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It has been an unusually disappointing year for the CSL Limited (ASX: CSL) share price.

The biotechnology giant’s shares have thoroughly underperformed the market during this time and are trading significantly lower than their 52-week high.

In fact, with the CSL share price currently fetching $263.40, it is down 21% from its high of $332.68.

Why is the CSL share price under pressure?

The weakness in the CSL share price has been driven largely by concerns over plasma collection headwinds.

As well as being impacted by social distancing initiatives, COVID stimulus payments have prevented some traditional donors from donating. This has led to a reduction in supply and an increase in costs.

Given how plasma is a vital component in many of CSL’s most lucrative therapies, this has the potential to weigh on margins in the short term.

However, it is important to understand that this is a temporary headwind and not structural. In light of this, once the pandemic passes, plasma collections should become far easier and costs should inevitably reduce.

In the meantime, increased demand for influenza vaccines looks set to offset some of this headwind.

Another concern that appears to be weighing on investor sentiment is Argenx’s FcRn CIDP therapy, which is under development. This has the potential to be a bit of a game changer in the industry and could steal away some immunoglobulin sales in the future.

Is this a buying opportunity?

A number of brokers believe that the CSL share price is trading at a very attractive level.

For example, UBS currently has a buy rating and $330.00 price target and Credit Suisse has an outperform rating and $315.00 price target.

UBS’ price target implies potential upside of 25% over the next 12 months. Whereas Credit Suisse’s price target represents upside of just under 20%.

It is also worth noting that the latter broker isn’t worried about Argenx’s FcRn CIDP therapy. Even if it were a success, the broker believes demand is growing strong enough to accommodate both therapies.

All in all, these brokers appear to believe that now would be an opportune time to buy CSL shares.

More reading

• CSL (ASX:CSL) share price dips on latest AstraZeneca news
• 6 reasons CSL (ASX:CSL) shares are struggling
• CSL (ASX:CSL) share price wobbles on COVID vaccine news
• What’s happening with the CSL (ASX:CSL) share price?
• CSL (ASX:CSL) share price remains near 52-week low on COVID-19 vaccine delays

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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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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:

EML Payments Ltd (ASX: EML)

According to a note out of UBS, its analysts have retained their buy rating and lifted their price target on this payments company’s shares to $6.20. The broker made the move after EML announced the acquisition of Sentenial. It notes that Sentenial’s Nuapay open banking business is well-placed in the European market and has opportunities to expand globally. UBS also likes that the deal further reduces its earnings exposure to giftcards. The EML share price was fetching $5.75 at the close of play on Friday afternoon.

Tyro Payments Ltd (ASX: TYR)

Analysts at Morgans have commenced coverage on this payments company’s shares with an add rating and $4.25 price target. The broker has been impressed with the way the fifth largest merchant acquiring bank in Australia has been growing its market share over the last few years and appears confident of more of the same in the future. In addition, it points out that Tyro has consistently delivered operating leverage as it grows. The Tyro share price was trading at $3.74 at the end of last week.

Westpac Banking Corp (ASX: WBC)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $27.20 price target on this banking giant’s shares. According to the note, the broker believes that demand for home loans due to the rebound in the housing market will support its revenue, earnings, and ultimately its share price. The broker’s data also indicates that its market share loss is now easing. The Westpac share price was fetching $25.21 at Friday’s close.

More reading

• These were the best performing ASX 200 shares last week
• 3 ASX shares brokers have rated a buy today
• This broker expects great things from Bank of Queensland’s (ASX:BOQ) results next week
• 2 excellent ASX dividend shares to buy today
• ASX 200 climbs 1%, Westpac rises, Western Areas jumps

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tyro Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. 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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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:

Ainsworth Game Technology Limited (ASX: AGI)

According to a note out of UBS, its analysts have retained their sell rating but lifted their price target on this gaming technology company’s shares slightly to 35 cents. While UBS notes that its performance is improving, it suspects that its recovery could be prolonged. Particularly in the Latin American market, which has been hit hard by casino closures and operating restrictions. The Ainsworth Game Technology share price ended the week at 74 cents.

Air New Zealand Limited (ASX: AIZ)

A note out of Macquarie reveals that its analysts have retained their underperform rating and NZ$1.20 (A$1.11) price target on this airline operator’s shares. This follows news of a travel bubble between Australia and New Zealand opening up this month. While the broker expects there to be pent-up demand for people wanting to visit friends and family, it isn’t sure that business and leisure travellers will be as interested. This is due to the potential of being stranded should borders suddenly snap shut because of an outbreak. The Air New Zealand share price ended the week at A$1.70.

