Tag: Motley Fool

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

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

If you’re a fan and follower of legendary investor Warren Buffett, then you’re certainly aware of Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B). When people talk about mirroring Buffett’s buys and sells, they’re actually talking about Berkshire’s trades. The holdings of the company’s portfolio are publicly disclosed every quarter, too, which makes riding the Oracle of Omaha’s coattails a relatively easy task. Easier still is simply owning shares of the highly diversified multinational conglomerate!

Whatever your style, a handful of things are likely to happen with Berkshire Hathaway’s portfolio in what will hopefully be a more normal 2021. Three stand out above the rest. Buffett and his acolytes have already tipped their hands, so to speak, as to two of them.

1. Rekindled operating earnings, cash flow

It’s an often overlooked nuance of the Berkshire Hathaway portfolio, but it’s not just a collection of stocks. Around half of Berkshire’s $500 billion valuation reflects the value of privately held companies, like See’s Candies, Dairy Queen, Helzberg Diamonds, GEICO, Pampered Chef, and Benjamin Moore, just to name a few.

These owned companies are tracked differently than Berkshire’s stocks. Berkshire’s publicly traded investments are called “investments in equity securities” on the company’s books, and changes to their value are booked as “investment gains (or losses)” on its quarterly statements. Businesses that are outright owned by Berkshire Hathaway, however, don’t have an ever-changing market value. They’re the companies that drive revenue that’s eventually turned into net income and cash flow, as any stand-alone business reports.

The arrangement can make it tough to ferret out just how Buffett’s non-stock holdings are performing in any given quarter. And like most other companies, this year has been a tough one for Berkshire. Its third-quarter operating profits fell 32% year over year, worsening from Q2’s 10% dip in operating income to $5.5 billion. You may have seen much different numbers due to gains in the value of the stocks also held by Berkshire during that time, though no amount of unrealized stock gains can fully offset the record-breaking net loss of $50 billion booked during the first quarter of the year, when the pandemic first took hold. As it stands right now, Berkshire’s actual operating income this year should be on the order of about half of last year’s total.

Buffett cares little about these wild swings in reported quarterly income, as the stock market’s volatility exaggerates how well or how poorly the portfolio is actually doing. But you should care, since the cash these privately held companies produce ultimately funds things like new acquisitions and stock buybacks. The good news is, there’s every reason to believe operating income and cash flow will look more like 2019’s levels in a more normal 2021.

2. A scaleback of Apple

Much of this year’s non-operating (and unrealized) gains logged by Berkshire can be attributed to the fund’s surprisingly big stake in Apple (NASDAQ: AAPL).

It’s no secret Buffett’s never been a huge fan of tech stocks, explaining he doesn’t understand them well enough to judge them. Nevertheless — and presumably with some nudging from other Berkshire team members — the company began building a stake in the tech giant back in 2016. In the meantime, it’s ballooned into Berkshire’s biggest single stock position. With nearly 1 billion shares worth more than $100 billion, Apple accounts for nearly half of the total value of Berkshire’s overall stock holdings.

That may be enough, though, if not more than enough. Berkshire shed around 36 million shares of the iPhone maker during Q3, or roughly $4 billion worth.

The move could simply be chalked up to a little profit-taking. Apple shares have nearly doubled in value this year, and it’s not like Buffett hasn’t occasionally sold some Apple stock since Berkshire first opened its position in 2016. But Buffett and his stock-picking team rarely do one-offs. They generally want in or out. The fact that we’ve now seen multiple partial exits may well indicate Berkshire is looking for a more substantial exit of the trade.

3. Added pharmaceutical exposure

Finally, while Berkshire may be on the way out of its Apple trade, it’s clearly looking to add stakes in pharmaceutical stocks. During the third quarter, the company added brand new positions in Bristol-Myers Squibb (NYSE: BMY), Merck (NYSE: MRK), and AbbVie (NYSE: ABBV). Berkshire also bought a small stake in Pfizer (NYSE: PFE).

None of these positions were particularly big by Berkshire standards. The company didn’t commit more than $2 billion to any of them, and “only” owns a little more than $100 million worth of Pfizer despite its successful (and now approved) COVID-19 vaccine. It’s not clear exactly what Buffett or his managers may see for the industry that they didn’t see as of the second quarter.

As is the case with the modest repeated sales of Apple shares, though, this new interest in pharma companies is likely to be a prelude to much bigger positions that are gradually expanded rather than established with one big trade.

