Tag: Motley Fool

ASX gold shares have finally been playing catch-up with the rest of the market and investors can thank cryptos like bitcoin for the outperformance.

Cryptocurrencies have been one of the drags on the gold price as some experts believe digital currencies are a good substitute for the yellow metal.

This is why the brightening outlook for gold coincided with the crash in the crypto market. The price of bitcoin and ether both tumbled by around 30% to 40% in a day, reported CNBC.

Gold rises as cryptos like bitcoin crashes

There are a few reasons for the sudden reversal in sentiment towards cryptos. Unfavourable tweets by Tesla Inc’s (NASDAQ: TSLA) founder Elon Musk and warnings by China that it won’t accept digital tokens for payments were two big drivers.

Meanwhile, the gold price jumped to a more than four-month high when it hit around US$1,882 an ounce at the end of last week.

Gold has been rising steadily for most of this month.

ASX gold shares are shining bright

This helped major ASX gold shares, like the Newcrest Mining Ltd (ASX: NCM) share price, the Evolution Mining Ltd (ASX: EVN) share price and Northern Star Resources Ltd (ASX: NST) share price outrun the S&P/ASX 200 Index (Index:^AXJO).

While the big sell-off in cryptos won’t discourage the legion of fervent supporters, it only goes to show why digital tokens aren’t ready for prime time.

If anything, recent events show why cryptos are not a good replacement for gold – at least not yet.

Crypto fails test as a gold substitute

Investors buy gold for safety during times of fear. It has been trusted as a store of value for over 3,000 years.

The wide gyrations of cryptos undermines the belief that they can protect your wealth. This is particularly so if the asset class can be rocked (or rocketed) by a single tweet!

Cryptos hardly fit the definition of a safe haven.

Right investment, wrong reason

Don’t get me wrong, there are plenty of Ferrari-driving millennial millionaires thanks to the crypto craze, but they bought in to make big profit, not as a hedge.

The truth is, you don’t buy gold to become an overnight rich-lister. That’s not what investing in gold is all about.

This is a lesson many investors are about to learn, regardless of where cryptos trade next week or month.

Can ASX gold shares keep outperforming?

Another factor that is likely to drive investors away from cryptos and back to gold is waning risk appetite.

There is a clear trend showing capital flows are draining from more speculative assets, including high-flying tech shares.

For these reasons, we could see ASX gold shares continue to outperform in the short- to medium-term.

Beware making investment decisions that are based on the wrong reasons.

More reading

• These were the best performers on the ASX 200 last week
• These were the worst performers on the ASX 200 last week
• ASX 200 shares cashing in on the rising gold price this week
• ASX 200 rises, Kogan sinks, EML soars
• 3 top-performing ASX shares this week

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There could be some good in the S&P/ASX 200 Index (ASX: XJO) dividend shares that may be candidates for income.

Businesses that have grown to a certain large size have the potential to sustain a high dividend payout ratio and continue to keep growing earnings.

These two ASX 200 dividend income shares could be interesting candidates.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is predominately a funds management business. It has over $100 billion of funds under management and it’s rated as a buy by the broker Morgans with a price target of $58.26.

The company has a dividend policy of interim and final dividends being based on 90% to 95% of profit of the funds management business excluding crystallised performance fees. It also pays an annual performance fee dividend of 90% to 95% of net crystallised performance fees after tax.

Magellan makes a lot of profit from its funds management business. Higher funds under management (FUM) leads to higher management fees which largely falls to the net profit line.

In the FY21 half-year result, its management fees grew 8% to $309.4 million and the funds management business’ profit before tax and before performance fees increased 8% to $256.2 million. That helped the interim dividend increase by 5% to 97.1 cents per share.

The ASX 200 dividend share continues to see long-term growth of FUM – in April 2021, total FUM rose from $106 billion to $110.4 billion. It’s also making investments into private businesses that have long-term growth potential and can provide useful information to Magellan such as Barrenjoey and Guzman y Gomez.

Morgans thinks that Magellan is going to pay a FY21 dividend that amounts to a yield of 4.5% in FY21.

