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The Veem Ltd (ASX: VEE) share price is climbing in early-afternoon trade after the company provided a gyro sales update.

At the time of writing, the marine technology company’s shares are up 5.8% to $1.08. This puts its shares within a whisker of its all-time high of $1.15 reached earlier this month.

Sales update

The Veem share price is racing higher as investors appear pleased with the company’s presence in the Italian superyacht construction market.

According to its release, Veem advised that it has received orders for its gyro stabilisers from two Italian clients, Rossinavi and Overmarine. This marks the first time the company has added these two prestigious superyacht builders to its books.

Overmarine, a designer and builder of superyachts for more than 30 years, produces luxury and long-range yachts branded Mangusta. The Italian boat maker ordered 2 Veem gyros for its new Mangusta 165.

Rossinavi, on the other hand, an Italian manufacturer of custom steel and aluminium superyachts. The luxury yacht builder is seeking to purchase one Veem gyro for its new superyacht design.

While Veem did not reveal the value of the orders, it stated that its order book stands at $5 million. Around $3.5 million of the gyros is expected to be included in sales during the current half.

Addressable market opportunity

Veem highlighted the “huge” market opportunity for its gyros, referring to a report published by Super Yacht Times. The article noted 710 vessels were in the global superyacht construction order book on 1 January 2021. This represents an addressable market of more than $260 million in sales for Veem gyros.

In addition, the company said that there is a total of 9,233 vessels around the world that are considered superyachts. Over the past year, this number grew by 1.7%. Veem hopes to capture this market through retrofitting its gyros on the existing fleet of superyachts.

What did the managing director say?

Veem managing director Mark Miocevic commented:

We expect orders to continue once customers have experienced the benefits of the significantly greater stabilisation and demand VEEM Gyros as part of their new builds.

Having orders in hand already to deliver $3.5m of sales this half gives us confidence that the trend of significant sales increases year on year will continue.

Mr Miocevic said the superyacht fleet represented a huge market for VEEM Gyros, both in the new constructions underway and the retrofit potential.

Our current sales, while growing rapidly, are only a small portion of the potential within the superyacht, commercial and defence addressable markets.

About the Veem share price

The Veem share price has gained more than 130% in the past 12 months and around 30% year-to-date.

Based on the current share price, Veem commands a market capitalisation of $140.4 million, with 130 million shares on issue.

More reading

• Westpac (ASX:WBC) share price lower despite Consumer and Business changes
• ASX 200 down 0.6%: Telstra upgraded, Webjet rated as a buy, Westpac update
• Leading brokers just upgraded these ASX shares to “buy” today
• Bell Potter thinks the PointsBet (ASX:PBH) share price could go 40% higher
• How this week’s Fed meeting could impact ASX 200 shares

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 Westpac Banking Corp (ASX: WBC) share price is trading lower on Wednesday despite the release of a positive announcement.

In afternoon trade the banking giant’s shares are down 0.25% to $24.67.

What did Westpac announce?

Late this morning, Westpac announced a further initiative which aims to simplify its business.

According to the release, the bank is combining its Consumer and Business divisions into a new Consumer & Business Banking division. This change will happen from the start of next week on 22 March.

Leading the new division will be Chris de Bruin. He is currently the Chief Executive of the Westpac Consumer division.

One person that won’t be sticking around, though, is Guil Lima. The current Chief Executive of the Business division will be leaving Westpac following the changes.

Why are the changes being made?

Westpac’s CEO, Peter King, explained that the bank’s new lines of business operating model had enabled it to consolidate divisional management and simplify the business.

He said: “Our new lines of business operating model has given us a solid foundation for this change, with greater clarity on accountability and a common management approach across each of the six business lines.”

Mr King expects the changes to simplify things and also help reduce costs.

The CEO added: “The combined division will drive simplification of banking and help to reduce cost, including by consolidating support functions. The change will enable more efficient utilisation of common assets such as branches and call centres, and better capitalise on the work underway to improve our capabilities, particularly in service, digital and data.”

Positively, the chief executive believes the division is in safe hands with Chris de Bruin.

