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With interest rates around the developed world close to zero, and central banks pumping trillions of dollars into global financial systems in quantitative easing (QE) programs, share market and housing prices have been remarkably resilient in the face of the pandemic.

In fact, in Australia, our house prices have now edged above the level they were at before the pandemic struck.

The S&P/ASX 200 Index (ASX: XJO), slipping today, is only 5% below its all time February 2020 highs.

It’s a similar story in China, where speculators are snapping up prime properties. And China’s benchmark CSI 300 Index (SHA: 000300) is just 3% below its own record high which was set last week on 25 January.

25 January is the same date that the United States benchmark S&P 500 (INDEXSP: .INX) closed at new all time highs as well. It’s down a slender 0.7% since then.

With asset prices soaring amid economies still hamstrung by COVID-19 and an uncertain vaccine outlook, should you be worried about the potential for bursting bubbles?

Not particularly. At least, not according to the leaders of some of the world’s top central banks.

US Fed buying $1.9 trillion of bonds per year

If you thought the Reserve Bank of Australia’s (RBA) QE program was impressive, have a gander at the US Federal Reserve.

The Fed has been buying US$120 billion of bonds per month. That’s US$1.44 trillion (AU$1.9 trillion) per year.  The bank has said it will maintain the purchases until “substantial further progress” is made towards its employment and inflation goals. The Fed has also indicated its target interest rate is unlike to increasing for the current 0.00–0.25% range any time soon.

However, the Fed has distanced itself from being the cause of asset bubbles or the recent share market volatility fuelled by speculative retail trading frenzies around likes of GameStop Corp. (NYSE: GME).

Asked about the concerns, St. Louis regional Fed President James Bullard said (quoted by Bloomberg):

I’m not really seeing that right now. Fed policy has been appropriate given the crisis that we are in. I think it has helped to stabilize the economy and put the economy on a recovery path since May of 2020, and that recovery looks poised to continue, possibly very strongly.

People’s Bank of China injects $56 billion in 3 days

Moving closer to home, the People’s Bank of China (PBoC) is no stranger to market intervention.

As the Australian Financial Review reports, the PBoC injected174 billion yuan (AU$55.7 billion) into the financial system to bring down the soaring overnight lending rate. That’s the rate banks tend to charge each other for short-term loans. The overnight rate has now fallen from 3.33% to a more palatable 1.85%.

While some analysts fear that volatility in the overnight rate could lead to tighter monetary policy, Haitong International Securities chief economist Sun Mingchun dismisses those concerns. Speaking at VanEck’s China investor symposium, Sun said:

A lot of the investors are quite worried about a tightening in China’s monetary policy. We have seen some slight changes over the past few months but I think it’s not a change in direction. It’s more about trying to be practical and flexible. I don’t worry about monetary tightening. I think the People’s Bank of China is very smart. They are very flexible in determining their monetary policy.

RBA’s Lowe “not essentially” worried

Bringing it back home, the RBA on Tuesday left the official cash rate at a rock bottom 0.1%. The central bank also committed to another $100 billion of government bond purchases once the first $100 billion program runs its course in April.

How long can we expect this to continue?

According to Governor Philip Lowe:

The Board remains committed to maintaining highly supportive monetary conditions until its goals are achieved. Given the current outlook for inflation and jobs, this is still some way off.

I see.

So should ASX investors and property owners and investors be worried about the possibility of deflating bubbles?

Not essentially so.

According to Lowe (quoted by the AFR):

Am I worried about asset prices rising too quickly? At the moment, not essentially so. At the moment, I don’t see anything that’s unsustainable. I find it hard to express concerns about either of these developments in asset prices to date…

There’s a lot of focus at the moment on the fact that housing prices are rising again and the stock market has been strong. Well, the national house price index today is where it was four years ago… and the equity market, we’re back to where we were at the beginning of last year.

Lowe did point out that the RBA will be keeping a sharp eye on lending standards. Lowe stated “we would be concerned if there were to be a deterioration in these standards”. Adding “but there are few signs of this at the moment.”

So there you have it.

To date, the world’s most powerful central banks have worked alongside their governments to help keep housing prices and share markets from crumbling under the pressure of viral mitigation measures and the devastating impact of the virus itself.

And to date, the leaders of those banks appear confident they can manage any bubbles that may arise.

