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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Leithner & Co joint managing director Chris Leithner tells how a pair of unpopular companies passes his team’s own ethical testing.

Hottest ASX shares

The Motley Fool: What are the 2 best stock buys right now?

Chris Leithner: Again, they fall into the category of well-established industry leaders [and] track record. 

APA Group (ASX: APA) is the country’s biggest natural gas infrastructure business. It is, in a sense, not often talked about, but it’s sort of the successor to Australian gas and lights when they put together the Moomba to Sydney pipeline. That’s the origins of APA from that. 

Its pipeline networks resemble natural monopolies, and long-term contracts secure its revenues. Moreover, because APA’s relatively lightly regulated, its profit margins are very high. 

On 8 November 2018, in his rejection of a foreign entity’s offer to buy APA, the treasurer noted “the size and significance of APA Group”. He added that it’s a “unique company supplying gas for part of all mainland capital cities”. 

Call it cautious contrarianism, conservative contrarianism. We’ve done a lot of research on [fossil fuels] and basically it’s tough to envisage a world that uses considerably less gas than it does at the moment.

Aurizon Holdings Ltd (AXX: AZJ) traces its origins to Queensland’s first railways in the mid-19th century. Today it’s Australia’s largest rail-based transport business. It owns and operates as a government-regulated monopoly one of Australia’s most critical bulk-haulage, multi-user rail networks. 

Both of those are unpopular from a coal, gas, and fossil fuel point of view. But it seems to me in the past, they have been very resilient cash-generating businesses, and it seems to us that’s going to continue. 

Aurizon and APA are also complex beasts, and APA’s effort to buy AusNet further complicates its valuation. 

The ASX share for a comfortable night’s sleep

MF: If the market closed tomorrow for 4 years, which stock would you want to hold?

CL: We invest for the indefinite long term, and over our 22 years of operation our average holding period has been more than 5 years. So everything we currently own – as well as what we’ve contracted to buy and hope to acquire in the future – we’re prepared to retain for at least 4 years. 

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

CL: We want to avoid what we call ‘sins of commission’, as in ‘My God, why did we do that?’ because it’s turned out to be a stinker.

We’ve also committed a fair few ‘sins of omission’ that, in effect, we had the right company [but] we’re waiting for a price which never eventuated. 

One that comes to mind, this would have been early on in the global financial crisis, Flight Centre Travel Group Ltd (ASX: FLT) fell to something like $4 or thereabouts. And we had colossal orders in, whatever the price was, it didn’t quite reach it — a matter of just 50 cents or some such. And in post-GFC at some stage, it certainly was about $40, into the $50s. So that would be a good example of a sin of omission.

There’s a trade-off that you really can’t avoid. If you want to avoid the sins of commission to minimise the number of stinkers… you’re going to increase the number of sins of omission.

The post 2 very unpopular ASX shares that’ll keep rising: expert appeared first on The Motley Fool Australia.

More reading

• Here’s why the Flight Centre (ASX:FLT) share price is up 26% so far in 2021
• Could the Aurizon (ASX:AZJ) share price hit $3.70 by Christmas?
• These 3 ASX 200 shares are topping the volume charts this Tuesday
• These are the 10 most shorted ASX shares
• These 3 ASX 200 shares are topping the volume charts this Monday

Motley Fool contributor Tony Yoo 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 APA Group. The Motley Fool Australia has recommended Aurizon Holdings Limited and 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 Macquarie Group Ltd (ASX: MQG) share price will be one to watch when it returns from its trading halt.

This follows the release of the investment bank’s half year results this morning.

Macquarie share price on watch after doubling profits

• First half net profit up 107% to $2,043 million
• International income now represents 72% of total income
• Assets under management up 31% during the six months to $737 billion
• CET1 level 2 ratio of 11.7%
• Capital surplus of $8.4 billion
• Partially franked interim dividend of $2.72 per share
• $1.5 billion capital rising announced

What happened during the half?

All eyes will be on the Macquarie share price next week after the investment bank reported a first half net profit of $2,043 million. This was double what it recorded in the prior corresponding period and in line with the second half of FY 2021.

A key driver of this growth was the Macquarie Capital business which delivered a net profit contribution of $468 million. This was up significantly from a loss of $189 million in the first half of FY 2021. Management advised that this reflects higher fee and commission income which was driven by mergers and acquisitions and debt capital markets income.

