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With the interest rates on offer from traditional interest-bearing assets at record lows, it certainly is a tough time to be an income investor.

But don’t worry because the Australian share market is home to a large number of dividend shares with far better yields. Two to take a closer look at are listed below:

Fortescue Metals Group Limited (ASX: FMG)

If you’re looking for very large yields and don’t mind investing in the resources sector, then Fortescue could be worth a look. It is one of the world’s leading iron ore producers and boasts some of the lowest costs in the industry.

At present Fortescue is pulling iron ore out of the ground with a C1 cost of just US$12.74 per wet metric tonne. This compares to the current iron ore price of US$155.64 per tonne. So with Fortescue on course to deliver record shipments in FY 2021, it is well-placed to record another bumper full year result.

One broker that is expecting this to be the case is Macquarie. The broker is forecasting a very generous dividend payment in FY 2021 of approximately $2.61 per share fully franked. Based on the current Fortescue share price, this equates to a massive 10.9% dividend yield.

Westpac Banking Corp (ASX: WBC)

Although the big four banks have rallied hard in recent months, they still offer investors potentially generous dividend yields now that APRA is allowing unrestricted dividend payments in 2021.

Especially given improving house prices and Australia’s solid economic recovery from the pandemic. This could put the banks in a position to deliver modest growth in the coming years and reward shareholders for their patience.

In respect to Westpac, analysts at UBS are forecasting a $1.00 per share dividend in FY 2021 and then a $1.20 per share dividend in FY 2022. Based on the current Westpac share price, this represents fully franked ~5% and 5.9% dividend yields, respectively.

More reading

• ASX 200 Weekly Wrap: ASX hits new post-March high
• 2 ASX dividend shares with 4%+ yields
• How useful is the P/E ratio in assessing ASX shares?
• Why Bapcor, Fortescue, Nufarm, & Saracen shares are pushing higher
• Why the IOOF (ASX:IFL) share price is one to watch on Friday

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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On Monday the City Chic Collective Ltd (ASX: CCX) share price was in sensational form.

The fashion retailer’s shares surged 11% higher to $3.52.

Why did the City Chic share price surge higher?

Investors were buying the company’s shares after it announced a binding asset purchase agreement to acquire UK-based women’s plus-size clothing retailer Evans for 23.1 million pounds (A$41 million).

Evans is a UK-based retailer of women’s plus-size clothing with a longstanding customer base and strong market position. The Evans assets will be acquired from the Arcadia group, which entered into administration on 30 November.

Management notes that the acquisition provides the company with a platform to launch into a new market worth 5 billion pounds per annum at present.

Is it too late to buy City Chic shares?

According to a note out of Goldman Sachs, its analysts don’t believe it is too late to invest.

This morning the broker reiterated its buy rating and lifted its price target on the company’s shares to $4.25.

Goldman Sachs was pleased with its acquisition of Evans and believes the acquisition will have a positive impact on its business.

The broker commented: “We estimate that the acquisition price implies a 6.0x FY22 EBITDA, vs. 2.2x FY21 EBITDA paid for Avenue in the US and is broadly in line with what CCX would have had to pay to acquire Catherines but arguably delivers greater strategic benefits: (1) immediate scale in the UK, (2) strong platform for cross-selling Avenue and City Chic product, and (3) retaining a strong balance sheet that will not constrain CCX’s ability to invest in future organic and/or inorganic growth.”

“We raise our FY21E/FY22E/FY23E EPS by 4-16% based on revenue growth assumptions of 5-10% for Evans and EBITDA margins to achieve 15% by FY23E. Our 12m TP moves to A$4.25 (from A$3.90). As this offers a potential return of 21%, we retain our Buy rating,” it concluded.

More reading

• Here’s why this fundie thinks City Chic (ASX:CCX) is an attractive ASX share
• Why City Chic, Kogan, Next Science, & NIB shares are charging higher
• Why the City Chic (ASX:CCX) share price is rocketing 15% 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 Australian share market may have been out of form on Monday, but that didn’t stop the Nanosonics Ltd (ASX: NAN) share price from continuing its positive run.

In fact, the infection prevention company’s shares climbed to a new record high of $7.95.