“Mr de Bruin has significant experience running both consumer and business banking functions at a large multinational bank, as well as a strong background in fintech and digital banking, which will be particularly valuable as we better support customers’ needs,” said Mr King.

The Westpac share price is up almost 26% year to date.

More reading

• ASX 200 down 0.6%: Telstra upgraded, Webjet rated as a buy, Westpac update
• ASX 200 Weekly Wrap: Calm restored to the ASX 200
• 2 blue chip ASX dividend shares in the buy zone
• ASX share market on watch: Goldman Sachs shares thoughts on inflation and interest rates
• Leading brokers name 3 ASX dividend shares to buy

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is giving back the majority of yesterday’s gains. The benchmark index is down 0.6% to 6,784 points at the time of writing.

Here’s what is happening on the market today:

Telstra shares upgraded

The Telstra Corporation Ltd (ASX: TLS) share price is rising today after being the subject of a positive broker note. According to a note out of Ord Minnett, its analysts have upgraded the telco giant’s shares to a buy rating with a with an improved price target of $4.05. The broker believes Telstra’s key post-paid mobile business is well-placed to benefit from the 5G rollout.

Webjet given buy rating

The Webjet Limited (ASX: WEB) share price is flat on Wednesday despite analysts at Goldman Sachs initiating coverage on the company with a buy rating and $7.36 price target. The broker believes Webjet is well-placed for growth when the travel recovery comes. It also sees opportunities for the company to make earnings accretive acquisitions and feels that its valuation is undemanding on a normalised basis.

Westpac update

This morning Westpac Banking Corp (ASX: WBC) announced that it is combining its Consumer and Business divisions into a new Consumer & Business Banking division. The new division will be led by the current Chief Executive, Consumer, Chris de Bruin. Guil Lima, the current Chief Executive, Business, will be leaving. The banking giant expects the combined division to drive the simplification of banking and help to reduce costs.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Unibail-Rodamco-Westfield CDI (ASX: URW) share price with a gain of almost 5%. This follows a similarly strong gain by the shopping centre operator’s European listed shares overnight. The worst performer has been the Corporate Travel Management Ltd (ASX: CTD) share price with a 6% decline after its CEO sold a large number of shares.

More reading

• Leading brokers just upgraded these ASX shares to “buy” today
• Webjet (ASX:WEB) share price rises on bullish broker note
• 2 ASX 200 shares that keep growing the dividend every year
• 5 things to watch on the ASX 200 on Wednesday
• Sneaky way ASX company can boost share price by 7%

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Telstra Limited, and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The market may be giving ground this morning but two ASX shares are bucking the downtrend after getting upgraded to “buy” by top brokers.

The S&P/ASX 200 Index (Index:^AXJO) slipped 0.4% at the time of writing as weak leads from Wall Street weighed on sentiment.

But the pessimism isn’t extending to the Telstra Corporation Ltd (ASX: TLS) share price as it was one of two ASX shares to find favour with brokers today.

Upgraded to “buy” on mobile strength

The Telstra share price gained 0.5% to $3.14 after JPMorgan called it the best placed to benefit from mobile subscriber trends.

Mobile is the most important growth driver for the Telstra share price and TPG Telecom Ltd (ASX: TPG) share price. Telcos can’t make much from fixed broadband as the NBN has a stranglehold on that market.

“Our in-depth assessment of the market suggests that both Telstra and TPG’s Vodafone will lose share of the prepaid market to [Mobile Virtual Network Operators],” said JPMorgan.

“However, in the more lucrative postpaid market, we believe Telstra is better placed given its head start in the rollout of 5G infrastructure.”

Telstra share price catalysts

Better than expected growth in its mobile subscriber base is one potential share price catalyst for Telstra. The other is cost savings in fixed broadband.

“Additionally, we are currently at the bottom of Telstra’s medium-term EBITDA target of A$7.5-$8.5 billion by FY2023,” added JPMorgan.

“This implies potential upside to our valuation should management achieve cost reduction targets in Fixed Broadband.”

The broker upgraded its recommendation on the Telstra share price to “overweight” from “neutral”. Its 12-month price target is $4.05 a share.

Recovery play underpins “buy” upgrade for this ASX share

Another ASX share that is outperforming today is the Clover Corporation Limited (ASX: CLV) share price.