Charter Hall Long WALE REIT (ASX: CLW)

This is a real estate investment trust (REIT), it’s one of the larger ones on the ASX with a market capitalisation of around $3 billion.   

Charter Hall Long WALE REIT is currently rated as a buy by Citi with a price target of $5.30. The aim of the ASX 200 dividend share is to have a portfolio of properties that are rented to high-quality tenants with long leases.

The REIT recently announced acquisitions for a total cost of $415.4 million. It’s buying the Services Australia building in Tuggeranong, ACT, for $153 million, the ATO building in Box Hill, Victoria, for $115 million, the Red Cross building in Alexandria, NSW, for $79.5 million and the ATO building in Albury, NSW, for $42.5 million.

It also settled the acquisition of a 100% interest in an Ampol Ltd (ASX: ALD) anchored long weighted average lease expiry (WALE) convenience retail property in Redbank Plains, Queensland, for $25.4 million.

These acquisition reflect a passing yield of 5.2%, with a long WALE of 9.2 years and a weighted average revenue review (WARR) of 3.6% per annum. It increases the exposure to government tenants from 16% to 21%.

Management believe the acquisition supports the ASX 200 dividend share’s secure and growing income profile.

It now has 464 properties worth almost $5 billion with a 97.7% occupancy rate, a WALE of 13.8 years and a WARR of 2.3%.

The REIT aims to have a distribution payout of 100% of operating earnings per security (EPS). It’s expecting to generate 29.2 cents of EPS in FY21, translating into a yield of 6.1%. The property business also provided FY22 operating EPS guidance of growth of at least 2.75% compared to FY21. That suggests an FY22 yield of around 6.3%.

More reading

• Why the Charter Hall REIT (ASX:CLW) share price is frozen
• 2 ASX dividend shares to buy with yields above 5%
• Why is the Magellan (ASX:MFG) share price up 4% today?
• 2 ASX 200 shares to buy for dividends
• ASX 200 rises, Macquarie falls, Magellan declines

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While investors will be very familiar with tech shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO), there are some quality options in the sector flying under the radar.

Two such ASX tech shares are listed below. Here’s what you need to know about them:

Hipages Group Holdings Ltd (ASX: HPG)

The first ASX tech share to take a look at is Hipages. It is a leading Australian-based online platform and software as a service (SaaS) provider that connects tradies with residential and commercial consumers.

Over three million Australians have used Hipages increasingly popular platform, providing work to over 34,000 trade businesses that are subscribed to the platform. In addition to this, the company’s Call of Service job management software improves tradies’ productivity by streamlining their workflow and taking away the stress of admin.

At present the company is capturing approximately 5% of total industry advertising spend, but has been tipped to grow its market share materially in the future. According to a note out of Goldman Sachs, its analysts see scope for Hipages to capture upwards of 40% to 60% in the future as the company builds out its ecosystem. 

In light of this, it will come as no surprise to learn that Goldman is very positive on the company. It recently reiterated its buy rating and $3.35 price target on its shares. This compares to the current Hipages share price of $2.43.

Life360 Inc (ASX: 360)

Another ASX tech share to look at is San Francisco-based app maker Life360.

The company’s app offer families a wide-range of safety solutions for the modern world. This includes real-time location sharing and notifications, driving safety features like Crash Detection and Roadside Assistance, and messaging. Life360 is ultimately on a mission to create tools that remove uncertainty from modern life.

These features appear to be resonating well with families, with Life360 recently revealing 28 million monthly active users.

Pleasingly, the company continues to add to its offering. In April, it announced the acquisition of Jiobit for US$37 million. Management notes that the acquisition of the wearable location device provider is supportive of its growth strategy and opens up cross-selling opportunities.

One broker that is particularly positive on the company is Credit Suisse. It currently has an outperform rating and $8.30 price target on its shares. This compares to the latest Life360 share price of $5.45.

More reading

• 2 top mid cap ASX shares for growth investors
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• Leading broker names 5 emerging ASX shares to buy today
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• Brokers name 3 ASX shares to buy now

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There are some ASX dividend shares that might be worth looking into for income.

