Tag: Motley Fool

The Metcash Limited (ASX: MTS) share price dropped lower today despite an upgrade by analysts at Morgan Stanley. In the latest broker report, Morgan Stanley increased the price target on Metcash from $3.80 to $4.15.

The Metcash share price closed today at $3.46, down 2.5% for the day.

Why the broker upgrade?

According to Morgan Stanley, Metcash’s second half trading to date showed “ongoing tailwinds with its food and liquor division, and increased upside with its hardware pillar”.

The broker said the strong sales was complemented by operating leverage, with hardware sales 5% ahead of expectations, complemented by a 1.40% margin expansion. This reflected a higher contribution from the company’s DIY hardware segments from both company-owned and joint-venture stores.

Morgan Stanley equity analyst, Niraj Shah, noted Metcash’s strong start to the second-half, and believes that the company’s share price is trading at a significant discount to most of its peers. 

“Despite persistent category and company specific tailwinds, further diversification and an improved balance sheet means that Metcash trades at a 40% discount to the ASX 200 Industrials ex-Financials index. This compares with its long-term historical average discount of 35%.”

The broker maintained its overweight rating on Metcash’s shares, and lifted its price target from $3.80 to $4.15.

A brief take on Metcash

Metcash dominates the Australian wholesale distribution of packaged groceries to the independent retailer.

The company effectively acts as a co-operative for the small corner shop and the local independent supermarket. By funnelling sales volume through a single channel, Metcash derives buying power to negotiate volume discounts with manufacturers.

In addition, the company owns national retailers such as Mitre 10, Home Timber & Hardware, and Cellarbrations, as well as the IGA supermarket chain. Note that Metcash owns the IGA brand, but the individual IGA stores are owned independently.

Metcash is often called the “4th force” in the supermarket and liquor industry, with 11% market share from its IGA stores competing with Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) which account for 65%, and Aldi at 9%.

For the six months ended 31 October, the company reported a 12.2% increase in group revenue to $7.1 billion. This led to Metcash reporting a 30.4% increase in underlying group earnings before interest and tax (EBIT) to $203 million, and a 43% lift in underlying profit after tax to $129.6 million.

About the Metcash share price

The Metcash share price has gained 35% in 2020, after dropping by 10% in May. At the current share price, the company has a market value of $3.6 billion.

More reading

• Why G8 Education, Metcash, Woodside, & Zip shares are dropping lower
• ASX 200 rises on Monday
• ASX 200 up 0.7%: Metcash impresses, BHP & Fortescue storm higher, Xero given buy rating
• Why Fortescue, Metcash, Nuix, & Xero shares are storming higher
• Metcash (ASX:MTS) share price jumps 8% after strong first half growth

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Metcash (ASX:MTS) share price down 2.5% despite broker upgrade appeared first on The Motley Fool Australia.

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

It is worth remembering that all companies start somewhere and don’t become blue chips overnight.

Two ASX shares that are at the start of their journeys are listed below. Here’s what has investors watching them closely:

Audinate Group Limited (ASX: AD8)

Audinate is a $545 million digital audio-visual networking technologies provider. It is best known for its industry-leading Dante audio over IP networking solution. This product is used widely across a number of industries and has begun to dominate its market.

Management recently revealed that the number of Dante enabled products manufactured by its customers has grown to 2,804. This is a massive eight times greater than its nearest rival.

And while 2020 has been tough for Audinate because of the pandemic, its performance has started to improve now and 2021 looks set to be a much stronger year.

It was partly because of this that analysts at UBS currently have a buy rating and $8.00 price target on its shares. This compares to the current Audinate share price of $7.18.

Whispir (ASX: WSP)

Whispir is a $330 million software-as-a-service communications workflow platform provider. Its platform automates communications between businesses and their workers and customers.

This allows users to improve their communications through automated workflows that ensure stakeholders receive accurate, timely, useful, and actionable insights. An example of this was the government’s use of its platform to distribute COVID-19 updates during the pandemic.