Shares in the nutrition technology company jumped 1% to $1.51 at the time of writing. UBS reckons there’s another 30% plus upside when it upgraded the Clover share price to “buy” from “neutral”.

The broker believes it’s a good recovery play as Clover’s sales were heavily impacted by the COVID-19 disruption.

Boost from Chinese regulators

Clover’s technology is used to increase the Docosahexaenoic acid (DHA) in infant formula. While the sales recovery might not be “V-shaped” given the sombre outlook by A2 Milk Company Ltd (ASX: A2M), Clover is likely to get a regulatory boost from China.

“A key result positive was CLV’s expectation for China to mandate increased DHA requirements for infant formula during 2H21E, with a 2-year introductory period,” said UBS.

“The company expects a revenue benefit from new customer wins from FY23E.”

UBS’ 12-month price target on the Clover share price is $2 a share.

More reading

• ASX 200 down 0.6%: Telstra upgraded, Webjet rated as a buy, Westpac update
• 2 ASX 200 shares that keep growing the dividend every year
• 5 things to watch on the ASX 200 on Wednesday
• Sneaky way ASX company can boost share price by 7%
• ASX 200 jumps, Pointsbet reveals acquisition, Metcash drops

Brendon Lau owns shares of Telstra Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk and 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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The PointsBet Holdings Ltd (ASX: PBH) share price started from humble beginnings in June 2019 at an initial public offering (IPO) price of $2.00 and market capitalisation of $220 million.

Its shares have since surged more than 7- fold, resulting in the company joining the S&P/ASX 200 Index(ASX: XJO) back on 27 January 2021. 

The bookmaker is taking the emerging United States sports betting market head-on and is currently operational in Australia and 5 US states. Despite its significant share price run, Bell Potter thinks there’s plenty of growth left for the PointsBet share price. 

Bell Potter retains speculative buy rating

Bell Potter is bullish on the PointsBet share price, retaining a speculative buy rating with a $20.55 valuation on 16 March. At the time of writing, its shares are swapping hands for $14.44.

The broker highlights the company’s recent acquisition of Banach Technology, a Dublin-based sportsbook solutions provider that has developed a proprietary risk-management platform and quantitative-driven trading models for operators. Bell Potter believes Banach will enhance PointsBet’s technology platform to provide a superior betting experience.

PointsBet anticipates the size of the US in-play market to increase rapidly. Currently, the company estimates a 50/50 split between bets placed pre-game and in-play. Within three years, PointsBet anticipates that ~75% of bets will come from in-play betting products. The company believes that in-play clients are more valuable across key metrics, including higher engagement, higher retention and higher turnover.

Bell Potter sees Banach playing a pivotal role in driving “increased in-play betting turnover by reducing periods when betting is suspended during a live sporting match”. Banach’s technology capabilities are expected to complement PointsBet’s competitive advantage in its breadth and depth of available betting markets.

Bell Potter analysts highlight that during the Super Bowl, PointsBet offered 765 different betting markets compared to its major competitors that only offered 248 to 543 markets. 

Key assumptions for the PointsBet share price target 

Bell Potter has made several assumptions for its bullish take on the PointsBet share price.

The broker assumes the company will start operations in West Virginia and Kansas by the end of 2021. It also forecasts that US states, including Kansas, Ohio, Missouri, Louisiana and New York, should legalise sports betting over the next three years.

PointsBet would be able to commence operations in these states through its existing partnerships. 

More reading

• How this week’s Fed meeting could impact ASX 200 shares
• ASX 200 jumps, Pointsbet reveals acquisition, Metcash drops
• Why Clover, PointsBet, Syrah, & Temple & Webster shares are racing higher
• ASX 200 up 0.8%: Metcash update, tech shares rebound, PointsBet acquisition
• Why all eyes will be on the PointsBet (ASX:PBH) share price today

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The consensus is that no matter what US Federal Reserve Chairman Jerome Powell tells the press today (overnight Aussie time), it will impact S&P/ASX 200 Index shares.