When it hit that level, it meant the Nanosonics share price was up 25% year to date.

But perhaps even more impressive, is that it has gained 54% since the start of November.

Why is the Nanosonics share price at a record high?

Investors have been buying the company’s shares over the last couple months amid a big improvement in its performance.

In its business update at the start of November, management revealed that the company has continued to grow the footprint of its trophon product during the first four months of FY 2021. It advised that the number of new trophon units installed globally was up 16% during the period.

This was supported by growth in the sales of the consumables that the trophon system uses. Unit purchases of consumables by end customers in the first four months of FY 2021 were up 4% compared with prior corresponding period and 25% compared with the last four months of FY 2020.

This update went down well with analysts at UBS, who put a buy rating and $7.20 price target on its shares following the update.

Though, after rocketing 38% higher since that broker note was released, the Nanosonics share price is now trading well ahead UBS’ price target.

What else is driving its shares higher?

As with many shares, the prospect of effective vaccines being rolled out imminently has given its shares a boost.

Nanosonics struggled to gain access to hospitals in FY 2020 because of the pandemic. This appears to have made it harder to close deals and put a dampener on its growth.

However, once vaccines are rolled out, access should be significantly easier. And given the increasing importance of infection prevention, investors appear to be betting that demand for its products could strengthen.

This will make Nanosonics one to watch in 2021.

More reading

• These are 8 of the best performing ASX healthcare shares of 2020 so far
• 2 ASX healthcare shares to buy for 2021 and beyond
• 10 highly rated ASX shares to buy in 2021
• 2 quality mid cap ASX shares to buy in December
• 10 fantastic ASX shares to buy in December

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 Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics 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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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week in a subdued manner and recorded a small decline. The benchmark index fell a few points to 6,669.9 points.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

ASX 200 expected to fall.

The Australian share market looks set to drop lower on Tuesday. According to the latest SPI futures, the ASX 200 is poised to open the day 26 points or 0.4% lower this morning. This follows a mixed start to the week on Wall Street. In late trade the Dow Jones is up 0.25%, the S&P 500 is down 0.35%, and the Nasdaq has fallen 0.2%.

AGL Energy rated neutral

The AGL Energy Limited (ASX: AGL) share price sank lower on Monday after downgrading its guidance for FY 2021. One leading broker that isn’t rushing in to buy shares is Goldman Sachs. Its analysts have retained their neutral rating and cut the price target on the energy company’s shares to $14.10. On Monday AGL downgraded its net profit after tax guidance from $560 million-$660 million to $500 million-$580 million. This represents an 11% reduction at the midpoint.

Oil prices sink lower.

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could come under pressure today after oil prices sank lower. According to Bloomberg, the WTI crude oil price is down 2.8% to US$47.73 a barrel and the Brent crude oil price has fallen 2.8% to US$50.81 a barrel. A new COVID-19 strain has fuelled demand concerns.

Gold price softens.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and St Barbara Ltd (ASX: SBM) could come under pressure after the gold price softened. According to CNBC, the spot gold price has fallen 0.3% to US$1,883.50 an ounce.

Pfizer COVID-19 vaccine approved in Europe.

The European Medicines Agency has authorised the Pfizer COVID-19 vaccine in people ages 16 and older. In light of this, Europe is on track to start vaccinations within a week. According to CNBC, vaccine authorisations are picking up pace on the continent just as countries tighten their lockdowns amid a deadlier winter wave of infections.

More reading

• ASX 200 ends slightly down
• Why the Medibank (ASX:MPL) has surged 4% higher today
• Why the AGL (ASX:AGL) share price has fallen 6% today
• What will happen when Tesla (NASDAQ:TSLA) joins the S&P 500 today?
• Under attack! Why the WiseTech Global (ASX:WTC) share price is down 9%

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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Retail investors in the US are shaping up to be better stock pickers than the professionals during the COVID‐19 rebound this year.

These mum and dad investors have generated returns that are twice that of hedge funds, according to Reuters.

I believe everyday ASX investors in Australia are also beating the pros at their own game. As reported in July, retail investors here have rushed to buy embattled ASX stocks during the COVID market meltdown.