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

More reading

• World’s 10 biggest companies are now worth 12% of Earth’s GDP
• Why Berkshire Hathaway is a retiree’s dream stock
• Here’s how world’s 10 richest made $1.5 trillion from COVID-19

James Brumley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Berkshire Hathaway (B shares) and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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The Origin Energy Ltd (ASX: ORG) share price and the Buru Energy Limited (ASX: BRU) share price are on the radar today, after both companies announced that Origin has secured farm-in permits in Buru’s Canning Basin oil field.

At the time of writing, the Origin Energy share price has slipped 0.4% to $4.88, while the Buru Energy share price has charged 12% higher to 10.5 cents.

What was announced this morning

Origin Energy has announced a farm-in with Buru for 7 permits covering 20,000sq km in Western Australia’s prospective Canning Basin.

A farm-in permit refers to an arrangement whereby a company acquires an interest in a lease owned by another company, on which oil or gas has been discovered or is being produced.

Under the agreements, Origin secures a 50% equity share in five permits with Buru Energy, and a 40% equity share in two permits with Buru and Rey Resources Limited (ASX: REY) – in exchange for carrying $12.3 million of their share of work program costs.

The total estimated spend by Origin over a 2-year period is expected to be approximately $35 million, inclusive of a two-well drilling program and seismic work.  

Origin also has contingent options to carry an additional $10.6 million of Buru and Rey’s costs over a four-year period.

In addition, Origin has the option to assume operatorship for any significant gas development, as well as any carbon capture and storage development.

Origin Executive integrated gas general manager Mark Schubert said the investment would give Origin opportunity in gas plays:

Origin will now hold positions in three large prospective onshore basins – the Beetaloo, Canning, and Cooper-Eromanga – giving us exposure to conventional and unconventional gas plays and what we believe are the most prospective shale formations in Australia.

Our interest in these seven permits lies in the strength of the gas resources following extensive analysis of the basin, and the longer-term potential for carbon capture and storage.

Schubert also said the investment opened the pathway for green gas offerings in the future, saying that “gas remains core to Origin’s strategy, as it can help drive the transition to lower emissions faster by supporting intermittent renewables and replacing more carbon intensive fuels”.

Quick take on Origin Energy’s business

Origin Energy has two main revenue sources – Australian energy retail, and liquified natural gas (LNG) export.

In the retail business, Origin Energy is one of three energy retailers in Australia controlling 80% of the market. The other two being Energy Australia and AGL Energy Limited (ASX: AGL).

The retail business is relatively stable, where each of the three players essentially owns similar percentages in market share. The retail energy market in Australia is also highly regulated, so significant future growth from this segment is restricted.

Origin Energy’s LNG business on the other hand, is a volatile yet potentially highly lucrative business. The company’s flagship is its 37.5% stake in a company called Australia Pacific LNG (APLNG), a major liquefied natural gas exporter in Queensland. 

How has the Origin Energy share price performed in 2020

Origin Energy delivered a flat underlying profit of $1,023 million in FY 2020. 

In its latest guidance to the market in November, the company continues to expect underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $1,150 million to $1,300 million for FY21. This is down 11% to 21% from $1,459 million in FY 2020.

The Origin Energy share price has fallen by more than 42% this year as the coronavirus pandemic took a toll on its export business.

The share price has a 52-week high of $8.82 reached in January, and a low of $3.75 reached in March.

At this price level, Origin commands a market cap of $8.63 billion.

More reading

• Top brokers name 3 ASX shares to sell next week
• AGL (ASX:AGL) shuts coal power unit after serious injury
• Leading brokers name 3 ASX shares to sell today
• Is AGL (ASX:AGL) really offering a 7% dividend yield today?
• Which ASX 200 sectors performed the best in November? 

Motley Fool contributor Eddy Sunarto 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 NIB Holdings Limited (ASX: NHF) share price is pushing higher on Monday after releasing an update on its premium increases for 2021.

At the time of writing, the private health insurer’s shares are up 2.5% to $5.76.

What did NIB announce?

This morning NIB announced that private health funds across Australia have received approval from the Federal Minister for Health for changes to private health insurance premiums.

According to the release, NIB has received approval from the Minister to increase its insurance cover premiums for NIB health funds by an average of 4.36% across all products. These changes will come into effect on 1 April 2021.

This is a larger than normal increase for NIB. Over the last three years, the company’s average premium increase was 3.55%.

