Tag: Motley Fool

The SeaLink Travel Group Ltd (ASX: SLK) share price is on the move on Thursday morning.

At the time of writing, the travel and transport company’s shares are up 4% to $9.24.

Why is the SeaLink share price rising?

The SeaLink share price is rising today after investors responded positively to the announcement of a new joint venture in the UK with RATP Dev UK.

According to the release, the company has formed a strategic joint venture, to be called RATP Dev London Transit, that will combine SeaLink’s Tower Transit Westbourne Park public bus operations in London with RATP Dev UK’s London United and London Sovereign operations.

The release explains that the joint venture is expected to employ over 4,000 staff and operate 1,250 buses on 115 routes from 10 garages in Western London. This is expected to lead to more than 260 million passengers annually, delivering anticipated turnover in the region of 275 million pounds per annum

SeaLink will have a 12.5% interest in the new joint venture. It will operate on a standalone basis and SeaLink will have no obligations to make further capital contribution.

Management notes that the arrangement provides increased scale efficiencies for both current operators in a challenging London public bus transport market.

It also facilitates a pooling of their significant operational experience including the transition to new technology. The company notes that by 2022, 24% of the RATP Dev UK London fleet will be electric with the electrification of six of its garages operating 13 electric routes.

The SeaLink share price has been a very strong performer in 2021. Since the start of the year, the company’s shares have risen an impressive 37%. This is more than tripled the return of the ASX 200 index over the same period.

The post SeaLink (ASX:SLK) share price charges higher on UK deal appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Brokers name 3 ASX shares to buy today
• Why Tyro (ASX:TYR) and SeaLink (ASX:SLK) share prices could be moving up
• ASX quarterly rebalance: A2 Milk dumped from ASX 50, Nuix kicked out of ASX 200
• Sealink (ASX:SLK) share price falls 6% despite $37.8 million profit

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 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 Bank of Queensland Limited (ASX: BOQ) share price has had an interesting time of late.

In addition to volatility in the broader market, the bank’s shareholders have also had to digest various management changes.

Let’s take a closer look at what’s been moving the Bank of Queensland share price.

Key appointments shake Bank of Queensland share price

Shares in the Bank of Queensland have been on shaky ground recently. They are down 3% in the past week and 1.8% in a month.

Earlier this week, the regional bank announced further changes to its executive makeup. Bank of Queensland advised shareholders it had made two new executive appointments to its leadership team.

The bank revealed a new chief risk officer in David Watts, who will assume the role in early 2022. Adam McAnalen, who is Bank of Queensland’s current chief risk officer, will shift to a new role.

In addition, the bank announced chief product officer Chris Screen will become group executive of business banking.

The recent leadership changes have raised questions on the bank’s churn rate from various market commentators.

Of particular concern was the departure of business group executive Fiamma Morton who was in the role for 15 months. Morton had replaced Peter Sarantzouklis, who assumed the role in August 2019, before leaving five months later in January 2020.

What else has been happening with Bank of Queensland?

In addition to leadership changes, the Bank of Queensland share price has had to deal with various other catalysts.

The regional bank has been under pressure after reports ME Bank could get a penalty of up to $100 million. It is alleged by ASIC that ME Bank made “false and misleading representations in letters to borrowers, and failed to notify customers when repayment rates changed”.

Bank of Queensland acquired ME Bank in early July for cash consideration of $1.325 billion.

Given the recent volatility, investors will be eagerly awaiting the bank’s full-year report in mid-October. Earlier this year, the bank reported a strong first half for FY21.

For the first half, Bank of Queensland recorded a 9% increase in cash earnings to $165 million and a 66% lift in statutory net profit after tax to $154 million.

Snapshot of the Bank of Queensland share price

Despite struggling these past few days, shares in Bank of Queensland have had a stellar year thus far.

Since the start of 2021, the bank’s share price has gained more than 20%. By comparison, the broader S&P/ASX200 Index (ASX: XJO) has only managed to claw 10% for the year.

The Bank of Queensland share price closed yesterday’s session at $9.05.

The post Bank of Queensland (ASX:BOQ) share price in focus amid concerns over management churn rate appeared first on The Motley Fool Australia.