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• The worst isn’t over for GameStop: Here’s why
• GameStop chaos: How Aussie fund doubled money in 2 days
• COVID, US stimulus, Gamestop and a retreating Reddit army: The battles continue
• Millionaire maker! Rent.com.au (ASX:RNT) share price now up 300% in a week

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

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The Senetas Corporation Limited (ASX: SEN) share price is on the run today following the release of its preliminary results and an update on its Votiro investment.

At the time of writing, shares in the developer of encryption security solutions are up 12.2% to 6.4 cents.

Senetas performance update

In today’s release, the company delivered a robust result for the first half of the 2021 financial calendar.

For the period ending 31 December, subject to auditor review, Senetas achieved revenue growth of $12.5 million to $12.8 million. This reflects an increase of more than 30% on the prior corresponding period (pcp). The company highlighted strong sales of its 100Gbps encryptors, and growing market presence in the Middle East and Europe as key drivers of the result.

Senatas forecasts total group revenue to come in around $14 million to $14.4 million. This includes its interest in Israeli cybersecurity firm, Votiro, and represents a lift more than 30% on the first half FY20 period.

The company projects underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of $3.8 million to $4 million, up more than 170% on the same time last year.

Total group EBITDA, including Votiro, is predicted to stand at $1.3 million to $1.4 million. Consolidated group net profit after tax (NPAT) for H1 FY21 is estimated to be $0.2 million.

The company will release its final half-year results along with an update on its outlook on 26 February.

How is Votiro tracking?

After investing $8 million in Votiro during late 2018, Senetas is starting to reap the benefits.

Currently, the Israeli firm is conducting trials with a number of large north American organisations to supply its cybersecurity technology. The global leader is well-recognised for protecting government and businesses from malware and ransomware attacks.

In addition, a Fortune 500 company has selected Votiro’s secure file gateway to be deployed. The unnamed customer will use the technology to protect its 50,000 users from malware intrusions. It’s estimated that the contract is valued roughly US$250,000 per year over a 3-year term.

Management commentary

Senetas chair Francis Galbally welcomed the update, saying:

The demand for software protection against such threats is now only starting to emerge and Senetas believes this growth will be considerable and will translate into an opportunity to grow a substantial annuity business

The board is pleased that Votiro is achieving the expected results and growth that it targeted when we made our initial investment.

Senetas share price summary

The Senetas share price has stayed relatively flat over the course of the past 12 months, down 4%. Its shares have been up and down through the year, falling to a multi-year low of 3.8 cents, and rising to 7.9 cents.

Based on the current share price, Senetas has a market capitalisation of $67 million.

More reading

• What to expect from the Commonwealth Bank (ASX:CBA) half year result
• This chart shows why the ASX bull market can keep running
• Looking for diversification? Try this ASX ETF
• The Incannex (ASX:IHL) share price is surging 7% higher today. Here’s why
• Here are 3 ASX IPOs this fund manager was buying

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Earnings season will be heating up next week with the release of results from some of Australia’s biggest companies.

Chief among them will be the half year results release of Commonwealth Bank of Australia (ASX: CBA) on Wednesday.

Ahead of the release, I thought I would take a look to see what the market is expecting from Australia’s largest bank.

What is expected from Commonwealth Bank in the first half?

According to a note out of Goldman Sachs, it is expecting the bank to report cash earnings from continuing operations (pre-one offs) of $3,692 million. This will be down 15% on the prior corresponding period.

It is also notably lower than the market consensus cash earnings estimate of $3,954 million.

Goldman is also forecasting a dividend that is well short of consensus estimates. It has pencilled in an interim dividend of $1.25 per share, compared to the market’s expectation for a $1.45 per share dividend.

Both will be down from the $2.00 per share dividend it paid to shareholders in the prior corresponding period.

What else should you look out for?

The broker is expecting Commonwealth Bank to report a 4 basis point half on half decline in its net interest margin (NIM). This is expected to be driven by the impact of lower cash rates, mortgage competition, and its asset mix.

Though, Goldman does see potential for upside risk to its NIM forecast in the short term given recent and relatively aggressive downward repricing of deposit rates.

Its analysts are also expecting the bank to report a normalisation in its bad debts, which could ultimately lead to a reversal in some of the provisions it has made.

It explained: “To date, CBA’s performance on loan deferrals looks promising with the most recent data point showing another improvement (in Dec-20, deferrals sat at c.2% of total loans, down from its May-20 10% peak). We forecast BDD/TLs to fall to 30bp (from 54bp in 2H20) and see scope for potential provision releases; a key focal point of ours in the upcoming result being any indications made around this timing.”

Is the Commonwealth Bank share price a buy?