However, NIB’s Managing Director, Mark Fitzgibbon, believes the larger than average increase is necessary to ensure members can access medical treatment when and where they need it.

Mr Fitzgibbon commented: “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 mental health benefits totalled $48.8 million,” he added.

Competitive pricing.

The Managing Director believes that NIB’s products are still both competitive and affordable, particularly given that this increase comes from a lower premium base compared to the industry average.

He notes that following the 1 April 2021 premium increase, NIB’s annual average premium per single equivalent unit will be $2,844. This compares to the industry average of $3,119.

Elsewhere, rival Medibank Private Ltd (ASX: MPL) has delivered its lowest premium increase in two decades this morning.

It revealed that it has received approval to increase Medibank and AHM health insurance premiums by an average of 3.25% from 1 April 2021.

More reading

• Quarterly rebalance: Afterpay (ASX:APT) added to ASX 20, Kogan (ASX:KGN) joins the ASX 200
• Macquarie’s model portfolio of ASX stocks to hold in the post-COVID recovery

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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 Next Science Ltd (ASX: NXS) share price is surging higher today. This comes after the company announced it has received CE mark approval for its product, BlastX. At the time of writing, the Next Science share price is up 5.04% to $1.25.

BlastX is an antimicrobial wound gel that uses the company’s biofilm-disrupting Xbio technology. BlastX works by breaking down the protective layer of biofilm and eliminating the bacteria. It then maintains a moist wound environment which allows the healing process to begin.

The product is ideal for the treatment of chronic wounds such as diabetic foot ulcers, bed sores (pressure ulcers) and venous leg ulcers. In addition, BlastX is used in operating theatre environments to help prevent infections in acute and surgical wounds.

Let’s take a look and see what is moving the Next Science share price today.

What’s driving the Next Science share price?

The Next Science share price is on the rise after the company advised the CE mark approval in Europe will enable it to now apply to sell BlastX in each market in the European Union and United Kingdom.

In an independent study published in 2015, the company demonstrated that using its BlastX product with custom antibiotics worked effectively. The speed of healing in choric wound closures increased by 40% in 4 weeks. This was conducted over a 4-week randomised trial with 45 patients and compared with customised antibiotic treatment on its own.

The advanced wound care market in Europe is estimated to be around US$2.8 billion per year, growing 4.5% annually. According to Next Science, as population centres expand, so too does the market value for collective BlastX and antibiotic treatment.

At the moment, BlastX is being sold by 3M in the world’s largest healthcare market, the United States.

Management remarks

Next Science managing director Ms Judith Mitchell commented:

The receipt of a CE Mark approval for BlastX represents the successful conclusion of three years of work and marks a major milestone for Next Science as we pursue our mission to heal patients and save lives worldwide by reducing the impacts of biofilms on human health. The CE Mark is a minimum requirement for many other jurisdictions so we can now work on further approvals.

Return of revenue

In a further update, Next Science stated it is witnessing a return of revenue run rates in the fourth quarter. The current levels are matching those of the prior corresponding period.

Furthermore, the company believes, should the US Food and Drug Administration (FDA) approve its surface disinfectant, Xperience, this will also positively impact earnings. Next Science is resubmitting its 510(k) application for approval of Xperience by the end of the year.

Negotiations for licencing are ongoing, and it is anticipated these will be finalised some time in the first quarter of 2021.

About the Next Science share price

The Next Science share price has been trending lower since the beginning of the year, down nearly 35%. The company’s shares reached an all-time high of $2.76 in late January before the COVID-19 selloff hit. In March, the Next Science share price fell to an all-time low of $1.00.

More reading

• Why the Next Science (ASX:NXS) share price dropped 9% today

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nexus Energy Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 3M. 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 Cimic Group Ltd (ASX: CIM) share price has slipped today following a new contract announcement for its joint venture Ventia. At the time of writing, the Ventia share price is trading down 1.47% at $25.45.

Ventia is an independent partnership between funds managed by affiliates of Apollo Global Management (NYSE: APO) and Cimic. The company provides a broad range of infrastructure services across Australia and New Zealand.

What’s moving the Cimic share price?

In this morning’s announcement to the ASX, Cimic Group revealed that Anglo American’s Metallurgical Coal business operations in the Bowen Basin, Central Queensland will employ Ventia for its facility and asset management services.

