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Webjet Limited (ASX: WEB) is the most shorted company on the ASX. At the time of writing, the Webjet share price is residing at $4.90.

A re-emergence of COVID-19 induced lockdowns has weighed on the online travel agent since mid-March. As a result, the short interest in Webjet has climbed atop the leader board.  

Blood in the water

Firstly, it is important to note that the short interest data is from 16 July 2021. This data is sourced by the Australian Securities & Investments Commission (ASIC) from individual short sellers, so there’s a delay between collection and reporting.

Based on ASIC’s latest data Webjet holds the highest amount of short interest, at 12.1% of shares on issue shorted. Interestingly, this isn’t Webjet’s first dance with short-sellers. Even at the beginning of the year, the online travel agent was the second most shorted ASX company with 12% short interest.

It seems the Webjet share price has become a popular bet for declining further. This is likely the result of how reliant the company is on a reopening of borders.

Additionally, because of the substantial decrease in revenue, Webjet has become a loss-making company. In its full-year results for FY21, Webjet revealed a net loss of $156.6 million. Therefore, the company is in a precarious position whereby it is burning through its cash to sustain operations.

Webjet share price presents ‘golden opportunity’

Despite the high level of short interest, fund manager Roger Montgomery recently made a point of the opportunity in the Webjet share price.

According to Montgomery, the $346 million of capital raised in early 2020 fortified the business. The fund manager believes Webjet is well-positioned to capitalise once travel resumes. The only question is, when will that occur?

At the current Webjet share price, the company holds a market capitalisation of $1.86 billion.

The post Webjet shares (ASX:WEB) are among the most shorted on the ASX appeared first on The Motley Fool Australia.

More reading

• Why the Webjet (ASX:WEB) share price has fallen 10% in a month
• What happened on the US stock market overnight and how could it impact ASX shares?
• These are the 10 most shorted ASX shares
• Fund manager sees Webjet (ASX:WEB) share price as ‘golden’ opportunity
• Broker says Webjet (ASX:WEB) share price weakness is a buying opportunity

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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Oil Search Ltd (ASX: OSH) share price is in focus following reports a bidding war could erupt between the company and Santos Ltd (ASX: STO).

Santos lobbed a $23 billion confidential merger offer at Oil Search late last month.

The offer, and its rejection, was announced on Tuesday. Oil Search’s board said the $4.25 scrip consideration – a 12.3% premium on the Oil Search share price as of 24 June – didn’t appropriately value Oil Search’s shares.

Santos is now expected to up its offer. But whether it will increase its consideration, or by how much, is yet to be seen. Additionally, some analysts are tipping the Oil Search board will battle against the merger.

Right now, the Oil Search share price is $4.08. That’s 10.87% higher than it was at Monday’s close after the company battled the fallout of its CEO’s surprise departure.

Let’s take a look at what’s now expected of Santos’ offer for the Papua New Guinea-based oil and gas producer.

Oil Search to enter a bidding war?

The Oil Search share price is on watch as the market waits to see if Santos will continue campaigning for control of the company.

Santos’ offer would have seen the ASX 200 oil producers merged into one company, with Oil Search shareholders owning 37% of the resulting entity.

Woodmac senior analyst Daniel Toleman told The Australian the firm expects Oil Search won’t submit to Santos’ merger plans easily. He said:

At the current share price, the Oil Search board will likely believe that a merger with Santos would not provide full value to Oil Search shareholders. As a result, we expect the board to fight off the merger attempt.

However, Bernstein analyst Neil Beveridge, who was also quoted by The Australian, said a bidding war would likely harm the Oil Search share price.

For shareholders, attention is now focused on Oil Search and whether Santos will up their offer. We expect it will be competitive. However, a bidding war is the last thing investors will want.

MST Marquee analyst Mark Samter also spoke to the publication.

He said Oil Search should be wary of rejecting an increased offer. Samter said doing so could leave it down a CEO, numerous board members, and struggling to progress in Alaska. Such a situation would likely have dire consequences for the Oil Search share price.

Samter also spoke of Santos’ CEO Kevin Gallagher, saying:

Having watched Kevin operate this past 5 or so years, I think it would be foolish of us to think he might not have a few nice little tricks up his sleeve.

Oil Search share price snapshot

Oil Search’s shares have been performing well lately.

They are currently 8.22% higher than at the start of 2021. They have also gained 25.54% since this time last year.

The ASX 200 oil producer has a market capitalisation of around $8.4 billion, with approximately 2 billion shares outstanding.