Supporting this growth was the Macquarie Asset Management (MAM) business, which delivered a net profit contribution of $1,305 million. Management advised that this was up 23% and driven largely by income related to the disposition of Macquarie Infrastructure Corporation assets. This was offset partially by lower performance fees.

The Banking and Financial Services (BFS) business delivered a net profit contribution of $482 million for the half, up 52% on the prior corresponding period. This reflects strong home loan, business lending, platforms and deposits growth and lower credit impairment charges. Partially offsetting this was an increased headcount and investment in technology to support growth.

The Commodities and Global Markets (CGM) business was a strong performer during the half. CGM delivered a net profit contribution of $1,729 million, up 60% on the prior corresponding period. This was driven by increased revenue across Commodities, with strong risk management income from Gas and Power, Resources, and Agriculture. The result also benefited from the partial sale of the UK meters portfolio of assets in May.

Macquarie’s Managing Director and Chief Executive Officer, Shemara Wikramanayake, said: “This first half saw a significant increase in net profit contribution from all four operating groups compared with 1H21, a period which was affected by the COVID-19 pandemic. Today’s result is consistent with a strong 2H21 and reflects improved trading conditions across our diverse platform.”

Capital raising

The reason the Macquarie share price is in a trading halt today is that it is undertaking a non-underwritten institutional placement aiming to raise approximately $1.5 billion. These funds will be raised via a bookbuild process commencing at $190.00 per share. This represents a 4% discount to the Macquarie share price at Thursday’s close.

A share purchase plan will follow, giving shareholders the opportunity to apply for up to $30,000 of shares. This will be offered at the lower of the placement price (adjusted for the interim dividend) or a 2% volume weighted average price during the five days prior to the closing date of the share purchase plan.

Ms Wikramanayake commented: “Having deployed $5.5 billion of capital over 2H21 and 1H22, we continue to see a strong pipeline of opportunities. Raising new capital provides us with additional flexibility to invest in new opportunities where the expected risk-adjusted returns are attractive to our shareholders, while maintaining an appropriate capital surplus.”

Outlook

Macquarie appears cautiously optimistic on the future but provided no guidance for the remainder of FY 2022.

Ms Wikramanayake said: “Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; a strong and conservative balance sheet; and a proven risk management framework and culture.”

The Macquarie share price is expected to return to trade on Tuesday at the latest.

The post Macquarie (ASX:MQG) doubles half year profit and launches $1.5bn capital raising appeared first on The Motley Fool Australia.

More reading

• The ASX 200 share I’d hold for 5 years: fund manager
• Macquarie (ASX:MQG) share price booted from $200 club after only one day
• Macquarie (ASX:MQG) share price breaks $200 mark for first time ever, sets new record high
• Brokers name 3 ASX shares to buy today
• ASX 200 (ASX:XJO) midday update: BHP and Rio Tinto fall, Qantas higher

Motley Fool contributor James Mickleboro 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 Macquarie 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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Despite the strong bull run of the ASX share market over the last couple of years, there are a few ASX shares that have been beaten up in recent months. They could be opportunities.

Whilst some businesses have gotten into difficulty and not recovered (yet?), like AMP Limited (ASX: AMP), there are others that are hoping for a turnaround sooner rather than later. If they are able to turn the business around, it’s possible that they might be worth considering.

Kogan.com Ltd (ASX: KGN)

Over the last month the Kogan share price has fallen around 7% and in 2021 to date it has dropped almost 50%.

The e-commerce retailer and services provider has been telling investors of slowing growth for its products and profit impacts during FY21

However, Kogan recently announced how it performed in the first quarter of FY22.

It said that gross sales grew by 21.1% year on year and 23.2% quarter on quarter to $330.5 million.

The gross profit performance was a bit mixed. It generated $52.5 million of gross profit, which was down 1.7% year on year, but up 31.6% quarter on quarter.

The ASX share made $10.8 million of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), which included a $2.3 million contribution from Mighty Ape.

Active customers and Kogan First members continue to climb alongside the gross sales improvement. The active customers increased by 30.7% to 3.35 million, whilst Mighty Ape had almost 750,000 active customers at 30 September 2021. Kogan First members increased 171.1% year on year and rose 64.4% quarter on quarter to 197,000.