Cimic expects the 4-year contract to generate total revenues of approximately $216 million, and that Ventia will employ more than 250 people as part of the deal. Anglo American has the option to extend the contract for an additional year.

Commenting on the new contract, Ventia Group defence and social infrastructure executive Derek Osborn said:

We are proud to have been awarded this facility and asset management services contract with Anglo American. We aim to help support the safety, health and wellbeing of everyone on site through our services.

This will be enabled by our ability to harness technology and provide a tailor-made solution to support Anglo American’s facilities and assets. We will provide a strong focus on asset lifecycle management and our technology platform will help us achieve this.

The company reports the services it will provide include town and site maintenance, property management, grounds and gardens, pest control, aerodrome management, security and safety, industrial cleaning, village catering and accommodation, housekeeping, janitorial and town services.

Cimic Group share price and company snapshot

Cimic Group (formerly Leighton Holdings) is a construction, mining, and services company that operates across the lifecycle of assets, infrastructure and resources projects. Cimic has a number of different brands under its banner, including CPB Contractors, UGL, Thiess, Sedgman, and its jointly owned Ventia.

The Cimic Group share price was hit particularly hard during the wider COVID-19 market selloff earlier this year. Shares plunged 63% from 22 January through to 19 March. Since that low, the share price has rebounded 99%.

That leaves Cimic’s shares down 22% since the closing bell on 31 December last year. By comparison, the broader S&P/ASX 200 Index (ASX: XJO) is flat year-to-date.

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
• 5 things to watch on the ASX 200 on Monday
• How useful is the P/E ratio in assessing ASX shares?
• These were the worst performing ASX 200 shares last 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 A2 Milk Company Ltd (ASX: A2M) share price was among the worst performers on the S&P/ASX 200 Index (ASX: XJO) last week.

The infant formula and fresh milk company’s shares sank a sizeable 22.4% lower over the five days.

Why did the a2 Milk Company share price crash lower?

Investors were selling the company’s shares on Friday after it downgraded its guidance for FY 2021.

The former market darling was forced to make the move after experiencing a more significant and protracted disruption in the daigou channel than it was previously expecting.

The company is now expecting to deliver revenue of NZ$670 million in the first half of FY 2021. This is a 7.5% to 13.5% reduction on its previous guidance range of NZ$725 million to NZ$775 million.

For the full year, management now expects revenue to be in the range of NZ$1.4 billion to NZ$1.55 billion. The mid point of this guidance range is down 18% to 22.3% from its previous guidance range of NZ$1.8 billion to NZ$1.9 billion.

It gets worse from here, unfortunately. The company has also reduced its margin expectations and is now forecasting an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 26% to 29%. This is down from 31% previously.

All in all, based on the mid points of both guidance ranges, this would represent EBITDA of NZ$405.6 million in FY 2021. This would be down a disappointing 26.2% from FY 2020’s EBITDA of $549.7 million.

Should you buy the dip?

While brokers are largely divided on whether a2 Milk shares are now in the buy zone, one broker that remains relatively upbeat is Morgans.

This morning the broker retained its add rating but cut its price target down to $12.20.

While the broker has reduced its earnings forecasts notably over the coming years, it still estimates that its shares are trading at just a little over 25x FY 2022 earnings. It appears to believe this is a fair price to pay, all things considered.

More reading

• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: ASX hits new post-March high
• Synlait Milk (ASX:SM1) share price on watch after earnings halve due to a2 Milk (ASX:A2M) update
• These were the worst performing ASX 200 shares last week
• Why did the Synlait (ASX:SM1) share price drop 2% then enter a trading halt today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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 2020 stock market crash could provide opportunities to buy the best shares at cheap prices to benefit from a long-term stock market recovery.

Through identifying sectors with strong long-term growth prospects, it is possible to unearth companies with sound prospects. Furthermore, concentrating on company fundamentals may allow an investor to find businesses with solid market positions that can lead to higher profitability in the coming years.

Buying such companies at discounts to their peers may mean higher returns in the long run after the 2020 stock market crash.

Identifying the most attractive sectors to find the best shares

The best shares to buy today could be those companies that operate in industries with strong long-term growth outlooks. Certainly, many sectors are likely to experience fast-paced change in the coming years, as the full impact of the coronavirus pandemic on consumer trends becomes clearer. However, some industries may have clearer paths to growth than others.

