Tag: Motley Fool

It has been a demoralising month and week for Bitcoin (CRYPTO: BTC) investors. After topping out at an all-time high of $83,598.87 mid last month, the speculative digital asset has been struggling to find its feet.

Previously a catalyst for upwards momentum following the announcement of buying and accepting Bitcoin, Tesla Inc (NASDAQ: TSLA) CEO Elon Musk is now being blamed for the accelerated selloff in the cryptocurrency over the last week.

Elon Musk tweeted that Tesla will no longer accept Bitcoin amidst his own concerns of exorbitant energy usage per transaction. Now investors are wondering whether the electric vehicle company has dispensed the original crypto completely from its balance sheets.

Despite these recent developments, the Bitcoin community continues to work towards improving the technology behind the now 12-year-old currency.

Could Taproot lead to a better Bitcoin?

Musk has seemingly taken a negative stance towards Bitcoin, pointing towards the Cambridge Bitcoin Electricity Consumption Index, which currently estimates Bitcoin’s electricity consumption to be 147.41 TWh. For comparison, Australia’s total electricity consumption was 192.4 TWh in the 2019-2020 financial year.

The latest update in the Bitcoin code is aimed at addressing some key matters. The latest proposed upgrade is known as Taproot. In the most significant update since 2017, Taproot is expected to:

• Increase privacy for transaction type
• Add more flexibility with a new type of signature
• Decrease fees
• Make the Lightning Network (a second layer solution) cheaper, more flexible, and more private

These changes to Bitcoin will only come into effect if 90% or more of the processed blocks across two weeks receive a signal of support for Taproot from miners.

Despite the improvements not specifically addressing energy usage, it demonstrates a continued effort from developers to enhance the technology.

When could we see changes?

The signalling process is taking place as you read this. At the time of writing, only 496 blocks of the 2016 blocks have been completed – 15.33% have approved the Taproot activation, while 9% have blocked the activation.

If the activation is blocked, an additional two-week long signalling windows will occur until 11 August 2021. If Taproot is not approved by then, the update will go back into development.

More reading

• Why these 3 experts aren’t worried about the tumbling Bitcoin price
• Bitcoin suffers largest correction since March 2020
• Why I’m loving this ASX bank share at the moment: fundie
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Could this be a once-in-a-lifetime buying opportunity for ASX tech shares?

Mitchell Lawler owns shares of Bitcoin and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin and Tesla. 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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ASX investors are waking up to the possibility that maybe, just maybe, inflation won’t remain humbly muted for as long as the world’s central bankers are forecasting. A scenario that could see interest rates rising sooner than promised.

Along with launching a massive quantitative easing (QE) program, the Reserve Bank of Australia (RBA) joined the US Federal Reserve and other leading central banks in slashing interest rates to near zero in an effort to revive economies knocked down by the global pandemic.

While that’s largely proven effective, a growing number of investors appear to doubt the central banks’ claims that resurgent inflation won’t force them to raise official interest rates before 2024.

For some insight into just how much money is looking for protection against rising inflation, we turn to the TIPS market.

Why inflation wary ASX investors should follow the TIPS

If you’re not familiar with TIPS, it stands for Treasury Inflation-Protected Securities, issued by the United States government.

And the TIPS market is booming, reaching some US$1.6 trillion.

As Bloomberg reports:

Heightened fears about the risk of raging consumer-price gains as growth rebounds are driving investors of all stripes to search for cover in Treasury Inflation-Protected Securities, a market that’s grown to $1.6 trillion.

Last week the 5-year inflation outlook in the US reached 2.82%. That’s the highest level since 2005. As far as where inflation is really heading in the near term, that appears to be anyone’s guess.

Gang Hu, at New York based hedge fund WinShore Capital Partners, is keeping a keen eye on this Thursday’s US$13 billion auction of the inflation-linked debt by the US government.

According to Hu:

Nobody actually has a very good handle on where near-term inflation prints will land, and it’s thrown everyone off their game. There’s a lot of noise in the recent prints and this is not over yet. There’s no way anyone can be very confident about what the next two or three prints will bring.

ASX 200 slides on inflation fears

Many analysts and economists remain confident that the inflation showing up in developed economies is transitory and likely to fade within 12 months. But that didn’t stop investors from hitting the sell button last week.

After hitting an all-time closing high last Monday, the S&P/ASX 200 Index (ASX: XJO) finished the week down 2.2%.