The post Oil Search (ASX:OSH) share price on watch — board tipped to fight merger appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Santos (ASX:STO) share price jumps on record quarterly sales
• What’s happening with ASX 200 oil shares this week?
• 5 things to watch on the ASX 200 on Thursday
• Here are 3 top trading ASX 200 shares this Wednesday

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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The Boral Limited (ASX: BLD) share price has been on the tear in 2021. Shares in the Aussie manufacturing and building supplies company have climbed an impressive 48.9% higher to hit an all-time high on Thursday.

So, what’s helping the company’s shares outperform the S&P/ASX 200 Index (ASX: XJO) by more than 38% this year?

Why the Boral share price has gained 45% in 6 months

Arguably the biggest news of the year has been a takeover bid by Seven Group Holdings Ltd (ASX: SVW). The Kerry Stokes-led conglomerate lobbed an initial takeover bid for $6.50 per share back in May. Seven already owned a sizeable chunk of the company’s shares and was able to use the “creeping takeover” clause in Aussie takeover regulations to slowly build up its stake.

The Boral share price shot higher back in May on news of the bid. The board maintained that the offer was opportunistic and undervalued the company. Despite urging that shareholders should not sell, it looks like those words seem to have fallen on deaf ears.

From a starting stake of 23%, Seven Group and its subsidiaries have now acquired nearly 60% of Boral’s shares. A change in substantial holding notice yesterday showed Seven entities now control 59.23% of voting power in the company. That includes the purchase of 11,588,010 ordinary shares at $7.40 per share by Seven Group entities.

All of this means Seven is inching closer to a full acquisition of the building group. All of that buying, combined with an increased takeover price of $7.40, has helped push the Boral share price higher in recent months.

The takeover efforts have moved swiftly, however, Mr Stokes’ interest in the company is well-known. Seven’s initial stake was purchased at a time when Boral was struggling, and Seven Group CEO Ryan Stokes currently sits on the Boral board of directors.

Foolish takeaway

The Boral share price has been rocketing higher in the last 6 months. That has largely been as a result of steadfast efforts from Seven Group to keep its share purchase offer open and quietly accumulate control of the Aussie building group.

The post Why the Boral (ASX:BLD) share price has gained 45% in 6 months appeared first on The Motley Fool Australia.

More reading

• Here are 3 top trading ASX 200 shares this Wednesday
• A jump in the ARB (ASX:ARB) share price, but no joy for the Woodside (ASX: WPL) share price. Scott Phillips on Nine’s Late News
• Boral (ASX:BLD) share price edges up as Seven Group wins control
• Boral (ASX:BLD) share price gains as Seven’s hold surpasses 50%
• Boral (ASX:BLD) share price falls as Seven’s hold nears 50%

Motley Fool contributor Ken Hall 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 Commonwealth Bank of Australia (ASX: CBA) share price has tracked higher over the last few months. This comes despite the company last providing a financial update in mid-May, and notwithstanding the sale of its general insurance business.

At yesterday’s market close, the CBA share price finished the day up 1.48% to $99.88.

Property market continues to rise

A possible catalyst for the recent surge in the CBA share price could be a strong Australian housing market. According to Fitch Ratings, property prices are predicted to jump by 16% this year. This is particularly being driven by government support, low interest rates and a stronger than expected economic recovery, according to the report.

In the previous update released by Fitch in December, it indicated house prices in Australia would only grow between 3% to 5% for 2021. However, Fitch noted that the revised forecast is a result of people saving more due to working from home, lockdown restrictions and border closures. In effect, higher savings are allowing buyers to quickly enter the property market, pushing up demand.

Furthermore, the Reserve Bank of Australia’s (RBA) record-low interest rates have meant that mortgage credit is available for most buyers, the report said. Currently, the official cash rate stands unchanged at 0.1%, with the next RBA board meeting on 3 August 2021.

Fitch explained “low interest rates in Australia have also started to encourage housing investors into the market, potentially replacing demand from first-time buyers as they start to be priced out”.

The lack of construction of new homes, combined with higher timber prices contributed to soaring house prices. This has led to supply constraints within the housing market, as demand ramps up.

“Supply constraints are likely to persist at least into next year, due to limited construction during the pandemic”.

“…The cost of building materials has also risen in 2021, pushing up construction costs, which will be passed on to buyers through higher asking prices for future new builds”, added Fitch.

What do the brokers think?

Earlier this month, two brokers rated CBA shares with varying price points.