For example, trends in the healthcare and retailing sectors may provide growth opportunities for businesses operating within them. In healthcare, factors such as a growing world population and an ageing population may mean that demand for products and services increases over the coming years. Similarly, online retailers may be able to produce higher rates of sales and profit growth than their bricks-and-mortar peers.

Of course, market trends may be difficult to identify when seeking to find the best shares to buy today. However, investing money in a diverse range of sectors that have positive long-term growth outlooks may lead to relatively high returns in the coming years.

Focusing on high-quality stocks

Some of the best shares to buy today may be those companies with sound financial positions, as well as wide economic moats. They may be better able to survive a period of uncertain economic performance. They may even strengthen their positions relative to peers by investing in cheap assets or in developing new products and services to react to changing consumer demand.

Company fundamentals can provide guidance on the financial strength of a business. For example, low debt levels within a company’s balance sheet suggest sound finances. Meanwhile, an economic moat can be identified by considering factors such as the uniqueness of a company’s products, as well as its degree of customer loyalty.

Buying cheap shares for a stock market recovery

The best shares within a specific sector may be those that trade at cheap prices relative to their peers. For example, a company that has a better financial position and a wider economic moat than its peers, but that trades at a discount to its rivals, may provide greater scope for capital appreciation over the long run.

Therefore, considering a wide range of companies within a specific sector could be a useful step to find the best shares to buy today. It may provide an insight into which stocks offer the best value for money on a long-term basis.

More reading

• Is the a2 Milk (ASX:A2M) share price in the buy zone after last week’s 22% decline?
• Why the City Chic (ASX:CCX) share price is rocketing 15% higher
• Why the Creso Pharma (ASX:CPH) share price is jumping 9% higher
• Forecast double-digit surge in Aussie dollar could put brakes on ASX rally in 2021
• Why I didn’t go all in on the Airbnb IPO

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In morning trade the City Chic Collective Ltd (ASX: CCX) share price is rocketing higher.

At the time of writing, the fashion retailer’s shares are up 15% to $3.65.

Why is the City Chic share price rocketing higher?

Investors have been buying the company’s shares this morning after it announced a binding asset purchase agreement to acquire the Evans brand and its eCommerce and wholesale businesses for 23.1 million pounds (A$41 million) in cash.

According to the release, 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 Evans Retail Limited and certain other entities within the Arcadia group, which entered into administration on 30 November 2020.

Management expects the acquisition to complete on 23 December 2020, subject only to payment of the cash consideration.

Why Evans?

City Chic’s Chief Executive Officer and Managing Director, Phil Ryan, revealed that he has been following Evans closely for over a decade.

During this time he has seen the brand evolve from a dominant high street retailer into a more digitally focused business. The company also knows the brand very well, as it has had a successful partnership with Evans for many years.

Overall, Mr Ryan believes Evans ticks a lot of boxes in regard to the type of acquisition he is looking for.

He explained: “The acquisition meets our strategic objective of growing through global customer acquisition, digitally, and in the $50 billion curvy apparel market. In addition to providing a launching pad into a new market, we are confident we can deploy our lean, customer-centric operating model to drive revenue growth and cost efficiencies in the existing business. We have a great opportunity ahead of us to develop the third major region for the City Chic Collective.”

The acquisition will be funded from City Chic’s existing cash balance. The company’s pre-acquisition cash balance as at 30 November 2020 was A$121 million. Its A$40 million debt facility will remain undrawn.

More reading

• Why the Creso Pharma (ASX:CPH) share price is jumping 9% higher
• Forecast double-digit surge in Aussie dollar could put brakes on ASX rally in 2021
• Why I didn’t go all in on the Airbnb IPO
• Why the QBE (ASX:QBE) share price has been given a conviction buy rating
• These are the 10 most shorted shares on the ASX

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 Creso Pharma Ltd (ASX: CPH) share price has started the week on a positive note.

In early trade the cannabis company’s shares are up over 9% to 17.5 cents.

Why is the Creso Pharma share price jumping higher?

This morning Creso Pharma announced that it has secured regulatory approval from the Ministry of Agriculture and Animal Feed in Uruguay through its commercial partner Adler Laboratories for its line of animal health products, anibidiol.

According to the release, the company expects the first purchase order for anibidiol 8 (worth A$89,000) to be delivered in the first quarter of 2021. Management notes that this underpins the company’s growing revenue profile in the Latin America (LATAM) region.

What is anibidiol?