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• Bank of Queensland (ASX:BOQ) share price dips amid new key appointments
• Climbing mortgage stress: Are the CBA, ANZ, NAB and Westpac share prices in danger?
• Why is the Bank of Queensland (ASX:BOQ) share price underperforming its sector today?
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Motley Fool contributor Nikhil Gangaram 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 Square Inc (NYSE: SQ) share price will be of keen interest to Afterpay Ltd (ASX: APT) shareholders.

Overnight, shares in the payment processing business closed 3.89% higher on Wall Street to US$261.07.

Let’s take a closer look at what this could mean for Afterpay shares today.

What the rising Square share price could mean for Afterpay shares

As has been well-publicised, Square agreed to purchase Afterpay for what was valued at the time at $39 billion – the largest M&A deal in the history of the ASX.

The deal, however, is not for cash – but entirely scrip. For every one Afterpay share held by an investor, they will receive 0.375 Square shares. On 2 August, when the deal was announced, the Square share price was US$247.26 – which valued Afterpay shares at $126.21 per share.

The higher price of Square means a higher valuation of Afterpay. Using the latest Square value and current exchange rates, Afterpay shares are now worth approximately $135.21.

The Afterpay share price closed yesterday down 0.38% to $126.23. So, in theory, Afterpay shares could open roughly 7% higher today.

Why is it rising?

According to our friends at The Motley Fool US, the market debut of competitor Toast Inc (NYSE: TOST) seems to have spurred on the Square share price.

Since its initial public offering (IPO), shares in Toast have surged 54%, and it seems the rising Toast tide lifted all boats in the fintech sector – including those in Square.

Regardless of the reason behind Square’s latest rise, the news could be good for the Afterpay share price.

The post The Square share price jumped 4% overnight. What could this mean for Afterpay (ASX:APT) shares? appeared first on The Motley Fool Australia.

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• Afterpay (ASX:APT) share price slips despite new ‘Retro’ launch
• This Afterpay-backed company is listing on ASX next week
• What percentage of Afterpay (ASX:APT) shares are owned by insiders?
• Why Afterpay, AnteoTech, Cettire, & Vulcan shares are storming higher
• ASX 200 tumbles but the Afterpay (ASX:APT) share price is green?

Motley Fool contributor Marc Sidarous 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 AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

As one of the world’s leading media entertainment businesses, Netflix (NASDAQ: NFLX) has been a lucrative stock to own. Over the past decade, shares have skyrocketed almost 3,000%, absolutely crushing the market during that time. This large-cap company is now valued at $260 billion. 

There are a lot of things to like about Netflix. And while future returns may not be as extraordinary as in the past, the stock still looks like a good buy today. Here are three reasons you should consider adding shares of this streaming giant to your portfolio. 

1. First-mover advantage 

A big reason Netflix has been so successful is simply because it was the first company in the streaming space. Co-founder and co-CEO Reed Hastings was convinced that the internet was going to fundamentally change how people consumed video entertainment, so he positioned Netflix to invest aggressively to acquire as many customers as possible before other companies took the market seriously. 

Netflix is planning to spend $17 billion in cash on content in 2021, which is far greater than any of its competitors. With 209 million subscribers and $27.6 billion in trailing-12-month revenue, this makes complete economic sense because the business is able to spread out the massive cost over the most customers. 

Good luck to the smaller rivals who are late to the streaming party and trying to play this game. Not only will they need tons of capital (from raising debt), but they’ll now have to compete for eyeballs in an incredibly crowded field. The merger of AT&T‘s WarnerMedia division with Discovery is a telltale sign that scale is necessary in this industry. More consolidation is likely in the future, demonstrating Netflix’s dominance. 

2. Pricing power 

There is perhaps no topic that has garnered more attention from financial media lately than inflation. The unexpected surge in consumer demand following the depths of the pandemic has led to higher commodity prices, supply chain issues, and labor shortages. Netflix’s ability to raise prices consistently over time protects it from any potential inflationary pressures, a characteristic many corporations wish they had. 

Last October, Netflix raised monthly prices by $1 for its standard plan and $2 for its premium plan. In the first full quarter following that hike, management cited improved levels of engagement compared to the prior-year period. And since Netflix first started this initiative of bumping up prices in 2014, membership has only soared. From year-end 2014 to today, customer count has jumped 264%. 