ASX Ltd (ASX: ASX)

Analysts at Goldman Sachs have retained their sell rating and $67.46 price target on this stock exchange operator’s shares. This follows the release of its activity data for the month of March. Goldman notes that futures trading continues to slide while cash market trading normalises. Overall, the broker continues to see earnings risks skewed slightly to the downside. As a result, it believes its shares are overvalued at the current level. The ASX share price was trading at $72.78 on Friday.

More reading

• ASX 200 flat, Flight Centre drops, Air New Zealand rises
• Why the Air New Zealand (ASX:AIZ) share price is on watch
• NZ-Australia bubble opens! Qantas (ASX:QAN) shares take off
• Why the Webjet (ASX:WEB) share price closed 5% higher today
• Trans-Tasman Bubble: Does this mean take off for ASX listed airports?

Motley Fool contributor James Mickleboro 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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Is the BHP Group Ltd (ASX: BHP) share price a buy right now? Over the last month it has been as high as $48 and also below $45.

The resources giant is also exactly where it was after it reported a couple of months ago.

FY21 half-year result

BHP reported a mixed set of numbers for the first six months of FY21.

The statutory profit of US$3.9 billion was down 20% compared to the prior corresponding period. However, this included a one-off loss of US$2.2 billion predominately related to the impairments of New South Wales Energy Coal (NSWEC) and the associated deferred tax assets, and Cerrejon.

However, the underlying attributable profit was up 16% to US$6 billion with net operating cashflow increasing 26% to US$9.4 billion.

BHP has been able to use that cashflow to both improve its balance sheet and declare a very big dividend. The net debt position improved by 7% to US$11.8 billion.

The board decided to increase the half-year dividend by 55% to US$0.55 per share. That brings the trailing grossed-up dividend yield to 6.3% at the current BHP share price.

What’s the BHP outlook?

In a broader sense, the BHP CEO Mike Henry said:

Creating and securing more options in future facing commodities remains a priority. In nickel and copper, we established further new partnerships, acquired new tenements and progressed exploration.

Our outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signalling a durable commitment to growth and signalling ambitions to tackle climate change. These factors, combined with population growth and rising living standards, are expected to drive continuing growth in demand for energy, metals and fertilisers.

The resources giant also said that whilst the short-term remains uncertain, with vaccine deployment underway (with some uncertainty about timing and effectiveness) a major downside risk to the possible economic range outcomes have been substantially mitigated.

Thinking about iron ore prices, it said that the strong Chinese demand and weak Brazilian exports due to COVID-19 caused iron ore prices to stay high.

BHP’s analysis indicates that before prices can correct meaningfully from their current high levels, one or both of the Chinese demand and Brazilian supply factors will need to change materially. In the second half of the 2020s, Chinese demand for iron ore is expected to be lower than today as crude steel production plateaus and the scrap to steel ratio rises. In the long-term, prices are expected to be determined by high cost production, on a value-in-use adjusted basis, from Australia or Brazil. Quality differentiation is expected to remain a factor in determining iron ore prices.

Is the BHP share price a buy?

There is a bit of a mixed bag of thoughts on BHP.

Broker Macquarie Group Ltd (ASX: MQG) rates BHP as a buy with a price target of $57, which has a bullish outlook on shorter-term commodity prices.

UBS is neutral on BHP, but it has a price target of $42 because it thinks that the demand from China isn’t going to remain as strong as it is and more iron ore is going to come out from Brazil.

More reading

• Leading broker names 3 of its best ASX share ideas for April
• The new race between US and China is good news for these ASX shares
• ASX 200 rises, EML jumps, Zip falls
• Alliance (ASX:AQZ) share price tumbles despite material BHP deal
• UBS is calling time on the ASX iron ore supercycle

Motley Fool contributor Tristan Harrison 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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What do Warren Buffet and Jeff Bezos’ fortunes have in common? They were both (largely) built on the stock market. But you don’t have to have a brilliant eye for goldmine shares and excellent timing to make money on the ASX. The simple power of compounding interest is all it takes.

“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” – Albert Einstein (reputedly)

Let’s take an example. Say you have $1000 in spare coin to invest, and you pop it into stocks that continue to increase in value by 10% each year.

Then, you find each week you have an additional $100 that you can afford to pop invest on top of your original amount, so you do.