Australia’s largest investment house, Morgans, raised its target for the CBA share price by 4.1% to $76.00. This is still significantly lower than the current level of CBA shares, indicating the broker believes them to be overvalued.

Bell Potter followed suit to also increase its rating by a massive 17% to $105.00. At the last closing price, this implies an upside of around 5%.

CBA share price snapshot

The ASX is forward-looking, and investors appear buoyant that Australia’s largest bank will come out unscathed by the current lockdown. In response, the CBA share price has continued its positive run, to record a gain of almost 12% in the last 3 months. The S&P/ASX 200 Index (ASX: XJO) has lifted just over 4.6% in the same time frame.

Based on valuation grounds, CBA has a market capitalisation of roughly $177.2 billion, with more than 1.7 billion shares outstanding.

The post Why the Commonwealth Bank (ASX:CBA) share price is up 12% in 3 months appeared first on The Motley Fool Australia.

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• Commonwealth Bank (ASX:CBA) shares higher as bank moves into broadband business
• CBA (ASX:CBA) share price lags big banks as requests for deferrals surge
• Lockdowns hurt, ASX falls, Wesfarmers climbs, and the Aussie set to fall? Scott Phillips on Nine’s Late News
• ANZ’s (ASX:ANZ) $1.5bn buyback puts other ASX 200 banks under capital return spotlight
• Do ASX 200 banks share same BNPL ambitions as Westpac (ASX: WBC)?

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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A big-name company all but forgotten among investors is now “one of the most compelling opportunities on the ASX today”.

That’s according to Firetrail Investments portfolio manager Blake Henricks, who reckons that Lendlease Group (ASX: LLC) has made “significant progress” in creating shareholder value for the coming years.

“Lendlease is a global leader in property development and investment management,” he wrote in a memo to clients.

“Their expertise and reputation in property development has seen the development pipeline grow to over $110 billion today.”

LendLease is a name familiar to Australians on construction sites, but it also has two other arms — property development and investment management.

Why are LendLease shares cheap right now?

Shares for LendLease have lost more than 11% this year so far. In fact, that’s about the same price change experienced over the last 5 years.

There were multiple reasons for this “poor experience” for investors, according to Henricks.

“Lendlease began reporting cost overruns and issues at its engineering projects in 2017,” he said.

“Several issues within the division such as tunnelling in North Connex, construction delays at Melbourne Metro and the recent provision on completed legacy projects has resulted in losses of almost $1 billion.”

And of course, COVID-19 hit the company hard too.

“Due to COVID, LendLease has had to pause the development of some of its major urbanisation projects,” said Henricks.

“Property sectors like office[s] have seen a slowdown in tenant demand which has negatively impacted near term earnings.”

Then why is the future brighter?

A big factor is LendLease’s sale in late 2019 of its engineering division to Spanish giant Acciona SA (BMZE: ANA).

“We believe that the engineering business has been a major reason [for] the firm’s financial underperformance, in addition to the large valuation discount applied to the total business by the market,” said Henricks.

“Exiting engineering has created an opportunity for Lendlease to simplify its business and focus on property development and investment management.”

He added the environment for attaining planning approvals and capital partners has much improved.

“Over the last 3 years, project wins have accelerated, and the development pipeline has grown from $71 billion to over $110 billion,” Henricks said.

“Importantly, many of these projects have been secured with large capital partners, reducing the capital intensity and sharing the risk involved in major developments. Lendlease’s capital partnership model also allows them to leverage their strong relationships with large investors and institutional partners to accelerate future projects.”

The investment management arm is also set for massive growth, not dissimilar to what Charter Hall Group (ASX: CHC) is doing.

“Today, Lendlease has $36 billion in Funds Under Management (FUM) which is expected to grow to over $80 billion in the coming years,” said Henricks.

“In our view, investment management could account for around 50% of earnings in the next 5 years, compared to an average of 31% over the past 5 years.”

LendLease shares were up 1% on Thursday, to close the session at $11.79. The stock has a current dividend yield of 1.55%.

Both the Firetrail Australian High Conviction and Firetrail Absolute Return funds hold LendLease.

The post ‘Unloved’ for 5 years, this ASX share is ready to rocket appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Kogan FY 2021 update, Altium sinks
• Lendlease (ASX:LLC) share price edges higher on divestment news
• 5 things to watch on the ASX 200 on Friday
• Why Lendlease, Marley Spoon, Reece, & Woolworths shares are sinking
• ASX 200 down 0.3%: SEEK record high, IGO jumps, Lendlease downgrade

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 planning to add some growth shares to your portfolio this month, then you may want to look at the shares listed below.