This is a company that can survive any economic environment, including the short-lived recession last year and the recent inflation worries, primarily because it continues increasing the value it offers to consumers. “If we do a good job there, then ultimately…we have the ability to go back and occasionally ask some of those members to pay a little bit more to keep that virtuous cycle going,” COO Greg Peters said on the most recent earnings call. Pricing power is a wonderful thing to have. 

3. Adding subscribers

Certainly, the biggest concern on Netflix shareholders’ minds today is the dramatic slowdown in subscriber growth — 5.5 million — during the first six months of this year. Compare that to 2020, when the company added a whopping 36.6 million customers as everyone stayed home. No doubt, a tough act to follow. But what matters most is Netflix’s ability to add paying subscribers over the long term. 

MoffettNathanson, a large research firm, believes Netflix will end 2025 with close to 375 million members. Unsurprisingly, most of this expansion will come from the Asia-Pacific region. In particular, the company is making a huge push in India, investing hundreds of millions of dollars to release 40 local productions in the country over the coming year. 

And Netflix’s recent foray into the video-game market is an example of how the company wants to truly become a global leader in video entertainment. While customers won’t be charged more for this feature, it should only drive higher levels of engagement and attract newer subscribers to the service. 

Although this stock has made early investors very rich over time, I don’t believe the days of market-beating performance are over. Netflix’s first-mover advantage, pricing power, and growth plans make it a solid buy right now. 

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

The post 3 great reasons to buy Netflix appeared first on The Motley Fool Australia.

More reading

• Here’s why investors can consider Netflix in the next market crash
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Neil Patel 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 Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Discovery (C shares). The Motley Fool Australia has recommended Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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The NIB Holdings Limited (ASX: NHF) share price has had a solid year thus far.

The outlook for shares in the private health insurer could be even rosier, according to some prominent analysts.

So, why does the NIB share price have such a healthy outlook?

Portfolio manager lauds the outlook for NIB

The NIB share price was highlighted in a recent interview hosted by Livewire Markets, titled ‘how to uncover the next small-cap champions’.

The panel consisted of two noted Australian portfolio managers, with the theme rotating around healthcare and tech.

Both analysts noted the interesting thematic and intersection between healthcare and technology.

According to the panel, governments around the world are struggling with healthcare costs. As a result, technology has an important role to play in managing these challenges.

Mike Murray, who is head of domestic equities at Australian Ethical Investment Limited (ASX: AEF), highlighted NIB.

According to Murray, NIB is an “innovative company” that is diversifying from its bread and butter of health insurance. An example of this is their joint venture, Honeysuckle Health, which focuses on data science and develops programs that help people better invest in their health.

Murray noted that prevention ultimately helps the end customer and in turn also helps the health insurer in NIB.

More on the NIB share price

It has been an eventful year for the NIB share price thus far. Since the start of 2021, shares in the private health insurer have soared more than 12.5%.

At one point, the NIB share price was flying more than 35% higher for the year. However, the company gave back much of its gains for the year after releasing its full-year report.

For FY21, NIB reported strong policyholder sales growth and retention, with policyholder growth lifting 4.2% versus an industry average of 3.1%.

Other highlights from the company’s full-year report included;

• Total group revenue of $2.6 billion, up 2.9% on the prior corresponding period (FY20 $2.5 billion);
• Group expense claim of $2 billion, up 2.5% (FY20 $1.95 billion);
• Group underlying operating profit (UOP) of $204.9 million, up 39.5% (FY20 $146.9 million);
• Net profit after tax (NPAT) of $160.5 million, up 84.5% (FY20 $87 million); and
• Fully-franked final dividend of 14 cents per share, up from 4 cents per share.

Despite the strong report, investors remained cautious about the health insurer’s outlook.

The NIB share price closed yesterday’s trading session at $6.72.

The post Why this analyst is bullish on the NIB (ASX:NHF) share price appeared first on The Motley Fool Australia.

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Motley Fool contributor Nikhil Gangaram owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and NIB Holdings 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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There are some top ASX growth shares that could be worth looking at.

Businesses that are growing profit across the world could certainly be worth looking at. Plenty of ASX shares are focused on the Australian and New Zealand markets.