It appears that US retail investors have done the same – turning the idiom “fools rush in where angels fear to tread” on its head!

I’ll tell you why this is significant later in this piece.

Stocks most popular with retail investors in 2020

Online trading platforms showed that the US stocks most popular with retail investors have performed much better than the overall market.

These stocks include the likes of the Amazon.com, Inc. (NASDAQ: AMZN) share price and Tesla Inc (NASDAQ: TSLA).

Reuters said that a basket of 58 US stocks popular with retail investors have surged 80% this year.

This compares to a 14.5% rise in the S&P 500 Index (INDEXSP: .INX) and a 40% return from hedge funds run by some of the brightest minds in the financial sector.

In Australia, our equivalent to Amazon and Tesla is the Afterpay Ltd (ASX: APT) share price. I suspect retail investors have been snapping up the stock more so than fund managers.

2020 is the year for “fools”

Perversely, it may be the lack of so-called “sophistication” that allowed retail investors to race ahead of the pros. These amateurs don’t believe in diversification and have a portfolio that’s concentrated in a few stocks that have led the rebound.

They were also less worried about controlling and managing risks. On the other hand, professionals have been cautious about pumping capital into a falling market earlier this year.

Retail investors beating pros to starting line

You can blame central banks for this. Retail investors have thrown caution into the wind when their savings are attracting close to zero returns. Other safe investment options are also underperforming when interest rates are at rock bottom and central bankers are flooding financial markets with cash.

This leaves retail investors few options and they are the ones diving head first into equities when the pros were still working out how deep the waters were.

Double, double toil and trouble

Some are drawing comparisons with the dotcom crash of 2000 as retail investors don’t seem to mind buying stocks that experts think are overpriced.

The “hot” US retail stocks of 2020 are trading on negative price-earnings multiples on average because many don’t make a profit, added Reuters.

“Of course it’s a bubble,” Mark Taylor, a sales trader at Mirabaud Securities, told Reuters.

“But money is free, liquidity is high, it’s never been easier to trade for retail punters, there’s no savings rate or bond yield and everyone wants the bubble to pop.”

Retail investors in winners circle

Sceptics waiting for the day of reckoning may need to exercise patience. The rebound in global economic growth as vaccines become available means that share markets are likely to keep rallying in 2021.

This is likely to force fund managers and other professionals left behind by retail investors to play catch-up quick.

Otherwise, they risk underperforming for a second year running and face uncomfortable questions from irate clients.

More reading

• What will happen when Tesla (NASDAQ:TSLA) joins the S&P 500 today?
• How to invest in US shares in 2021
• Better buy: Amazon vs Chewy
• Amazon has a new strategy to capture India’s e-commerce market
• World’s 10 biggest companies are now worth 12% of Earth’s GDP

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors.

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Tesla 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 Amazon. 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 year 2020 has not been kind to the transport sector, with some of the biggest names biting the bitter pill in a year that’s been lost to the coronavirus pandemic.

Airlines and airports have naturally been hit hard this year. However, there are also some transport shares that have done well in 2020.

Let’s take a look at the top 3 winners and losers in ASX transport shares in 2020.

First, the losers…

Company	1-year share price return	Current share price	Market cap
1. Qantas Airways Limited (ASX: QAN)	-33%	$4.89	$9.2 billion
2. Sydney Airport Holdings Pty Ltd (ASX: SYD)	-28%	$6.35	$17.2 billion
3. Aurizon Holdings Ltd (ASX: AZJ)	-25%	$4.04	$7.47 billion

Qantas Airways

The national carrier’s share price has seen some volatility this year, being pushed up and down at the slightest news on the virus outbreak.

The Qantas share price lost 33% this year, after losing 70% in March and dropping to its 52-week low of $2.03. The share started to pick up in November after news of successful vaccine testing was announced to the market.

Light is starting to appear at the end of the tunnel however, with the airline saying last week that its budget offshoot Jetstar will already exceed pre-COVID volume of flights within 3 months.

Although international leisure travel may still be months away, the airline revealed that its domestic capacity was already at 68% of pre-COVID levels for December, rising to nearly 80% for quarter-three.

