Tag: Motley Fool

On Tuesday morning the Commonwealth Bank of Australia (ASX: CBA) share price is pushing higher following the release of its annual general meeting update.

At the time of writing, the banking giant’s shares are up 2% to $70.04.

As the bank’s annual general meeting has gone virtual because of the pandemic, I thought I would summarise the event for shareholders and readers.

Three key takeaways from the Commonwealth Bank annual general meeting are as follows:

Commonwealth Bank is in a strong position.

The company’s Chair, Catherine Livingstone AO, acknowledged that the next 12 months will be difficult, but she remains positive due to its strong position.

She commented: “Although the year ahead will involve challenges and uncertainty, the Bank faces this environment in a strong position. Our business is performing strongly, and we have a resilient balance sheet, which means we are well placed to continue delivering on our purpose.”

Customers are happy with the bank.

CEO and Managing Director Matt Comyn revealed that customer satisfaction is at a high level despite the difficult trading conditions. In fact, Commonwealth Bank is leading the way in the industry.

Mr Comyn explained: “In our latest DBM net promoter score results, which is our measure of customer advocacy, we are for the first time #1 across consumer, business and institutional customers. We’re also ranked #1 in net promoter score for internet banking and our mobile app.”

But Commonwealth Bank isn’t resting on its laurels. The CEO advised: “We are investing in our business and institutional banking experiences through enhancements to our service, data and technology capabilities.”

New branding.

The CEO also spoke about Commonwealth Bank’s branding update, which has seen the bank embrace an all gold logo.

He commented: “Today you’ve seen examples of the Commonwealth Bank’s new brand, our first update in almost 30 years. We believe the time is right to refresh our brand to symbolise the work we’ve done to be better, the work we still have to do, and the brighter future we are committed to helping Australia achieve. It also represents our determination to be the bank you want us to be: the bank for all Australians, the bank for businesses and the bank for the country.”

More reading

• 5 things to watch on the ASX 200 on Tuesday
• CBA (ASX:CBA) share price higher on COVID-19 loan deferral update
• ASX 200 down 0.1%: CBA’s COVID-19 loan deferrals improve, Link receives takeover approach
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Forget term deposits and buy these ASX dividend shares instead

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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The HUB24 Ltd (ASX: HUB) share price has surged higher following the release of its first quarter update.

At the time of writing the investment platform provider’s shares are up 5% to a record high of $21.79.

How did HUB24 perform in the first quarter?

HUB24’s update revealed that its strong form continued in the first quarter of FY 2021.

For the three months ended 30 September, the company reported record first quarter net inflows of $1.36 billion and an average monthly net inflow of $454 million.

Combined with a positive market movement of $436 million, this lifted its Funds Under Administration (FUA) to $19 billion at the end of September. This was a 32% increase on the prior corresponding period and has increased HUB24’s platform market share to 2.1%.

What were the drivers of its growth?

Management advised that its strong flows were driven from both new and existing licensee channels across self-licensed and boutique advisers, brokers, and large national accounts.

This includes advisers winning new clients as well as funds being transitioned from incumbent platforms.

Pleasingly, management remains positive on the future and notes that its new business pipeline continues to grow.

It signed 27 new licensee agreements during the September quarter, with both large boutique licensees and self-licensed practices.

Management commented: “HUB24 is confident that the new business pipeline will continue to grow as additional opportunities emerge given adviser movement from institutional licensees and further industry consolidation.”

“Given market dynamics, HUB24 continues to be a platform of choice as advisers look for stability, delivering innovative product solutions that provide their clients with choice and customer service excellence,” it added.

In addition to this, the company notes that business development activity across all states is continuing as advisers adapt to the current environment. Furthermore, the HUB24 team continues to leverage growth opportunities from within its existing customer base while actively pursuing new relationships.

Rate cut impact.

The company also provided commentary on the impact it is experiencing from the ultra low cash rate.

“HUB24 is continuing to absorb some of the impact of the historically low interest rates since the Reserve Bank of Australia (RBA) cash rate reductions announced in March 2020. Should the RBA announce a further rate reduction, HUB24 expects to absorb this reduction which will negatively impact platform segment revenue until interest rates begin to rise,” it concluded.

More reading

• Leading brokers name 3 ASX shares to sell today
• Up 99% in 3 months, can the HUB24 (ASX:HUB) share price double again?

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 Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. 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 Why the HUB24 (ASX:HUB) share price surged to a record high today appeared first on Motley Fool Australia.

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Some ASX mining stocks could come under pressure on reports that China may be banning the use of Australian coal.

Several sources have confirmed to the Australian Financial Review that Chinese authorities have been telling their local traders to stop buying coal from us.

The ban includes thermal coal, which is used in power plants, and coking coal that is used in producing steel.

ASX miners hit by China coal ban

The AFR quoted one Chinese analyst saying he believed the move is “a political sanction against Australia”.