Rick Rieder is BlackRock’s CIO for global fixed income. As quoted by CNBC, Rieder said:

I think the last press conference, I think I watched with one eye, and listened with one ear. This one I’m going to be tuned in to every word, and the markets are going to be tuned in to every word. If he says nothing, it will move markets. If he says a lot it will move markets.

As you may know, the Fed has been meeting behind closed doors for the past 2 days. Tomorrow morning – or tonight, if you’re keen enough to tune in – ASX 200 investors will have a clearer picture of its intentions.

Why the Fed’s announcement matters for ASX 200 shares

The United States and numerous other nation’s economies are growing strongly as they begin to recover from the coronavirus pandemic – including Australia and economic powerhouse China.

The pressing questions then for ASX 200 shareholders are, how soon will the Fed begin to unwind its unprecedented monetary easing policies? How soon could the world’s most-watched – and most imitated – central bank begin to ratchet up interest rates and scale back its quantitative easing (QE) program?

Currently, the Fed’s official interest rate sits at 0.25%. And it buys US$80 billion of Treasuries and US$40 billion of mortgages every month. Yep, that’s US$1.44 trillion (AU$1.87 trillion) every year.

But as the US economy is posting strong growth, bond yields have been ramping higher. As recently as 4 August, US 10-year Treasuries had a yield of 0.52%. Today that’s up at 1.62%. And these long-term rates have a direct trickle-down effect on key loans, like mortgages.

As the Federal Open Market Committee members study the latest economic forecasts, they may adjust their expectations on winding down QE and ratcheting up interest rates.

When can ASX 200 investors expect the US Fed to raise interest rates?

While virtually no experts expect US rates to rise this year, some have flagged 2022, with more pointing to 2023.

According to CNBC, the last forecast showed “five of 17 members expected a rate hike in 2023, and just one forecast a hike in 2022”.

Mark Cabana, head of US short-rate strategy at Bank of America, said:

We think they will sound a bit more optimistic but still cautious. That said, we think it will be hard for them to sound as dovish as they have been just because the facts on the ground are improving.

As a result of that, we think they’re going to sound a little less accommodative than the market is expecting. We think they’re likely to show a hike at the end of 2023.

How will rising rates in the US impact ASX 200 shares?

Like it or not, where the US goes, much of the world follows. Not only will higher interest rates from the Fed impact ASX 200 shares with business in America, but it’s also likely the Reserve Bank of Australia and other central banks may follow in the Fed’s footsteps.

ASX 200 growth shares could be the most impacted by Jerome Powell’s speech.

Growth shares are those that can grow revenue and share price faster than the broader economy. They’re also more vulnerable to any shocks, like rising interest rates.

The Afterpay Ltd (ASX: APT) share price, for example, is up 484% over the past 12 months.

Or Pointsbet Holdings Ltd (ASX: PBH), whose share price has soared 776% over the past full year.

That compares to a gain of 28% on the ASX 200.

Powell’s speech on the Fed’s expected timeline for raising rates and scaling back QE could impact the broader ASX 200, but it’s the ASX 200 growth shares that may move the most.

More reading

• ASX 200 jumps, Pointsbet reveals acquisition, Metcash drops
• Flight Centre and Zip were some of the most traded ASX shares last week
• The Afterpay Ltd (ASX:APT) share price on watch after launch in France, Spain and Italy
• Here’s what Citi thinks about the Afterpay (ASX:APT) share price
• Why Clover, PointsBet, Syrah, & Temple & Webster shares are racing higher

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 Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to give back a portion of yesterday’s gain. The benchmark index is currently down 0.4% to 6,799.3 points.

Four ASX shares that are not letting that stop them push higher are listed below. Here’s why they are rising today:

Lake Resources N.L (ASX: LKE)

The Lake Resources share price is up 3% to 36 cents. Investors have been buying the lithium company’s shares after it refreshed its flagship Kachi Lithium Brine Project Pre-Feasibility Study (PFS) based on revised lithium price estimates. It now estimates that the project has a net present value of US$1.6 billion (A$2.1 billion). This is almost double its previous estimates. Lake Resources made the move following discussions with potential off-takers and recent projections from Benchmark Mineral Intelligence.