Given that Goldman Sachs is forecasting much weaker earnings and dividends than the market consensus, it may not come as a surprise to learn that the broker isn’t buying its shares right now.

The broker currently has a sell rating and $65.49 price target on its shares. This compares to the latest Commonwealth Bank share price of $87.06.

More reading

• This chart shows why the ASX bull market can keep running
• Commonwealth Bank (ASX:CBA) tipped to increase dividend by 50% next week
• ASX 200 up 0.9%, Afterpay drops, CBA rises
• Financials sector rallies as ASX 200 sees third day of gains
• GameStop (NYSE:GME) dominates the US shares ASX investors have been buying

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.

The post What to expect from the Commonwealth Bank (ASX:CBA) half year result appeared first on The Motley Fool Australia.

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The ASX bull market is losing steam today but there are good reasons to believe that ASX shares can keep running higher through 2021, if not longer.

The S&P/ASX 200 Index (Index:^AXJO) shed 0.8% ahead of the market close and will likely finish at the bottom of its intraday trading range.

It’s hard to feel confident about equities when many experts point to overstretched valuations, which leave little room for bad news.

And bad news can come from multiple fronts. A slower than expected roll out of mass COVID-19 vaccinations (essential for economic growth), mutating virus, rising bond yields and asset bubble fears are only a few that will keep investors on their toes.

Property rise will fuel ASX shares bull run

But there’s good news. ASX share market bulls looking for reassurance can thank the property market.

Expectations of rising home prices bode well for share investors, according to Morgan Stanley.

Rising home prices a bullish signal for ASX shares

That might sound somewhat counter-intuitive to some who believe that more capital flows into property means less for ASX shares. Property investors always feel like adversaries to share investors despite widespread overlap of the two camps.

How property and share investors are linked

But history shows that property is the best friend of ASX shares, and for good reason.

“House prices are an important signal of equity returns, both through direct housing-linked stock exposure (including sizable banks sector),” said Morgan Stanley.

“And also the underlying uplift they provide to the economy, given the significant leverage of the household sector to housing (e.g. wealth effects, construction employment etc).”

Double-digit growth forecast

Experts believe that house prices could jump by up to 10% this calendar year, reported Domain Holdings Australia Ltd (ASX: DHG).

The prediction follows data that shows house prices and new loan commitments hitting record highs.

This bullish forecast for property bodes well for the shares. Record low interest rates are the gift that keeps on giving for ASX investors.

Foolish takeaway

The flood of cheap money first lifted shares from their COVID low in March. Now it’s fuelling a hot property market.

This is one reason why I am bullish about the banking sector after years of being underweight on the sector.

The Commonwealth Bank of Australia (ASX: CBA) share price, Westpac Banking Corp (ASX: WBC) share price, Australia and New Zealand Banking GrpLtd (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) share price have been outperforming recently too.

Buy the dip, fellow Fools!

More reading

• What to expect from the Commonwealth Bank (ASX:CBA) half year result
• Top brokers just upgraded these 3 ASX shares to “buy”
• ASX 200 down 0.7%: AGL & Origin sink lower, Qantas pushes higher
• 4 most trusted ASX companies (and the 4 least trusted)
• Why the Westpac (ASX: WBC) share price is pushing higher

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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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Exchange-traded funds (ETFs) are often hailed for the diversification they can bring to one’s share portfolio. Since an ETF is a fund, it holds a basket of underlying shares within it.

The level of diversification offered by an ETF, however, can vary in scale and scope. Some ETFs cover specific industries, some cover the share markets of an entire country and some cover markets spanning multiple countries. These separate categories offer different types of diversification, some of which may suit certain investors more than others.

On that note, let’s take a closer look at one ASX ETF that offers more diversification than almost any other. That ETF is the Vanguard MSCI Index International Shares ETF (ASX: VGS).

A highly-diversified ETF

The reason VGS can be considered one of the most diverse ETFs on the ASX lies in its nature. The fund tracks the MSCI World ex-Australia index, which, according to Vanguard, follows “the world’s largest companies listed in major developed countries”. These advanced economies include the United States, Japan, the United Kingdom, France, Canada, Germany, Switzerland, New Zealand, Hong Kong and others (14 to be precise).

From these countries, The ETF tracks more than 1,500 different underlying shares. Due to sheer size, most of these holdings (67.5%) are domiciled in the United States, but Japan, the UK and Canada also meaningfully contribute.