More reading

• 2 buy-rated ASX growth shares for investors this week
• Why these ASX shares just raced to 52-week highs
• Forget Dogecoin! Here are 2 ASX dividend shares to buy for income today
• Why the Nuix (ASX:NXL) share price just hit its lowest level ever
• HomeCo (ASX:HMC) share price rises on latest acquisitions

Motley Fool contributor Bernd Struben 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 a growth investor, then you’re in luck. The local share market is home to a number of top companies that have the potential to grow strongly in the future.

Two top ASX growth shares that have been tipped as buys are listed below. Here’s why they are highly rated:

IDP Education Ltd (ASX: IEL)

IDP Education is a provider of international student placement and English language testing services. While it has been hit hard by the pandemic, it has been tipped to come out of the crisis in an even stronger market position. This could make it a big winner when trading conditions return to normal. Particularly given its investment in software, which appears to have given it another edge over the competition.

Last week analysts at Morgans put an add rating and $28.48 price target on the company’s shares. While the broker acknowledges that the awful COVID-19 outbreak in India is a headwind, it still believes the risk is to the upside for its earnings. This is due to pent-up demand and marger and acquisition opportunities.

ResMed Inc. (ASX: RMD)

Another growth share to look at is ResMed. This sleep treatment-focused medical device company has been growing at a solid rate for a decade. And thanks to its industry-leading products, growing software business, and the increasing awareness of sleep disorders, it looks well-placed to continue this trend over the next 10 years.

Particularly given its long runway for growth. Management estimates that there are ~1 billion people suffering from sleep apnoea worldwide, with only ~20% of these sufferers currently diagnosed. ResMed also appears well-placed to benefit from the shift to home healthcare thanks to its investments in the space.

Credit Suisse is a fan of ResMed. It recently put an outperform rating and $29.00 price target on its shares.

More reading

• 2 buy-rated ASX 200 blue chip shares
• 2 top ASX shares rated as buys this week
• Leading brokers name 3 ASX shares to buy today
• 2 fantastic blue chip ASX 200 shares rated as buys
• What do brokers think of the ResMed (ASX:RMD) share price dip?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The market may be up over 5% since the start of the year, but a number of shares have performed materially better.

Three ASX shares that have just hit 52-week highs or better are listed below. Here’s why they are flying high:

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price hit a record high of $11.59 today. When the quick service restaurant operator’s shares reached that level, they were up 21% since the start of the year. Investors have been buying the company’s shares since the release of its half year results late last year. Strong demand led to the company reporting an 11.3% increase in revenue compared to the prior corresponding period to $499.6 million. And on the bottom line, underlying net profit after tax came in 15.1% higher at $27.5 million. Collins Foods is due to release its full year results next month. Judging by its share price performance, Investors appear to be expecting a strong result.

Kathmandu Holdings Ltd (ASX: KMD)

The Kathmandu share price climbed to a 52-week high of $1.49 on Monday. Investors have been buying the adventure retailer’s shares since the release of a strong half year result in March. For the six months ended 31 January, Kathmandu reported a 12.9% increase in sales to NZ$410 million and a 19% jump in operating earnings to NZ$48 million. A key driver of this growth was its Rip Curl business, which has helped diversify its offering. Particularly in respect to seasonality.

Moelis Australia Ltd (ASX: MOE)

The Moelis share price reached a 52-week high of $5.85 earlier today. The catalyst for this was the release of the fund manager’s operational update last week. According to the release, during the first four months FY 2021, Moelis has achieved strong net fund inflows of $340 million and grown its assets under management by 7% to $5.8 billion. In addition to this, the company reaffirmed that it expects to report underlying earnings per share growth of 10% to 20% in FY 2021.

More reading

• Here’s why the Moelis (ASX:MOE) share price has lifted today
• Why Humm, Moelis, Orica, & Treasury Wine shares are storming higher
• 3 quality mid cap ASX shares rated as buys
• 2 high quality ASX shares for your retirement portfolio
• Popeyes down under? Collins Foods’ (ASX:CKF) KFC may have a new competitor

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods 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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Cryptocurrencies are a popular investment right now. But whilst cryptos like Dogecoin (CRYPTO: DOGE) have offered up some mind-blowing capital gains recently, they certainly don’t do well in the dividend department. And that makes them pretty useless for investors who are aiming to maximise income.