PainChek Ltd (ASX: PCK)

The PainChek share price has jumped 10% to 7.6 cents. This morning PainChek released an update on its smart phone-based pain assessment and monitoring application. According to the release, the Universal Pain Assessment Solution has received CE Mark in Europe and Therapeutic Goods Administration clearance in Australia.

Z Energy Ltd (ASX: ZEL)

The Z Energy share price has risen over 4% to $2.72. Investors have been buying the New Zealand-based fuel retailer’s shares after it announced that it has successfully renegotiated the covenant waivers with its banking syndicate. This will allow Z Energy to recommence distributions to shareholders, starting with an expected full year dividend in FY 2021.

Zip Co Ltd (ASX: Z1P)

The Zip share price is pushing 2% higher to $8.92 despite there being no news out of the buy now pay later provider. However, investors may believe its shares are good value based on a note out of Citi yesterday. Although its analysts have retained their neutral rating, their price target of $11.35 is notably higher than where its shares trade at today.

More reading

• Why the Lake Resources (ASX:LKE) share price is shooting 10% higher today
• Flight Centre and Zip were some of the most traded ASX shares last week
• The Afterpay Ltd (ASX:APT) share price on watch after launch in France, Spain and Italy
• Here’s what Citi thinks about the Afterpay (ASX:APT) share price
• Why did the Afterpay (ASX:APT) share price and 2 other BNPLs fall today?

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 ZIPCOLTD FPO. 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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Galaxy Resources Limited (ASX: GXY) shares are sinking today after the company released an update to the market earlier this morning. At the time of writing the Galaxy share price is trading 1.59% lower at $2.47.

Here’s what the company had to say.

Update on resource and ore reserves

The Galaxy share price is sliding lower today after the company updated the mineral resource and ore reserve estimates for its Mt Cattlin operation in Western Australian.

As at 31 December 2020, Mt Cattlin mineral resources were estimated at 12.0Mt (tonnage) at a grade of 1.3% Li2O. Ore reserve estimates were revised to 8.0Mt at a grade of 1.1% Li2O. The company noted that ore reserves had depleted by 0.25Mt due to reduced mining activity.

In the investor presentation, Galaxy highlighted that production in 2021 will be accelerated to meet customer demand. The company noted that mining rates have increased from 200k BCM per month in 2020 to 324k BCM per month in February 20201. As a result, Galaxy estimates mining production for Q1 to be in the range of 45 to 48kt.

Galaxy also provided an outlook for future opportunities at Mt Cattlin. The company cited 1.3Mt of unprocessed tailings with an average grade of 1% Li2O. As a result of strong demand in China, Galaxy is looking to explore the sales of tailings as aggregates for civil construction.

How has the Galaxy share price been performing?

Galaxy is an international lithium production company with facilities and hard rock mines in Australia, Canada and Argentina. The company’s flagship and wholly-owned Mt Cattlin mine in Western Australia currently produces spodumene and tantalum concrete.

The Galaxy share price has surged since late 2020, fulled by soaring lithium spot prices and a recovery in resources. Investors have been keeping a keen eye on lithium companies like Galaxy as lithium prices eye 2-year highs.

Earlier this month, Galaxy made headlines after providing an update on its James Bay Lithium Mine Project in Canada. According to the update, the preliminary assessment found that the project is a viable, near-term supplier of spodumene.

The company’s management also highlighted that the project will deliver average annual production of 330,000 tonnes of spodumene with an approximate mine life of 18 years.

Over the past year, the Galaxy share price has jumped by nearly 200%. Year to date, Galaxy shares are up by around 7%.

More reading

• ASX lithium shares on watch as lithium prices eye 2-year high
• Goldman reaffirms its conviction buy on this ASX share on Yallourn shutdown
• Top brokers name 3 ASX shares to sell today
• Here’s why the Galaxy (ASX:GXY) share price is pushing higher today
• Why this broker is bullish about ASX lithium shares

Motley Fool contributor Nikhil Gangaram 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 Paladin Energy Ltd (ASX: PDN) share price isn’t going anywhere this morning as management requested a trading halt. This comes after the company announced an equity raise to repay its senior notes and reorganise its capital structure.