Businesses that are paying dividend yields that are much higher than what investors might be able to get out of a bank account might seem attractive.

These two could be interesting ideas for income:

Centuria Industrial REIT (ASX: CIP)

This real estate investment trust (REIT) is Australia’s largest domestic pure play industrial option.

It’s currently rated as a buy by the broker Morgan Stanley with a price target of $3.77.  

Centuria Industrial REIT now has a portfolio of 61 investment properties worth more than $2.6 billion with a weighted average capitalisation rate (WACR) of 4.95%, an occupancy rate of 98.8% and an overall weighted average lease expiry (WALE) of 9.7 years as at 31 March 2021.

One example of the type of tenant that the ASX dividend share has is Woolworths Group Ltd (ASX: WOW) which is leasing the Warnervale Distribution Centre in NSW. It recently doubled this lease to 10.2 years. The ASX dividend share said that this demonstrated tenant demand for strategic food logistics assets.

Centuria Industrial REIT fund manager Jesse Curtis said:

We are seeing growing market demand for leasing of food logistics assets reflecting increasing consumer demand for fresh food and rise of food-related e-commerce. This is a structural trend we identified when we took over management of CIP in 2017 and have since focused on leveraging in this area, by adding strategic food-related assets to our portfolio and securing long-term leases with blue chip tenants.

Our Warnervale lease extension is a testament to this strategy. It builds on CIP’s acquisition of $214 million worth of cold storage assets and $236 million of food manufacturing facilities since FY19 – all of which are delivering significant value and attractive returns for CIP unitholders.

Morgan Stanley thinks that Centuria Industrial REIT will pay a FY21 distribution of 17 cents per unit, translating to a yield of 4.9% from the ASX dividend share.

Accent Group Ltd (ASX: AX1)

Accent is a large Australian retailer of shoes. It sells a number of different brands including CAT, Dr Martens, Platypus, Skechers, Vans, Timberland and The Athlete’s Foot. The Glue Store is the latest business to be added to the portfolio.

The business is heavily focused on growing its store network – where it is seeing solid same store sales growth – as well as its digital presence. Online shopping is booming and Accent Group is taking advantage of that. The HY21 result saw digital sales grow 110% to $108.1 million, representing 22.3% of sales.

HOKA ONE ONE is one of the latest brands that Accent has been appointed to be the exclusive distributor in Australia for an initial 3-year term. Accent said that it’s one of the fastest growing performance brands globally.

In the first eight weeks of the second half of FY21, the ASX dividend share’s like for like retail sales were up 10.7% and digital sales were above 65.4%.

It has a goal of at least 10% compound earnings per share (EPS) growth. Citi has a price target on Accent of $3.10 and thinks the FY21 grossed-up dividend yield will amount to 6.5%.

More reading

• Retail sales rose 1.1% in April, but some ASX retail shares are selling off in May
• Which ASX 200 shares withstood today’s selloff?
• 2 top ASX dividend shares rated as buys
• Here’s why Centuria Capital (ASX:CNI) shares are falling 6% today
• 3 little-known ASX dividend shares offering big income

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of UBS, its analysts have retained their buy rating and NZ$13.50 (A$12.50) price target on this infant formula company’s shares. UBS believes that A2 Milk’s efforts to tighten its inventory are working without damaging its brand. In addition to this, the broker’s research indicates that pricing for a2 Platinum is improving. The a2 Milk share price ended the week notably lower than this price target at $5.55.

Afterpay Ltd (ASX: APT)

A note out of Macquarie reveals that its analysts have upgraded this payments company’s shares to an outperform rating with a $120.00 price target. Macquarie has been looking into the US market and believes that Afterpay is well-positioned thanks to its wide merchant network. This is because the broker’s research indicates that shoppers are showing little loyalty with BNPL providers and would sooner use another provider instead of shopping elsewhere. Looking ahead, the broker expects the BNPL market to continue to grow over the next decade. So much so, it estimates that it could be worth a total of $3.8 trillion by 2030. The Afterpay share price ended the week at $93.00.

