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.

Amazon.com Inc (NASDAQ: AMZN) and Peloton Interactive Inc (NASDAQ: PTON) are two of the hottest stocks on Wall Street. Both of them were hot even before the pandemic, but while COVID-19 has harmed many businesses, it’s been a boon to both of these companies. 

Amazon is the standard favorite, and Peloton is the new stock on the block. Let’s take a look at what they have going for them and which one is better for your stock portfolio.

High-speed growth

Many investors look for high-growth companies to fuel their portfolios. High growth comes with risk, but it also provides the opportunity for high gains. Shareholders who believed in Amazon from the time it was a humble online bookseller have seen their stock skyrocket. Those who are sticking with Peloton are looking for the same kind of returns. 

Amazon became the go-to retail experience during the pandemic as Americans stayed home and accelerated their adoption of online shopping. The e-commerce giant hired hundreds of thousands of new employees to fill soaring demand, and even had to temporarily pause deliveries of nonessentials to focus on getting customers the goods they really needed. 

Sales surged commensurately, increasing 40% in the second quarter ended 30 June and 37% in the third quarter ended 30 September. 

Peloton has seen even more extreme growth during the pandemic. In the fourth quarter ended 30 June, revenue increased 172%, connected fitness subscribers grew 113%, and paid digital subscriptions were up 210%. Clearly, these are the beginning stages of a very popular brand. Some gyms were closed during this time and others continue to stay shuttered, and fitness enthusiasts had to find other means to achieve their fitness goals. This definitely helped increase adoption of Peloton’s products, since growth was beginning to slow down before COVID-19.

Keeping it up

Amazon still has tremendous prospects. It’s expecting sales to increase between 28% and 38% in the fourth quarter, which includes the high-volume holiday season. It’s expanded its business with Amazon Web Services, which provides cloud computing solutions and has picked up many large clients such as Global Payments and Moderna.

It has also made headway in its efforts to get into storefronts, an important piece of omnichannel shopping that’s become the new wave in digital. It pioneered the Amazon Go cashierless technology and has opened 26 Go stores in four states. It also launched four Fresh stores in California, with another on the way in Illinois. These combine in-store grocery shopping with almost every iteration of digital options, including the Amazon Dash cart, where customers can place their goods and skip the checkout lane. 

Peloton also has a lot of future potential. It recently lowered the price of its standard bike and introduced a newer, premium model. It’s also launching a line of connected fitness treadmills with a range of prices. Its exercise class subscription model ensures there’s an inexpensive way to connect with the company and keeps the brand in the public eye. 

One could argue that once the pandemic ends, the kind of growth Peloton is seeing will subside. While that’s probably true to some degree, Peloton customers are happy customers, and getting them to take the first step is the beginning of keeping them on board. The company has high retention rates, at least in part because customers who buy the expensive equipment want to make the most of their purchase.

Amazon stock is up 71% year to date and is trading at about 90 times trailing 12-month earnings. That seems high, but historically Amazon has traded for a much higher valuation.

Peloton stock is up 300% year to date and is trading at a staggering 408 times trailing 12-month earnings. 

I think that they’re both great companies, and investors won’t lose out buying shares in either one. But if I had to choose one, I’d go with Amazon. It’s more established and therefore less risky. It’s also trading pretty cheaply, and has many years of growth ahead, making this an excellent time to buy shares.

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

More reading

• ASX stock of the day: Linius (ASX:LNU) share price blasts up 30% on product debut
• Here’s how world’s 10 richest made $1.5 trillion from COVID-19
• Amazon grew even more dominant in 2020
• Amazon’s holiday sales jump 60%
• Cyber Monday sales hit a record $10.8 billion

Jennifer Saibil has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Peloton Interactive and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 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.

The post Better buy: Amazon vs. Peloton appeared first on The Motley Fool Australia.