The business said that it had resolved previous inventory pressures and closed a number of inefficient overflow warehouses. This reduction in inventory has led to the company significantly reducing its warehousing costs, delivering an average variable cost saving of $0.8 million per month compared to the last quarter of FY21.

Kogan continues to invest in its long-term strategy, improving its technology, logistics, platform, Kogan First membership benefits and so on.

According to Commsec, the Kogan share price is valued at 23x FY23’s estimated earnings.

Magellan Financial Group Ltd (ASX: MFG)

Over the last six months the Magellan share price has fallen by 28.5%. In the last year it has dropped by 38%.

The fund manager has seen its leading investment strategy, the global equity strategy, underperform the global share market in recent times. On top of that, the ASX share saw $1.5 billion of net outflows during the three months to 30 September 2021. That outflow represented 1.3% of the average funds under management (FUM) for the quarter.

However, the broker Macquarie Group Ltd (ASX: MQG) thinks that the decline of Magellan shares could mean it’s an opportunity.

The broker has a price target on Magellan of $38. It is trading cheaper compared to its historical forward earnings multiple. Macquarie also notes the fund manager’s high dividend yield, which could help attract and retain investor attention.

On Macquarie’s numbers, Magellan has a partially franked dividend yield of 6.5%.

Magellan recently held its annual general meeting (AGM).

Whilst the company is confident about the long-term profitability of its core management business, management think that its external investments are very compelling, which includes a 40% economic interest in Barrenjoey, a 12% shareholding of Guzman u Gomez and a 15% interest in FinClear.

Magellan said that Barrenjoey was profitable in the first three months of FY22.

Regarding those investments, Magellan said:

All of these initiatives are investments for the future that we believe can add meaningful additional earnings streams, create a more robust and diverse business and ultimately create meaningful shareholder value over time.

According to Macquarie, the Magellan share price is valued at 15x FY22’s estimated earnings.

The post 2 beaten-up ASX shares that could be buys in November appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• 3 reasons why the Magellan (ASX:MFG) share price could be a buy
• Why did the Magellan (ASX:MFG) share price smash the ASX 200 today?
• Why the Kogan (ASX:KGN) share price could be a top buy
• Why A2 Milk, Adairs, Bapcor, and Kogan shares are racing higher

Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Macquarie 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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Is the Woolworths Group Ltd (ASX: WOW) share price worth looking at? The supermarket business recently revealed how the first quarter of its FY22 has gone.

FY22 first quarter

Woolworths said that its group continuing operations sales went up by 7.8% year on year to $16 billion. E-commerce sales increased by 53.5% to $1.88 billion.

Let’s look at the individual key segments.

Australian food sales rose by 3.9% to $12.27 billion.

It started reporting a new segment, its Australian business to business (B2B) division. That includes the acquisition of PFD Food Services, the establishment of partnership services with Endeavour Group Ltd (ASX: EDV) and the growth of existing B2B businesses. This division saw growth of total sales by 196.4% to $952 million.

New Zealand food increased by 12.9% to $1.96 billion.

Big W sales fell 17.5% to $920 million.

Woolworths said that the first quarter was the most challenging COVID quarter for the business because of disruption to its supply chain and stores, caused by the Delta variant. The Woolworths share price has fallen more than 4% since the release of this trading update.

Looking at the second quarter of FY22, in October to date, Woolworths said that Australian food sales have slowed as NSW lockdown restrictions eased. However, Big W sales have improved as Greater Sydney stores reopen. Management noted that Christmas will be even more important for Big W this year.

Interestingly, despite all the talk about inflation, average Woolworths supermarket prices decreased 0.9% over the quarter, or 1.8% excluding tobacco, with deflation across all major categories except tobacco and meat, due to comparing against the temporary reduction in promotional activity in the prior year and deflation in fruit and vegetables.

During the quarter, Woolworths opened a total of six new stores in Australia, with five supermarkets and one Metro store.

Woolworths is now firmly focused on Christmas and the festive season. Management said the outlook remains uncertain and that there are likely to be “challenges in the weeks ahead”.

What is the broker opinion on the Woolworths share price?

Brokers are mostly neutral on the business at the moment.

For example, the analysts at Macquarie Group Ltd (ASX: MQG) think that Woolworths shares are a ‘neutral’ with a price target of $41.50. Whilst households continue to eat more food at home than before the pandemic, the supermarket business is starting to see this reverse. The broker also thinks that Coles Group Ltd (ASX: COL) is going to stage a comeback as COVID impacts subside.

