Tag: Motley Fool

Yesterday, shares of Myer Holdings Ltd (ASX: MYR) surged 10.45% to 37 cents a share, giving the embattled but iconic Aussie retailer a market capitalisation of just over $300 million. You have to go back to early March to find the last time the Myer share price was at this level. Additionally, Myer shares are now up more than 76% since 21 October, when they were asking just 21 cents. So what’s going on here?

What’s driving the Myer share price?

Apart from regular appearances on the ASX’s most shorted stock list (including this week), there has only been one major piece of news out of Myer recently. That was the announcement late last month that Myer’s chair, Gary Hounsell, will be walking the plank.

Mr Hounsell had been under some pressure for some time. It has been well known that Solomon Lew, CEO of Premier Investments Limited (ASX: PMV), had been pushing for Mr Hounsell’s resignation for a while. Mr. Lew’s Premier is a large investor in Myer, owning a 10.8% stake in the company. And, as we reported at the time last month, Lew got what he came for after fellow major shareholder, Geoff Wilson of Wilson Asset Management, sided with Premier against voting for Mr. Hounsell’s re-election. Mr. Lew has also called on the entire board to step down or be shown the door, and has threatened to call an extraordinary general meeting over the matter.

My-store for much longer?

According to reporting in the Australian Financial Review (AFR) yesterday, this is what was behind the massive surge in Myer shares yesterday. The AFR reports that there is building speculation that Mr. Lew, through Premier, is preparing to mount a takeover of Myer. Premier’s retailing businesses like Smiggle, Peter Alexander and Just Jeans have done enormously well during the pandemic, if the company’s stellar FY2020 earnings numbers are anything to go by. It seems plausible at least that Myer shareholders would be excited about the prospects of Mr. Lew running the company.

However, this might not be the whole story. The AFR also quotes Wilson Asset Management fundie, Oscar Oberg, who reckons that Myer is simply benefitting from the goodwill flowing out of the recent coronavirus vaccine announcements:

“If I look into 2022 we’d like to think a vaccine brings back some normality in the business”, the AFR quotes Mr. Oberg as stating. “We think management has been doing a great job, the balance sheet is in great nick and we think they’ll be able to repay their debt when it comes due next year”

It could be one, or a combination of these factors that is pushing the Myer share price to an 8-month high this week.

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• These are the 10 most shorted shares on the ASX

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. 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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For a company often labelled Australia’s version of Amazon.com Inc (NASDAQ: AMZN), Booktopia Group Limited (ASX: BKG) founder and chief Tony Nash doesn’t see the resemblance.

“Books are not a priority for Amazon anymore,” he told The Motley Fool.

“It’s less than 3% of their revenue now. Sure, it was 100% when they started out, and is a part of their DNA, but it’s not a priority for them.”

But Amazon did start as an online book store, so the comparisons are inevitable.

Booktopia’s initial public offering closes on Tuesday with the shares released on the ASX on Thursday 4 December.

The IPO price is $2.30 per share, giving the retailer a market capitalisation of $315.8 million.

Not the first time at the circus

Booktopia attempted to float 4 years ago, but soon after Amazon announced plans to open Australian operations.

Potential investors became nervous and the IPO was cancelled.

“People needed to see that they weren’t going to annihilate us,” said Nash.

“We’ve gone from $80 million to over $200 million [of revenue] during that time.”

This showed that Amazon was never a threat, according to Nash. It’s too busy with other projects like cloud computing, grocery deliveries, video streaming and audio books.

“They would prefer someone else to sell the book to someone else and they take their 20% clip of the ticket,” he said. 

“Physical books are not what they want to focus on.”

The money raised from this IPO – $43.1 million – is similar to the amount Booktopia sought the first time round in 2016.

Our moat is incumbency: Booktopia CEO

When Nash created Booktopia in 2004, he remembers people calling him crazy for establishing a bookstore against the giant incumbents.

