owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Australian Foundation Investment Co Ltd (ASX: AFI) share price (AFIC for short) is having a decent day this Monday. AFIC shares are currently sitting at $8.27 each, up 0.24% for the day so far. That looks pretty good against the S&P/ASX 200 Index (ASX: XJO) which is down 0.1% so far today at 7,449 points.

AFIC is a Listed Investment Company (LIC). That means it is very similar to other ASX shares that we’d all be familiar with. LICs have ASX-listed share prices, market capitalisations and dividend yields, just like most other ASX shares.

However, something an LIC has which an ordinary company does not is a net tangible asset (NTA) backing. Even though LICs are technology companies in their own right, most function in a similar fashion to a managed fund. That is, they invest clients’ money on their behalf into a portfolio of financial assets like shares. In AFIC’s case, this LIC has made a name for itself over decades as a stable, dividend-paying LIC that primarily invests in blue chip ASX 200 shares.

As of 31 October, its top 5 holdings were Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), and Wesfarmers Ltd (ASX: WES).

AFIC share price commands NTA premium

Like most LICs, AFIC publishes its own NTA every month. This metric tells us how much AFIC’s investment portfolio is worth on a per-share basis. So, as of 31 October, AFIC’s NTA per share stood at $7.51. That means that each AFIC share represents $7.51 in underlying shares, cash and other assets.

Now you might notice something strange about that metric. It happens to be rather different from AFIC’s actual share price. In fact, with AFIC shares trading at $8.24 currently, this represents a premium of roughly 10% over the NTA baking of each share.

This is quite common with LICs though. Of the dozens of LICs on the ASX, few actually consistently trade at their NTA value. Sometimes, the market assigns a premium to an LIC if it has a strong track record of solid management or market outperformance. This is what we see with AFIC right now.

Other LICs that perhaps haven’t proved themselves, or have a poor history of returning value to shareholders, might trade at a discount, reflecting the market’s lack of confidence.

Fortunately for AFIC investors, the market seems happy to grant a hefty premium to AFIC shares over their NTA, perhaps reflecting its decades-long track record of ASX investing.

At the current AFIC share price, this LIC has a market capitalisation of $10.1 billion and a dividend yield of 2.91%.

The post AFIC (ASX:AFI) shares have a net tangible asset backing of $7.51 each. What does this mean? appeared first on The Motley Fool Australia.

More reading

• Why has the ANZ (ASX:ANZ) share price dropped 2% today?
• ASX 200 (ASX:XJO) midday update: Sydney Airport agrees to takeover, Wesfarmers’ strikes API deal
• 5 things to watch on the ASX 200 on Monday
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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