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

from The Motley Fool Australia https://ift.tt/2W2HXfS

Warren Buffett’s long-term approach to investing money in shares has allowed him to benefit from the stock market’s growth over many decades.

Furthermore, his focus on buying high-quality shares at low prices has allowed him to unearth some of the best opportunities in the stock market.

As such, following his methods may lead to relatively high long-term returns that allow an investor to retire earlier than they had planned.

Warren Buffett’s long-term approach

Warren Buffett has always taken a long-term approach to investing money in the stock market. He is relatively unconcerned with the potential for a market crash, other than to use it to buy stocks for lower prices.

A long-term investment approach can be beneficial because it allows an investor to take advantage of compounding. For example, the stock market has historically offered an 8% annual total return. Over a short time period, such a return is unlikely to make a significant impact on a portfolio’s value. However, repeated over a period of 25 years, for example, it can turn modest amounts of capital into a surprisingly large portfolio.

For example, using Warren Buffett’s long-term approach could mean a $10,000 investment today is worth $68,000 in 25 years’ time. This assumes an 8% annual return, which is in line with the return previously delivered by indices such as the FTSE 100 Index (FTSE: UKX).

A focus on high-quality companies at low prices

Of course, Warren Buffett has generated an annual return that is significantly higher than 8% per annum over the long run. A key reason for this is his focus on buying high-quality companies when they trade at low prices. High-quality companies are generally those businesses with competitive advantages over their peers. This can allow them to generate higher profits in a range of market conditions.

Buying such companies at low prices provides greater scope for capital appreciation over the long run. Certainly, the best buying opportunities often coincide with the periods of greatest economic weakness. However, by focusing on long-term recovery prospects for high-quality businesses, it may be possible to purchase them at attractive prices.

Retiring early with a portfolio of stocks

Clearly, it has taken Warren Buffett many years to build his wealth to its current level. However, an investor aged 40 is likely to have a long time horizon until they plan to retire.

Furthermore, Buffett has stuck with his holdings for the long run. Many of his holdings have been part of his portfolio for many years. By holding companies over an extended timeframe, they are provided with the opportunity to deliver on their growth potential. It also means they have time to implement new strategies and to see the results of their own investments. Over time, this can catalyse a portfolio’s performance and lead to an early retirement.

More reading

• Why the ASX tech share rally can run well into 2021
• WAM Global (ASX:WGB) share price jumps on dividend guidance
• Why the Appen (ASX:APX) share price is sliding 11% today
• Why Asaleo Care, Fortescue, Perpetual, & Starpharma shares are storming higher
• Whisky maker Top Shelf’s (ASX:TSI) share price slips on IPO debut

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.

The post No savings at 40? I’d follow Warren Buffett’s advice to retire early appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2W1x2Dr

“Reports of my death have been greatly exaggerated,” Mark Twain famously quipped.

After falling ill in England, Twain’s obituary was published in the United States. Rather prematurely, it turned out. Forcing him to write a letter proclaiming he was very much alive.

Some analysts have been sounding a similar premature death knell for the outlook of technology shares in 2021.

The reasoning goes that, following a stellar run in 2020’s coronavirus-plagued ‘work, shop and socialise from home’ world, tech shares are likely to underperform in 2021 as the world reopens.

Top 3 ASX 200 tech shares

Now it’s true that tech shares have had a stellar run since the rebound from the March lows.

In the US, the tech heavy Nasdaq Composite (NASDAQ: .IXIC) is up 80% from 23 March.

It’s a similar story with ASX technology shares.

The S&P/ASX All Technology Index (ASX: XTX) – which tracks 50 of Australia’s leading and emerging technology shares – is up a whopping 132% since 23 March.

But there are few signs yet to proclaim that strong performance is over. On Tuesday, the Nasdaq closed at yet another new record high, posting 10 straight days of gains.

And yesterday, the All Tech also closed for a new all-time high.

In fact, 3 of the 10 best performing shares on the S&P/ASX 200 Index (ASX: XJO) in 2020 are technology shares.