Whispir was a very strong performer in FY 2020. For the 12 months ended 30 June 2020, it posted a 25.5% increase in revenue to $39.1 million and ARR growth of 34% to $42.2 million. Pleasingly, its positive form has continued in FY 2021, with the company’s ARR lifting to $43.7 million at the end of September.

This is still only a very small slice of a Workflow Communications platform as a Service market which management estimates could reach US$8 billion per year by 2024.

More reading

• 2 exciting small cap ASX shares to watch in 2021
• 3 exciting small cap ASX shares rated as buys
• 2 exciting small cap ASX shares to buy
• The Nitro (ASX:NTO) share price is down 20% in a month. Time to invest?
• Why the Whispir (ASX:WSP) share price is storming higher

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

The post 2 exciting small cap ASX shares to watch appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/33VkYYF

The S&P/ASX 200 Index (ASX: XJO) and ASX shares are unquestionably making most investors very happy right now. The ASX 200 Index just had its best month since the 1980s in November and, on today’s gains, is up almost 13% since 30 October.

The ASX 200 has also pretty much seen off the losses that the coronavirus-induced market crash brought us for the year, and is now up more than 47% since the lows of 23 March.

But the higher shares climb, the more investors have to lose, and so the more nervous they tend to get.

According to reporting in the Australian Financial Review (AFR), one investor is especially so, calling the current share market “overvalued”. That investor is James Spenceley, a founder of the ASX-listed telco Vocus Group Ltd (ASX: VOC).

These days, Mr Spenceley describes himself as a ‘venture capitalist’, but still isn’t afraid to call out what he calls “outsized valuations”. He notes that if he took Vocus to IPO right now, he’d probably manage a price-to-earnings (P/E) ratio of 25 if the company hit the boards today, rather than the P/E ratio of 5 that Vocus managed upon its ASX debut:

Everything is overvalued, there’s absolutely no question, we’re into bubble territory. I think the important differentiator is bubbles can keep going for a very long while.

He also told the AFR that, “people could draw down from their mortgage at 2.5 per cent and put money into the stockmarket making 15, 20 per cent a day, a month… He concludes by stating “we’re not necessarily commenting on value… the heart of the problem is complete obliviousness to risk”.

The ASX 200 party rages on

The AFR also quotes another venture capitalist with concerns over the current market. Mark McConnell is CEO of Citadel Group Ltd (ASX: CGL) and also reckons there are danger signs in the current market. He told the AFR that young investors were “after an instant golden goose”.

Mr McConnell singles out the red hot buy now, pay later (BNPL) sector as an example:

When I read some of the reports around some of the fintech and buy now, pay later [stocks], I get uncomfortable with statements such as, ‘it will eventually grow into its valuation’. For a value investor that doesn’t really work for my paradigm.

He goes on to blame young and speculative investors for not putting in the time and research to navigate risk on the market:

I’m continually amazed at how many people buy on the strength of the bouncing ball moving up and down on the screen but yet they never read an annual report, they never turn up to an annual general meeting, they’ve got no idea what the company does.

It’s a similar sentiment to the one Warren Buffett made 20 years ago. Food for thought!

More reading

• Woodside (ASX:WPL) share price flat on CEO retirement
• ASX 200 up 0.1%: Bank of Queensland update, Link jumps, Woodside CEO to retire
• ASX small caps could get a boost with the Aussie dollar hitting 28-month highs
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises on Monday

Motley Fool contributor Sebastian Bowen 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 Vocus (ASX:VOC) founder: ASX is in ‘bubble territory’ appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2JK2iUW

The Talga Group Ltd (ASX: TLG) share price rocketed higher today after the company released news of a successful study. Shares in the battery anode producer closed 5.29% higher at a price of $1.89.

It has been a wildly successful year for the company as its shares have risen by an astounding 301%. These gains come amid the electric vehicle (EV) revolution that has seen companies such as Tesla Inc (NASDAQ: TSLA) and Nio Inc – ADR (NYSE: NIO) perform well this year.