Because of this US dominance, most of VGS’s top holdings are US companies. Its 10 largest holdings are as follows:

1. Apple Inc (NASDAQ: AAPL)
2. Microsoft Corporation (NASDAQ: MSFT)
3. Amazon.com Inc (NASDAQ: AMZN)
4. Facebook Inc (NASDAQ: FB)
5. Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)
6. Tesla Inc (NASDAQ: TSLA)
7. Johnson & Johnson (NYSE: JNJ)
8. JPMorgan Chase & Co (NYSE: JPM)
9. Visa Inc (NYSE: V)
10. Procter & Gamble Co (NYSE: PG)

Other large holdings that are not US companies include Nestle SA, Novartis, LVMH and Toyota Motor Corp.

Although it appears as though VGS is a US-centric ETF, it’s worth noting that most of the largest US companies it holds have significant global operations.

So how has this ETF performed?

Well, VGS has managed to return 5.8% in 2021 so far. It has also delivered an annualised return of 11.26% over the past 3 years, 11.03% over the past 5, and 12.03% since its inception in 2014. Part of these returns has come from dividend distribution payments. VGS possesses a trailing distribution yield of 1.81% on recent pricing.

The fund charges a management fee of 0.18% per annum, which means it will cost an investor $18 per year for every $10,000 invested.

Foolish takeaway

Outside the emerging markets space, there aren’t too many ETFs on the ASX that offer a more diversified portfolio that VGS. It provides investors with exposure to more than 1,500 companies around the world through just one holding. 

More reading

• 2 ETFs to buy for strong diversification
• These top ETFs could be great options for ASX investors right now
• 2 high quality ETFs for ASX investors to buy today
• 2 quality ETFs to buy for the long term

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Johnson & Johnson, JPMorgan Chase, Procter & Gamble, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, Facebook, Microsoft, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, Facebook, and Vanguard MSCI Index International Shares ETF. 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 Incannex Healthcare Limited (ASX: IHL) share price has zoomed up today as the company announced positive results in its drug study results.

Shares in the bio tech small cap are currently trading 7.5% higher at 17 cents.

What Incannex does

Incannex is a clinical stage pharmaceutical development company in the cannabis industry. The company utilises medicinal cannabis products and psychedelic therapies for the treatment of obstructive sleep apnoea and traumatic brain injury among other things.

Incannex is pursuing FDA registration, subject to ongoing clinical success, for each product under development.

In addition, the company owns a license to import, export and distribute medicinal cannabis products and has launched a line of cannabinoid oil products. The products are sold under Incannex’s product supply and distribution agreement with Cannvalate – a major shareholder of Incannex.

What’s driving the Incannex share price?

Incannex shares are higher today as the company expands its IHL-675A drug to include more inflammatory lung conditions. This comes after the company received positive results from additional in vivo (animal) studies.

The drug IHL-675A combines CBD with hydroxychloroquine for anti-inflammatory purposes. Previous tests have shown it is excellent candidate for the prevention and treatment of sepsis associated acute respiratory distress syndrome (SAARDS).

Incannex has now expanded target indications with initial patent filings for IHL675A to include asthma, bronchitis, and other inflammatory lung conditions.

Furthermore, the company estimates that the global addressable drug market for its products will reach US$50.4 billion by 2022.

Management comments

Incannex Healthcare CEO Joel Latham welcomed the news, saying:

IHL-675A is consistently showing stronger anti-inflammatory properties than CBD. Continued research will reveal how important this will be to the cannabinoid sector in light of continued research globally on CBD and its application to inflammatory conditions.

The synergistic action of IHL-675A allows us to substantially expand the potential uses for IHL675A and presents new patient treatment opportunities.

About the Incannex share price

Shares in Incannex are rising today as the company reported favourable drug results.

The company’s share price has soared in the last 6 months, up from 6 cents to 17 cents and banking an impressive 183.3% in the process.

More reading

• Here are 3 ASX IPOs this fund manager was buying
• Here’s why the Tombador (ASX:TI1) share price is rocketing 35% higher
• Top brokers name 3 ASX shares to sell today
• 3 compelling ASX shares rated as buys by brokers
• 2 ASX growth shares to buy right now

Motley Fool contributor Daniel Ewing 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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Earlier this week I took a look at three ASX shares which had helped the OC Micro-Cap Fund smash the market. You can read about that here.

Those shares weren’t the only ones helping drive OC Micro-Cap Fund’s strong performance. The fund manager also took part in a few IPOs during the final quarter of 2020. Here’s what it was buying:

Booktopia Group Ltd (ASX: BKG)

The OC Micro-Cap Fund participated in the IPO of this online book retailer. This proved to be a good move, with the Booktopia share price gaining 13% in the final quarter.