ASX shares, on the other hand,  have always been a fertile hunting ground for income-producing investments. Dividends, along with franking credits, can be a great way of boosting your passive income. It can also be used to turbocharge your investing returns by reinvesting dividend income for more dividends down the road. But some ASX shares are better than others in this respect. So here are two ASX shares to consider for dividend income today.

Washington H. Soul Pattinson & Co. Ltd (ASX: SOL)

The first ASX dividend share to consider today is Washington H. Soul Pattinson. Soul Patts is a rather special dividend share, as it happens to hold the ASX record for the longest streak of dividend increases. Yep, Soul Patts has raised its dividend every year since the year 2000. Thus, if an investor has held shares that whole time, then it would be a very useful company to own from an income perspective. Not too many ASX shares out there give you an annual pay rise.

Soul Patts is an industrial conglomerate. It actually functions more like an investment fund itself, rather than a traditional ASX company. It holds large chunks of other ASX shares, such as TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), and Brickworks Limited (ASX: BKW). On current pricing, Soul Patts offers a trailing dividend yield of 2.06%, or 2.94% grossed-up with full franking.

Telstra Corporation Ltd (ASX: TLS)

Telstra might still conjure up some bad feelings from investors who have owned this ASX telco for more than a few years. And fair enough. Telstra has not had a kind decade thrust upon it. The NBN rollout and changing dynamics in the telco space have changed the playing field for Telstra since its privatisation in the 1990s. And Telstra’s share price depreciation over the past decade, as well as cuts to its raw dividend, have been painful for long-term owners.

However, saying that, things seemed to have turned a corner at Telstra. It has managed to keep its dividend steady at 16 cents per share for a while now, even through the tumultuous year we had last year. Its 5G rollout is going well, which may even open up a lucrative new earnings stream over the next few years. And the Telstra share price has put on close to 30% since late October last year. On current pricing, Telstra’s dividend is worth a healthy yield of 4.65%, or 6.64% grossed-up with full franking.

More reading

• Why is the Telstra (ASX:TLS) share price falling today?
• Why I’m loving this ASX bank share at the moment: fundie
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 2 quality ASX dividend shares for income investors
• Top brokers name 3 ASX dividend shares to buy today

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and 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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Shares in Nuix Ltd (ASX: NXL) have reached their lowest point ever today, following media articles questioning the company’s governance and business activities. At the time of writing, the Nuix share price is trading at $3.17, down 8.65% from Friday’s close.

That’s a slight improvement on the software company’s all-time low of $3.06, which it hit earlier today.

The media articles were published by Fairfax outlets early this morning. They are reportedly the result of a joint investigation by the Australian Financial Review, The Age, and The Sydney Morning Herald. According to the publications, the reports are based on a number of interviews with staff and former staff, as well as confidential internal documents.  

Nuix defended itself against the claims, saying the company has a “proud history” of conforming with regulators. Nuix also declared that the allegations were largely based on testimonies from unnamed sources.

Let’s take a look at the media storm seemingly dragging on the Nuix share price today.

Media storm

Much of the reporting published by the Fairfax outlets discuss Nuix founder, Tony Castagna.

Castagna was charged with money laundering and tax evasion in 2018 but was acquitted the following year.

The reports claim Castagna was hired as a consultant at Macquarie Group Ltd (ASX: MQG)’s Macquarie Bank in 1998. He was later asked to manage Nuix, in which Macquarie held a significant investment.

According to the Fairfax publications, Castagna left Nuix’s board the day its ASX float prospectus was launched. The outlets further state that few retail investors would have been aware that Castagna was involved with Nuix.

The reports also allege in the years prior to Nuix’s float, its board launched a coup attempt at CEO Rod Vawdrey. Further, the articles questioned the company’s culture and the disclosure of its finances.

According to the publications, ASIC was warned by a director of Aperion Law on behalf of one of its clients that Nuix’s prospectus needed to be investigated.

The law firm was quoted in the reports as saying:

There is a risk that financial errors or mismanagement by Nuix, including but not limited to: errors in financial reporting practices or the accounting treatment of certain transactions; the incorrect interpretation of accounting standards or incorrect tax calculations.

The publications stated that ASIC then monitored Nuix’s initial public offering (IPO). Finally, the articles listed the profits made by Macquarie, Castagna, and Vawdrey as a result of Nuix’s float.

