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It wasn’t a great day for the Hexagon Energy Materials Ltd (ASX: HXG) share price, sinking 10% to 13 cents by the close of trade. This comes after the company came out of a trading halt today, announcing it had successfully completed a placement.

Let’s take a closer look at the company update.

Placement to fund Pedirka

It appears investors are selling Hexagon shares and heading for the hills as the company faces an impending share dilution.

In today’s release, Hexagon Energy advised it has received $6.2 million in firm commitments by a way of placement. The offer was heavily subscribed by institutional and sophisticated investors at an issue price of 11 cents per share. The new fully-paid ordinary shares represent a 9.5% markdown to the 30-day volume-weighted average price (VWAP).

The company will alot more than 56.3 million shares using its 15% placement capacity under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval.

Settlement of the shares is expected to occur on or around 5 May 2021.

What’s the plan?

The funds raised will be primarily used towards completing the pre-feasibility study (PFS) and accelerating the Pedirka Blue Hydrogen project. In addition, the company will allocate remaining monies to other project obligations and for working capital purposes.

Hexagon highlighted that it has conducted several meetings with Genesis regarding project planning and timing of the PFS. The discussions have proved positive, with “substantial cost savings for the PFS program from initial budget estimates” which the company said significantly lowered the amount of funding required to complete the study.

In what may be a possible catalyst affecting the Hexagon Energy share price, the company also noted that “incorrect media reports” have been circulating. Recently, Hexagon Energy announced it has selected Air Products to become a key technology provider for the Pedirka project. However, there was a misunderstanding that both companies were in a contract, partnership or financial arrangement.

Hexagon Energy reiterated that a formal engagement between the parties will come to fruition if the PFS progresses and becomes viable. It further explained that there are multiple options for technical providers in all aspects of the Pedirka project.

What did management say?

Hexagon Energy chair, Charles Whitfield touched on the successful capital raise, saying:

We were delighted at the very strong level of interest shown by both existing and new investors in this capital raise opportunity…

With this capital in place, the work on Pedirka can be accelerated and the team is exceptionally excited about the months ahead.

About the Hexagon Energy share price

Despite today’s significant fall, the Hexagon Energy share price has jumped almost 100% in the past 12 months. Looking at year-to-date performance, the company’s shares are sitting above a 130% gain.

Hexagon Energy commands a market capitalisation of roughly $50 million, with approximately 389.6 million shares on issue.

More reading

• The Hexagon Energy (ASX:HXG) share price powers up 41% today

Motley Fool contributor Aaron Teboneras 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 S&P/ASX 200 Index (ASX: XJO) was essentially flat at 7,029 points.

Here are some of the highlights from the ASX:

Westpac Banking Corp (ASX: WBC)

The Westpac share price went up more than 5% today in reaction to the bank’s half year result which showed a strong recovery of profit.

The big four ASX bank reported that its statutory profit increased by 189% to $3.44 billion. Cash earnings increased 256% to $3.54 billion. First half earnings were largely higher because of an impairment benefit of $372 million.

Excluding notable items, cash earnings went up 60% to $3.82 billion. The net interest margin (NIM) fell 4 basis points to 2.09% whilst the common equity tier 1 (CET1) ratio rose another 153 basis points to 12.34%.

The Westpac board decided to pay an interim dividend of $0.58 per share.

The ASX 200 bank plans to fix its risk governance as well as simplify the business. That includes the target of an $8 billion cost base by FY24 to materially improve its efficiency.

Westpac CEO Peter King said on the outlook:

Most significantly, unemployment is falling and there are more people employed now than pre-COVID. A strong labour market will continue to support growth in the economy.

While challenges remain, we expect the Australian economy to expand by 4.5% in 2021, supporting a 4.6% increase in total credit with residential lending expanding 6.5%.

New lending for housing has surged, up 49% over the past year, including a 75% jump from the May 2020 low. While most interest has been from owner occupiers, investors are beginning to return to the market, with investor lending up 31% over the four months to February.

Premier Investments Ltd (ASX: PMV)

The Premier Investments Limited (ASX: PMV) share price fell 1.6% after the retailer announced it was returning the jobkeeper money it had received.