BNPL darling Afterpay Ltd (ASX: APT) leads the charge. Afterpay’s share price is up 228% year-to-date.

Data centre operator Nextdc Ltd (ASX: NXT) also makes the top 10 performers list, with the share price up 78%.

The third ASX tech share to make it into the top 10 gainers on the ASX 200 this year is cloud-based accounting software provider Xero Limited (ASX: XRO). Xero’s share price is up 74% year-to-date.

What’s happening with tech share prices today?

Markets never go up in a straight line. And tech shares are certainly no exception.

Yesterday (overnight Aussie time) all 3 major US indexes lost ground. The Nasdaq suffered the biggest fall, losing 1.9%.

As tends to be the case, ASX shares are following the US lead lower.

At time of writing, the ASX 200 is down 0.4%. And tech shares are falling harder here as well, with the All Tech index down 1.8%.

But as long-term investors, you shouldn’t get overly hung-up on daily price swings.

The losses we’re witnessing on our screens right now mostly come down to any lack of progress on the next multi-trillion-dollar US stimulus package.

But that doesn’t mean the stimulus package won’t be passed… eventually.

As Mark Heppenstall, chief investment officer for Penn Mutual Asset Management, says (quoted by Bloomberg):

To the extent they can’t come to an agreement on stimulus given the heightened urgency, given the recent outbreak, that’s a bad message. I do think stimulus is coming and I think the market was more prepared for it to be this year than next year.

Diana Mousina is a senior economist at AMP Capital, a subsidiary of AMP Ltd (ASX: AMP). Speaking at AMP’s webinar yesterday, she said she also believes a US stimulus package is forthcoming. And this hasn’t been fully priced into share markets yet:

When it is passed, I do expect that share markets will have another leg up. Because there’s always some concern that it may not get there… Of course, if you don’t see it getting passed, that will be a negative for share returns.

It’s not just technology shares with a bright outlook

While the reports of the death of technology shares may be greatly exaggerated, that doesn’t have to come at the expense of cyclical shares.

As the Australian Financial Review reports, LPL Financial is forecasting moderate gains for share markets in 2021. Its analysts wrote:

We see an S&P 500 Index fair value target range of 3,850–3,900 in 2021 with potential for further upside if the production of a vaccine exceeds expectations. Growth-style stocks may continue to perform well next year, but we expect participation to broaden, which could boost cyclical value stocks. Early-cycle positioning and prospects of a strong earnings rebound may provide a tailwind to small caps.

And then there’s this conclusion from global market strategists at JPMorgan Chase & Co, reported by Bloomberg.

The strategists, led by Nikolaos Panigirtzoglou, expect to see a US$600 billion (AU$810 billion) increase in demand for shares in the year ahead, largely driven by retail investors. Topping that off, they expect the supply of shares to fall by US$500 billion, mostly driven by an increase in share buybacks alongside less capital raising activity.

“This is similar to the equivalent equity demand/supply improvement in 2019 relative to 2018 which at the time had seen global equities rising by around 25%,” JPMorgan said.

Happy investing.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Top brokers name 3 ASX shares to buy today
• Morgans picks the best ASX stocks to buy for 2021
• Why Afterpay, Creso Pharma, Healius, & Resonance Health shares are storming higher
• What’s wrong with the Zip (ASX:Z1P) share price?

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 ASX tech share rally can run well into 2021 appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2JHpKCo

The market may be tumbling lower today but the same cannot be said for the WAM Global Ltd (ASX: WGB) share price.

In afternoon trade the fund manager’s shares are up 5.5% to a record high of $2.41.

Why is the WAM Global share price at a record high?

Investors have been buying the company’s shares following the release of a positive announcement this morning.

That announcement revealed that its global investment fund has been outperforming the MSCI World Index in 2020.

According to the release, at the end of November, the WGB Investment Portfolio had delivered a return of 14.6% in the current financial year.