Qantas delivered underlying profit before tax (NPAT) of $124 million for full year FY20, down 91% from FY19.

Sydney Airport

The Sydney Airport story in 2020 has pretty much followed the fate of Qantas. 

The airport’s shares had fallen by 50% in March, before recovering as economic outlook progressively improved in the second half of the year.

The company revealed that for the month of November 2020, it saw total passenger numbers decline by 90.6% to 350,000.

Sydney Airport has suspended dividend payments for the first time ever in its history, after reporting a $51.8 million net loss after tax, compared to a profit after tax of $200 million in the corresponding 2019 period.

The airport’s shares will certainly be one to watch in 2021 when the economy and travel are expected to be back to normal.

Aurizon 

Aurizon is not perhaps covered tremendously in the media. After all, it’s a rail freight operator company.

However, the company is a large juggernaut, transporting more than 250 million tonnes of Australian commodities – connecting miners, primary producers, and industry with international and domestic markets.

The Aurizon share price has lost a bit of shine this year, losing 25% in value as commodities exports dwindle in the face of the pandemic. Near term headwinds will come in the face of the continuing Australia-China political spat, as Australian coal has apparently been added to Beijing’s ban list.

Given the tough market, the company actually delivered an impressive full year FY20 NPAT of $531 million, up from $473 million the previous year.

And now for the winners….

Here are the top 3 performing ASX transport shares in 2020. The winners have been dominated by small cap shares, with the airlines Rex leading the charge.

Company	1-year share price return	Current share price	Market cap
1. Regional Express Holdings Ltd (ASX: REX)	+64%	$1.965	$212.6 million
2.Alliance Aviation Services Ltd (ASX: AQZ)	+65%	$4.04	$646.6 million
3.Wiseway Group Ltd (ASX: WWG)	+15%	$0.22	$32.2 million

Rex Airlines

The Rex share price has gained 64% in 2020, with 25% made in the past month alone.

Rex has been a favourite for investors recently, after it announced that it will break out of its regional roots and start servicing the “golden triangle” route. 

The Golden Triangle refers to the Sydney-Melbourne-Brisbane routes – among the busiest in the world.

The airline was brought to its knees back in March as passenger numbers plummeted 90%. Rex subsequently announced a loss after tax of $19.4 million on a turnover of $321.8 million for financial year 2020.

Alliance Aviation

The Alliance Aviation share price has performed brilliantly in 2020, gaining 54% and reaching its all-time high of $4.08 on 18 December.

Why has the company performed solidly this year while other airlines floundered?

First, Alliance generates income by providing contract, charter and allied aviation services to the mining and energy industry, both locally and internationally. The company actually delivered a profit before tax of $47.7 million in FY20 (+24.1% compared to the previous year).

Unlike other aviation and airport businesses, Alliance Aviation provides aviation services to mainly iron ore, gold, copper and uranium sectors, with the commodities industry representing 53% of its total contract value in FY20. As some of these exports have maintained their strong demand this year, so has demand for Alliance’s services.

Wiseway Group

You can’t blame yourself for not having heard about this company.

Wiseway describes itself as “one of the leading forward freight companies in Australia”, offering “extensive high-quality services for the whole Australia wide and globally”.

The company services all aspects of international forwarding and logistics, including air freight, sea freight, customs clearance, transportation, warehousing, distribution, and logistics solutions.

The Wiseway share price has gained 15% this year, with revenues up 53% to $31 million for the first quarter of Fy21. This was up $10.7 million from the prior corresponding period.

The $31 million in revenue for FY2021 so far compares favourably with the total revenue of $102.6 million that the company banked in the entirety of FY2020.

More reading

• ASX 200 ends slightly down
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• ASX 200 Weekly Wrap: ASX hits new post-March high
• 3 recovery ASX shares to buy for 2021
• 2 ASX dividend shares for 2021’s zero interest rate world

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings 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 McPherson’s Ltd (ASX: MCP) share price will be on watch on Tuesday following the release of a trading update after the market close.

What did McPherson’s announce?

This afternoon McPherson’s confirmed that sales from its core brands in the Australian market continue to exceed last year’s figures.

According to the release, year to date, the company’s owned brands, excluding the Dr. LeWinn’s brand, have recorded sales growth of 7%.