It is also alleged that Beijing only issued a verbal ban. This is because it didn’t want to leave evidence of trade protectionism that could be used against it in the World Trade Organisation (WTO).

However, the financial impact of the ban on Australian coal producers is unclear. Power plants that use Aussie thermal coal have used up their coal import quota two months ago.

Why share prices of ASX miners are reacting differently

This could explain why the share prices of ASX coal producers responded differently when reports of the ban started leaking yesterday.

The Whitehaven Coal Ltd (ASX: WHC) share price crashed by over 5% to 98 cents. But the New Hope Corporation Limited (ASX: NHC) share price dipped 0.8% to $1.30 and South32 Ltd (ASX: S32) share price was flat at $2.19.

Roughly half of Whitehaven’s coal is coking (used for steel), which may be more impacted by the unofficial Chinese ban.

New Hope produces thermal coal from two open cut coal mines in South East Queensland, while South32 produces a diverse range of minerals other than coal.

ASX stocks used as pawns on Sino-Australia chess board

“We are aware of these reports and have had discussions with Australia’s resources industry, who have previously faced occasional disruptions to trade flows with China,” Trade Minister Simon Birmingham said in a statement reported in the AFR.

“Australia will continue to highlight our standing as a reliable supplier of high grade resources that provide mutual benefits.”

Several ASX stocks have been used as pawns in the escalating tensions between Canberra and Beijing. The Treasury Wine Estates Ltd (ASX: TWE) share price and Australian Agricultural Company Ltd (ASX: AAC) share price have also felt the heat.

China is using Australian wine, beef and barley to punish Australia after Prime Minister Scott Morrison called for an independent investigation into the origins of COVID-19.

Given our economic over-reliance on the Asian giant, investors should be prepared for more volatility ahead!

More reading

• Why you may not need ASX REITs for dividends
• Top brokers name 3 ASX shares to buy next week
• ASX renewable vs coal shares: Which will win?
• These were the best performing ASX 200 shares in September
• ASX 200 ends the day flat, BOQ (ASX:BOQ) shares drop on impairments

Motley Fool contributor Brendon Lau owns shares of South32 Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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ASX Ltd (ASX: ASX) has been heavily criticised for problems with its new website, which went live on Monday.

After testing and trial runs, the system went fully public on Monday. But it was plagued with issues on day one – including not being able to show company announcements in the midst of the annual general meetings season.

“ASX announcements are currently not displaying on the ASX website,” stated ASX Ltd’s Twitter account.

“All company announcements are available to view via brokers and news agencies.”

Can’t believe that this Market Operator can NOT get anything right….this is an enormous FAIL for #ASX …
Regulators seriously need to break-down this monopolist…#ASX lack innovation in the TECH space.!!

— siciliavin (@siciliavin) 12 October 2020

https://platform.twitter.com/widgets.js

Previously, when I was logged in, I tried opening various pages and was unable to with a message that ‘connection was reset’. Now I’ve been logged out and when I try login in I get the same message. The previous website was so well designed; this one is a step backwards.

— Craig Boston (@cnboston) 11 October 2020

https://platform.twitter.com/widgets.js

Even the website’s intentional designs were panned, with many social media users criticising putting previously accessible information behind a user login wall.

The Motley Fool has contacted ASX Ltd for comment.

ASX has a monopoly, remember?

Some users said the failures reminded investors that the company runs a monopoly.

In the UK, publicly listed companies are allowed to choose from a few different providers to meet their mandatory disclosure obligations. These include news agencies.

In Australia, all ASX companies must go through ASX Ltd to post their announcements.

OpenMarkets chief executive Ivan Tchourilov told the Australian Financial Review that the ASX stranglehold in Australia, like any monopoly, was unhealthy.

“The industry is concerned that ASX has too much power to dictate play and there isn’t much of an opportunity for competitors to create a diverse environment that will ultimately benefit customers,” he said.

More reading

• Top brokers name 3 ASX shares to sell next week
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 next week
• Why the Purifloh (ASX:PO3) share price crashed to a 2-year low today

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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The COVID-19 recession has seen anxious Australians lock up their wallets to save their money.

Unfortunately for ASX-listed retailers, like Wesfarmers Ltd (ASX: WES), JB Hi-Fi Limited (ASX: JBH), Super Retail Group Ltd (ASX: SUL), Myer Holdings Ltd (ASX: MYR) and Harvey Norman Holdings Limited (ASX: HVN), Christmas is not expected to bring much joy.

Research firm IBISWorld revealed this week that negative shopper sentiment combined with high unemployment and tumbling discretionary incomes could devastate the sector.

“Consumer electronics retailing is expected to be 2.7% lower this December, relative to last Christmas. Department store turnover is expected to be 1.0% lower, at $2.8 billion,” said IBISWorld senior industry analyst Yin Yeoh.