Nuix’s response

While the Nuix board stated it wasn’t going to respond to every allegation published by the Fairfax outlets, it did respond to a number of claims.

Nuix responded to the reports’ mentions of Castagna, saying:

Tony Castagna was a founder of the company and a large part of its success. Mr Castagna was acquitted of charges relating to his personal tax affairs in 2019. He has provided consulting assistance to the company.

The board also defended the company’s culture and lawfulness. It said:

Nuix has in place robust processes to measure forward indicators of performance in order to ensure that it keeps the market fully informed and has done so on a timely and regular basis. Nuix is committed to the highest standards of corporate governance…

The Board recognises and prizes Nuix’s strong corporate culture and high calibre leadership. Nuix continues to add to the considerable skills and experience of the existing executive team as it pursues its growth agenda… The effectiveness, dedication and stability of the Nuix leadership team over many years has been at the heart of the company’s ongoing success in winning new customers and in growing the value of the order book and pipeline.

Nuix share price snapshot

Nuix shares have fallen significantly during their first few months on the ASX.

Since it floated on 4 December 2020, the Nuix share price has plunged by around 60%.

Nuix has a market capitalisation of $1.1 billion, with approximately 317 million shares outstanding.

More reading

• Why Carsales, Incitec Pivot, Infinity Lithium, & Nuix shares are sinking
• These ASX tech shares are down 50% from their 52-week highs
• Could the ANZ (ASX:ANZ) share price have an edge against other banks?
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Macquarie (ASX:MQG) share price unfazed amid questions over climate conflict

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. recommends Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Nuix Pty 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 Home Consortium Ltd (ASX: HMC) (HomeCo) share price is edging higher today. At the time of writing, shares in the diversified landlord are swapping hands for $4.65. That’s up 2.42%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.28% higher.

HomeCo comes into focus after the company announced $133 million worth of property acquisitions to seed its soon-to-be real estate investment trust (REIT), HealthCo.

Let’s take a closer look at today’s news and what it means for the HomeCo share price.

What’s affecting the HomeCo share price today?

In its statement, HomeCo advised it has purchased 3 properties for HealthCo at a combined value of $133.2 million. The includes $110 million for the purchase of a “health hub” in Morayfield on Queensland’s Sunshine Coast. The remaining $23.2 million is for the purchase of two childcare centres, one in Brisbane and one in Sydney.

HealthCo’s total portfolio value is currently $480 million with another $300 million worth of properties under due diligence.

Last month, HomeCo said it was doubling the equity raise for the proposed trust to $1 billion. The company expects HealthCo to be established by the first half of FY22.

Judging by the HomeCo share price lift, it appears that investors welcome today’s news.

Morayfield Health Hub

HomeCo says the $110 million purchase price for the Morayfield Health Hub represents a capitalisation rate of 5.4%. Services at the property include a GP clinic, pharmacy, radiologist, and allied health services. There are also childcare services at the centre.

The sale will only be approved when the vendor’s unitholders vote to approve it.

According to the company, the Sunshine Coast is one of the fastest growing regions in Australia. In 2020, the population of the region grew 1.64%, national growth was only 0.9%.

Childcare centres

HomeCo is also purchasing childcare centres in Brisbane and Sydney for the HealthCo portfolio. The Brisbane centre is located 3km from the CBD in Woolloongabba and was purchased for $13 million. The purchase price reflects a capitalisation rate of 5.5%. Childcare provider Busy Bees is the current tenant at the property.

The other centre is located in Five Dock, a suburb in Sydney’s Inner West. The sale should settle at the end of this month for a price of $10.2 million, which reflects a capitalisation rate of 5.5% as well. The current tenet is G8 Education Ltd (ASX: GEM) subsidiary, Greenwood.

Property sales

As well as acquisitions, HomeCo announced a number of property sales. In Morayfield, HomeCo sold a shopping centre for $28.4 million. The company says this figure is 3.5% higher than the property’s book value on 31 December 2020. HomeCo previously announced the sale of a shopping centre in Bathurst, NSW for $17 million.

HomeCo’s direct ownership of shopping complexes has dropped to $154.6 million. In its statement, the company says it will continue to look at asset recycling opportunities, to “deliver optimum long term security holder returns”.