This has been driven by double digit sales growth from the Manicare, Lady Jayne, and A’kin brands. Furthermore, market share growth has been recorded from 4 out of 6 of its owned brands.

The Dr. LeWinn’s brand continues to weigh on the company’s performance, though. Like A2 Milk Company Ltd (ASX: A2M), this has been caused by weakness in the daigou channel.

However, unlike a2 Milk, the sales of these products inside China haven’t been strong, with Chinese Singles’ Day sales falling well short of expectations.

Global Therapeutics acquisition.

In addition to this, the company revealed that the Global Therapeutics acquisition from Blackmores Limited (ASX: BKL) completed successfully on 30 November and its integration is progressing smoothly.

Management believes that this reflects the professional, collaborative approach of Global Therapeutics, McPherson’s, and Blackmores.

McPherson’s new Chief Executive Officer and Managing Director, Grant Peck, commented: “McPherson’s year to date domestic sales growth reflects the consumer appeal of our market leading brands and our focus on new product innovation. All of the early signs are positive as we integrate Global Therapeutics into McPherson’s and realise the complementary capabilities of the combined teams. Domestically, we continue to drive cashflow to support our mature dividend profile and modest debt levels.”

Mr Peck, who was appointed CEO earlier this month after the sudden departure of Laurie McAllister following a series of terrible updates, also provided the market with guidance for the first half of FY 2021.

He revealed that McPherson’s is on track to achieve its previous first half underlying profit before tax guidance in the range of $6.5 million to $7.5 million. This represents an 11.8% to 23.5% decline on the prior corresponding period’s profit before tax of $8.5 million.

In addition to this, the new chief executive revealed that shareholders should expect a dividend March. He advised that the company’s dividend policy is to pay a minimum dividend of 60% of underlying profit after tax, subject to cash requirements.

In line with this policy and based on its forecast first half underlying earnings, an interim fully franked dividend of at least 3 cents per share is expected to be paid to shareholders in March.

Annualised, this represents a fully franked 4.5% dividend yield. This may be far better than many had expected after its recent updates and guidance withdrawal.

More reading

• Why Appen, McPherson’s, Northern Star, & PWR shares are dropping lower
• Why the McPherson’s (ASX:MCP) share price is sinking lower again
• Why Adore Beauty, Bank of Queensland, Bega Cheese, & McPherson’s are dropping lower
• Why is the McPherson’s (ASX:MCP) share price dropping 35% today?
• Why these All Ords shares have been smashed this month

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Blackmores Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With only 3 full shopping days left before Christmas, let’s throw the spotlight on S&P/ASX 200 Index (ASX: XJO) retail shares. Specifically, 3 leading ASX retail shares that are well-positioned to potentially outperform the market in 2021.

If you’ve already finished your Christmas shopping for the year, good on you! If you still have a few items to cross off your Santa list, you’re far from alone.

Outside of the greater Sydney area, where a new wave of COVID-19 infections has unfortunately seen lockdown restrictions return, shoppers are increasingly returning to brick-and-mortar retailers.

Which is not to say that the rise of online retailing is over. It’s not. According to estimates from Macquarie, 20% of consumer spending will be online in 5 years.

But that still leaves the majority of spending occurring in physical stores. And with the rollout of vaccines expected to commence in Australia in February or March, the second half of 2021 could see a major return to in-store shopping.

Whether you prefer to do your shopping on your phone or computer, or face to face with clerks and shoulder to shoulder with your fellow shoppers, the 3 ASX retail shares we look at below have a strong presence in both online and physical store sales.

Cashed up consumers a tailwind for ASX retail shares

Credit Suisse analysts Grant Saligari and Annabelle Diamond are bullish on the outlook for Australian consumer spending in the final days of 2020 and through 2021.

According to the Australian Financial Review, the analysts say:

The market is too bearish on household goods and food expenditure. Under-spending on travel and a substantial savings buffer provide considerable downside support for spending.

The analysts expect the work from home trend established during the pandemic lockdowns to continue, even as more people do return to office. They estimate this could see a 4% increase in spending on electronics and furniture.