Talga’s fortunes are closely aligned with EV companies, as it makes battery anodes for lithium-ion batteries. Earlier in the year Talga made waves on this front as it partnered with battery giant Farasis.

What happened

This morning Talga announced the completion of a scoping study on its graphite resources (the Niska project) in Northern Sweden. The results sent the Talga share price soaring higher.

The study suggests there is strong evidence to support a stand-alone mine and anode refinery at the site, with robust economics being driven by high graphite resources, high anode product yields and the company’s vertical integration.

Talga sees the study as an important step towards increasing anode production. To this point, the company’s Niska project, when combined with its existing Vittangi Project, would form the largest natural graphite producer in the world.

What did the study say?

The Niska scoping study aims to utilise 5.1 megatonnes of carbon graphite at 28.7%. The study also states that the carbon will be mined at a rate of 400,000 tonnes a year.

Based on these numbers, Talga estimates its average annual pre tax cashflow would be approximately US$690 million per annum. This would be over a total of 14 years of operation and assuming US$2380/tonne of coated product.

The study also outlined some clear benefits for the project. For example, the mine would be favourably located in a tier 1 investment jurisdiction in Sweden and would have access to low cost 100% renewable energy supply and proximity to European battery markets.

Furthermore, the project would have a likely net present value of US$2.4 to $4.6 billion.

Investors have clearly been excited by the prospect, pushing the Talga share price up by more than 5% today.  

More reading

• Cimic (ASX:CIM) share price inches up on $112 million contract wins
• President Trump to sign bill that could kick Chinese stocks off U.S. exchanges
• Here’s how world’s 10 richest made $1.5 trillion from COVID-19
• Elon Musk wants to steer Tesla towards higher profits
• 10 most searched shares in Australia

Daniel Ewing 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 Tesla. 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 Talga (ASX:TLG) share price surged by 5% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/36TOb86

Australia and New Zealand Banking Grp Ltd (ASX: ANZ), Citigroup Global Markets Australia Pty Limited and Deutsche Bank AG (ETR: DBK) and 6 of their executives have been committed to stand trial.

The banks plus John McLean, Rick Moscati, Michael Ormaechea, Michael Richardson, Stephen Roberts and Itay Tuchman face criminal charges of running a cartel.

NSW Local Court in Sydney on Tuesday committed the case to a trial in the Federal Court.

The allegations include making arrangements to run a cartel in 2015 in relation to trading ANZ shares held by the other two banks.

ANZ and each of the 6 executives are accused of knowingly being involved in the cartel conduct.

The charges arose after a Australian Competition and Consumer Commission (ACCC) investigation.

ACCC chair Rod Sims declined to comment as the matter is now the subject of a criminal case.

If found guilty, corporations face a maximum fine of the greater of $10 million or 3 times the total benefits earned from the cartel conduct. If the benefits can’t be calculated, it could be slugged 10% of its annual turnover in Australia.

The 6 executives each face 10 years’ imprisonment, a $420,000 fine or both.

The Federal Court will hear the case at a date to be determined.

ANZ shares were up 0.26% on Tuesday, closing the day at $23.40.

More reading

• Why the ANZ (ASX:ANZ) share price may be a buy
• ASX 200 up 0.3%: Premier Investments update, big four banks rise, gold miners tumble
• Here are the ASX bank shares rated as a buy today
• Cashrewards (ASX:CRW) share price lifts on successful IPO debut
• Banks rejoice: House prices to return to 2019 levels

Motley Fool contributor Tony Yoo 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 ANZ bank and execs face criminal charges appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/39NuMI1

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.

What happened

Shares of General Motors (NYSE: GM) were revving higher after the automaker delivered a strong third-quarter earnings report and benefited from bullish sentiment in the electric-vehicle sector as investors are beginning to appreciate the company’s exposure to EVs. 