One of the most negative opinions on Woolworths is from Credit Suisse, which has an ‘underperform’ on the business with a price target of just $31.84. This broker believes that Woolworths’ profit margins could soon be tightened a little bit.

However, it’s not all negative. The broker Ord Minnett thinks the Woolworths share price is a buy, with a price target of $43. Ord Minnett believes that the company still has attractive prospects.

Valuation on the Woolworths share price

Using the middle rating of Macquarie’s ‘neutral’ rating, the broker thinks that Woolworths shares are valued at 30x FY22’s estimated earnings.

The post Is the Woolworths (ASX:WOW) share price a buy in November 2021? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell today
• Why A2 Milk, Codan, EOS, and Woolworths shares are sinking
• ASX 200 (ASX:XJO) midday update: A2 Milk crashes, Woolworths tumbles
• Need a COVID test? Now you can buy one at Coles (ASX:COL) or Woolies
• Woolworths (ASX:WOW) share price slides after Q1 earnings update

Motley Fool contributor Tristan Harrison 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 COLESGROUP DEF SET and Macquarie 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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It feels like a decade’s worth of events have occurred in China this year.

There have been clampdowns on technology and education companies, devastating stock prices in those sectors. Sweeping blackouts have been seen in some of the nation’s biggest cities.

The prospect of real estate development companies collapsing, including China’s biggest, has also loomed large.

According to Nucleus Wealth head of investments Damien Klassen, that last issue has been underplayed by western media and analysts.

“Dramatic declines in demand by the largest consumer of commodities in the world, Chinese housing construction, is an ominous sign,” he said in a memo to clients.

“Evergrande is merely the first, there is a lot more to come. Metals are the last places to be invested if Chinese property construction slows.”

Why are ASX shares so vulnerable to China?

And this is where the problem lies for Australia and ASX stocks.

Plunging commodity prices triggered by low demand out of China will lead to a downward whack to ASX shares, which are dominated by the mining sector.

Nucleus’ analysis shows the best-case scenario for China’s urban population growth will mean 20% less construction of homes in the next 10 years than the previous decade. 

The “gradual adjustment” scenario sees building activity reduced by a whopping 33%.

Yet there are many analysts still blowing the horn that stocks will keep heading up. Klassen reckons this is driven by self-interest.

“You make much better commissions convincing investors to blow the bubble bigger,” he said.

“But iron ore and lumber have recently shown us that prices can halve in a matter of weeks. I prefer to bet on a lower tide.”

So what do we do now?

There’s an obvious course of action for Klassen’s team to avoid any calamity China could cause on ASX shares.

“Australian equities have been a good source of investment performance in recent months. We switched out of them and into international equities and cash,” he said.

“So far, the timing has been good. We have largely built the defensive side of the portfolio up, changing out of value winners like resources, banks, and cyclical industrials.”

According to Klassen, the No. 1 current risk to stock investors is “policy error”.

“Markets are [currently] supported to a great degree by central banks and governments,” he said.

“Stock markets are expensive. Debt levels are extremely high. Government/central bank support continues but is slowing. Earnings growth had been really strong, but has come to a halt.”

And any number of factors could bring on “unexpected inflation”.

“Mutations could disrupt supply chains again. Chinese/developed world tensions might rise further, leading to more tariffs. Or, China might reverse its tightening on property sectors. Biden may get through additional stimulus, driving increases to minimum wages.”

The post Should investors worry about China’s impact on ASX shares? appeared first on The Motley Fool Australia.

More reading

• 2 top ASX dividend shares with 4%+ yields
• 5 things to watch on the ASX 200 on Friday
• 2 top ETFs that might be buys in November 2021
• Why has the Silver Lake (ASX:SLR) share price leapt 30% in a month?
• The Nearmap (ASX:NEA) share price is up 20% in 3 weeks. What’s happening?

Motley Fool contributor Tony Yoo 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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If you’re looking to boost your income with some dividend shares, then you might want to consider the ones listed below.

Both dividend shares are expected to provide investors with attractive yields in the near term. Here’s what you need to know about them:

Rural Funds Group (ASX: RFF)

The first ASX dividend share to look at is Rural Funds. It is an Australian agricultural property company with a portfolio of high quality assets across five sectors. These comprise almonds, cattle, vineyards, cropping, and macadamias.