If you continue this for 13 years, you’ll have invested $67,600 in total, but your portfolio will be worth a whopping $141,428.

You’ve more than doubled your money!

However, there’s never any guarantee that a share will go up in value, and no amount of compound interest can save a portfolio of poorly chosen shares.

That’s why we’ve compiled 2 approaches to the ASX that might suit a newbie investor.

Advice for a beginner looking to strategically invest in ASX shares

The blue-chip approach

If you’re wondering how to invest in shares without taking huge risks, shares in blue-chip companies might be a good place to start your research. 

While prior performance never guarantees future performance, blue-chip companies are usually recognisable and established. Generally, they have high market capitalisations and their share prices often show less volatility than others. These companies tend to show continuous and predictable growth, though that is never guaranteed. 

They may be great options for new investors who feel a bit apprehensive or who might want a solid foundation for their portfolio. There are many blue-chip companies listed on the ASX, most of which can be found on the S&P/ASX 50 Index (ASX: XFL). 

One such example is Rea Group Ltd (ASX: REA). If you don’t recognise REA Group by name, you’ll probably recognise its logo. This company is behind brands such as realestate.com and Flatmates.

It’s a long-term ASX resident. The global digital advertising company has been listed on the ASX since 1999, weathering many a storm in its time.

REA Group has a large market capitalisation. It’s worth around $18 billion, with approximately 132 million shares outstanding.

The exchange-traded fund approach 

Exchange-traded funds (ETF) are traded on the ASX like stocks, but rather than being a portion of a company, they are a share in a fund that holds a selection of ASX listed-companies. Some investors believe ETFs are a great way to diversify your portfolio without much fuss.

Once more, it’s important you take a personal approach to investing, as ETFs won’t suit every investor or portfolio. 

Often, ETFs will have a hold in all or most of the companies on a particular index, such as the S&P/ASX All Technology Index (ASX: XTX), the S&P/ASX 200 Index (ASX: XJO) or the All Ordinaries Index (ASX: XAO).

One example of an ETF is Betashares Nasdaq 100 ETF (ASX: NDQ). If the name doesn’t give it away, Betashares Nasdaq 100 follows the US-based Nasdaq index.

The Nasdaq index is home to companies such as Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA).

Since these companies aren’t listed in Australia, investors interested in this ETF might be looking for a way to get involved in the US market.

More reading

• Is it riskier NOT owning Tesla (NASDAQ:TSLA)?
• Amazon planning its annual prime day event for June this year
• With the Bitcoin price up overnight your crypto Tesla just got cheaper
• Why Amazon could be the big winner in the Biden infrastructure bill
• These ETFs have been making ASX investors rich

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and recommends the following options: short March 2023 $130 calls on Apple, long January 2022 $1920 calls on Amazon, long March 2023 $120 calls on Apple, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, BETANASDAQ ETF UNITS, and 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

One of the most important factors when it comes to investing successfully is the amount of time your money is productively working for you in the market. The longer your money is working smartly for you, the more it can compound and grow on your behalf. That makes early investing mistakes particularly brutal; it’s not the money you lose, but the time you lose that destroys your ultimate portfolio value.

Still, even the best investors had to start somewhere, and there are a lot of rookie mistakes that catch new investors unaware. Still, they can be easy to avoid if you recognize them in advance of committing them. If you’re new to investing, here are three such beginner mistakes to avoid.

1. Investing money you need in the near term

Over the long haul, the stock market has delivered returns near a 10% annualized rate, but those returns are far from guaranteed or steady. The market can drop and has even crashed from time to time, wiping out a huge portion of investors’ cash.

Because the market can drop, you should never invest money in it that you expect to spend in the next few years. That way, if the market does go down, your immediate lifestyle won’t be affected by it. That goes a long way toward enabling you to stay invested when you’re facing losses due to an uncooperative market.

In addition, one of the best ways to make money investing is to buy stocks when they’re cheap, which often happens after a panic or crash. If you’re unable to keep your money committed when stocks are cheap because you need that money to cover your costs, then you won’t make the outsize returns that often come after a crash.

2. Paying too much attention to a stock’s past performance

There’s a reason that a standard investment disclaimer goes something like, “Past performance is not indicative of future results.” That’s in large part because the stock market attempts to price in what will happen in the future, not simply reflect what happened in the past. The problem with the future is that it hasn’t happened yet, and as a result, it may not unfold exactly as investors hoped.