Premier Investments previously said that it was keeping the jobkeeper money to pay the wages of employees who may be stood down under future state government mandated COVID-19 lockdowns.

During the recent Queensland and WA lockdowns, the company used the jobkeeper funds to keep people in jobs and pay the full time and part time team members their contracted hours whilst they were stood down and unable to attend work.

Critically, the ASX 200 company said, following the lockdowns and upon reopening, increasing trading from the combined states has fully offset the cost of supporting the teams through the lockdowns. Premier said that jobkeeper funds were not required to support the teams.

After looking at these outcomes, and the Australian success of managing COVID-19, the board decided to refund the net jobkeeper benefit of $15.6 million to the ATO.

Subject to macro economic trading conditions remaining stable and no further COVID-19 lockdowns, and after accounting for the ATO $15.6 million repayment, Premier is confident in its ability to meet the market consensus of Premier Retail’s FY21 earnings before interest and tax (EBIT) pre-AASB 16 of $318 million.

ELMO Software Ltd (ASX: ELO)

The HR software business announced today the launch of its new predictive people analytics module for customers.

This module was developed in collaboration with the University of Technology Sydney. It utilises artificial intelligence to predict employee behaviour as well as providing “insightful data visualisation tools”.

One of the examples of the uses of this software is that it identifies high-performing employees who might be a “flight risk”.

ELMO said that the new module further strengthens ELMO’s value proposition and will provide an additional revenue stream.

More reading

• 2 of the best ASX 200 blue chip shares to buy today
• Here’s how much the Westpac (ASX:WBC) dividend is worth now
• The A2 Milk (ASX:A2M) share price is up 5% in 5 days. Can it go higher?
• Why is the Telstra (ASX:TLS) share price rising today?
• Why Dubber, PointsBet, Starpharma, & Westpac shares are storming higher

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Elmo Software. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking for blue chip ASX 200 shares to buy, then you might want to check out the ones listed below.

These quality companies could have the potential to grow strongly over the next decade, which could lead to their shares generating market-beating returns for investors. Here’s why they have been rated as buys:

REA Group Limited (ASX: REA)

The first blue chip ASX 200 share to look at is this property listings company.

Trading conditions have not been easy for REA Group over the last few years. However, thanks to the resilience of its business model and dominant market position, it has delivered growth despite dealing with a mini housing market crash and the pandemic.

The good news is that the housing market is now booming and demand for listings looks set to increase. Combined with price increases and new revenue streams, this bodes well for its earnings growth in the coming years. 

Morgan Stanley is particularly positive on the company. It recently put an overweight rating and $175.00 price target on its shares. This compares to the latest REA Group share price of $157.00.

Wesfarmers Ltd (ASX: WES)

Another blue chip ASX 200 share to look at is Wesfarmers. This leading conglomerate owns and operates a diverse group of businesses across several sectors. This includes the likes of Bunnings, Catch, Covalent Lithium, Kmart, Officeworks, and Target.

But it may not stop there. The company has a penchant for acquisitions, and thanks to its strong financial position, it is quite likely that it will be adding to its portfolio in the near future.

In fact, according to a recent note out of Goldman Sachs, its analysts believe Wesfarmers has over $8 billion in excess of credit requirements, prior to the Mt Holland development. This gives it a lot of firepower when considering its next acquisition(s).

Goldman currently has a buy rating and $59.70 price target on the company’s shares. This compares to the current Wesfarmers share price of $53.78.

More reading

• REA (ASX:REA) share price eyes new record highs after running 10% in April
• ASX 200 Weekly Wrap: Shares have average week but a great month
• These ASX 200 shares are tracking the Aussie economy higher in 2021
• Wesfarmers (ASX:WES) share price on watch as Bunnings buys Beaumont Tiles
• Why Zip (ASX:Z1P) and these ASX shares are rated as buys

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

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With plenty of positive news to drive them, shares in Vulcan Energy Resources (ASX: VUL) have been having a party on the ASX lately.

At the time of writing, the lithium developer’s share price has gained 32% in 30 days, despite trading 5% down today. Currently, shares in the company are swapping hands for $7.81.