However, there are businesses that have global growth goals. The potential growth is why these two companies are potential quality ideas to consider:

Premier Investments Limited (ASX: PMV)

Premier Investments is a retail business that owns a number of brands including Just Jeans, Jay Jays, Peter Alexander, Smiggle and Portmans. The ASX share also owns substantial amounts of both Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).

The ASX share has stores across the world including the UK, Republic of Ireland and Asia, as well as Australia.

Despite store closures for periods of FY21, the business is expecting to report in FY21 that its retail operations generated earnings before interest and tax (EBIT) of between $340 million to $360 million. Year on year, that would be growth of between 82% to 92%.

There are four different reasons for the expected strong EBIT growth according to management. There was strong customer demand for the winter product ranges across all brands, strong online sales growth and highly profitable online performance, exceptional gross profit margin expansion in the second half of FY21 with an increase of 380 basis points and, finally, a strong cost control culture including continuing to reach agreements with landlords that appropriately rebase the group’s rent expense.

With Smiggle, the ASX share is expecting the brand to rebound with “maximum” EBIT growth as sales recover. The company plans to continue to significantly invest in Smiggle’s “highly profitable” global online presence.

According to Commsec, the Premier Investments share price is valued at 21x FY22’s estimated earnings.

Bailador Technology Investments Ltd (ASX: BTI)

Bailador is a business that aims to invest in expansion-technology businesses at attractive valuations.

Its current portfolio includes names like Siteminder, Instaclustr, Straker Translations Ltd (ASX: STG), Nosto and Standard Media Index. Global hotel booking business Siteminder may actually be nearing an initial public offering (IPO).

It’s also on the lookout for new technology businesses that have good growth potential that just needs funding to help it grow more. For example, in July 2021, it invested $5.5 million into the digital healthcare platform InstantScripts which allows Aussies to access doctor care and routine prescription medication.

The targets it’s looking at typically have revenue of between $5 million to $50 million, a proven business model, a globally addressable market and provides minority protections with board representation. The ASX share also integrates ESG principles into its investment thoughts.

FY22 is expected to be a significant year for new investments and profitable sales of some of its holdings.

It’s evaluating “numerous opportunities” to invest additional capital and realise existing investments.

At the end of August 2021, its pre-tax net tangible assets (NTA) per share was $1.51. That compares to the current share price of $1.46.

The post 2 top ASX growth shares that could be buys appeared first on The Motley Fool Australia.

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• Why Adbri, AusNet, IAG, & Premier Investments shares are falling
• Premier Investments (ASX:PMV) share price has room to grow: expert
• Is hotel booking tech company Siteminder close to an IPO?
• Premier Investments (ASX:PMV) share price moves as new retail CEO takes charge
• 2 impressive ASX shares that could be buys in September 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 Bailador Technology Investments Limited. The Motley Fool Australia has recommended Bailador Technology Investments Limited and Premier Investments 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 Telstra Corporation Ltd (ASX: TLS) share price was a reasonably positive performer on Wednesday.

The telco giant’s shares rose 0.5% to $3.95.

How has the Telstra share price performed since reporting its results?

Following the small rise in the Telstra share price yesterday, the company’s shares have now risen a touch over 3.1% since the release of its results.

However, this doesn’t tell the whole story. Around six weeks ago when the company released its results, the market was already getting excited about a potential return to growth in FY 2022.

This was confirmed with its results.

Telstra’s CEO, Andy Penn, commented: “2021 was a really significant year for Telstra. We delivered results in line with guidance and we are seeing the focus and discipline on T22 pay off. It represents a turning point in our financial trajectory. Our second half underlying EBITDA was up on the first half, and our guidance for FY22 underlying EBITDA is $7.0-7.3 billion, which represents mid to high single digit growth.”

However, with the market already pricing this in, the response by the Telstra share price was modest.

Though, one thing that certainly wasn’t modest, were the gains the company’s shares made prior to its results.

Demand for its shares has been strong in 2021, leading to the Telstra share price being one of the best performing large caps this year. For example, since the start of the year, the company’s shares are up a sizeable 31%.

Where next for the company’s shares?

The good news is that the Telstra share price has been tipped to rise further by a number of leading brokers.

One of those is Morgans. In response to its T25 strategy update last week, the broker retained its add rating and lifted its price target to $4.44.