Anibidiol is a cannabidiol (CBD) hemp-based complementary feed for pets which the company claims promotes well-being by supporting the immune system and natural response.

The company also claims that it supports behaviour balance, overall vitality, the nervous system, and contributes to the reduction of tiredness and fatigue.

Today’s news means it is the first product of its kind that has been approved for pets in LATAM. Management believes this represents a ground breaking milestone from a regulatory and business perspective.

The approval also represents a key strategic milestone, which broadens the company’s global footprint.

Management believes the LATAM market provides a large opportunity for Creso Pharma and unlocks potential access to over 24 million pets across Uruguay, Argentina, Paraguay and Bolivia and further countries.

Creso Commercial Director, Jorge Wernli, commented: “The approval of anibidiol as the first CBD hemp complementary feed in Uruguay, with a simultaneous purchase order is a major achievement for Creso Pharma. “The Company’s entry into the Latin American market more broadly represents a major strategic development and significant growth opportunity, with potential access to millions of pets across several Latin American countries.”

“We look forward to working with our established, in country representatives to target rapid expansion across the region. We anticipate a number of follow up purchase orders will materialise in the coming months, as we rapidly scale up in Latin America,” he concluded.

More reading

• Creso Pharma (ASX:CPH) share price lower despite supply agreement news
• Creso Pharma and Nuix were among the most traded shares on the ASX last week
• ASX pot stocks have been skyrocketing in December
• Why the Creso Pharma (ASX:CPH) share price crashed 33% lower today
• Why the Creso Pharma (ASX:CPH) share price is rocketing 96% 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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Investors who have yet to factor the Australian dollar into their ASX investment decisions should pay heed.

The Aussie dollar is poised to exit the year on a 30-month high and experts believe it could rally another 12% to hit US85 cents in 2021.

I am expecting a lot more stocks on the S&P/ASX 200 Index (Index:^AXJO) to talk about the exchange rate headwind at the February reporting season. The Aussie puts a handbrake on earnings.

Lucky Aussie dollar not lucky for some

Currency strategists are struggling to keep up with our rallying dollar, reported the Australian Financial Review.

We are the lucky country, but it’s this “luck” that’s likely to inflict earnings pain on many large cap stocks. Around a third of ASX stocks on the top 200 index have material exposure to currency movements, especially from the Australian-US dollar pair.

The Aussie battler is racing higher as our economy is outperforming, thanks to our ability to control the COVID‐19 outbreak.

A$ could hit US90 cents

Australia’s rebound from COVID surprised everyone. The federal government recently upgraded their GDP growth forecast to 0.75% for 2020 compared to earlier predictions of a contraction.

What’s more, the outlook for 2021 is looking bright. Consumer confidence is strong, employment conditions are buoyant and the commodity price boom is re-filling the government’s depleted coffers faster than expected.

National Australia Bank Ltd. (ASX: NAB) thinks a move towards US90 cents is not out of the question even though their official forecast is for US80-US85 cents, reported the AFR.

Other factors driving the Aussie higher

It doesn’t help that the US dollar is expected to stay on a back-foot for 2021 either. The country needs another massive stimulus injection to help it stay ahead of the COVID economic shock. This spells bad news for the greenback.

Also, the expected rebound in global GDP as vaccines are rolled out will prompt investors to dump safe haven assets, like the US dollar, for growth assets like the Aussie.

Outperforming ASX stocks impacted by the Aussie

The higher Australian dollar will impinge on overseas income when translated back into the local currency here.

Several large cap ASX stocks that have outperformed in 2020 might find it harder to maintain momentum in the new year due to this.

Examples include the James Hardie Industries plc (ASX: JHX) share price, the Resmed CDI (ASX: RMD) share price and Breville Group Ltd (ASX: BRG) share price.

On the flipside, ASX stocks that import goods from overseas and pay in US dollars will benefit. These include the Wesfarmers Ltd (ASX: WES) share price and Premier Investments Limited (ASX: PMV) share price.

More reading

• ASX 200 Weekly Wrap: ASX hits new post-March high
• 5 things to watch on the ASX 200 on Monday
• 2 of the best ASX growth shares to buy for 2021 and beyond
• How useful is the P/E ratio in assessing ASX shares?
• How to turn $20,000 into over $250,000 in 10 years with ASX shares

Motley Fool contributor Brendon Lau owns shares of Breville Group Ltd, James Hardie Industries plc, and National Australia Bank Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended ResMed Inc. 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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