Vulcan Energy is a European lithium miner dedicated to creating the world’s first zero-carbon lithium. It owns Europe’s largest lithium resource in Germany and aims to provide lithium for the electric vehicle and renewable energy markets.

Let’s take a look at what’s been moving the Vulcan share price lately.

Vulcan Energy’s astonishing April

Vulcan has had a busy month on the ASX, to which its share price has reacted positively.

First up, it powered up its direct lithium extraction pilot plant. The company hopes the plant will prove that it’s possible and economical to extract lithium from geothermal brine.

Vulcan said it planned to use data from its pilot plant to determine whether it could build a larger plant to scale up its extraction method. The news drove the Vulcan Energy share price to gain 20% over the course of the week.

Not too long afterwards, on 21 April, the Vulcan Energy share price hit a bump in the road. The company announced plans to disconnect and publicly list its non-core Scandinavian battery metals projects. Its zero-carbon copper, nickel and cobalt assets are to form another company, named Kuniko Limited.

Vulcan stated the spin-off will let it focus on its lithium assets. As a result, the Vulcan share price slumped a minuscule 0.8% over the course of the day. It had well and truly gained that back by the time the company made its next announcement.

Next, on 27 April, Vulcan announced it had entered into a binding agreement to purchase geothermal surface consultancy business, Global Engineering and Consulting Gmbh. The engineering and consulting company has a scientific team of 25 people.

Vulcan said the acquisition leaves it with an “unparalleled surface and sub-surface geothermal development team” to drive its zero-carbon lithium strategy. That day, the Vulcan share price closed 8% higher than the previous day.

Finally, Vulcan released its report for the quarter ended 31 March. The report contained a list of achievements the company had made over the quarter, including a $120 million placement.

Vulcan share price snapshot

The Vulcan share price is no stranger to strong performance, it’s been wowing ASX investors for a while now.

It’s currently up by 181% year to date. Not to mention, it’s up a whopping 3,614% over the last 12 months – this time last year Vulcan shares were trading for 21 cents.

Vulcan has a market capitalisation of around $890 million, with approximately 107 million shares outstanding.

More reading

• Why the Vulcan Energy (ASX:VUL) share price is charging 6% higher
• Why Bingo, Life360, Tabcorp, & Vulcan shares are storming higher
• Why the Vulcan (ASX:VUL) share price is surging 7%
• Vulcan Energy (ASX:VUL) share price slumps amid asset spin-off
• Why this broker thinks the Vulcan (ASX: VUL) share price can double again

Motley Fool contributor Brooke Cooper 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 Galaxy Resources Limited (ASX: GXY) share price was one of the best performers on the All Ordinaries index in April.

Over the 30 days, the lithium producer’s shares recorded an enormous 55% gain.

This stretched the 12-month gain by the Galaxy share price to a remarkable 450%.

Why did the Galaxy share price smash the market in April?

There were a couple of catalysts for the strong rise by the Galaxy share price in April.

The first was a further increase in lithium prices thanks to strong demand from electric vehicle manufacturers and concerns about supply.

But perhaps the main reason for the rise in the Galaxy share price was the announcement of a mega-merger with fellow lithium producer Orocobre Limited (ASX: ORE).

For the same reason, the Orocobre share price rose an impressive 42% over the month.

The Galaxy-Orocobre merger

In the middle of April, Galaxy and Orocobre announced a proposed $4 billion merger of equals that will establish a new force in the global lithium sector.

The merger will create the fifth largest global lithium chemicals company, with a diversified production base and exciting growth platform.

Management also advised that that it believes there is scope to unlock significant synergies and realise value for all shareholders.

The merged company, which will operate under a new name, will have Galaxy’s Chairman, Martin Rowley, as its Non-Executive Chairman and Orocobre’s Chairman, Robert Hubbard, as its Deputy Chairman.

Leading the company will be Orocobre’s CEO and Managing Director, Martín Pérez de Solay. Galaxy’s current CEO, Simon Hay, will become President of International Business.

What was the reaction?

The merger went down well with analysts at Macquarie. Following its announcement, the broker put an outperform rating and $4.50 price target on its shares. This compares very favourably to the current Galaxy share price of $3.88.