This means there’s still potentially a further 12.5% upside for Telstra’s shares over the next 12 months. Food for thought.

The post How has the Telstra (ASX:TLS) share price performed since reporting results? appeared first on The Motley Fool Australia.

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• Analysts name 2 ASX dividend shares to buy
• Own Telstra (ASX:TLS) shares? Then you’re helping develop flying cars
• Here are the ASX 200’s most active shares this Tuesday
• Why this broker loves the current Telstra (ASX:TLS) share price
• 2 ASX shares rated as strong buys by brokers

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 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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The Fortescue Metals Group Limited (ASX: FMG) share price could be one to consider for the dividend yield after the iron ore giant’s big price decline in recent weeks.

How much has it fallen?

Over the last month the iron ore miner has fallen 21%. It has fallen over 40% since 29 July 2021. That is a large decline considering Fortescue is one of the biggest ASX shares. Even after the plunge, the market capitalisation is now $45.4 billion according to the ASX.

The iron ore price has seen a huge decline. In May 2021 the price was more than US$230 per tonne and it has since dropped more than US$130 per tonne. That reduces the profit potential of Fortescue because iron ore is what it is focused on.

What has been sending the Fortescue share price and iron ore down?

There have been various issues that have been on investor’s minds. Supply from Brazil is expected to increase in the coming months. Demand from China is reducing as authorities told steel producers to cut production to decrease emissions.

But over the last week, there was concern that the Chinese developer Evergrande may collapse. Everegrande is one of the largest users of steel (and iron ore). However, as reported by my colleague Kerry Sun:

According to Reuters, Evergrande Group’s main unit, Hengda Real Estate Group Co Ltd, said that it will make a bond interest repayment on Thursday, 23 September.

Despite the small win, Evergrande will continue to face stress tests with another 7-year dollar bond due next Wednesday, 29 September.

The real estate conglomerate has seen its liabilities balloon to over US$300 billion and has already fallen behind in payments to stakeholders including banks, building suppliers and holders of investment products.

Is the Fortescue share price a buy for its 16% dividend yield?

The business isn’t likely to generate as much profit in FY23 as FY21. However, due to the profit decline, the prospective dividend is still quite high.

Analysts at Morgans think that Fortescue is going to pay a FY23 annual dividend of $1.757 per share. That represents a grossed-up dividend yield of 16.3%.

However, despite projecting a large dividend in the coming two years, Morgans rates the Fortescue share price as a sell with a price target of $14.15.

The broker thinks there will be continuing pressure for the iron ore price.

UBS also believes that Fortescue shares are a sell after the rapid decline of the iron ore price. UBS is even more bearish on the dividend that Fortescue could pay in FY23 – it’s expecting a full year payment of $1.327 per share. That translates to a grossed-up dividend yield of 12.3%. UBS reckons the current Fortescue share price is valued at 12x FY23’s estimated earnings.

The post Should investors buy Fortescue (ASX:FMG) shares in September 2021 for the 16% dividend yield? appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares this Wednesday
• Evergrande on investors’ minds and miners in focus. Scott Phillips on Nine’s Late News
• Why Champion Iron, Fortescue, Lake Resources, & Zip are racing higher
• Why the Fortescue (ASX:FMG) share price is up 5% today
• ASX 200 jumps as Evergrande confirms it will meet next interest repayment

Motley Fool contributor Tristan Harrison owns shares of Fortescue Metals Group Limited. 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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Are you wanting to make some new additions to your portfolio? If you are, then you may want to look at the shares listed below.

Here’s why analysts are tipping these top ASX shares as buys:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX share to look at is Aristocrat Leisure. It is one of the world’s leading gaming technology companies. While the pandemic weighed heavily on its poker machine business, it has bounced back to life over the last few months. This has been driven by the increasing popularity of its machines with players and casinos.

In addition to this, its digital business continues to flourish and generate significant recurring revenues for the company. Among its most popular titles are RAID: Shadow Legends, Mech Arena, and Vikings: War of Clans.

Pleasingly, with both businesses now pulling together, the company appears well-positioned for growth over the 2020s. The team at Credit Suisse certainly appear to believe this is the case.

Last week the broker retained its outperform rating and lifted its price target on the company’s shares to $50.30.