Management commentary

HomeCo managing director and CEO David Di Pilla said:

We remain on track to establish HealthCo later this year and today’s update further demonstrates our ability to source high quality assets which are well suited to the model portfolio strategy we announced last month for HealthCo.

Pleasingly, we continue to execute our strategy in a capital efficient manner through active capital recycling. Our balance sheet is well capitalised with minimal debt, providing us with significant capacity to secure additional assets for HealthCo including several which are currently under due diligence.

HomeCo share price snapshot

Over the past 12 months, the HomeCo share price has increased 87.2%. Since hitting its record high of $5.25 at the end of April this year, the value of the company’s shares has fallen 12%.

Home Consortium has a market capitalisation of around $1.3 billion.

More reading

• These ASX childcare shares slumped despite Budget news

Motley Fool contributor Marc Sidarous 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week on a positive note. At the time of writing, the benchmark index is up 0.4% to 7,040.4 points.

Four ASX shares that have failed to follow the market higher are listed below. Here’s why they are sinking:

Carsales.Com Ltd (ASX: CAR)

The Carsales share price is down 10.5% to $17.45. This follows the successful completion of the institutional component of its $600 million pro rata accelerated renounceable entitlement offer. Carsales raised $428 million at a 12.9% discount of $17.00. The auto listings company will now seek to raise a further $172 million from retail shareholders. These funds are being used to acquire a 49% stake in United States-based business Trader Interactive.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is down 3% to $2.34. This follows the release of a weaker than expected half year result. The industrial chemicals company posted a 6.7% decline in revenue to $1,724.1 million and a 30.8% decline in earnings before interest and tax (EBIT) to $110 million. According to a note out of Goldman Sachs, its analysts were forecasting revenue of $1,825 million and EBIT of $171 million.

Infinity Lithium Corp Ltd (ASX: INF)

The Infinity Lithium share price has crashed 66% lower to 6.5 cents. Investors have been selling the lithium explorer’s shares following an update on its San José Lithium Project in Spain. According to the release, Infinity Lithium has received notification that the Investigation Permit Valdeflorez (PIV) application has been cancelled at the project. This was due to the urban unfeasibility of the research permit. This essentially means the project has been deemed to be too close to the local town. Infinity Lithium will appeal the decision.

Nuix Ltd (ASX: NXL)

The Nuix share price is down 8% to $3.18. This follows a joint investigation by The Sydney Morning Herald, The Age, and The Australian Financial Review. That investigation raises questions about the technology company’s governance and financial accounts. Nuix has responded by defending its business and processes. It commented: “Nuix has in place robust processes to measure forward indicators of performance in order to ensure that it keeps the market fully informed and has done so on a timely and regular basis.”

More reading

• These ASX tech shares are down 50% from their 52-week highs
• Why the Infinity Lithium (ASX:INF) share price is crashing 67% lower
• ASX 200 up 0.45%: Carsales sinks 10%, Aristocrat Leisure jumps
• Carsales (ASX:CAR) share price down 7% after raising $428 million
• Incitec Pivot (ASX:IPL) share price sinks 5% on half year update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended carsales.com Limited and Nuix Pty 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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It’s no secret that the ASX tech shares have not had the easiest of months. Or the easiest of years so far, come to think of it. After a blazing 2020, and 2019 before that, investors have been doing some hardcore profit-taking over the past month or two. As a guiding light, the S&P/ASX All Technology Index (ASX: XTX) is down 13.5% in 2021 so far.

But some ASX tech shares have fared far worse than that. Here are 4 such shares that are now down 50% or more from their 52-week highs today.

Afterpay Ltd (ASX: APT)

Afterpay has copped a beating over the past month or so. After topping out at $160 a share back in February, Afterpay is today trading at $85.55 a share. That’s a drop of 46.5% (ok, not quite 50%, but tomayto, tomato). It’s also the lowest level the buy now, pay later pioneer has hit since October last year. Even so, Afterpay reported some breakneck numbers in its recent quarterly update, so perhaps some investors might be thinking this sell-off is overdone. Only time will tell.

Zip Co Ltd (ASX: Z1P)

Afterpay’s fellow BNPL provider, Zip has also been getting hammered of late. After rising as high as $14.53 a share back in February, Zip is now exploring prices around the $7 mark today. As some quick maths might tell you, that’s a drop of just over 51%. Like Afterpay, Zip seems to have been caught up in a sharp reduction in the leniency investors seem willing to extend to high-growth businesses like Zip right now.