A company whose shares have done well in the past might very well see its stock price fall in the future as its prospects become less rosy. On the flip side, a company whose shares have tanked might very well see its stock rise in the future if it turns out that the future is not as dire as the market originally projected.

Smart investors recognize that stocks trade on the market’s expectations for the future of the underlying company. Instead of looking at how the stock’s price has moved, they’ll look at how the company is valued today versus what its current prospects are for the future.

If the market’s past movements have knocked the price down to where the company looks cheap compared to those prospects, they’ll buy. On the other hand, if the market’s enthusiasm has boosted the price up to where the company looks incapable of living up to expectations, those same smart investors will seriously consider selling.

What matters is the company’s current price compared to its expected future prospects — and a recognition that the future will probably wind up different than you really expect. You’ll never get it perfect, but with that perspective, you’ll improve your thinking and give yourself a reasonable chance of performing well over time.

3. Failing to diversify

No matter how good your analysis is and no matter how solid the company you’re looking at appears to be, the ugly reality is that things go wrong in the market and with investing. If you’re “all-in” on a company that happens to fail, then you will lose all your money. On the flip side, if you’re diversified and a company you own happens to fail, then while you’ll likely still feel it, it won’t completely devastate your portfolio.

As a general rule of thumb, you’ll want to target to own at least somewhere in the neighborhood of 20 stocks across multiple industries to get most of the benefit from diversification. There’s both academic and kitchen-table logic to support a number in that ballpark. Textbooks say you can get around 90% of the value of diversification with 12 to 18 stocks chosen with diversification in mind. 

The kitchen-table logic is that if one of your diversified 20 portfolio stocks fails, you’ll lose about 5% of the value of your account. That will set you back a bit, but if the market performs near its overall historic rate, you’ll likely recover your overall loss from it in less than a year. That’s a much better spot to be in than losing everything when your one pick turns out sour.

In today’s era of commission-free investing and fractional share ownership, diversifying is far easier and cheaper than it used to be. Removing that cost and complexity barrier makes it all the more important that you make it a key part of your overall investing strategy. Done right, diversification is the closest thing to a free lunch available to investors. Not taking advantage of it can magnify the pain from investing mistakes and set your plan back years.

Avoid the easy mistakes and improve your chances of success

Everyone makes mistakes investing — even the greats like Warren Buffett. While you can’t avoid every mistake, these three are common ones that new investors make that you can avoid if you put your mind to it. Make a plan from day one that keeps you away from them, and you’ll improve your overall chances of progressing from a new investor to a seasoned investor, with all the benefits that follow.

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

More reading

• 2 quality ASX dividend shares to buy next week
• 2 high-growth ASX COVID-19 shares
• Is it time to buy ANZ (ASX:ANZ) at today’s share price?
• 3 secrets market analysts use to pick the best ASX shares to buy
• How to turn $20,000 into $240,000 in 10 years with ASX shares

The Motley Fool Australia has no position in any of the stocks mentioned. Chuck Saletta 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Are you looking to add to your income portfolio in the near future? If you are, then you might want to look at the ASX dividend shares listed below.

Here’s what you need to know about them:

National Storage REIT (ASX: NSR)

The first ASX dividend share to look at is National Storage. It is one of the ANZ region’s largest self storage operators with a total of over 200 centres. From these centres, it tailors self-storage solutions to residential and commercial customers.

National Storage looks well-placed for growth in the coming years. This is thanks to its development and acquisition plans and the favourable housing cycle. In respect to the latter, a thriving housing market traditionally leads to solid demand for self-storage solutions. This could bode well for the coming years.

Based on the current National Storage share price and its guidance for FY 2021, its shares currently offer a forward 3.6% distribution yield.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share to consider buying is Telstra. After a few years of well-documented struggles, this telco giant’s outlook is improving greatly.

This due to rational competition, the easing NBN headwind, its T22 strategy, the arrival of 5G internet, and its plan to split into three separate businesses. The latter is expected to simplify its operations and allow Telstra to take advantage of potential monetisation opportunities, unlocking value for shareholders.

Goldman Sachs is a fan of Telstra and its separation plans. It recently reaffirmed its buy rating and $4.00 price target on the company’s shares.

The broker also continues to forecast the company paying a 16 cents per share fully franked dividend for the foreseeable future. Based on the current Telstra share price, this will mean a very attractive 4.7% dividend yield over the next 12 months.