This compares to a 10.3% return by the MSCI World Index, which represents an outperformance of 4.3% for WAM Global.

What does this mean for dividends?

A lot of investors look to WAM Global and its other funds for a source of income. This is due to their traditionally very generous payouts.

The good news for investors is that FY 2021 will be no different.

The release advises that the WAM Global board intends to pay shareholders a fully franked interim dividend of 5 cents per share. This represents a 66.7% increase on FY 2020’s interim dividend.

If you were to annualise this interim dividend, it would mean a fully franked full year dividend of 10 cents per share. Which based on the current WAM Global share price, implies a fully franked 4.15% dividend yield.

The release also revealed that the company currently has 41.9 cents per share in profits reserve. This represents 4.2 year of dividend coverage for shareholders.

Management commented: “The dividend guidance has been made possible by the WAM Global investment portfolio’s solid risk-adjusted performance in the financial year to date and the increased profits reserves available.”

“The Board notes the share price is currently trading below the net tangible assets (NTA) and believes the clear dividend guidance and the continued strong performance of the investment portfolio will lift the share price to a premium to NTA over time,” it concluded.

More reading

• Top fundie, Wilson, names ASX shares to buy

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 WAM Global (ASX:WGB) share price jumps on dividend guidance appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/37TdUNt

The Appen Ltd (ASX: APX) share price is falling lower today. This comes after the company announced a disappointing trading update to the market. At the time of writing, the Appen share price is trading down 11.1% at $26.60.

What’s driving the Appen share price lower?

Investors have sent the Appen share price to lows not seen since May after the company reported that COVID-19 impacts have disrupted its performance for the current quarter of FY20.

The company – a global language technology data provider – noted a slowdown in customer spend in both in April and August announcements to the market. While the current quarter has improved over the previous period, Appen attributed this to the time of year, which routinely sees a lift in revenue from customers.

As the pandemic has intensified in the United States, Appen’s major customers have shifted their priorities and activities. This has impacted the company’s face-to-face sales and customer engagement norms, thus leading to lower revenue being achieved.

In light of these developments, Appen anticipates underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of $106 million to $109 million. This reflects a substantially lower guidance range of the previously indicated $125 million to $130 million EBITDA in its half-year August report.

Further weighing down the expected results is the surging Australian dollar against the US dollar. In December, the exchange rate moved 4 cents to AUD$1 = US$0.74, impacting EBITDA by up to a further $2 million.

Looking ahead

Despite this, Appen revealed that the second-half EBITDA is forecast to grow more than 30% over the period.

The company said that it continued to win new customers in industries less affected by COVID-19. These include shipping, automotive, education and healthcare.

In addition, its major clients have transferred their focus to new product development, in which Appen is seeing a significant increase in work load.

A report from IDC Worldwide Artificial Intelligence Systems Spending Guide estimates that artificial intelligence (AI) spend is increasing 28% annually. Appen reiterated that long-term trends remained positive and it projects a strong rebound post COVID-19.

Appen share price summary

After losing 11% today, the Appen share price has fallen almost 40% from its 52-week high of $43.66. The company’s shares have risen 20% since the start of the year.

Appen has a market capitalisation of $3.2 billion and a price-to-earnings (P/E) ratio of 72.3.

More reading

• ASX 200 down 0.4%: Appen downgrades guidance, Fortescue hits a record high
• Why Appen, McPherson’s, Northern Star, & PWR shares are dropping lower
• 3 stellar ASX growth shares to buy
• 2 stellar ASX tech shares to buy next week
• Why Appen, Chalice Gold Mines, Piedmont Lithium, & Zip shares are dropping lower

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

The post Why the Appen (ASX:APX) share price is sliding 11% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3qM8OLI

The S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is on course to end its winning streak. In afternoon trade, the benchmark index is down 0.6% to 6,688 points.