BHP Group Ltd (ASX: BHP)

Another note out of Macquarie reveals that its analysts have retained their outperform rating and $57.00 price target on this mining giant’s shares. Macquarie notes that production has commenced at its South Flank iron ore project. And while it will ramp up production over the coming years, it doesn’t impact Macquarie’s forecasts. This is due to South Flank replacing the Yandi mine, which is reaching the end of its mine life. Outside this, the broker is expecting a record second half result in FY 2021 thanks to sky high iron ore prices. This could lead to greater than expected dividends. The BHP share price was fetching $47.75 at Friday’s close.

More reading

• Encounter (ASX:ENR) share price rockets 30% on BHP copper joint-project
• Why the Afterpay (ASX:APT) share price is up 10% this week
• Why is the A2 Milk (ASX:A2M) share price up 7% today?
• Why a2 Milk, EML Payments, Webjet, & Xero shares are pushing higher
• ASX 200 down 0.25%: Kogan sinks, EML & A2 Milk jump

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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Are you looking to add some dividend shares to your portfolio next week? Then take a look at the ones listed below.

Here’s why they could be top options for income investors:

BWP Trust (ASX: BWP)

The first dividend share to look at is this retail property company.

BWP is the largest owner of Bunnings Warehouse sites across Australia, making it the envy of many retail landlords. At the last count, the company had a total of 68 properties which were leased to the home improvement giant.

Thanks to Bunnings’ strong performance over the last 12 months, BWP has been able to collect rent as normal this year. This even led to BWP reporting a 6% increase in profit during the first half of FY 2021, allowing the the company’s board to reaffirm its plans to pay a full year distribution of ~18.3 cents per share.

Based on the current BWP share price of $4.14, this equates to an attractive 4.4% dividend yield.

Fortescue Metals Group Limited (ASX: FMG)

Another dividend share to consider is Fortescue. It is one of the world’s leading iron ore producers. And what a time to be one!

With spot iron ore prices above US$200 a tonne, iron ore producers are currently generating significant free cash flow. And while Fortescue’s lower grade ore doesn’t command as great a price, it is still materially more than its cash costs per tonne.

In light of this and its favourable dividend policy, the company looks set to reward shareholders handsomely with dividends in the near term.

Ord Minnett expects this to be the case and is forecasting fully franked dividends of $3.29 per share in FY 2021 and $2.86 per share in FY 2022. With the Fortescue share price currently fetching $22.30, this will mean massive dividend yields of 14.7% and 12.7%, respectively.

The broker has a buy rating and $28.00 price target on the company’s shares.

More reading

• Top brokers name 3 ASX dividend shares to buy today
• Why the Fortescue and BHP share prices are sinking this week
• ASX 200 sinks, EML plunges, Appen soars
• Should ASX iron ore producers worry as China plans to up its own production?
• Why these ASX lithium shares are down for a 5th straight session?

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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Ardent Leisure Group Ltd (ASX: ALG)

According to a note out of Ord Minnett, its analysts have retained their sell rating and 75 cents price target on this entertainment company’s shares. Although the broker was pleasantly surprised by the strong performance of its Main Event business in the United States, it isn’t convinced that this will be maintained. Ord Minnett suspects that COVID stimulus payments have supported its strong performance and may not be repeated in the coming months. Overall, the broker feels the company is still some way of becoming profitable. The Ardent Leisure share price ended the week at 94 cents.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

A note out of UBS shows that its analysts have retained their sell rating but lifted their price target on this medical device company’s shares to NZ$24.80 (A$23.00). According to the note, UBS is expecting Fisher & Paykel Healthcare to deliver a strong full year result next week. However, this is being driven by COVID-19 tailwinds, which are unlikely to be repeated in FY 2022. In light of this, the broker is forecasting a sharp decline in its earnings next year. As a result, it feels its shares are overvalued at the current level. The Fisher & Paykel Healthcare share price was fetching $31.22 at Friday’s close.

Iluka Resources Limited (ASX: ILU)

Analysts at Credit Suisse have retained their underperform rating and cut the price target on this mineral sands company’s shares to $5.30. This follows an announcement which reveals that Iluka plans to suspend its Sierra Rutile operation for six months later this year. Credit Suisse notes that the decision further clouds the outlook for the Sembehun project, which needs the Sierra Rutile infrastructure to be operational. The Iluka share price ended the week at $7.56.