Its analysts also have an outperform rating and $7.10 price target on Orocobre’s shares. This compares to the latest Orocobre share price of $6.68.

More reading

• Why ASX lithium shares like Orocobre (ASX:ORE) soared in April
• The Core Lithium (ASX:CXO) share price jumped over 11% today
• Why the Orocobre (ASX:ORE) share price is at a 52-week high
• ASX lithium shares are soaring. Is it too late to jump onboard?
• Brokers weigh in on Galaxy (ASX:GXY) and Orocobre (ASX:ORE) merger

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. 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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It was one step forward and two steps back for the Qantas Group Ltd (ASX: QAN) share price in April. Shares in the airline finished the month 3% lower, with the market seemingly unphased by its positive business update on 15 April.

The Qantas share price is at a standstill as domestic capacity is expected to surpass pre-COVID levels while vaccine delays continue to delay the topic of international travel.

Qantas shares have seemingly gone nowhere since a 10% jump to $5.20 on 10 November 2020. This was driven by the initial trial results for the Pfizer vaccine which showed an efficacy rate of more than 90%. 

At the time of writing, the Qantas share price is down 0.3%, trading at $4.93. Let’s check in with the airline.

Domestic travel is good but … 

Qantas’ business update announced that fourth-quarter capacity was expected to reach more than 90% of pre-COVID capacity by 4Q21 and more than 100% in FY22.

Despite the positive news for its domestic travel, Morgan Stanley notes that the impact on profit is relatively small. 

International travel is key 

Qantas CEO Alan Joyce has said in regards to international travel that: 

The vaccination program is absolutely key to restarting international flights in and out of Australia. While there have clearly been some speedbumps with the vaccine rollout, we are still planning for international flights to resume in late October.

Despite the positive commentary, the resumption of international travel is entirely out of Qantas’ control. 

Brokers such as Ord Minnett reduced their international capacity assumptions back in mid-April to reflect the revised timeline of vaccinations.

Whereas Macquarie said it would continue to monitor vaccine roll-outs in key destinations such as the United States and Singapore that formed a significant proportion of the company’s available seat kilometres. 

Brokers are bullish across the board 

It isn’t often that brokers share the same view on a stock. But across Ord Minnett, Morgan Stanley, Macquarie, Citi and UBS, all five brokers maintain a buy or buy-equivalent rating for the Qantas share price with an average target price of $6.13.

This would represent an upside of approximately ~23% compared to today’s price of $4.93.

More reading

• This ASX airline you never heard of could see 40% earnings boost
• Are ASX travel shares about to go through a big recovery?
• Brokers favourite ASX share for the COVID-19 reopening trade
• 5 things to watch on the ASX 200 on Wednesday
• Australia-NZ bubble now open! The 4 ASX shares impacted

Motley Fool contributor Kerry Sun 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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Beach Energy Ltd (ASX: BPT) shares fell off a cliff on Friday after the company announced poor production figures and a downgrade in oil reserves in its third-quarter results. Its shares are down almost 24% since Thursday to $1.285 and are not far off their March 2020 lows of $1.150. 

With oil prices remaining relatively steady at US$63 per barrel and a rebound in the global economy as vaccination programs are underway, could there be value in the heavily discounted Beach Energy share price? 

Brokers weigh in on the Beach Energy share price 

Citi: slight upside but nothing exciting 

Beach Energy’s underperformance was led by its West Flank operations says Citi. This resulted in a downgrade to its 2P reserves for the project by 24.8 million barrels of oil equivalent (mmboe) and the withdrawal of its 5-year guidance. Post downgrade, Citi expects the company’s FY21 earnings to fall by approximately 23%. 

Despite the significant share price weakness, the broker believes there is a lack of growth catalysts to inspire any significant upside. A neutral rating was retained with the target price cut from $1.88 to $1.42. This is, however, still 10.5% higher than the current share price. 

Macquarie: outperform but wary of impairments and guidance withdrawal

Macquarie has been anticipating some weakness from Beach Energy, but its downgrades beyond the Bauer facility came as a major surprise. The broker warns that the withdrawal of guidance and potential for impairments in August could serve as an overhang and drag the share price in the near term. 