More reading

• Telstra (ASX:TLS) and 2 other ASX dividend shares offer yields over 5% today
• Here’s how much Telstra’s (ASX:TLS) dividend is worth right now
• The National Storage (ASX:NSR) share price is at a 52-week high. Here’s why
• 2 high quality ASX shares for retirees to buy today
• 2 high yield ASX dividend shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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Some ASX COVID-19 shares are directly involved in the fight against the pandemic and are still generating high levels of growth.

No-one can know how long the world is going to be fighting this pandemic, but it has been going on for over a year already. The COVID-19 variants could make it even harder to stop the spread completely.

These two ASX COVID-19 shares could be worth owning:

Ansell Limited (ASX: ANN)

Ansell is one of the world leaders in manufacturing protective equipment, particularly gloves. It provides plenty of other items like protective suits.

As you might expect, there has been a large increase of demand for Ansell’s products during this difficult period with the global pandemic. The growth continued into the first half of FY21, with its healthcare division generating organic growth of 37.3% with strong volume growth across all strategic business units.

Industrial organic growth was still good at 7%, with strong growth with its chemical protective clothing and multi-purpose gloves offsetting weaker demand from impact gloves.

The company has invested for more growth in the coming years by starting five new production lines and expect another eight lines to go live during the second half to help meet the demand. By FY22 to FY23 Ansell expects to have more than doubled its in-house capacity of single use gloves and suits.

The ASX COVID-19 share says it expects the coronavirus will continue to impact the world for some time and once the pandemic is under control, elevated demand for its products will likely persist for multiple reasons. Enhanced safety practices at plants and hospitals, better protection awareness in emerging markets, more research and testing worldwide or the potential need for annual COVID-19 vaccinations are reasons that Ansell could keep seeing elevated demand.

In the first half of FY21 it generated 65.5% growth of earnings per share (EPS) to 82.9 cents.

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the main businesses involved in doing high levels of COVID-19 testing using PCR tests.

The northern hemisphere has seen high levels of COVID-19 cases, which has contributed to high levels of organic growth for Sonic in countries like the USA, Germany, the UK, Switzerland and Belgium. The Australia division has also seen high levels of organic growth because there has still been a lot of testing, even if there hasn’t been too much of an outbreak.

Sonic has been able to utilise its existing infrastructure and staff to carry out all of the COVID-19 tests, which is why the business has seen strong profit margin growth. FY21 half-year sales went up 33% whilst net profit after tax (NPAT) rose 166% to $678 million.

The ASX COVID-19 share expects the next 12 months will continue to see good profit generation. If the pandemic subsides then its pre-COVID base business can make a recovery. If there’s more pandemic waves then the testing will likely increase.

Management also believe there’s potential growing demand for COVID-19 serology testing to see if a person is immune or not to COVID-19.

Sonic’s balance sheet is “very strong” and can support acquisitions as well as other significant opportunities in Australia, the UK, the USA and Canada.

More reading

• Aussie dollar tipped to weaken and this ASX share stands to gain the most
• 2 ASX 200 shares to buy for growth
• Should income investors buy Sonic Healthcare (ASX:SHL) shares?
• Why the Sonic (ASX:SHL) share price could be a hidden opportunity
• 2 top quality blue chip ASX shares to buy in April

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and Sonic Healthcare 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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Could it be time to buy Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares at today’s share price?

The ANZ share price hasn’t moved much over the last month, but it has gone up just over 60% over the last six months.

Why has the ANZ share price risen so much?

ANZ and the overall market are seeing a recovery right now. The painful credit provisions that were taken earlier during 2020, because of the COVID-19 pandemic, are not being repeated.

In the three months to 31 December 2020 (the first quarter of ANZ’s FY21), it generated cash profit from continuing operations of $1.81 billion – up 54% on the average of the last two quarters of 2020. It was a similar sort of story as the bank generated $1.62 billion of statutory profit.

That quarterly average of the credit impairment charge in the first half of FY20 was $827 million and in the second half the quarterly average was $541 million. In the first quarter of FY21, ANZ decided on a capital release of $150 million reflecting improved economic conditions.

ANZ said that margins were up across the group due to higher volume growth in targeted segments and a “disciplined and active approach to risk and pricing”. ANZ managed to achieve the profit result whilst keeping costs in check and operating with the majority of employees still working remotely.

The number of Australian loans being deferred has dramatically reduced. In mid-February, ANZ said that of the 96,000 loans where a deferral was provided, only 15,000 were still being deferred. Those active deferrals represented $6 billion.