Consequently, the stock finished the month of November up 27%, according to data from S&P Global Market Intelligence. It also benefited from broad market trends around coronavirus vaccine news and a positive response to the election results.

As you can see from the chart below, General Motors stock gained consistently over most of November following its earnings release at the beginning of the month.

GM data by YCharts

So what

General Motors shares rose 5.4% on 5 November after the company smashed through estimates in its Q3 report. Automakers have bounced back rapidly from the early days of the pandemic as demand for vehicles has soared in part because of an aversion to public transportation, and General Motors has been a beneficiary. Profits jumped thanks to consumers buying higher-margin SUVs and crossover vehicles.

The company’s revenue in the quarter was flat at $35.5 billion, which essentially matched estimates. However, the factors above as well as cost-cutting and fewer markdowns drove a surge in adjusted earnings per share from $1.72 a year ago to $2.83, well ahead of the consensus at $1.38.

The following week the stock climbed again on news that Pfizer and BioNTech had produced a successful coronavirus vaccine and that General Motors said it would hire 3,000 engineers to accelerate its push into electric vehicles and autonomous vehicles (AVs). The week after that, General Motors again asserted that EVs were a priority, stating that it planned 30 electric-vehicle launches by 2025.

With the market now viewing traditional combustion vehicles as a declining industry, it’s key that the automaker pivot toward new technologies.

Now what

Towards the end of the month, General Motors restructured its partnership with Nikola and said it would not take a $2 billion stake in the EV start-up, though GM still plans to supply fuel cell systems to the company. 

As it focuses on EVs and AVs, General Motors offers investors an interesting opportunity since it is still priced as value stock even though it could be a leader in those new sectors. The challenge for General Motors will be to manage the decline of tradition combustion vehicles while transitioning to EVs and AVs.

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

More reading

• ANZ bank and execs face criminal charges
• Why the S2 Resources (ASX:S2R) share price was on the move today
• Dalrymple (ASX:DBI) share price tanks 15% at IPO debut today
• Why the Infratil (ASX:IFT) share price rocketed 21% higher today
• Is the Coles (ASX:COL) share price a buy for 2021?

Jeremy Bowman 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 General Motors stock jumped 27% last month 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/3qFfsmy

The S2 Resources Ltd (ASX: S2R) share price was up by nearly 6% in early morning trading today, before giving back its gains throughout the day to finish flat.

The share price movement comes following this morning’s announcement of promising drill results at its Finish gold prospect.

Year-to-date, the S2 Resources share price is up 38%. By comparison the All Ordinaries Index (ASX: XAO) is up 1.7% so far in 2020.

What does S2 Resources do?

S2 Resources is a mineral resource exploration company. It seeks to identify early stage assets offering high growth potential. The company operates in three segments: Finland exploration activities, US exploration activities, and Australia exploration activities. Its projects include Polar Bear, Eundynie, and Norcott.

S2 Resources explores for copper, zinc, gold, nickel, and platinum metals. Share first began trading on the ASX in October 2015.

What did S2 Resources announce to send its share price higher today?

In this morning’s ASX announcement, S2 reported on the results it has received from 3 of the 4 diamond holes drilled at its 100% owned Aarnivalkea prospect in Finland.

The diamond holes, drilled in October, were testing for extensions to the shallow gold mineralisation previously uncovered by S2. The drilling was intended to test “down-dip and down-plunge extensions” to the known mineralisation.

The best results came from hole FAVD0062, which intersected several mineralised zones, with the strongest located 110 metres down-dip from previous drilling. The drill results returned 6.85 metres at 11.8g/t gold from 223.0 metres downhole, including 4.0 metres at 18.1g/t from 223.0 metres downhole.