While international travel for Australians may recommence by mid-2021, the Credit Suisse analysts believe the tailwinds from cashed up consumers are likely to continue into the 2022 financial year:

A recovery in international travel in FY22 to 50 per cent of its pre-COVID-19 level would imply under-spending. While we acknowledge that travel substitution is likely a transitory impact, it is likely that some extension of under-spending will continue into FY22 at least.

With Australians unable to take international holidays, and many households benefiting from ramped up government support packages and early access to super, the AFR notes that the average Aussie’s credit card debt is already down more than $500 year-on-year, while the average bank balance is up $12,500.

And it’s not just less debt and more cash in the bank that’s likely to drive an increase in spending. According to the latest ANZ-Roy Morgan consumer confidence survey, consumer confidence is also up year-on-year.

Ka-ching!

Why Credit Suisse upgraded these retailers

With this consumer spending picture in mind, Credit Suisse has upgraded its views on these 3 ASX 200 retailers, in part based on the companies’ relatively low levels of debt.

First up, Harvey Norman Holdings Limited (ASX: HVN), known for its wide offerings ranging from electronics and appliances to furniture and homeware. Credit Suisse upgraded its view to “outperform” with a target price of $5.30. That’s 11% above Harvey Norman’s current share price of $4.74.

Harvey Norman’s shares reached a low for the year on 23 March, trading for $2.45 per share. Year-to-date the Harvey Norman share price is up 17%.

The company pays a dividend yield of 3.85%, fully franked.

Next up is Wesfarmers Ltd (ASX: WES), whose subsidiaries include household names such as Bunnings Warehouse, Kmart Australia and Officeworks. Credit Suisse upgraded its view to “outperform” with a target price of $55.83. That’s 9% above the Wesfarmers’ current share price of $51.30.

Wesfarmers pays a 2.97% dividend yield, fully franked. Year-to-date the Wesfarmers’ share price is up 24%.

The third ASX retail share to receive an upgrade from Credit Suisse is JB Hi-Fi Limited (ASX: JBH), also raised to “outperform”. Credit Suisse set a new target price of $53.02 for the iconic electronics, appliance and whitegoods retailer. That’s 10% above JB Hi-Fi’s current share price of $48.38.

JB Hi-Fi pays a 3.94% dividend yield, 50% franked. Year-to-date the JB Hi-Fi share price is up 29%.

More reading

• Forecast double-digit surge in Aussie dollar could put brakes on ASX rally in 2021
• ASX 200 Weekly Wrap: ASX hits new post-March high
• These are the 7 best ASX retail shares in 2020
• Why this broker thinks the Wesfarmers (ASX:WES) share price can go higher
• Citigroup picks the best ASX retail stocks to own for 2021

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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 S&P/ASX 200 Index (ASX:XJO) fell slightly on Monday, down 0.1% to 6,670 points.

Here are some of the highlights from the ASX today:

City Chic Collective Ltd (ASX: CCX) acquisition

City Chic is going to acquire UK plus-size brand Evans from the Arcadia group. Evans has a long history, having operated for 90 years as a high street retailer.

The ASX share is buying Evans’ e-commerce and wholesale businesses, which generated £26 million (A$46 million) of sales for the financial year to August 2020. The Evans website had 19 million visits in that time.

However, this acquisition doesn’t include the store network of more than 100 locations in the UK. The administrators are entitled to trade from the existing Evans stores until the end of March 2021, in order to liquidate existing stock in the stores. The franchise business, based primarily in Middle East, is also excluded from the acquisition.

The Evans group (online, wholesale, stores and franchise) generated over £60 million of annual sales prior to COVID-19. City Chic said that Evans has high online penetration with almost half of direct-to-consumer sales (stores and website) being through the digital channel.

The store portfolio has been shrinking for a number of years with customers changing to the digital channel, which City Chic thinks will minimise any e-commerce sales leakage as a result of the administration-led store liquidation. The acquisition will be funded from City Chic’s existing cash balance, which was A$121 million before the acquisition. Its $40 million debt facility will remain undrawn.

City Chic said that this acquisition will give it a platform to launch into a new market worth £5 billion annually in the UK, or $9 billion in Australian dollar terms.