By 2015, the internet upstart was acquiring fallen star Angus & Robertson. The company also bought University Co-op Bookshop last financial year.

Notwithstanding this industry disruption in the past 16 years, Nash said Booktopia’s moat is its sheer market dominance.

“The number 2 online book retailer in Australia is turning over $25 million – a company named Zookal. They do textbooks for university students then it drops away after that,” he told The Motley Fool.

“We don’t have daylight between us and our competitors. We’ve got days and weeks… There’s really no one else.”

When you can’t just hire more people

According to Nash, Booktopia is at a point now where automation and robotics are required to take its operations to the next stage of growth.

“As you grow, you hit certain choke points within your business and you need to invest,” he said. 

“You can’t simply throw more people at it… You just don’t have the hours in the day nor the space to put people in.”

As such, it has gone on a spending spree of $36 million for logistical technology to pick and pack books in its western Sydney warehouse.

The program will upgrade its capacity from 800,000 units of stock to 1.8 million.

Booktopia earlier this year raised $8 million through a private equity round to fund the technology drive. Nash said $25 million of the funds raised in the IPO would also go towards this program.

The company has found a sweet spot in a highly commoditised industry, Nash believes. 

“We don’t necessarily have to be the cheapest. We’ve worked out at that if you’re in the ballpark people will come to us.”

Cycling to Paris

The funding will also allow Booktopia to keep higher stock levels.

“I don’t want to run out of the popular ones. That’s my main issue right now,” Nash said.

“The top 10, 20, 30 thousand titles – we shouldn’t run out of stock… These are the things we’re going to address because we’re well-funded.”

Booktopia wants to take full advantage of people rediscovering reading during the year of COVID-19.

“People are starting to re-evaluate their lives… The value of a book and the value of your time and a value of an enriched life – the pandemic has really helped recalibrate ourselves.”

Despite a long 16-year journey, the ASX listing is not the beginning of the end for Nash. 

“If I was doing the Tour de France, the IPO to me is like on the 10th stage, going through the 40km mark, you have 40km to go, you’ve a big climb up some mountain… Then after the 10th stage there’s another 11 stages to go.”

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon 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. 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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Two fund managers have revealed the stocks they think will perform strongly after a COVID-19 solution comes along.

With growth shares taking off since the coronavirus trough in March, it’s difficult for investors to find companies that haven’t already blown up in value.

But TMS Capital portfolio manager Ben Clark and First Sentier Investors deputy head of Australian growth equities David Wilson each reckon they have found one.

Mining without the mineral price rollercoaster

Clark tipped Deterra Royalties Ltd (ASX: DRR) for a rosy future in the post-virus world.

“One stock we’ve started buying is a company called Deterra, which has just been spun out of Iluka Resources Limited (ASX: ILU),” he said on a Livewire video.

“It owns a mining royalty over some land that BHP Group Ltd (ASX: BHP) mines in, and BHP’s going to almost triple its output from Mining Area C over the next 3 years.”

The advantage of a mining royalty company is that it’s not exposed to wild fluctuations in the global minerals market.

“You’re almost certainly going to see very strong growth in their underlying earnings even if we see quite a significant pullback in the iron ore price,” Clark said.

The company only listed on the ASX a month ago, starting at $4.87 a share and a market capitalisation of $2.57 billion. The stock has since dipped to $4.36 as of Monday afternoon.

The current price is very tempting, according to Clark.

“When you can compare it to the royalty companies that trade in Toronto and in New York, it looks quite cheap,” he said.

“We would argue it’s probably one of the highest quality mining royalty streams anywhere in the world, given the counterparty, the production growth, the length of the asset.”

Pivoting for the future

Wilson’s tip for growth was gaming provider Aristocrat Leisure Limited (ASX: ALL), which made its name in the past for poker machines.

“A little while ago they took the bold step to actually step away from their traditional business and move into the digital space,” Wilson said.