Booktopia recently released its half year update and revealed that it had a very strong finish to the year with both a record month in December and a record half. Booktopia shipped a massive 728,000 units during the final month of the half, bringing its total shipments to 4.2 million units for the six months.

This was a 40% increase in shipments on the same period last year and underpinned a 52% increase in unaudited half year revenue to $113 million and a 506% increase in adjusted EBITDA to $8 million.

Doctor Care Anywhere Ltd (ASX: DOC)

The fund manager also took part in the IPO of this telehealth company. It will have been delighted to see the Doctor Care Anywhere share price surge 50% higher during the quarter.

As with Booktopia, Doctor Care Anywhere was on form during the final three months of 2020. It reported a 151% increase in fourth quarter revenue to 3.8 million pounds, bringing its unaudited full year revenue to 11.6 million pounds. This was a 102% year on year increase.

Management advised that this was driven by a 186% increase in the eligible patient metric to 2.2 million and the increasing demand for telehealth services during the pandemic.

OC Micro-Cap Fund commented: “DOC is a UK based tele-health provider with plans to expand its offering into continental Europe and potentially in the Asia-Pacific region. The COVID-19 health crisis has accelerated patients switch to accepting online medical advice (rather than face to face consultations) and DOC is well placed to capitalise on this opportunity to deeply penetrate its potential customer base.”

Sovereign Cloud Holdings Ltd (ASX: SOV)

The OC Micro-Cap Fund also participated in this private cloud infrastructure company’s IPO. As with the others, this proved to be a success, with the Sovereign Cloud share price gaining 37.3% during the period.

The fund manager believes it has significant potential.

It commented: “SOV, at $100m market capitalisation, is on the smaller side for our Fund to participate in as an IPO but we believe the company has tremendous potential. SOV provides a private cloud infrastructure environment for sensitive information controlled by customers such as the Australian government and the ADF and is levered to increasing value and use of data.”

More reading

• Brokers name 3 ASX shares to buy right now
• ASX 200 falls 0.6%
• Why Booktopia, Nitro, Reliance, & Vulcan shares are charging higher
• Why the Booktopia (ASX:BKG) share price is rocketing 15% to a record high
• Why the Doctor Care Anywhere (ASX:DOC) share price is shooting 6% higher

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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The Tombador Iron Limited (ASX: TI1) share price is one of the best performers on the ASX market today. Its shares are rocketing 49% higher to 11 cents at the time of writing. This comes on the back of a signed offtake agreement with Trafigura.

Based in Singapore, Trafigura is one of the world’s largest commodity trading houses. The company provides services to connect producers, processors, and consumers in the oil and petroleum, metals, and minerals markets.

Let’s take a closer look at the agreement and what this means for the Trafigura share price. 

What’s pushing the Tombador share price higher?

The Tombador share price is on the move today after announcing a lucrative partnership deal.

According to its release, the company advised it has executed a binding offtake agreement with Trafigura.

Under the agreement, Trafigura will purchase 100% of Tombador’s high-grade iron ore that is mined and sold to the international export market. This does not include the separate sales that are made domestically to the Brazilian market.

While the release did not provide much information, Tombador stated that the contract terms include details in regards to the sale, shipment, delivery, and pricing for the iron ore. In addition, Trafigura will provide a pre-delivery partial payment to Tombador for support of the additional working capital.

The contract is valid for an initial minimum period of 3 years from when iron ore is first produced at the mine. Provided both parties are satisfised, the term of the deal will be renewed annually.

Quick take on Tombador

Formed in October, 2020, Tombador is an Australian miner that is focused on the development and retailing of iron ore. The company owns 100% of a world-class Tombador iron ore project, situated in the Bahia State in Brazil.

CEO commentary

Commenting on the partnership, Tombador CEO, Gabriel Oliva, said:

With production on track to commence in Q2 2021, we are delighted to have forged a relationship with a company of the calibre of Trafigura. This partnership provides certainty for sales and working capital support, ensuring a smooth entry to the international market once operations commence.