More reading

• These were the worst performers on the ASX 200 last week
• ASX 200 jumps, Qantas flies, Nufarm rises
• Why Flight Centre, Iluka, Nuix, & Oil Search shares are tumbling lower
• ASX 200 up 0.95%: Qantas update, Nufarm’s profits surge
• The Iluka Resources (ASX:ILU) share price is falling today. Here’s why

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If you’re looking for some quality additions to your portfolio this month, then the two ASX shares listed below could be worth considering.

They have been tipped as shares that could generate strong returns for investors in the future. Here’s why they are rated very highly:

CSL Limited (ASX: CSL)

The first five-star stock to look at is CSL. This biotherapeutics giant could be one of the highest quality companies that Australia has ever produced.

CSL has been operating for over a century. It was founded in 1916 with the aim of servicing the needs of a nation isolated by war. Fast-forward to today and the company is a global giant with a portfolio of therapies and vaccines saving countless lives across the world.

One of the keys to its success has been the company’s high level of investment in research and development. Every year CSL invests approximately 10% to 12% of its sales revenue back into its these activities. This ensures that CSL is at the forefront of innovation in the industry and has a pipeline of potentially lucrative products.

The company has been struggling with plasma collections because of the pandemic. And while this could weigh on its performance in FY 2022, due to a lag between collection and production, it is only expected to be short-lived. In fact, collections are already rebounding strongly and have been tipped to reach pre-COVID levels later this year.

In light of this, with the CSL share price still trading notably lower than its high, now could be an opportune time to make a long term investment.

One broker that thinks this is the case is Credit Suisse. It recently upgraded CSL’s shares to an outperform rating with a $315.00 price target.

Goodman Group (ASX: GMG)

Another potential five-star stock could be Goodman Group. It is one of the world’s leading integrated commercial and industrial property companies. It owns, develops, and manages industrial real estate globally. This includes warehouses, large scale logistics facilities, and business and office parks. 

At the last count, Goodman had $52.9 billion of total assets under management globally, 366 properties under management, and 1,600+ customers. In respect to the latter, Goodman counts the likes of Amazon, DHL, Showpo, and Walmart as customers.

The company focuses on investing in and developing high quality industrial properties in strategic locations, close to large urban populations and in and around major gateway cities globally, where demand is strong and transformational changes are driving significant opportunities. This includes gateway cities such as LA, Paris, Sydney, Shanghai, and Tokyo. This strategy has worked incredibly well and led to Goodman delivering consistently strong growth in earnings and distributions.

One broker that is confident this positive form will continue is Citi. The broker currently has a buy rating and $22.10 price target on its shares.

More reading

• Why this expert is urging you to buy these ASX defensive shares even in a bull market
• Can the Commonwealth Bank (ASX:CBA) share price crack $100?
• Brokers name 3 ASX shares to buy now
• The 6-bagger ASX share that I now regret selling: fundie
• 2 high quality ASX 50 shares given buy ratings

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There are a number of exciting ASX tech shares that might be interesting to think about for the long-term.

Technology businesses have a few inherent advantages. For example, most technology businesses can offer their software with very little variable costs – it doesn’t cost much to replicate software for the next customer – leading to rising profit margins with new customers.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

This is an exchange-traded fund (ETF) that gives investors exposure to a portfolio of some of the largest companies that are related to video game development, e-sports and related hardware and software across the world.

And it is a global ASX share. There are nine countries that have a weighting of more than 1%: the US (38.6%), Japan (20.6%), China (18.5%), Singapore (7.2%), South Korea (5%), Sweden (3.7%), France (2.5%), Taiwan (2.3%) and Poland (1.5%). The US is still the biggest weighting, but it isn’t has high as some other ETFs.

You may recognise some of the biggest positions in the portfolio with some of the world’s leading gaming-related businesses: Nvidia, Tencent, Sea, Advanced Micro Devices, Nintendo, Activision Blizzard, Netease and Electronic Arts.