These high quality properties are leased to some of the biggest players in the agricultural sector such as Treasury Wine Estates Ltd (ASX: TWE) and Select Harvests Limited (ASX: SHV) on long term leases.

For example, at the last count the company’s weighted average lease expiry stood at 9.3 years. Combined with periodic rental increases, this gives the company great visibility on its future earnings and allows management to target distribution growth of 4% each year.

Speaking of which, in FY 2022 the company intends to increase its distribution by its target rate to 11.73 cents per share. Based on the current Rural Funds share price of $2.80, this represents an attractive yield of 4.2%.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share to look at is Telstra. This telco giant has returned to form this year thanks to the success of its T22 strategy.

The good news is that the company’s new T25 strategy is aiming to build on this and deliver solid earnings growth over the medium term. This has led to many analysts now pencilling in dividend increases for the first time in a decade in the coming years, much to the delight of shareholders.

In the meantime, Telstra is guiding to a fully franked 16 cents per share dividend again in FY 2022. Based on the current Telstra share price of $3.92, this represents a 4.1% dividend yield.

The post 2 top ASX dividend shares with 4%+ yields appeared first on The Motley Fool Australia.

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• These 3 ASX 200 shares are topping the volume charts this Thursday
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• These 3 ASX 200 shares are topping the volume charts on Wednesday
• 2 ASX dividend shares that could provide steady income in retirement
• Why the Telstra (ASX:TLS) share price is surging higher today

Motley Fool contributor James Mickleboro 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 RURALFUNDS STAPLED and Telstra Corporation 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped into the red. The benchmark index fell 0.25% to 7,430.4 points.

Will the market be able to bounce back from this on Friday? Here are five things to watch:

ASX 200 expected to edge lower

The Australian share market looks set to end the week on a subdued note. According to the latest SPI futures, the ASX 200 is expected to open the day 4 points lower. This is despite it being a strong night of trade on Wall Street, which late on sees the Dow Jones up 0.4%, the S&P 500 up 0.8%, and the Nasdaq up 1.2%. The latter hit a record high after a series of strong results.

ResMed quarterly update

The ResMed (ASX: RMD) share price will be one to watch on Friday when it releases its first quarter update. A strong result is expected from the sleep treatment focused medical device company. This is due partly to one of its biggest rivals battling with a major product recall.

Oil prices fall

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could have a poor end to the week after oil prices edged lower. According to Bloomberg, the WTI crude oil price is down slightly to US$82.64 a barrel and the Brent crude oil price is down 0.5% to US$84.14 a barrel. This follows a surprise jump in U.S. crude inventories and rising cases of COVID-19.

ANZ share price rated as a buy

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price remains great value following its full year results according to analysts at Goldman Sachs. This morning the broker retained its buy rating and lifted its price target on the bank’s shares to $31.82. Goldman was pleased with ANZ’s results, noting that its second half cash earnings came in 11% ahead of estimates.

Gold price rises

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a decent finish to the week after the gold price traded higher. According to CNBC, the spot gold price is up 0.2% to US$1,803 an ounce. Slowing US economic growth boosted the precious metal.

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

More reading

• The Nearmap (ASX:NEA) share price is up 20% in 3 weeks. What’s happening?
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts this Thursday
• Why ASX 200 energy shares are tanking on Thursday
• ASX 200 (ASX:XJO) midday update: ANZ result impresses, Fortescue higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. 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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Exchange-traded funds (ETFs) can be an effective way to invest into shares in Australia or internationally.

Picking ETFs allows investors to get exposure to a wide range of businesses in a single investment. That can provide an attractive amount of diversification.

There are some ETFs on the ASX that have delivered net returns that have been stronger than the S&P/ASX 200 Index (ASX: XJO) over the last few years. Whilst past performance is not a reliable indicator of future performance, these two could be ones worth considering:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This ETF is about the US share market, but just the businesses listed on the NASDAQ. The NASDAQ is one of the main American stock exchanges.

The NASDAQ is actually the home to many of the world’s largest technology businesses like Apple, Microsoft, Amazon.com, Tesla, Alphabet, Nvidia, Facebook, Adobe and Netflix. Whilst there are a total of 100 businesses in the portfolio, just the nine names I’ve mentioned make up almost 55% of the portfolio.