More reading

• The moral of the GameStop story?
• The Vmoto share price tumbles 9% despite some positive sales figures
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX
• Revenue growth pushes Wisr (ASX:WZR) share price higher
• The Next Science (ASX:NXS) share price is up 8% today. Here’s why

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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below. Here’s why these brokers are bearish on them:

BWP Trust (ASX: BWP)

According to a note out of UBS, its analysts have retained their sell rating and $3.86 price target on this Bunnings landlord’s shares. This follows the release of a half year result earlier this week that was a little softer than it was expecting. In addition to this, it has issues with its valuation and believes the market isn’t pricing in the risks it is facing. The BWP share price is currently fetching $4.11 on Thursday afternoon.

Platinum Asset Management Ltd (ASX: PTM)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating but lifted the price target on this fund manager’s shares to $3.20. According to the note, the broker believes that Platinum’s shares are overvalued considering the fund outflows it is experiencing. In December, the company experienced net outflows of approximately $149 million despite an improving performance. The Platinum share price is trading at $4.36.

Virgin Money UK CDI (ASX: VUK)

Analysts at Morgans have retained their reduce rating but lifted the price target on this UK based bank’s shares to $2.36 following its first quarter update. According to the note, the broker was pleased to see the company report low impairment charges during the quarter and reaffirm its guidance for FY 2021. Nevertheless, Morgans holds firm with its reduce rating and sees more value in some of the Australian banks. The Virgin Money UK share price is trading at $2.69 this afternoon.

More reading

• Why AGL, Bubs, BWP, & Origin shares are dropping lower
• ASX 200 up 0.9%, Afterpay drops, CBA rises
• Why the Virgin Money UK (ASX:VUK) share price is surging 13% higher
• ASX 200 up 1.1%: Amcor jumps, South32 sinks, Virgin Money UK rockets
• Here’s why the BWP (ASX:BWP) share price is heading higher today

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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Brokers are constantly looking at the ASX share market, deciding which businesses look like promising ideas and which ones look expensive.

The below ASX shares have been rated as buys by at least three brokers:

City Chic Collective Ltd (ASX: CCX)

City Chic is a retail business which specialises in plus-size apparel, footwear and accessories for women.

It’s currently liked by at least three brokers.

It operates a variety of different brands. It owns City Chic, Avenue, CCX, Hips & Curves, Fox & Royal. It has a network of almost 100 stores across Australia and New Zealand. It also has websites operating in Australia, New Zealand and the US. On top of that, it has marketplace and wholesale partnerships with big retailers in the US like Macys and Nordstrom, and a wholesale business with European and UK partners such as ASOS and Zalando.

Avenue targets value-conscious women with a long history and significant online customer following in the US. Hips & Curves and Fox & Royal are online intimates brands in the US and ANZ respectively.

One of the main reasons why brokers such as Morgan Stanley like the ASX share is that the retail apparel sector is doing well, as seen with updates from other apparel companies.

Morgan Stanley likes the balance sheet strength of the business, which could fund other acquisitions. City Chic recently announced the acquisition of Evans in the UK.

Reject Shop Ltd (ASX: TRS)

Reject Shop is a discount retailer in Australia. It’s currently liked by at least three brokers.

The ASX share is currently going through the process of trying to lower its cost base. Morgan Stanley pointed out that Reject Shop’s management said at the AGM that the strategy is going according to plan.

Reject Shop could be a beneficiary from customers spending more time at home, it’s also working on providing a smaller number of different products so that there’s more product availability of the remaining items for customers and so that it has better buying power with suppliers.

One of the other ways that Reject Shop is looking to improve margins is by renegotiating many of its leases with landlords.

Once the company’s cost base is set at a sustainable level, it’s expected to pursue longer-term growth through store network expansion and e-commerce.

However, there have been delays at Australian ports which is affecting stock availability and increased costs through higher shopping charges.

Bapcor Ltd (ASX: BAP)

Bapcor claims to be the largest auto parts business in Australasia.

This ASX share is currently liked by at least six brokers.

The company is seeing elevated levels of demand during these strange times.

Trade and wholesale represent over 80% of Bapcor’s business, with retail representing around 20%. Management said that trade focussed businesses perform solidly in difficult economy conditions, which is being demonstrated by the current levels of performance.

Bapcor said that retail businesses continue to gain momentum with revenue up 40% over the prior corresponding period in the first half of FY21. The company has implemented a number of initiatives to help growth. That includes a new Autobarn store format which is delivering a significant uplift in sales. It has also improved its e-commerce capabilities and continued to open new locations.

One of the other things that Bapcor is doing to improve profit margins is that it’s building a new distribution centre for Victoria. The automated picking system is expected to be operational by August 2021. Management believe this will offer significant operational benefits.

In the first half of FY21, Bapcor is expecting profit growth of at least 50%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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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