Commenting on the drill results, S2 Resources’ CEO Matthew Keane said:

This high grade result reinforces S2’s view of the prospectivity of our tenure in the Central Lapland Greenstone Belt. Aarnivalkea is a virgin gold discovery, completely masked by shallow glacial cover and located only 24 kilometres from Kittilä, Europe’s largest producing gold mine. Lapland remains an integral part of S2’s portfolio, and in addition to following up on these gold results, we also plan to commence base metal exploration in 2021 on our 100% owned Ruopas Project.

More reading

• ANZ bank and execs face criminal charges
• Why General Motors stock jumped 27% last month
• Dalrymple (ASX:DBI) share price tanks 15% at IPO debut today
• Why the Infratil (ASX:IFT) share price rocketed 21% higher today
• Is the Coles (ASX:COL) share price a buy for 2021?

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.

The post Why the S2 Resources (ASX:S2R) share price was on the move today appeared first on The Motley Fool Australia.

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

The Dalrymple Bay Infrastructure Limited (ASX: DBI) share price has taken a beating on the first day of its ASX listing, losing more than 15% soon after the shares floated.

In today’s initial public offer (IPO), Dalrymple has raised $656 million by selling 255 million shares at a price of $2.57 per share.

The Dalrymple share price was trading at $2.16 at close of trade.

More about the Dalrymple IPO

Dalrymple owns the Dalrymple Bay Coal Terminal, which handles about one-third of Queensland’s coal exports, and 15% of global export metallurgical coal volumes in 2019.

The port sits on the world’s largest coal export terminal, Port of Hay Point, which handles coal from the Bowen Basin mines. The Bowen Basin mines are the source of 80% of Queensland’s coal.

During the book build, Brookfield – which privately owned 100% of Dalrymple before IPO – had a hard time convincing institutional investors. Their concerns included the pricing of the float and its ability to expand if coal demand from China falters. Investors were also worried about the declining demand for coals in general as the world moves towards renewable energy.

Brookfield addressed investor concerns in the prospectus, saying that 80% of the coal going through the Dalrymple Bay terminal each year was metallurgical coal, also known as coking coal used in steel making. This type of coal is still generally accepted by investors who are divesting from thermal coal in favour of renewables amid climate concerns.

Retail investors eventually took up one-third of the share allocation, lured by the promise of a 7% dividend yield next year.

Brookfield retains a 49% stake, with Pershing Securities Australia – which was convicted of criminal offences in August for breaching laws relating to client money – taking 32 million shares of the allocation or 6.4% of the company. The Queensland Government meanwhile is the other major shareholder, investing $128 million from its Backing Queensland fund to take a 9.99% stake.

The IPO valued Dalrymple at $1.286 billion on a market capitalisation basis, and $3.074 billion in terms of enterprise value.

More reading

• Why the Infratil (ASX:IFT) share price rocketed 21% higher today
• Is the Coles (ASX:COL) share price a buy for 2021?
• Why the Andromeda Metals (ASX:ADN) share price is lifting off today
• ASX stock of the day: Linius (ASX:LNU) share price blasts up 30% on product debut
• Leading brokers name 3 ASX shares to sell today

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.

The post Dalrymple (ASX:DBI) share price tanks 15% at IPO debut today appeared first on The Motley Fool Australia.

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

One of the best performers on the Australian share market on Tuesday was the Infratil Ltd (ASX: IFT) share price.

The New Zealand-based infrastructure investment company’s shares rocketed 21% higher before being hurriedly placed into a trading halt shortly before the market close.

This means the Infratil share price ended the day at a record high of $6.80.

Why was the Infratil share price rocketing higher?

It appears as though Link Administration Holdings Ltd (ASX: LNK) isn’t the only company receiving a takeover approach today.

Investors were buying Infratil’s shares this afternoon amid reports that one of Australia’s leading superannuation funds has made a takeover approach for the dual-listed company.

According to the AFR, AustralianSuper says it has submitted a proposal to acquire all the shares in the dual-listed company.

Australia’s largest superannuation fund has tabled an offer of NZ$7.43 a share or NZ$5.37 billion (A$5.09 billion) to acquire the company.