It’s a tech heavy portfolio. ‘IT’ makes up almost half of the sector allocation. Communication services and consumer discretionary are another 19.5% and 17.5%, respectively. Keep in mind that Amazon and Tesla count as consumer discretionary, whilst Alphabet, Facebook and Netflix count as communication services.

But there’s more than just the global tech giants in this portfolio. There are plenty of other market-leaders within the ETF like PayPal, Cisco Systems, Costco, Broadcom, Texas Instruments, Intuit, Advanced Micro Devices, Qualcomm, Moderna, Intuitive Surgical, Autodesk, ASML and Docusign.

Many of these businesses are ones that have introduced products or services that are changing the world.

Over the last three years the Betashares Nasdaq 100 ETF has produced average returns per annum of almost 25%.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This ETF is not just based on a passive index. It is actively managed by analysts from the research outfit Morningstar.

The provider of this ETF is called VanEck, which explains that this ETF has a focus on quality US companies that Morningstar believes possess sustainable competitive advantages, or a wide economic moat. A moat is an analogy for how hard it is for competitors to attack the castle/business. The better the moat, the harder it theoretically is for a competitor to do any damage.

Morningstar believes that the businesses in ETF’s portfolio have competitive advantages that could last for many years.

However, the VanEck Morningstar Wide Moat ETF also only targets the wide-moat businesses that are currently at attractive value relative to Morningstar’s estimate of fair value. In other words, it thinks they’re good value.

Whilst there is an active process, where the portfolio positions regularly change, the ETF has an annual management fee of 0.49% per annum.

Over the last three years, the VanEck Morningstar Wide Moat ETF has produced average returns per annum of 17.9% per annum. That outperformed the return of the S&P 500 return over the last three years, which was an average of 15.4% per annum.

The post 2 top ETFs that might be buys in November 2021 appeared first on The Motley Fool Australia.

More reading

• 2 excellent ETFs for ASX investors right now
• 2 ASX shares that could be strong buys
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• Why is the Betashares Nasdaq 100 (ASX:NDQ) ETF share price struggling lately?
• 2 top ETFs that might be buys in October 2021

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. 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 share price of gold mining company Silver Lake Resources Limited. (ASX: SLR), inched 0.90% higher on Thursday to finish trading at $1.69.

Silver Lake shares have been on an upward trajectory this past month, posting a return of 30% in that time.

That’s a decent step ahead of the S&P/ASX All Ordinaries Gold Index (XGD) which has posted a return of about 10% in the same time, and even further ahead of the benchmark S&P/ASX 200 Index (ASX: XJO)’s gain of just 0.5%.

Here we dissect what’s been fuelling this price action in the last month.

What’s up with Silver Lake Resources share price lately?

Silver Lake presented its quarterly earnings and activities report on 19 October, for the three months ended September 30 2021.

In its report, the company recognised record quarterly production at its Deflector site of 31,033 ounces and 251 tonnes of copper.

Sales on this production were of 28,074 ounces of gold and 212 tonnes of copper, with an all-in sustaining cost (AISC) of $1,249 per ounce.

In fact, the Group realised its overall gold sales on a price of $2,467/oz and an overall AISC of $1,562/oz.

Another personal record Silver Lake beat last quarter was in its ore reserves of 1.36 million ounces, signifying an 18% year on year increase, or “61% of the net FY21 mine depletion”.

As a result of strengths last quarter, Silver Lake exclaimed it was well-positioned to deliver its FY22 group gold sales guidance of 235,000–255,000 ounces and copper guidance of 600–1,000 tonnes.

It forecasts these results on an estimated AISC of $1,550–$1,650 per ounce.

It also sees a “three year ore reserve backed outlook…outlining sales growth of 255,000–275,000 ounces per year” supported by low costs and high margins at the Deflector site.

Perfect timing

The news of Silver Lake’s production is supported by a recent rally in gold spot and futures pricing.

As we rolled over into this month, the price of gold has popped and has climbed 4% or US$76/t.oz since it took off again from 30 September.

A stronger US dollar, coupled with a pullback in US Treasury yields has gold investors piling into the yellow metal this week, however, the rally is also on a backdrop of inflationary fears across global markets.

Gold has historically been viewed as a reasonable hedge against inflation and an adequate store of value over time.

So during times of market turbulence, investors tend to flock to more “safe-haven” type assets, of which gold is a constituent.