Four shares that have not let that hold them back today are listed below. Here’s why they are storming higher:

Asaleo Care Ltd (ASX: AHY)

The Asaleo Care share price jumped 22% to $1.23 this morning before being hurriedly placed into a trading halt. The catalyst for this was news that the personal care products company has received an unsolicited takeover proposal. Asaleo Care has requested the halt until it releases an announcement in relation to the takeover proposal.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price has continued its positive run and climbed a further 3% to $22.50. Investors have been buying the iron ore producer’s shares after the price of the steel-making ingredient rose again. According to CommSec, the spot iron ore price pushed through the US$150 a tonne level overnight.

Perpetual Limited (ASX: PPT)

The Perpetual share price is up almost 6% to $35.98. The catalyst for this appears to be a broker note out of Credit Suisse this morning. According to the note, the broker has upgraded the fund manager’s shares to an outperform rating with a $39.00 price target. This follows the release of its investor day update on Wednesday.

Starpharma Holdings Limited (ASX: SPL)

The Starpharma share price has surged 11% higher to $1.45. This follows the release of an announcement by the biopharmaceutical company which revealed that it expects to release its COVID-19 antiviral nasal spray in the first quarter of next year. It will also be marketed as an antiviral nasal spray for other important respiratory viruses such as influenza and respiratory syncytial virus (RSV). The product will go on sale in Europe initially.

More reading

• ASX 200 down 0.4%: Appen downgrades guidance, Fortescue hits a record high
• Starpharma (ASX:SPL) share price jumps 15% after COVID-19 nasal spray update
• Inquiry calls moratorium on mining projects after Rio Tinto (ASX:RIO) Juukan debacle
• The Fortescue (ASX:FMG) share price has doubled in 2020: Too late to invest?
• Citigroup downgrades these ASX mining stocks after a big rally

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 Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Asaleo Care, Fortescue, Perpetual, & Starpharma shares are storming higher appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3n2MqeJ

The shares of whisky and vodka distiller Top Shelf International Holdings Ltd (ASX: TSI) made their debut on the ASX today, after an initial public offering (IPO) pricing it at $2.21.

The Top Shelf share price slipped to $2.19 inside the opening few minutes of trading, and is now trading down further to $2.12 at the time of writing.

More about the Top Shelf IPO

Top Shelf is the brainchild of former Shelf CFO, Drew Fairchild, who’s also currently sitting on the board of ASX-listed workforce management software company Damstra Holdings Ltd (ASX: DTC). 

The company distils its own brands, including the flagship Ned Whisky and also Grainshaker Vodka, from its state-of-the-art $20-million Campbellfield site in Melbourne. 

Top Shelf has raised $47.2 million in the IPO at $2.21 a share – split between a $35 million primary issuance of new shares, and a $12.2 million selldown by existing shareholders. The pricing values the company at $90.5 million, which is 4.5 times the forecast revenue for FY21.

According to the prospectus, the company has yet to turn a profit – posting negative earnings before interest, tax, depreciation, and ammortisation (EBITDA) of $3.1 million in FY20, and negative $1.3 million in FY19.

Top Shelf says the fresh funds would be used to invest in sales and marketing, as well as funding the acquisition of the Eden Lassie agave farm. Agave is the main ingredient used in the distilling of tequila or mezcal, which it will launch next year.

Business update

As part of the float today, Top Shelf has also released an update saying that strong sales momentum has continued in November and for the key December quarter, with sales growth on track to achieve Top Shelf’s FY21 revenue forecast of $20 million.

The revenue forecast is mainly driven by the ongoing rollout of Ned Whisky across Australian retail stores, and the successful initial release of the Grainshaker Australian Vodka, both on-premise and online.

Top Shelf also said that 150,000 agave plants have now been planted at the Eden Lassie Agave Farm, with a further 100,000 plants in the nursery available for planting.