It has an annual management fee of 0.55%, which is cheaper than plenty of active fund managers.

There has been sustained revenue growth in the gaming industry. Since 2015, e-sports revenue has grown by an average of 28% per year and overall video gaming revenue has increased by 12% per annum.

E-sports have opened up several other potential revenue streams for the relevant businesses – game publisher fees, media rights, merchandise, ticket sales and advertising.

Audinate Group Ltd (ASX: AD8)

Audinate’s product called Dante, which is all about making the lives of audio professionals easier.

The ASX tech share explains that audio systems ranging from small systems for modest houses of worship and conference rooms up to massive rock tours and stadiums all require connections between microphones, mixers, processors, amplifiers and speakers. Traditionally, that meant long runs of specialised analog cables that are heavy, cumbersome to maneuver and dedicated to only a single type of signal going to a single device at a time.

Dante replaces all of those connections with a computer network over slender ethernet cables.

Audinate’s systems have very attractive uses.

COVID-19 caused a lot of disruption to large events, which affected Audinate’s shorter-term revenue. But the business is now seeing a recovery. In the third quarter of FY21, it generated US$7 million of revenue which was up 31% year on year.

The period benefited from channel fill of newly released Bluetooth and USB-C AVIO adaptors, as well as an increase in orders from customers managing global supply chain concerns.

Compared to the first half of FY21, there has been continued strengthening of chips, cards and modules revenue.

However, the company did say that it’s continuing to watch global supply chains for potential negative impacts on both its customers and the company itself, which may constrain near-term revenue and growth. However, it’s working with its partners to mitigate any challenges and expects uncertainty to resolve as 2021 continues. Management said that they are very confident about the long-term outlook of the business.

More reading

• 3 ETFs for ASX investors to check out
• The 6-bagger ASX share that I now regret selling: fundie
• 3 outstanding small cap ASX shares to watch
• 2 fantastic ETFs for ASX growth investors to buy
• 2 fast-growth ASX tech shares that are being sold off

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One investment option that is growing in popularity is exchange traded funds (ETFs). And it certainly isn’t hard to see why they are so popular with investors.

As well as being an easy way to invest your hard-earned money, they provide you with opportunities that were unattainable a decade ago. But given the many options, it can be difficult to decide which ones to buy ahead of others.

But don’t worry. To narrow things down, I have picked out three ETFs that are highly rated right now. They are as follows:

BetaShares Global Cybersecurity ETF (ASX: HACK)

With the world rapidly shifting online, cyber security has become incredibly important. In light of this, demand for cyber security services continues to increase and shows no sign of slowing. Especially given some high profile cyber attacks in recent months.

The BetaShares Global Cybersecurity ETF could be a great way to gain exposure to this trend. It provides investors with exposure to the leading companies in the global cybersecurity sector. This means you’ll be buying a slice of companies such as Accenture, Cisco, Cloudflare, Crowdstrike, and Okta.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ETF to consider is the VanEck Vectors Morningstar Wide Moat ETF. This ETF gives investors exposure to a diversified portfolio of fairly valued companies with sustainable competitive advantages. This is something that Warren Buffett looks for when he picks his investments. So, if you’re aiming to invest like he does, this ETF could help you.

At present, there are a total of 49 US based stocks in the fund. This includes Amazon, Bank of America, Berkshire Hathaway, Intel, McDonalds, Microsoft, Philip Morris, and Yum Brands.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

The VanEck Vectors Video Gaming and eSports ETF gives investors access to a portfolio of the largest companies involved in video game development, hardware, and esports. Among the companies included in the fund are giants such as Nvidia, Take-Two, and Electronic Arts.

VanEck notes that these companies are in a position to benefit from the increasing popularity of video games and eSports. Another positive is that the fund gives investors the opportunity to diversify their portfolio by providing tech options outside FAANG stocks.

More reading

• Why this ASX ETF is trouncing the index today
• Got cash to invest? Here are 2 ASX shares to buy
• 2 high quality ASX ETFs to buy
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• 2 fantastic ETFs for ASX growth investors to buy

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