Macquarie retained its outperform rating for Beach Energy given the stock’s 25% fall and reduced its target price from $2.10 to $1.75. This represents a significant upside of approximately 36% from today’s prices. 

Morgans: share price discount drives add rating 

Similar to Macquarie, Morgans retained an add rating but lowered its target price from $2.20 to $1.82 as production forecasts fall and capital intensity increases at Western Flank. This represents an optimistic 41% upside to the current Beach Energy share price. The broker did note, however, that the company lowered FY21 earnings by 5%, which implies increasing operating costs.

More reading

• ASX 200 Weekly Wrap: Shares have average week but a great month
• These were the worst performing ASX 200 shares in April
• These were the worst performing ASX 200 shares last week
• ASX 200 drops 0.8%, Pointsbet jumps, Beach sinks
• Why supply and demand is the enemy of ASX resources shares

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bitcoin (CRYTPO: BTC) price is up 2.7% over the past 24 hours. One Bitcoin is currently worth US$58,009 (AU$75,336).

That’s still down 10.5% from the all-time high of US$64,829, which the Bitcoin price hit last month. But longer-term holders won’t be complaining. The Bitcoin price is up 100% so far in 2021, and it’s gained 550% since this time last year.

In a gauge of its use, CoinMarketCap tells me that US$41.8 billion of Bitcoin have changed virtual hands over the last 24 hours.

CoinMarketCap also tells me that during this same time there were US$87 billion Tether transactions.

That’s right.

Tether, with a market cap of only US$52 billion, has seen twice as much volume over the past 24 hours as Bitcoin, which has a market cap of US$1.1 trillion.

How Tether is fuelling the Bitcoin price

The Tether price is… stable today. Tether has gained 0.01% over the past 7 days.

Which is all as its designers intended.

Tether, if you’re not familiar, is what’s commonly referred to as a stablecoin. A coin that’s generally backed by fiat currencies.

And if you look at Tether’s long-term price chart, you’ll see it’s lived up to its stable billing. With the exception of a brief dip to 91 US cents followed by a short-lived spike to US$1.04 back in 2017, Tether has broadly traded within 1–2 cents of US$1 since inception.

So how did this humble stablecoin become the most traded cryptocurrency on Earth? And how is it helping fuel the Bitcoin price rally?

That’s largely thanks to its inherent lack of volatility, which makes it an attractive crypto to own if you want to avoid the big price swings witnessed by most digital tokens.

It also has become the preferred method to buy and sell Bitcoin, with CryptoCompare estimating that Tether is used to buy some 66% of Bitcoin.

Nic Carter is the co-founder of Coin Metrics. According to Carter (quoted by Bloomberg):

At those offshore exchanges, Tether is the main collateral and margin type. Exchange volumes are way up and Binance volume is way up.

For traders to get access to these crypto-only exchanges, they often prefer a stablecoin like Tether. You can think of the supply of Tether as a transparent proxy for the balance sheet of both the crypto-only exchanges as well as the funds trading crypto on those exchanges.

So while your Tether holdings are unlikely to yield any more than your short-term savings account, Tether could be setting us up for the next rally in the Bitcoin price.

More reading

• Some takeaways from Warren Buffett’s Berkshire Hathaway meeting
• ASX 200 Weekly Wrap: Shares have average week but a great month
• Why the Ether price gains are outpacing Bitcoin’s price rise
• Tesla’s $293 million of free cash flow in Q1 was an incredible year-over-year improvement
• Is today’s soaring Dogecoin price an attractive bargain or a dangerous bubble?

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. 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 Aventus Group (ASX: AVN) share price is skirting higher during late afternoon trade following a debt refinance update.

At the time of writing, the retail property company’s shares are trading for $3.00, up 1%.

What did Aventus announce?

Aventus shares are pushing higher as investors digest the company’s latest refinancing efforts.

According to its release, Aventus advised that it has successfully completed a debt refinance of $660 million. This represents 80% of the group’s $820 million debt portfolio.