All three of these ASX growth shares have been tipped as buys recently. Here’s what you need to know about them:

Afterpay Ltd (ASX: APT)

The first ASX growth share to look at is this buy now pay later (BNPL) focused payments company. Afterpay has been one of the quickest growth companies on the Australian share market in recent years and shows little sign of slowing in the near future. This is thanks to the increasing popularity of BNPL with consumers and merchants, the demise of credit cards, new product launches, and its global expansion.

Morgan Stanley is a fan of the company. It currently has an overweight rating and $145.00 price target on Afterpay’s shares.

Breville Group Ltd (ASX: BRG)

Another ASX growth share to look at is this leading appliance manufacturer. Breville has been growing at a strong rate over the last few years. This has been underpinned by a combination of acquisitions, its international expansion, and product development. The latter has filled Breville’s portfolio with strong, popular, and innovative products. The good news is that these same factors are expected to support further growth in the years to come, which should be supported by the work from home trend. With more people working from home, it is driving strong demand for appliances such as coffee machines.

UBS is positive that its growth can continue. As a result, it analysts currently have a buy rating and $35.70 price target on its shares.

PointsBet Holdings Ltd (ASX: PBH)

A final growth share to look at is PointsBet. It is a sports wagering operator and iGaming provider which has been growing at a rapid rate. This is being driven by the growing popularity of mobile sports betting and its expansion into the massive US market. The good news is that the latter is still only getting started, giving it a significant runway for growth over the next decade. Particularly given its strong market position and partnership with sports broadcaster NBC Universal.

Goldman Sachs is a big fan of PointsBet. Due to its huge opportunity in the United States, the broker is tipping the company to grow very strongly during the 2020s. Goldman has a buy rating and $17.20 price target on its shares.

The post 3 excellent ASX growth shares analysts love appeared first on The Motley Fool Australia.

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• Why the 4DS (ASX:4DS) share price is rallying today
• What can the surging lithium sector tell us about the Afterpay (ASX:APT) share price?
• Why analysts rate Afterpay (ASX:APT) and this ASX growth share as buys
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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 AFTERPAY T FPO and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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Some of the small ASX shares actually have quite larger dividend yields.

Just because a business is smaller doesn’t mean that it can’t pay a large dividend. The yield is dictated by the payout ratio and the valuation.

Plenty of the businesses in the S&P/ASX 200 Index (ASX: XJO) were smaller companies on the ASX at some point. Starting from a smaller base may give them a longer growth runway with their earnings as well.

Here are two small ASX dividend shares with large yields:

360 Capital REIT (ASX: TOT)

This is a diversified real estate investment trust (REIT). It’s one of the positions in the Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) financial services portfolio.

It has the ability to invest across most assets in the real estate world. At the moment it has two large strategic holdings in Australian REITs. One holding is 9.2% of Irongate Group (ASX: IAP). Another holding is Peet Limited (ASX: PPC).

Peet is a residential developer that delivers master planned communities, medium density housing and apartments.

Irongate is a diversified real estate investors with real estate assets and a third-party funds management platform. Irongate owns office and industrial assets across Australia and New Zealand.

Another of the small ASX dividend share’s recent investments include buying half of PMG Group, a New Zealand based diversified commercial real estate funds management business. At the time of the acquisition, PMG managed five unlisted funds, three single-property syndicates, with 42 properties and NZ$665.7 million of funds under management (FUM).

360 Capital says PMG gives the business an investment in a growing funds management platform with a long track record and diversification through exposure to the New Zealand real estate market. It provides fee income from funds management and underwriting activities.

Its longer-term objective is owning direct assets and value-add opportunities on the balance sheet. Initially, it’s getting exposure to this through strategic investments in real estate funds management platforms.

The small ASX dividend share’s annual distribution for FY21 is 6 cents per share. That trailing payment reflects a yield of 6.25%.

Pengana Capital Group Ltd (ASX: PCG)

Pengana is another business in the Soul Patts financial services portfolio.

It’s a fund manager with a diverse array of funds that it manages. Pengana has strategies relating to international shares, ASX shares, private equity, property and ethical shares.

At 30 June 2021, its FUM had grown to almost $4 billion (the exact number was $3.974 billion). At 31 December 2020, the FUM was $3.6 billion. So the FUM had grown by 10.6% over the prior six months. FUM is an important part of generating revenue for Pengana in the form of management fees.