The report advises that AustralianSuper’s offer consists of a cash consideration of NZ$5.79 a share and 0.221 of a Trustpower share per Infratil share.

Based on the current Infratil share price of NZ$6.08 (on the NZX), this offer represents a 22.2% premium.

AustralianSuper has apparently said that it would continue to seek engagement with the Infratil board to give its shareholders the opportunity to assess the proposal in full.

What now?

As things stand, Infratil is yet to comment on the takeover approach or confirm its receipt. This is likely to come tomorrow morning before the market reopens.

One thing that is for sure, though, is that AustralianSuper cannot be accused of making an opportunistic approach.

Even prior to today’s jump, the Infratil share price was up a sizeable 13.5% since the start of the year and trading within a whisker of its record high.

The superannuation fund appears to see long term value in the company and is prepared to pay a premium to get it.

More reading

• ASX stock of the day: Tilt (ASX:TLT) share price rockets 17% to new all-time high

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 Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration 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 Why the Infratil (ASX:IFT) share price rocketed 21% higher today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3gmto0l

The Coles Group Ltd (ASX: COL) share price has been a very strong performer in 2020.

Since the start of the year, the supermarket giant’s shares have risen an impressive 22%.

Is it too late to buy Coles shares?

Although the Coles share price has been on fire this year, analysts at Goldman Sachs believe they can still go higher from here.

This morning the broker retained its buy rating and $20.50 price target on Coles’ shares following the company’s appearance at its Black Friday Investor Series event.

COVID-19 trading.

At the event, Coles’ Chief Financial Officer, Leah Weckert, presented and spoke positively about the company’s performance and prospects.

In respect to COVID-19 trading, Goldman Sachs noted: “Sales remain elevated due to work from home, but the concept of new normal is taking hold. Management expects the work from home tailwind to be a longer term impact for the industry. The group has not observed any notable shift in consumers towards value purchases yet.”

Strong Christmas period expected.

The broker also revealed that Coles is positive on its prospects during Christmas and is expecting stronger than normal demand.

It explained: “Expecting demand to be higher than normal, but will not be very different from the peak of panic buying period, therefore expect to be better prepared for this heightened level of activity. Categories like entertainment have been elevated for some time but these have a short turnaround time making it easier to deal with demand fluctuations. Believe that consumers are looking to spoil themselves a bit into Christmas and will be watching this from a premiumization perspective.”

Strategy update.

Coles also provided an update on its refreshed strategy and particularly its Smarter Selling pillar. Pleasingly, for shareholders, the company is delivering ahead of expectations on this.

Goldman commented: “18 months into the strategy, management sees progress ahead of initial expectations, with EBIT growth being realised sooner than expected. Maintains a long term focus and not distracted by short term trends.”

Online improvements.

Another key takeaway for Goldman Sachs was an update on the progress Coles is making with its online business.

It explained: “Penetration rates are different in each state with Victoria at 9% for example, and WA not seeing much of a shift. Management does not expect much of a change in online penetration into Christmas unless there is another wave of government restrictions due to COVID-19.”

“The group is Investing in online where required, but is being judicious in its application due to risks around regret capex. An update on online is expected from management during the February result. Have improved the online checkout process to be 6 times faster and working on broadening the online range. Online capacity was doubled through COVID without much capex investment,” the broker added.

Buy rating maintained.

All in all, Goldman appears happy with what it heard at the event and has held firm with its buy rating and $20.50 price target.

Based on the latest Coles share price, this price target implies potential upside of 12% over the next 12 months, excluding dividends.

More reading

• 2 blue chip ASX dividend shares to buy
• Goldman says buy the Metcash (ASX:MTS) share price ahead of next week’s results
• 2 growing ASX dividend shares to buy this month
• ASX 200 Weekly Wrap: ASX 200 on track for a top month
• 2 of the best ASX shares for your retirement portfolio

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

The post Is the Coles (ASX:COL) share price a buy for 2021? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3mWO5lN