More reading

• Freedom Foods (ASX:FNP) faces class action lawsuit
• The two ASX stocks most impacted by the dangerous rise of the Aussie dollar
• Is Moderna stock a hold?
• Why has the CSL (ASX:CSL) share price seemingly gone nowhere this year?
• ASX 200 down 0.4%: Appen downgrades guidance, Fortescue hits a record high

Eddy Sunarto 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 Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Whisky maker Top Shelf’s (ASX:TSI) share price slips on IPO debut appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3n5hESe

The embattled Freedom Foods Group Ltd (ASX: FNP) now has yet another thing to worry about.

Freedom Foods has announced to the market this morning that it is now facing a class action lawsuit from law firm Slater & Gordon Limited (ASX: SGH).

The announcement this morning was a short one:

Freedom  Foods Group Limited advises that a Victorian Supreme Court class action proceeding was commenced against the Company and its auditors, Deloitte Touche Tohmatsu, and served on the Company on 9 December 2020. The proceeding alleges breaches of the Corporations Act 2001 (Cth), Australian Securities and Investments Commission Act and Australian Consumer Law.

The Company has appointed Arnold Bloch Leibler (ABL) to defend the proceeding.

According to reporting in the Australian Financial Review (AFR) today, the class action is on behalf of shareholders who bought or acquired Freedom shares between the dates of 7 December 2014 and 24 June 2020 (when the company was placed in a trading halt, which remains in place to this day).

The AFR reports that the class action’s “key allegation” is that Freedom “withheld material information relating to its true asset position since 2014”. It alleges that Freedom Foods “engaged in significant breaches of its continuous disclosure obligations and misleading and deceptive conduct”. It also alleges Freedom’s auditor Deloitte “failed in its duties in signing off on Freedom Foods’ accounts each financial year between 2014 and the first half of 2020”.

How did Freedom Foods get here?

Freedom Foods has had a year I’m sure it (and its shareholders) would rather forget. It all started back in June, when it was announced the company’s former chief executive officer, Rory McLeod, advised he would be going “on leave”. A few days later, it was announced that McLeod, as well as Freedom’s chief financial officer, would be leaving the company.

This came after revelations there had been some serious irregularities in Freedom’s accounting books, which failed to note that large volumes of food stocks had perished in storage. This lead to multiple writedowns amounting to around $60 million in inventories and a further ~$10 million in ‘bad debts’.

Following these embarrassing revelations, it was announced the company would go into an ASX trading halt until 30 October. Well, 30 October came and went and Freedom shares still remain in purgatory.

The company finally released its full-year results for the 2020 financial year last Monday (30 November) and told investors it had sustained a loss after tax of $174.5 million in FY2020.

Freedom Foods’ Interim Chief Executive Officer, Michael Perich, called these number a “deeply disappointing set of results for Freedom Food Group, its people and its shareholders”.

More reading

• Freedom Foods (ASX:FNP) reveals $174.5m loss and $280m capital raising plan
• Freedom Foods (ASX:FNP) prepares for return to trading
• G8 Education (ASX:GEM) share price rebounds after lawsuit news

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Freedom Foods Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Freedom Foods (ASX:FNP) faces class action lawsuit appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3m3PK7K

The Aussie looks poised to push to new 28-month highs and that spells bad news for some of the most popular ASX stocks.

Economists are warning that we are approaching a dangerous level. This is where the currency will put a brake on the economy and company earnings, reported the Australian Broadcasting Corporation.

The Australian dollar is hovering close to US74.5 cents currently and experts are predicting it could go higher in 2021.

Some S&P/ASX 200 Index (Index:^AXJO) stocks may have to downgrade their earnings guidance as soon as the March quarter, warned UBS.

Currency headwinds pressuring some ASX stocks

The broker worked out the ASX stocks that are most likely to suffer as it’s forecasting the Aussie battler to hit US78 cents by end of 2021 and US82 cents the following year.

“COVID saw large fluctuations in the AUD, with the AUD hitting a low of 0.57 on 23 March,” said UBS.