In the six months to 30 June 2021, the small ASX dividend share generated gross performance fees of $17.3 million. That brought total gross performance fees earned for FY21 to $27.6 million. However, those numbers are before payments to the fund manager teams and bonuses.

The FY21 half-year result saw FUM increase by 15% in the first six months of the financial year. This helped underlying profit before tax increase by 17.1% to $9.2 million.

Pengana declared an interim dividend of 5 cents per share, an increase of 25%. The current trailing dividend is 9 cents per share, meaning it has a trailing grossed-up dividend yield of 7.6%.

The post 2 small ASX shares with big dividend yields appeared first on The Motley Fool Australia.

More reading

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• Do brokers rate the Soul Patts (ASX:SOL) share price as a buy?
• ASX 200 rises, API soars, Wesfarmers up
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• Why is the Soul Patts (ASX:SOL) share price down this Monday?

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company 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 owns shares of and has recommended Washington H. Soul Pattinson and Company 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 quality ASX growth shares that might be worth looking as potential opportunities.

Businesses that are producing earnings growth give it a better chance to make shareholder returns.

Here are two ASX growth shares that might be worth thinking about:

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

This is an exchange-traded fund (ETF) by VanEck. The idea is to create a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.

Those businesses need to be at a good price for the Morningstar analysts’ estimate of fair value. But they must also possess sustainable competitive advantages, or “wide economic moats”. That means the businesses are expected to maintain their competitive position for a number of years (and perhaps beyond).

It has a portfolio of almost 50 positions. These are the positions that have a weighting of more than 2.5%: Servicenow, Microsoft, Tyler Technologies, Alphabet, Amazon.com, Facebook, Guidewire Software, Pfizer, Salesforce.com, Wells Fargo, Cheniere Energy and Medtronic.

All of the businesses are listed in the US, however, the underlying earnings come from many countries. The sectors that have more than 10% of the portfolio includes: health care (20.3%), information technology (16.6%), industrials (15.4%), financials (13.3%) and consumer staples (11.1%).

It has an annual management fee of 0.49%. Over the last five years, it has produced an average return per annum of 19.2%. Past performance is not an indicator of future performance.

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting might count as an ASX growth share in the baby and toddler retailing space.

It’s currently rated as a buy by several brokers, including Citi which has a price target on Baby Bunting of $6.22.

Citi has pointed out that there are potential issues relating to trading restrictions in a few places at the moment. Despite that, the spending on baby products is pretty essential and there isn’t much competition in the space either.

The FY21 half-year result showed both growth and operating leverage. Total sales grew 16.6% $217.3 million. But that included total online sales growth of 95.9% – which shows customers have multiple ways to access Baby Bunting’s product catalogue, even in lockdowns.

Baby Bunting’s gross profit margin improved 41 basis points to 37.4%. Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) grew faster than sales, by 29.7%, to $18.5 million. The pro forma net profit after tax (NPAT) rose 43.5% to $10.8 million.

The ASX growth share is looking to grow further by expanding into New Zealand, develop a new loyalty program, open more stores, improve its online offering and supply chain efficiencies.

In New Zealand it’s planning to open at least 10 stores. It had 59 stores in Australia a few months ago and has plans for a network of over 100 stores in the country.

According to Citi, the Baby Bunting share price is priced at 22x FY22’s estimated earnings.

The post 2 top ASX growth shares that might be worth buying appeared first on The Motley Fool Australia.

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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 has recommended Baby Bunting and 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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Both the Australian and US share markets have been a bit nervous in recent weeks about the Delta variant of COVID-19.

After first devastating India, this strain of the coronavirus has since impacted the entire globe. Even Australia, with its strict borders, could not keep it out — and now half the population is under lockdown.

This health crisis has put a nasty spanner in the post-pandemic economic recovery narrative.

Unfortunately, the market is “on tenterhooks” because of Australia’s low vaccination rate, according to Montgomery Investment Management chief investment officer Roger Montgomery.

“The Delta variant is materially more infectious than the original COVID-19 strain and is now the dominant strain in Australia,” he said on the company blog.

“And, importantly, with half of winter remaining, the lack of a broadly vaccinated population presents the virus with an opportunity to mutate, potentially undermining the efficacy of current vaccines.”

So what to do now for share investors?

Back to lockdown-friendly ASX shares

This means that more lockdowns seem to be inevitable for the rest of the year. So Montgomery reckons it’s time to flee back to the stocks that led the way in April last year.