Aventus stated that the refinance saw 11 existing debt tranches repackaged into 6 larger tranches. While no repayments were made, the group extended the maturity date for the debt. Currently, Aventus’ next loan (for which the principal amount must be paid in full) won’t happen until January 2025.

As a result, the company’s weighted average debt expiry (WADE) will increase from 2.3 years to 4.5 years.

The interest rates of the new debt facilities are in line with the existing tranches.

Aventus noted that even with its latest refinancing, FY21 earnings guidance will remain the same.

Aventus chief financial officer Lawrence Wong touched on the company’s progress, saying:

We are pleased that the refinancing was strongly supported by our financiers and demonstrates their confidence in Aventus and the large format retail sector. This work significantly reduces any short-term refinancing risks and allows the Group to focus on key strategic initiatives.

Aventus continues to deliver on our capital management strategy with no near-term debt expiries, lower gearing, and strong debt serviceability and ample liquidity. This leaves the Group well positioned to capitalise on future growth opportunities as they arise.

Aventus share price snapshot

Over the last 12 months, Aventus shares have been on an upward trend, gaining around 75%. Year-to-date performance is edging closer to 10% as of today. It’s worth noting that the Aventus share price is within a whisker of reaching its all-time high of $3.05.

Based on the valuation metrics, Aventus has a market capitalisation of approximately $1.7 billion, with 568 million shares on issue.

More reading

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 two S&P/ASX 200 Index (ASX: XJO) blue chip shares in this article could be two of the best to think about.

Blue chips are the businesses that are among the biggest in the country in their respective industries. ASX 200 shares may be stronger in difficult times than their smaller counterparts.

After recent declines, these two businesses could be worth looking at:

Coles Group Ltd (ASX: COL)

Coles is one of the largest supermarket businesses in the country. We all need to eat, so it’s able to provide a pretty reliable set of earnings and dividends for investors.

The Coles share price is actually down by 14% since 8 January 2021, which largely happened because of the result release in reporting season. In the first half of FY21, it reported that sales rose 8.1% to $20.4 billion and earnings per share (EPS) went up 14.5% to 42 cents.

The supermarket business has seen elevated sales because of COVID-19 demand. Online sales in-particular had been strong with 61% growth over the six months.

However, the trouble for the ASX 200 blue chip share is that it’s now cycling against very strong sales in 2020 when COVID caused a lot of pantry stocking. In an trading update, it said that in the first six weeks of the third quarter, sales growth was just 3.3% and online sales growth was 37%. At the time, the business warned that sales and earnings before interest and tax (EBIT) could come under pressure.

The third quarter update proved this to be so. Third quarter Coles sales were down 5.1%, although over a 2-year period sales were up 7.2%.

However, growth is returning. In the first four weeks of the fourth quarter, sales were up 4%. It continues to invest for growth.

The Coles share price is valued at 21x FY21’s estimated earnings with an estimated grossed-up dividend yield of 5.5% according to Commsec.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is one of the largest fund managers in Australia. It’s currently rated as a buy by Morgans with price target of $58.26.

The Magellan share price is down 16% over the last six months. Its funds haven’t been performing strongly over the last six months as a result of difficulties for its tech share investments as well as the stronger Australian dollar.

However, Magellan’s funds under management (FUM) continues to go. This adds to the ASX 200 blue chip share’s management fees and profitability. At the end of March 2021 it had FUM of $106 billion. It continues to receive net inflows, with $206 million during March.

Morgans believes that Magellan’s long-term growth will be driven by new offerings as well as its new investments such as Barrenjoey. Magellan is currently working on a retirement product for retirees.

At the current Magellan share price, it’s valued at 19x FY22’s estimated earnings according to Morgans. It also has a projected FY22 partially franked dividend yield of 4.75%.

More reading

• The A2 Milk (ASX:A2M) share price is up 5% in 5 days. Can it go higher?
• Why is the Telstra (ASX:TLS) share price rising today?
• Morgans just added these ASX shares to its “best ideas” buy list
• ASX 200 up 0.25%: Westpac result impresses, PointsBet jumps
• Deterra (ASX:DRR) share price outperforms on royalty update

Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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