The uranium producer’s shares are standing at 46.5 cents from yesterday’s market close.

What’s with the Paladin share price?

The Paladin share price is not trading today as investors weigh up the company’s latest update.

In its announcement, Paladin advised that it is undertaking an equity raise through a non-renounceable entitlement offer and institutional placement. The goal for the equity raise is to redeem the company’s outstanding senior secured notes and reset its debt obligations. Paladin is hoping to raise roughly $218.7 million.

The institutional placement will see around 347.3 million new ordinary shares issued to investors to raise $128.5 million. Paladin was granted a waiver from ASX listing rule 7.1 to expand the placement capacity as the offer is underwritten. On traditional terms, the company would only be able to issue 15% of its shares without shareholder approval.

In addition, Paladin expects a 1-for-8.5 pro-rata accelerated non-renounceable entitlement offer of 243.7 million new shares to raise $90.2 million.

The company will issue both the placement and entitlement offer at 37 cents for each new share. This represents a discount of 20.4% on yesterday’s closing price of 46.5 cents and a 17.2% mark-down on the 5-day volume average weighted price (VWAP).

Where will the funds go?

The proceeds of the equity raise will be primarily allocated towards redeeming the senior notes. Paladin forecasts the senior notes to have a balance of $203.6 million, including principal and interest, on 31 March 2021. The senior notes were originally due to mature in January 2023.

Management stated that the overhanging debt obligation hindered the company as it has security arrangements attached. This, in turn, affected its financial flexibility to resurrect uranium mining operations at the Langer Heinrich mine in Namibia.

Paladin has repaid the debt, it projects to have a net cash position of US$30 million. This will further boost its liquidity profile and allow the company to restart funding for the US$81 million required to bring the Langer Heinrich mine online.

What did management say about the capital raise?

Paladin CEO Ian Purdy commented:

This equity raise represents the final step in a truly transformational ‘reset’ of the Paladin story with the upcoming full redemption of the legacy corporate debt on Paladin’s balance sheet.

The company now has the benefit of increased capital flexibility which provides a solid foundation for management to continue its focus on the restart of Langer Heinrich and value creation for equity holders in an improving uranium market.

The Paladin share price has gained more than 800% in the past 12 months and moved above 80% higher year-to-date.

More reading

• Why ASX uranium shares could run even hotter in 2021

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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If you’re wanting to construct a balanced portfolio, having a few blue chip ASX shares in there could be a good idea.

Blue chip companies tend to be well-known, long-established, and in strong financial positions.

They’re companies that are likely to be around for a long time, allowing investors to make long term investments that benefit from the power of compounding.

But which ASX blue chip shares should you buy? Two to consider are listed below:

REA Group Limited (ASX: REA)

The first blue chip ASX share to look at is REA Group. It is the clear leader in real estate listings in the Australian market. At the end of the first half, the company reported 115 million monthly visits to its platform. This is 3.2 times more visits than its nearest competitor.

In addition to this, REA Group revealed that trading conditions are improving and listing volumes are growing again. Combined with price increases, cost reductions, and new revenue streams, this appears to have positioned the company for growth over the coming years.

One broker that expects this to be the case is Morgan Stanley. It is very positive on the company’s future and recently put an overweight rating and $175.00 price target on its shares. This compares to the current REA Group share price of $135.97.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is arguably one of Australia’s highest quality companies. The conglomerate owns and operates a diverse group of businesses across several sectors. This includes Bunnings, Catch, Covalent Lithium, Kmart, Officeworks, and Target.

And given Wesfarmers’ strong financial position and penchant for making earnings accretive acquisitions, it seems quite likely that it will be adding to its portfolio in the near future.

In fact, analysts at Goldman Sachs believe the company has an excessive capital position, with 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 move.

It is partly because of this that the broker currently has a buy rating and $59.70 price target on its shares. This compares to the latest Wesfarmers share price of $50.59.

More reading

• Why ASX e-commerce shares could keep running higher in 2021
• ASX 200 Weekly Wrap: Calm restored to the ASX 200
• 2 blue chip ASX dividend shares in the buy zone
• 10 of the best ASX shares to buy in March
• Will the ASX share e-commerce boom last?

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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