“Lockdowns must necessarily shift spending from services and experiences (that were available in open cities) to online spending on goods,” he said.

“Online shopping spiked during the last 12 to 18 months, and as consumers returned to in-store shopping, online eased. This could rapidly reverse with only essential stores permitted to open.”

Montgomery added that retailers that sell homewares and appliances could do especially well.

“Harvey Norman Holdings Limited (ASX: HVN), JB Hi-Fi Limited (ASX: JBH), Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH) were huge beneficiaries during last year’s lockdowns. And amid the recent easing of restrictions they continued to win.”

He did warn, though, that durable goods like large appliances have long lives. So the rate of sales growth might not be quite as spectacular as last year.

ASX shares related to hospitals, raw materials, energy and building materials all did well in the “re-opening” trade, but would now stumble.

“It should not be surprising, in such circumstances, to see at least some capital reallocated from profitable reopeners to lockdown winners,” said Montgomery.

“The key question for investors to now consider, however, is whether a reopening is undermined by a new strain of the virus that evades vaccines.”

Even vaccinated populations are struggling

Montgomery pointed out that even countries with high rates of COVID vaccination still struggled with Delta.

“In just the last month, the Netherlands, with more than three quarters of the population vaccinated, suffered the devastating effects of reopening too quickly,” he said. 

“Infections rose more than 500% in just one week. Shortly after the Dutch caretaker prime minister, Mark Rutte, announced that face masks would no longer be required, the Dutch government started backtracking on restrictions.”

A glass-half full view of the Delta strain slowing the share market is that inflation worries could subside. 

This would result in more dovish central banks, keeping interest rates at near historic lows.

“The emergence of the highly infectious Delta variant makes the future far less certain,” said Montgomery.

“My take is that higher quality and structural growth businesses should again be on your radar.”

The post COVID Delta is raging: 4 ASX shares to buy in turbulent times appeared first on The Motley Fool Australia.

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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 recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS 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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With savings accounts and term deposits only offering very low interest rates, the share market arguably remains the best place to earn a passive income.

But which ASX dividend shares should you consider buying? Two buy-rated ASX dividend shares to look closely at are listed below:

Carsales.Com Ltd (ASX: CAR)

The first ASX dividend share to consider is Carsales. It is the leading auto listings company in the ANZ market and also operates a number of similar websites across the world.

This will soon include the US-based Trader Interactive, which has a focus on the commercial truck, recreational vehicle, powersports, and equipment industries. Carsales recently raised funds to acquire a 49% stake in the company for US$624 million (A$800 million). It also has a call option to acquire the remaining interest on specified terms in the future.

UBS appears positive on the company’s growth prospects. It currently has a buy rating and $24.50 price target on its shares. The broker is also forecasting fully franked dividends of 44 cents per share in FY 2021 and 50 cents per share in FY 2021. Based on the latest Carsales share price of $21.48, this represents yields of 2% and 2.3%, respectively.

Charter Hall Social Infrastructure REIT (ASX: CQE)

Another ASX dividend share to look at is the Charter Hall Social Infrastructure REIT. It is a real estate investment trust focused on social infrastructure properties. These includes properties such as childcare centres and government sites.

At the end of the first half of FY 2021, the company was enjoying an occupancy rate of 99.7% and a weighted average lease expiry (WALE) of 14 years. Since then, things have got even better. A recent update reveals that its WALE has lengthened again following a series of contract renewals.

Things have been going so positively for the company that it recently advised that it intends to pay a 4 cents per unit special distribution in FY 2021. This will increase its fully year distribution to 19.7 cents per share. Based on the current Charter Hall Social Infrastructure REIT share price pf $3.50, this will mean a yield of 5.6% for income investors.

Goldman Sachs currently has a conviction buy rating and $3.84 price target on its shares. It commented: “We allow for at least 2.5% LFL rental growth over the next three years, given 63% of the portfolio leases are on fixed annual reviews (an average of 3% increase). However, we note 37% of the portfolio leases are CPI linked, providing protection in a reflationary environment.”

The post 2 top ASX dividend shares tipped as buys appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares to buy before looming economic slowdown: expert
• How to turn $20,000 into $250,000 in 10 years with ASX shares
• 2 ASX shares growing their dividends
• Why Alkane, Carsales, Platinum, & Stockland shares are tumbling lower
• How did the S&P/ASX All Technologies Index (XTX) perform in FY21?

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 recommended carsales.com 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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