“Since then, as a ‘risk-on’ currency, the AUD has appreciated 29% as markets have recovered.”

Calculating the impact of the Aussie

Working out the direct earnings impact of the Australian dollar-to-US dollar exchange rate is not easy. It’s much tricker when you try to link the currency pair to share price movements.

This is because offshore earners are often exposed to other currencies too, such as the Euro or British pound.

Further, share price movements are influenced by a host of other factors, such as market sentiment and outlook.

Cochlear share price most negatively correlated

However, UBS found that two ASX stocks in particular are most vulnerable to a strong Australian dollar.

The first is the Cochlear Limited (ASX: COH) share price. The hearing implant developer generates income in both the US dollar and Euro, but reports in Australian dollars.

The Euro could offset some of the earnings pressure from its US operations, but that may not be enough.

“A 1% increase in the AUD/USD has been associated with a -0.29% market-relative return for Cochlear, accounting for the historical relationships between other currency pairs,” explained UBS.

“A 1% increase in the AUD/USD has been associated with a -0.52% market-relative return for Cochlear, not accounting for the relationship between other currency pairs.”

Of all the ASX stocks under UBS’ coverage, the COH share price is the most sensitive to exchange rates.

CSL share price second most impacted

The second most sensitive stock is the CSL Limited (ASX: CSL) share price. The broker found that a 1% change in the currency pair coincided with a -0.27% market-relative return for the blood products maker, if other currencies are accounted for.

Otherwise, the CSL share price generated a 0.42% market-relative loss if only the AUD/USD rate is accounted for.

More reading

• Why has the CSL (ASX:CSL) share price seemingly gone nowhere this year?
• ASX 200 down 0.4%: Appen downgrades guidance, Fortescue hits a record high
• Why the Michael Hill (ASX:MHJ) share price is leaping 11% higher
• 5 things to watch on the ASX 200 on Thursday
• 2 fantastic ASX healthcare shares to buy for 2021

BrenLau owns shares of CSL Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The two ASX stocks most impacted by the dangerous rise of the Aussie dollar appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/39X6w6r

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.

A recent downgrade from buy to hold from a Wall Street analyst has Moderna (NASDAQ: MRNA) stock under pressure. Needham analyst Alan Carr has removed his $110 price target on the stock, citing valuation concerns.

Moderna’s market cap has swelled 885% this year to around $67 billion at recent prices. Despite coming under pressure recently, this is still one of the best performing large-cap healthcare stocks of 2020.

By the end of 2020, Moderna thinks it can deliver enough doses of mRNA-1273 for 10 million Americans, and perhaps produce enough for 500 million people in 2021. That could lead to enormous sales next year, but they probably won’t last.

Commercial-stage biotechnology companies generally trade at mid-single-digit multiples of total revenue when that revenue is expected to continue growing at a healthy pace. While Moderna could record a huge windfall in 2021, it isn’t likely to last. The next vaccine rolling through Moderna’s pipeline probably won’t have a chance to launch until 2024.

Forget about holding Moderna. It’s time to think about selling your shares. If all goes well with BNT162b2 and at least a few more names on a huge list of coronavirus vaccine candidates, Moderna won’t need to manufacture anything at scale by the end of 2022. Without any means to support its enormous valuation, it’s hard to see how the stock can rise over the long run. 

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

More reading

• CSL (ASX:CSL) share price on watch after hints of ‘far more robust’ vaccine
• Which ASX travel shares performed the best in November? 
• 3 key advantages Moderna holds over Pfizer and AstraZeneca
• Why Platinum Asset’s healthcare fund doesn’t own CSL (ASX:CSL) shares
• Why AstraZeneca’s potential vaccine is more exciting than you think

Cory Renauer 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 Is Moderna stock a hold? appeared first on The Motley Fool Australia.

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

from The Motley Fool Australia https://ift.tt/3oEnw5g