“That digital part of their business is now 40% of their earnings.”

The Aristocrat share price peaked at $37.43 in February before sinking to $17.54 in March during the COVID-19 panic. It is now back at $33.88.

The pivot was “a brave decision”, according to Wilson.

“They said ‘No, we need to step away from our core business, but try and get to where our business is going to be in 10 years’ time’. It’s going to be rough at times, but I think you can’t fault the way that they’ve executed thus far.”

Both fund managers said Australian stocks have excellent prospects compared to their northern hemisphere counterparts.

“We’re lucky we’ve got a great system here. Investors were happy to stump up quite significant amounts of cash in a pretty scary period. It allowed companies to get through,” said Clark.

More reading

• Top brokers name 3 ASX shares to buy next week
• Could the Aristocrat (ASX:ALL) share price be a leading ASX 200 growth share?
• Why the Aristocrat Leisure (ASX:ALL) share price can go higher from here
• ASX 200 rises again on Wednesday
• Why Aristocrat Leisure, Chalice Gold, Westpac, & Whitehaven Coal shares are charging higher

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. 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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There are plenty of food-related ASX shares that are available to invest in.

Here are some of the businesses that the Motley Fool investment team have taken a look at:

Collins Foods Ltd (ASX: CKF)

This company is a large franchisee of KFC restaurants across Australia and Europe (in Germany and the Netherlands).

During FY20 in Australia the company saw revenue growth of 9.5% with same store sales growth of 3.5%. The company has been investing in its digital and delivery systems so that it can continue to serve customers during this COVID-19 period. The company is also expanding in Australia with Taco Bell outlets.

However, in Europe, Collins Foods saw revenue growth of 8.3% with a decline of same store sales of 5.8%.

Overall in FY20, the company generated revenue growth of 8.9%, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 6.3% and underlying net profit went up 5.1% to $47.3 million.

The food ASX share is focused on expanding its Taco Bell network, whilst expanding its delivery network in Australia.  

Collins Foods is currently rated as a hold by the Motley Fool Dividend Investor service.

Costa Group Holdings Ltd (ASX: CGC)

Costa is the largest horticultural business in Australia. It grows a variety of different produce including tomatoes, avocadoes, mushrooms, citrus fruit and berries.

The company has been affected by drought and other one-off issues such as fruit flies and crumbly berries. Costa said the historical weather conditions should have no material impact in the second half of the year or beyond and there is broad based forward momentum in demand and pricing over its Australian portfolio.

The food ASX share reported growth in its FY20 half-year result which showed revenue growth of 6.8% to $612.4 million, underlying EBITDA grew by 13.7% to $93.7 million and underlying net profit went up 12% to $45.8 million.

Costa’s international segment, which includes Morocco and China, saw underlying EBITDA growth of 98% compared to the prior corresponding period.

The company believes that strong export and domestic demand, together with improved pricing levels, are expected to continue to the end of the season.

Costa continues to invest for growth with better facilities at some of its farms and whilst planting more hectares.

The company now has “excellent” water security and it’s expecting an increase in quality, yield growth and shareholder returns.

Costa is currently rated as a buy by the Motley Fool Share Advisor service.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) which owns a variety of different farm types including cattle, almonds, macadamias, vineyards and cropping (sugar and cotton).

Many of its tenants are large businesses including Olam, Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV) and Australian Agricultural Company Ltd (ASX: AAC).

Rural Funds doesn’t carry the operational risks of the farms, that’s down to the tenants. However, the food ASX share does own a large number of water entitlements for tenants to use if necessary.

The REIT has rental growth built into all of its tenancy agreements which are based either of a fixed 2.5% annual increase, or linked to CPI inflation, with some contracts having market reviews.

The management of Rural Funds aim to increase the distribution to shareholders by 4% per annum. At the current Rural Funds share price it has a FY21 distribution yield of 4.2%.