And with the unseen hands of supply and demand at play, pricing can tend to follow suite, increasing as demand for gold assets outmatches supply in the market.

Hence given these macro-economic factors, like inflation and changing bond yields, investors seem to have a love for gold once more, according to Trading Economics.

This appears to have weighed in positively for the Silver Lake Resources share price, as it climbed 26% in corresponding fashion to Gold’s latest upward move.

Silver Lake is an ASX resource share that produces gold, therefore it is considered a price taker of the yellow metal– it must accept the going rates of what’s offered in the market.

It is for this reason that its share price can and does fluctuate alongside volatility in the price of gold, typically following the yellow metal in suite whichever direction it goes.

With the summation of these factors in mind, especially the tight relationship between the price of gold and Silver Lake’s share price, it starts to form a picture as to what’s been driving the gold miner’s gains lately.

Silver Lake share price snapshot

Silver Lake Resources share price has struggled this year to date, having posted a loss of 6% since January 1.

This extends its loss over the last 12 months to around 25%, well behind the broad index’s return in that time.

The post Why has the Silver Lake (ASX:SLR) share price leapt 30% in a month? appeared first on The Motley Fool Australia.

More reading

• Why BHP, Propel, Silver Lake, and Tabcorp shares are falling
• The Silver Lake (ASX:SLR) share price is up 10% in the last week
• Which shares are the biggest winners and losers on the ASX 300 today?
• ASX 200 (ASX:XJO) midday update: Afterpay & Zip sink, energy shares rise
• ASX 200 (ASX:XJO) midday update: Gold miners jump, Pro Medicus wins contract

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 Novonix Ltd (ASX: NVX) share price took off today despite the broader market’s suffering.

The S&P/ASX 200 Index (ASX: XJO) fell 0.25% on Thursday. Meanwhile, the All Ordinaries Index (ASX: XAO) dipped 0.24%.

Fortunately for Novonix shareholders, the company’s stock dodged the carnage. As of Thursday’s close, the Novonix share price is $6.82, 3.65% higher than it was at the end of Wednesday’s session.

So, what drove the battery-focused graphite and graphite anode producer’s shares to gain on Thursday? Let’s take a look.

Novonix share price higher on Thursday

Novonix shares had a great day despite no news having been released by the company. And making the gain more unusual is the fact it’s actually not that unusual.

The Novonix share price has gained 30% in the last 3 weeks, but the company hasn’t uttered a word of price-sensitive news since August.

Also interestingly, there doesn’t seem to be a broader catalyst for Novonix’s movements today. In fact, many of its fellow battery technology shares spent the day in the red.

Lithium-sulphur battery technology company and ASX newbie Li-S Energy Ltd (ASX: LIS) saw its share price plunge 3.1% lower today. At the same time, that of lithium supplier, boron producer, and purchaser of formerly ASX-listed Galaxy Resources, Orocobre Limited (ASX: ORE) fell 5.9%.

However, there are some happenings that could explain what went on with the Novonix share price on Thursday.

For one, its surge might be a delayed reaction to the lithium rally the ASX experienced this week.

Novonix doesn’t deal in lithium. Though, as a battery technology company, it tends to run in the same packs as lithium producers.

ASX lithium shares rallied earlier this week, boosted by the increasing price of lithium and news from electric vehicle giant Tesla Inc (NASDAQ: TSLA). Tesla saw its value surpass $1 trillion after Hertz decided to add 100,000 Tesla cars to its rental fleet.

Additionally, the Australian Government pledged to reach net-zero carbon emissions by 2050 earlier this week.

The government’s plan focuses heavily on developing new low emissions technology. Thus, market watchers might have assumed stocks like Novonix could benefit from it.

While there’s no guarantee that either of the above happenings helped boost the Novonix share price today, its shareholders will likely be glad to have dodged the ASX’s sluggishness on Thursday.

The post The market had a lousy day. So why did the Novonix (ASX: NVX) share price leap 4%? appeared first on The Motley Fool Australia.

More reading

• Why has the Novonix (ASX:NVX) share price rallied 32% in 3 weeks?
• Here are the top 10 ASX shares today
• Here are the top 10 ASX shares today
• Why Bapcor, Cochlear, Novonix, and Zip shares are rising
• Why did the Novonix (ASX:NVX) share price leap 6% on Thursday?

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 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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