Appen Ltd (ASX: APX)

Appen is another ASX tech share that has not been feeling the love of late. In fact, Appen investors have suffered far more than the above two companies. This human-annotated dataset company topped out at $43.66 back in August last year. But it has been down, down for Appen ever since. Today, the shares are asking for a price of just $11.12, a massive ~75% loss from its old high. Investors seem to have been royally spooked by a series of updates from the company. These indicate a rocky road for its earnings growth prospects over the next few years.

Nuix Ltd (ASX: NXL)

A final poor ASX tech performer in recent times is this newer addition to the ASX. Nuix is a tech company that specialises in consumer data. It hit the ASX boards last year in a much-trumpeted IPO in December. But things have not been kind to Nuix since. It traded at a price of roughly $8 on its IPO day and even got up to a high of $11.86 a share in January. But today, Nuix is swapping hands for $3.09 at the time of writing. That’s an Appen-esque drop of more than 72%. Revised earnings guidance and internal issues seem to be behind this company’s s poor post-IPO performance.

More reading

• The Appen (ASX:APX) share price is 75% lower than its 52-week high
• US market bounces back, ASX 200 tech shares on watch
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Has COVID-19 killed the ASX WAAAX shares?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Appen Ltd, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty 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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S&P/ASX 200 Index (ASX: XJO) retail shares stand to be among the big beneficiaries of the new Federal budget, according to one fund manager.

The budget, unveiled last week, is widely seen as offering something to almost everyone… except for Australia’s future taxpayers.

Indeed, the government is opening the spending taps wide. So wide, that AMP Capital’s chief economist, Shane Oliver, estimates total government spending (spent and projected) since the early days of the COVID-19 outbreak has now hit around $350 billion. (More budget coverage here.)

Commenting on the Federal budget, Ophir Asset Management senior portfolio manager Andrew Mitchell said (quoted by the Australian Financial Review):

It was certainly a spendathon, and the Frydenberg treasury will likely go down as one of the biggest spenders in history. This perhaps shouldn’t be surprising as they have an election to win and an economy that still needs to play catch-up due to COVID-19.

Mitchell said he was caught off-guard by the government’s decision to extend the $7.8 billion low and middle-income tax offset for an extra year. Some 10 million taxpayers are eligible for the end-of-year rebate of up to $1,080.

He added, “The boost to household consumption…should see retailers remain strong.”

Two of the ASX 200 retail shares Mitchell singled out that should benefit are Harvey Norman Holdings Ltd (ASX: HVN) and JB Hi-Fi Ltd (ASX: JBH).

Cashed up consumers

It’s not just the latest extension of tax cuts that look set to offer another tailwind for ASX 200 retail shares.

Australian consumers also remain cashed up on the back of temporary boosts to JobSeeker and the recently terminated JobKeeper program. And with domestic borders only now fully reopening and international travel restrictions remaining in place, many consumers haven’t been spending as much as they would have in ‘normal’ times.

Which brings us back to…

Two ASX 200 retail shares tipped to benefit

Over the past full-year, JB Hi-Fi has handily outperformed the benchmark. Shares in the consumer electronics retailer are up 43% in 12 months. By comparison, the ASX 200 gained 29% in that same time. Year-to-date the JB Hi-Fi share price has gone the other direction, slipping 2% so far in 2021.

At the current price of $48.74 per share (up 3% in intraday trading today), JB Hi-Fi has a market cap of $5.6 billion. The ASX 200 retail share pays a dividend yield of 5.54%, fully franked.

Harvey Norman’s share price is also marching higher today.

Shares in the discretionary retailer are up 2% in intraday trading giving shareholders an 86% gain over the past 12 months. Harvey Norman is beating the benchmark in 2021 as well, with shares up 11% in 2021.

At the current price of $5.29 per share, Harvey Norman has a market cap of $6.6 billion and pays a dividend yield of 7.20%, fully franked.

More reading

• 2 ASX dividend shares to buy with yields above 4%
• The ASX shares poised to benefit from new spending in the 2021 federal budget
• JB Hi-Fi (ASX:JBH) share price lower despite new appointment: Time to buy?
• ASX 200 Weekly Wrap: Shares have average week but a great month
• Retail just changed. Forever…

Motley Fool contributor Bernd Struben 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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