Rural Funds is currently rated as a buy by the Motley Fool Dividend Investor service.

More reading

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO, RURALFUNDS STAPLED, and Treasury Wine Estates Limited. The Motley Fool Australia has recommended Collins Foods Limited. 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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There are some growth-focused exchange-traded funds (ETFs) that are rated as buys by a Motley Fool investment service.

What are exchange traded funds?

As linked above, ETFs are investment vehicles that allow the investor to buy a whole group of businesses at once. With some of them you can buy a decent number of shares with one investment – 50 to 100 holdings. Other investments give exposure to thousands of businesses at once.

Some ETFs are focused are providing dividend income to investors like Vanguard Australian Shares High Yield ETF (ASX: VHY) and BetaShares S&P 500 Yield Maximiser (ASX: UMAX).

However, there are other ones that have more of a growth profile:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This ETF gives investors exposure to 100 of the biggest businesses on the NASDAQ, which is a stock exchange in the US.

Many of the world’s biggest technology businesses are listed on the NASDAQ, which is apparent when you look at the ETF’s biggest holding exposures.

On 20 November 2020, its biggest positions were: Apple, Microsoft, Amazon, Alphabet, Facebook, Tesla, Nvidia and PayPal. There are also some other well-known technology businesses slightly down its holdings list such as Adobe, Netflix, Intel, Qualcomm and Broadcom.

Almost half of the holdings are in the sector ‘information technology’ with another 20% invested in communication services.

However, there are more than just technology shares on the NASDAQ. There are also businesses such as PepsiCo, Costco and Starbucks. Almost 20% of the ETF is invested in consumer discretionary shares.

The ETF has produced returns larger than the ASX in the past few years. Over the past year, the Betashares Nasdaq 100 ETF’s net return has been 34.6%. Over the past three years it has produced net returns of 25% per annum. In the past five years it has produced net returns of 19.8% per annum. Finally, since inception in May 2015 it has made net returns of 20.8% per annum.

Betashares Nasdaq 100 ETF has an annual management fee of 0.48% per annum. According to BetaShares, this ETF’s trailing 12-month distribution yield amounts to 2.6%.

This ETF is still rated as a buy by the Motley Fool Share Advisor service.

Betashares Global Cybersecurity ETF (ASX: HACK)

This ETF is focused on businesses that are looking to provide cybersecurity services to governments, businesses and other organisations.

Its top holdings include companies like Crowdstrike, Okta, Accenture, Zscaler, Cisco Systems, Cloudflare, F5 Networks, Palo Alto Networks, Leidos Holdings and Fireeye.

BetaShares says that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future. This ETF includes global cybersecurity giants as well as emerging players, from a range of global locations.

More than half of the portfolio is invested to the sector of ‘systems software’, but it’s also invested in businesses focused on internet services and infrastructure, communications equipment, application software and aerospace and defence.

In terms of returns, the net returns haven’t been quite as high as the NASDAQ one, over the past year its net return has been 16.2%, over the past three years it has delivered average returns per annum of 18.3% and since inception in August 2016 it has delivered net returns of 16.8% per annum.

With a country allocation of 89.5% to the USA, the vast majority of the ETF is focused on American companies. However, there is allocation of more than 3% to Israel and the UK, 2% to Japan and 1.4% to France.

Betashares Global Cybersecurity ETF has an annual management fee of 0.67%.

This ETF is currently rated as a buy by the Motley Fool Pro service.

More reading

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• 2 tech ETFs generating big returns

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETA CYBER ETF UNITS and BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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There are a lot of dividend shares for investors to choose from on the Australian share market. Which certainly is a blessing in this ultra low interest rate environment that we are living in.

Two ASX dividend shares that provide generous dividend yields are listed below. Here’s what you need to know about them:

BHP Group Ltd (ASX: BHP)

BHP is widely regarded as one of the highest quality miners in the world thanks to its long history, world class and low cost operations, and its significant growth opportunities. At present, the mining giant is benefiting greatly from favourable commodity prices. This is expected to underpin another strong full year result in FY 2021 and allow the company to reward its shareholders with more generous dividends.