Life360 Inc (ASX: 360)

Another ASX share to look at is Life360. It operates in the digital consumer subscription services market. The company’s focus is on products and services for digitally native families, where all members of the household are connected by smartphones.

Life360 has been growing at a rapid rate in recent years thanks to its increasingly popular app. At the end of the first half of FY 2021, the Life360 app had 32.3 million Global Monthly Active Users (MAU). This was up by approximately 4 million in just the space of three months thanks partly to a highly successful marketing campaign on TikTok.

The company is now focusing on monetising its user base through cross selling opportunities. One of those is via the acquisition of wearables company Jiobit. It provides GPS tracking for kids and pets.

The team at Bell Potter are very positive on Life360 and see plenty of monetisation opportunities. As a result, they currently have a buy rating and $10.75 price target on the company’s shares.

The post 2 top ASX shares that could be strong buys appeared first on The Motley Fool Australia.

More reading

• 2 stellar ASX growth shares rated as buys
• Broker tips Aristocrat Leisure (ASX:ALL) share price to keep rising
• Lithium surge, Sydney Airport takeover, ACCC torches Qantas deal. Scott Phillips on Nine’s Late News
• 2 outstanding ASX growth shares named as buys
• The Aristocrat (ASX:ALL) share price has hit 10 new record highs in the past month

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. owns shares of and has recommended Life360, Inc. 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 own ASX shares, you may be worried about the current bear market. Over the last month, the S&P/ASX 200 Index (ASX: XJO) has fallen 2.41%. At one point in the month, the index fell to its lowest point since May.

Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Ltd subsidiary AMP Capital has revealed 7 investment strategies you should know when facing a potential market correction.

Let’s take a closer look.

What investors need to keep in mind

Oliver says a range of reasons is to blame for recent downturns across the globe. These include worries of slowing growth due to the rise of the Delta variant of COVID-19, the tapering of monetary stimulus by central banks, and, more recently – problems at Chinese developer Evergrande. Oliver says a potential collapse of the developer could have ramifications for “the Chinese economy, global growth, and commodity prices (like iron ore).”

But while share market pullbacks can be painful, they are healthy as they help limit complacency and excessive risk-taking. Related to this, shares climb a wall of worry over many years with numerous events dragging them down periodically.

Bouts of volatility are the price we pay for the higher longer-term returns from shares.

With that in mind, here are 7 tips Oliver says investors, such as those in the ASX 200, need to keep in mind.

Oliver’s 7 tips for investors in ASX shares

1. Corrections are normal and healthy
   Markets have had big downturns in the past, such as in the early 2000s dotcom bubble, the 2008 global financial crisis, and more recently, the COVID sell-off of March 2020. Oliver says September is usually the weakest month for both US and ASX shares, with 50% of Septembers in the US and 70% of Septembers in Australia ending lower over the last decade.
2. The main predictor of a “major bear market” is an impeding recession
   Oliver doesn’t see one happening soon. He is forecasting global growth to be 4% in 2022. Vaccines are helping ease the economic uncertainty, especially in Australia where a technical recession should be avoided. The Evergrande situation seems to be settled for now as well, which has also allayed fears.
3. Don’t sell shares as soon as they go into the red
   As Oliver puts it: “selling shares … whenever shares suffer a setback just turns a paper loss into a real loss with no hope of recovering.” It’s almost impossible to know when the market will recover. Stick to a long-term plan when buying ASX shares.
4. Buy low
   When markets dip, it can be an opportune time for investors. While Oliver concedes it’s impossible to precisely time the dip, but a fall in the average moving price is a good indicator.
5. Share dividends are better than savings rates at the moment
   Dividends in commodity shares like BHP Group Ltd (ASX: BHP) may have peaked with the price of iron ore, but a well-diversified portfolio is “likely to remain attractive, particularly against bank deposits.”
6. Shares often bottom at the point of “maximum bearishness”
   When sentiment seems to be most pessimistic, you should buy shares. When its most optimistic, it may be time to sell.
7. Turn down the noise
   Ignore small fluctuations and day-to-day news coverage. Oliver says negative news can reach “fever pitch” and only lead to more panic. The investor’s best bet is to make a long-term strategy and stick to it.

The post Expert gives 7 tips for investors in ASX shares during a market correction appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Sidarous 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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