The City Chic share price rose by more than 11% today.

Private health insurance premiums

Private health funds across Australia have today received approval from the Federal Minister for Health for increases to the private health insurance premiums.

NIB Holdings Limited (ASX: NHF) has received approval from the minister to increase insurance cover premiums for NIB health funds by an average of 4.36% across all products. The changes are effective from April 2021.

NIB managing director Mark Fitzgibbon said the premium changes were a balance of affordability whilst ensuring NIB members can access medical treatment when and where they need it.

Mr Fitzgibbon said: “Premium changes are never welcomed but the reality is that the cost of medical treatment continues to rise well above inflation and we’re increasingly seeing members access healthcare services with health insurance a critical funding tool enabling treatment and care.

“A perfect example is the concerning increase in members accessing member health services. In the 12 months to 30 September 2020 mentals health benefits totalled $48.8 million.”

NIB also said that its contribution to the industry’s risk equalisation scheme is also a driver of its premium increase.

The NIB share price went up 3.75% in reaction to this.

The biggest private health insurer, Medibank Private Limited (ASX: MPL), said that it was approved for its lowest premium rise in 20 years.

Medibank said it has received approval to increase Medibank and ahm health insurance premiums by an average of 3.25% from 1 April 2021.

The Medibank share price went up by 3.75% today.

Travel shares drop, then recover

Many of the ASX travel shares fell heavily at the open after New South Wales was cut off from the rest of the nation as hard borders went up again in reaction to the COVID-19 outbreak in the northern beaches of Sydney.

At the end of the day’s trading, the Webjet Limited (ASX: WEB) share price finished 0.4% lower, the Flight Centre Travel Group Ltd (ASX: FLT) share price dropped 1.8%, the Qantas Airways Limited (ASX: QAN) share price fell 0.6%, the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price dropped 0.8% and the Helloworld Travel Ltd (ASX: HLO) share price declined 4%.

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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 Helloworld Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and NIB Holdings 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 Medibank Private Ltd (ASX: MPL) share price is surging more than 4% higher today to start the pre-Christmas trading week strongly.

This follows a market update this morning on changes to its health insurance premiums from April next year.

Why is the Medibank Private share price surging?

The Aussie private health insurer has received approval to increase its Medibank and ahm health insurance premiums. From 1 April 2021, premiums will rise by an average of 3.25% – the lowest average premium increase in 20 years.

The Medibank share price has rocketed 4.1% higher to $3.05 per share today. The news buoyed investors in an otherwise soft day of trade on the ASX across sectors.

It’s been a tough year for Aussie health insurers with the Medibank share price falling 4.2% lower in a year dominated by coronavirus concerns.

The story is similar for the NIB Holdings Limited (ASX: NHF) share price today. Shares in the rival health insurer have climbed 3.1% higher today but remain down 9.5% for the year.

The NIB share price has also surged after the company announced an average premium increase from 1 April next year of 4.36% across all products. In contrast to Medibank, that premium increase is higher than the 3-year average premium increase of 3.55%.

NIB managing director Mark Fitzgibbon noted the impact of the planned premium increase. NIB’s annual average premium per single equivalent unit will be $2,844 compared to an industry average of $3,119.

Foolish takeaway

The Medibank share price has been a bright spot in a soft start to the week for the S&P/ASX 200 Index (ASX: XJO).

The benchmark Aussie index is down 0.1% to 6,669 points as COVID-19 concerns continue to hang over markets. WiseTech Global Limited (ASX: WTC) and AGL Energy Limited (ASX: AGL) are among the biggest losers on Monday.

Medibank now boasts a market capitalisation of $8.4 billion with a price to earnings (P/E) ratio of 26.7 and a 3.9% dividend yield.

More reading

• What will happen when Tesla (NASDAQ:TSLA) joins the S&P 500 today?
• Under attack! Why the WiseTech Global (ASX:WTC) share price is down 9%
• The most crazy ASX chart of 2020
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• Here’s what is driving the NIB (ASX:NHF) share price higher today

Motley Fool contributor Ken Hall 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 Why the Medibank (ASX:MPL) has surged 4% higher today appeared first on The Motley Fool Australia.

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