According to a recent note out of Macquarie, its analysts have an outperform rating and $44.00 price target on its shares. The broker is also forecasting a ~$2.79 per share fully franked dividend. Based on the current BHP share price, this would mean a sizeable 7.5% dividend yield over the next 12 months.

BWP Trust (ASX: BWP)

BWP Trust is the largest owner of Bunnings Warehouse sites in Australia. At the last count, the company’s portfolio owned 68 stores. In addition to this, seven of the properties have adjacent retail showrooms that are leased to other retailers. Its portfolio currently has a value of approximately $2.5 billion, generates annual rent of $151.4 million, and boasts a 98% occupancy rate.

Bunnings has proven to be a great tenant in 2020. Due to the strength of the hardware retailer’s business, BWP has been able to collect rent as normal at a time when many other landlords have struggled with their collections. This allowed the BWP board to grow its distribution in FY 2020.

Analysts at UBS expect more of the same in FY 2021 and are forecasting an 18.3 cents per share distribution. Based on the current BWP share price, this will mean a yield of 4.3% for investors.

More reading

• Monadelphous (ASX:MND) share price higher on BHP and Rio Tinto contract wins
• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• How to turn $20,000 into $180,000 in 10 years with ASX shares
• China is a much bigger threat to the ASX bull run than COVID
• Can Magellan (ASX:MFG) prosper in a market dominated by Macquarie (ASX:MQG)?

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. 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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It looks set to be another positive day of trade for the S&P/ASX 200 Index (ASX: XJO) on Tuesday after a third COVID-19 vaccine candidate was shown to be effective.

At the time of writing, SPI futures are pointing to the ASX opening the day 31 points or 0.5% higher this morning.

What is the new vaccine candidate?

Overnight British pharmaceutical giant AstraZeneca revealed that data from an interim analysis of clinical trials showed that its vaccine, AZD1222, had an average efficacy of 70% in protecting against COVID-19.

This follows recent updates by both Pfizer and Moderna which showed that their vaccines are 95% effective against the virus.

While 70% might not sound amazing, it is worth noting that the AstraZeneca vaccine, which is being developed in collaboration with Oxford University and is not-for-profit, was assessed over two different dosing regimens.

When trial participants were given a half dose, followed by a full dose at least one month apart, the vaccine showed an effectiveness of 90%. Whereas, when given as two full doses at least one month apart, the vaccine showed just 62% efficacy.

Pleasingly, no hospitalisations or severe cases of the disease were reported from trial participants.

Chief Investigator of the Oxford Vaccine Trial at Oxford, Professor Andrew Pollard, commented: “These findings show that we have an effective vaccine that will save many lives. Excitingly, we’ve found that one of our dosing regimens may be around 90% effective and if this dosing regime is used, more people could be vaccinated with planned vaccine supply.”

This sentiment was echoed by AstraZeneca’s Chief Executive Officer, Pascal Soriot.

He said: “Today marks an important milestone in our fight against the pandemic. This vaccine’s efficacy and safety confirm that it will be highly effective against COVID-19 and will have an immediate impact on this public health emergency. Furthermore, the vaccine’s simple supply chain and our no-profit pledge and commitment to broad, equitable and timely access means it will be affordable and globally available, supplying hundreds of millions of doses on approval.”

What now?

AstraZeneca will now immediately prepare regulatory submission of the data to authorities around the world that have a framework in place for conditional or early approval. It will also seek an Emergency Use Listing from the World Health Organization for an accelerated pathway to vaccine availability in low-income countries.

Management notes that it is making rapid progress in manufacturing with a capacity of up to 3 billion doses of the vaccine in 2021 on a rolling basis, pending regulatory approval.