Balance sheet

The ANZ share price is also being supported by its strengthening balance sheet. At 31 March 2020, it had an APRA common equity tier 1 (CET) ratio of 10.8%, which had increased to 11.3% at 30 September 2020 and rose again to 11.7% at 31 December 2020.

Is now a good time to buy the ANZ share price?

ANZ has already risen quite a bit, the broker Macquarie Group Ltd (ASX: MQG) thinks the major bank can rise further with a price target of $30 and rates it as a buy.

However, Macquarie believes that low interest rates could be a pain for ANZ’s margins.

Morgan Stanley has a price target of $26.20 for ANZ, which suggests a bit of a decline. Using Morgan Stanley’s numbers, the ANZ share price is valued at 14x FY21’s estimated earnings with a dividend of $1.15 per share. That would be a grossed-up dividend yield of 5.9% if the dividend is fully franked.

More reading

• ASX 200 down 0.4%: Tech shares rise, Afterpay increases US stake
• This broker expects great things from Bank of Queensland’s (ASX:BOQ) results next week
• Seek (ASX:SEK) share price lifts as jobs ads reach 12-year high
• ASX 200 up 0.9%: Cleanaway jumps, tech shares rise, Incitec Pivot sinks
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Tristan Harrison 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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Dipping your toes into the stock market can be daunting, but many investors agree asking yourself these 3 questions can help set you up for the best chance to buy into successful shares on the ASX.

Starting out in investing can be both extremely rewarding and challenging. Every person and their dog will have an opinion on what’s ‘the next big thing’, there are a host of different investing styles to choose between and there’s never any guarantee of success.

But if you’re here, I probably don’t need to work to convince you that, no matter the challenges, investing can be immensely worthwhile.

There’s a ton of ever-changing information on the thousands of companies listed on the ASX. It’s one of the beauties of the beast – all the information professional market analysts use is available to the public.

I’m going to walk you through how to decide if an ASX listed company’s shares are the best buy for you and your portfolio.

Before we get started…

No matter how well researched or how highly recommended an ASX share is, there is no guarantee that they will make a good buy. All investment decisions need to be made by yourself as an individual, based on your specific needs and circumstances. Take the time to determine your goals, abilities and investing strategy before you begin.

3 things to check before deciding if an ASX share is right for you

1. Does it have a strong foundation and good cash flow?

If you don’t know what a company’s earnings before interest, tax, depreciation and amortisation (EBITDA) and price-to-earnings ratio (P/E) are, start by getting a hold on their meanings.

Once you’ve got a grasp on them, have a look at these metrics in the company you’re hoping to invest in. Many analysts believe these measures are one way to help predict growth.

You most likely want your ASX share of choice to have both a stable P/E and EBITDA. If you’re an investor who doesn’t want much risk, you probably also want to make sure that both have been consistently stable for some time.

This might be the quickest way to get a basic grasp on a company’s financial status, with the understanding that these numbers can change.

2. Do you believe in the growth potential of the industry?

There’s more to investing in ASX listed companies than the company itself, which is why it’s worth looking into the future of industry your ASX share of choice operates in.  

Take scope of an industry, its strengths and its weaknesses, before investing in any company within it.

You (presumably) don’t want to be among the people who invested in landlines, just as mobile phones were gaining traction. No market analyst worth their salt would be caught recommending even the strongest company in a risky industry. 

Further, if you’ve done your homework and believe an industry is up and coming, that might be a sign an investment in a company within that industry is right for you. Those who invested in strong companies in the buy now, pay later and lithium sectors only a year ago are sure to be rejoicing now.

Don’t forget, even the best investment is only as strong as the industry it falls into.

3. Do you trust those who manage it? 

Finally, take a look at who is managing the company. More than that though, look into their history, education and past endeavours.

If the CEO is brilliant but has never lasted more than 5 years in a role and they’ve been at the company for 4 years now, consider the possibility of a senior management shake-up in the near future.

Does the company’s senior management have a history of making solid, strategic decisions? What sort of publicity — negative or positive — has the management team amassed? Are you comfortable with the skills of the people managing your potential investment?

Market analysts often take the people running a company into consideration when deciding whether it’s an ASX share is a good buy. It’s not the be-all measurement, but it’s good to be aware of. Particularly if you’re undecided on whether a company is the best ASX investment for you to buy into.

More reading

• How to turn $20,000 into $240,000 in 10 years with ASX shares
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• 3 small caps ASX dividend shares offering big income
• Prime Media (ASX:PRT) share price unmoved as ACM tightens grip

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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