Pleasingly, the vaccine can be stored, transported, and handled at normal refrigerated conditions for at least six months and administered within existing healthcare settings. This compares favourably to the Pfizer vaccine which needs to be kept at extremely cold temperatures.

The good news for Australia is that CSL Limited (ASX: CSL) is already manufacturing this vaccine

The biotech giant has separate contracts with AstraZeneca and the Australian Government to manufacture approximately 30 million doses of the AZD1222 vaccine candidate. The first doses are planned for release in the first half of 2021, pending the outcome of clinical trials and regulatory approval.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Is Transurban’s (ASX:TCL) grip on Sydney roads set to tighten?
• ASX 200 rises again on Monday
• Why Morgans just upgraded the Orica (ASX:ORI) share price to “buy”
• Is the US heading for a ‘double-dip’ recession?

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 CSL Ltd. 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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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on a positive note. The benchmark index rose 0.35% to 6,561.6 points.

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

ASX 200 poised to rise.

It looks set to be another positive day of trade for the Australian share market on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 31 points or 0.5% higher this morning. This follows a good start to the week on Wall Street, which in late trade sees the Dow Jones up 0.9%, the S&P 500 up 0.35%, and the Nasdaq up 0.1%.

Technolgy One full year results.

The TechnologyOne Ltd (ASX: TNE) share price will be on watch today when it releases its full year results. The enterprise software company has provided full year guidance for net profit before tax growth of 8% to 12% in FY 2020. This is expected to be driven by strong growth in its software-as-a-service (SaaS) business. In the first half it reported a 33% increase in SaaS annual recurring revenue (ARR) to $110.2 million.

Oil prices push higher.

Energy producers such as Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 1.2% to US$42.94 a barrel and the Brent crude oil price climbed 2.2% to US$45.95 a barrel. News that the AstraZeneca-Oxford University COVID vaccine is up to 90% effective gave prices a lift.

Gold price sinks on vaccine new.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a tough day after the gold price sank lower. According to CNBC, the spot gold price sank 1.95% to US$1,836.10 an ounce. AstraZeneca’s positive vaccine data weighed heavily on safe haven assets.

Nanosonics annual general meeting.

The Nanosonics Ltd (ASX: NAN) share price could be on the move today when it holds its annual general meeting. Although the infection prevention company only recently released a business update, it promised a more detailed one with the release of its AGM presentation. This could mean earnings guidance for the first half.

More reading

• Is Transurban’s (ASX:TCL) grip on Sydney roads set to tighten?
• ASX 200 rises again on Monday
• Why Morgans just upgraded the Orica (ASX:ORI) share price to “buy”
• Is the US heading for a ‘double-dip’ recession?
• G8 Education (ASX:GEM) share price rebounds after lawsuit news

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited. 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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Although the Australian share market has recovered strongly in recent weeks and is close to moving into positive territory for the year, not all shares on the index have performed as positively.

Two ASX shares which are still trading materially lower than their 52-week highs are listed below. Are these beaten down shares in the buy zone?

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a leading provider of software products and services to the wealth management and funds administration industries. It is best known for its Sonata wealth management platform. This wealth management platform allows financial advisers to connect and engage with clients via computers, tablets, or smartphones. It is used by a number of large financial institutions.

The Bravura share price has come under pressure this year due to the negative impact of the pandemic on its performance and is down 45% from its 52-week high. Though, it is worth noting that the impact isn’t as great as its share price decline might indicate. Management has warned that its profits could be flat this year because of the crisis.

According to a note out of Goldman Sachs, its analysts think this is a buying opportunity. It recently reiterated its buy rating and put a $4.50 price target on its shares. It believes the company is well positioned due to its strong market position with its existing product offerings and its emerging microservices ecosystem strategy.

Telstra Corporation Ltd (ASX: TLS)

Although this telco giant’s shares have been strong performers this month, they are still some distance from their highs. On Monday, the Telstra share price ended the day at $3.08, which was 22% lower than its 52-week high.

This weakness has been driven by COVID-19 headwinds and concerns over the sustainability of its dividend. However, the latter concerns are now easing after the Telstra board revealed that it would do whatever it can to maintain its 16 cents per share dividend.

In addition to this, the company has recently announced plans to split its business into three separate entities. Management believes the restructure will allow Telstra to take advantage of potential monetisation opportunities for its infrastructure assets, which could create additional value for shareholders.

Goldman Sachs was a fan of this plan and reiterated its buy rating and $3.60 price target on the company’s shares. It has also reaffirmed its forecast for a 16 cents per share fully franked dividend in FY 2021 and beyond.

More reading

• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• 2 ASX dividend shares with huge yields
• Why the Telstra (ASX:TLS) share price can go even higher from here
• 2 ASX dividend shares to buy today for income
• Macquarie (ASX:MQG) picks best ASX stocks to buy for 2021 post-COVID recovery

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd and Telstra Limited. 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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Transurban Group (ASX: TCL) is Australia’s largest toll-road operator. By a long shot. The company is now the 10th largest company on the S&P/ASX 200 Index (ASX: XJO). Even though Transurban shares are down 1.3% today to $14.77, the company still has a market capitalisation of $40.5 billion.

Now Transurban is already a company with a market position of dominance. It owns or at least has stakes in 17 motorways around the country, as well as another 4 in the United States and Canada. The 17 Australian tollways are spread across Melbourne, Brisbane and Sydney. Transurban’s Brisbane roads include the Gateway and Logan motorways. Its Melbourne roads are the Western Link and the Southern Link.

But it’s Sydney that is the real crown jewel in Transurban’s portfolio. The company owns a stake in every single tolled-road across the city, with the exception of the Sydney Harbour Bridge and Tunnel roads.

That includes the M2, M7 and M5 motorways, as well as the just-opened NorthConnex tunnel, one of the longest and deepest road tunnels in the country, and the ‘missing link’ in the Sydney orbital network.

Transurban eyes WestConnex

But this grip on the city’s largest arterial roads could be set to tighten even further. According to reporting in the Australian Financial Review (AFR), the New South Wales government is preparing to put up its remaining 49% stake of the mammoth WestConnex road project up for sale. Transurban already owns the other 51% stake.

The AFR reports that the NSW government will split this 49% stake into 2 24.5% tranches. Transurban has been told by NSW that it will have to bid for the remaining tranches “at the same time as other investors”.

If Transurban is successful in acquiring the remaining tranches of Westconnex, its dominance of Sydney’s roads will be even more complete. WestConnex is the collective name for a series of 3 major motorways in Sydney. It involves an extension and widening of the existing M4 motorway (linking Sydney’s inner west with the Blue Mountains). It also involves duplication of the existing M5 tunnel (which has just been completed) as the M8 motorway. As well as a new motorway linking the M4 motorway with the M8 under Sydney’s inner west.

The AFR describes Transurban as “the most logical buyer” for the remaining 49 per cent WestConnex stake”, stating:

Transurban operates and has stakes in every other tollroad in Sydney (excluding the harbour crossings). It knows Sydney’s road network and traffic volumes better than anyone, and is a fearsome competitor when it comes to bidding for new or existing roads.

But we will have to wait and see if Transurban wins the bid. And is indeed willing to cough up the reported $9-10 billion that the 2 tranches are estimated to be worth.

More reading

• ASX 200 rises again on Monday
• Why Morgans just upgraded the Orica (ASX:ORI) share price to “buy”
• Is the US heading for a ‘double-dip’ recession?
• G8 Education (ASX:GEM) share price rebounds after lawsuit news
• Why ASX shares are in awesome shape vs overseas markets

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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 Is Transurban’s (ASX:TCL) grip on Sydney roads set to tighten? appeared first on Motley Fool Australia.

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