“Although many households are likely to receive a cash injection from the recent Federal Budget, there is a high likelihood that these funds will be saved rather than spent, providing little help to the ailing retail sector.”

Consumer goods retail lost 15.8% in revenue over the 2019-20 financial year, and is forecast to dip another 2.1% in the current year.

The Christmas winners

Although in the minority, there are some retailers who will have a good time this Christmas.

For example, Australians are expected to drink away their worries this festive season. 

Alcohol retailing this December is expected to surge 3.6% year-on-year, to hit $1.6 billion, according to IBISWorld.

The theory is that Australians can’t holiday overseas this Christmas so they will be forced to spend within the country.

As such, the supermarket sector will also benefit.

Grocers like Woolworths Group Ltd (ASX: WOW),  Coles Group Ltd (ASX: COL), and  Metcash Limited (ASX: MTS) will be licking their lips at IBISWorld’s prediction that sales will increase 2.8% year-on-year this December, to reach $11.1 billion.

“Families are expected to go all-out on their Christmas feasts this year, with many Australians celebrating their ability to reunite with family after states reopen borders and ease social distancing regulations,” said Yeoh.

She warned, however, these companies aren’t necessarily up for a windfall.

“While the upcoming Christmas season provides major opportunities for supermarkets and liquor retailers, growing competition in these industries is expected to exert downward pressure on prices and profit margins.”

Christmas is now November

The last five years has seen Christmas shopping habits shift to November as American customs like Black Friday and Cyber Monday seep into Australia.

This pattern, IBISWorld says, will continue this year.

“A 7.8% decline in discretionary income this year is likely to cause some consumers to postpone expensive gadget purchases,” said Yeoh.

“However, consumers are still expected to take advantage of Cyber Monday and Amazon Prime sales. Other large players, such as JB Hi-Fi and Harvey Norman, are likely to offer discounts during the same period, in an effort to retain market share.”

Prospects for retailers next year are a bit brighter, although still very dependent on the ongoing pandemic.

“The outlook for the retail sector, and the economy overall, is largely dependent on the rate of new COVID-19 cases across the country,” Yeoh said.

“Australia is making promising progress in this regard, which should make retailers optimistic for a rebound next year.”

More reading

• 3 unstoppable ASX shares to buy with $3,000
• Why Woolworths is too expensive right now
• Ignore EBITDA and P/E ratios? This fundie does
• If you LOVE a Bunnings sanga, you might LOVE the stock…
• 2 of the best ASX dividend shares you can buy today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths 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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The Telstra Corporation Ltd (ASX: TLS) share price will be on watch on Tuesday after the release of its annual general meeting presentation.

What did Telstra announce at its annual general meeting?

At the annual general meeting the telco giant provided investors with a breakdown on its performance in FY 2020 and the impacts of the pandemic on its operations.

But arguably the most important subject the company covered was its dividend for FY 2021.

The Telstra share price has come under significant pressure since the release of its full year results in August due to concerns that its earnings guidance for the year ahead implied a sizeable dividend cut.

However, as I have mentioned numerous times since then, Telstra’s accounting earnings are now notably lower than its free cash flows.

In light of this, I suggested that a switch to a free cash flow-based dividend policy would be more appropriate and could be a way for the company to maintain its 16 cents per share dividend.

At its annual general meeting, Telstra spoke about its dividend and the potential for such a shift in policy.

What did Telstra say?

Telstra’s Chairman, John Mullen, commented: “The board is acutely aware of the importance of the dividend to shareholders, and we understand the nervousness from some that COVID and other pressures may force Telstra to again cut its dividend.”

“Andy [Penn] has previously said that to maintain the dividend at 16c within our Capital Management framework post the nbn, we need to achieve Underlying EBITDA in the order of $7.5-$8.5b, and I want to assure you that we are absolutely aspiring to achieve this.”

“The board clearly understands the importance of the dividend and if necessary is prepared to temporarily exceed our capital management framework principle of paying an ordinary dividend of 70- 90% of underlying earnings to maintain a 16c dividend,” he added.

This would depend on several factors, which include:

“1. whether an underlying EBITDA of $7.5b to $8.5b post the rollout of the nbn is achievable. 2. whether the free cash flow dividend payout ratio remains supportive and we retain a strong financial position. 3. whether there are other factors that would make the payment of the dividend at that level imprudent,” Mr Mullen explained.

However, the chairman has warned investors that these comments are not “a guarantee of any level of dividend into the future.”  

Rather, it is to demonstrate “the board’s commitment to doing all that it can responsibly do to maintain the current dividend and eventually increase it again over time.”

More reading

• Telstra share price and 1 other ASX telecom trading near all time lows
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Why I would buy these ASX dividend shares in October
• 4 high quality ASX blue chip shares to buy right now
• 3 reasons the Telstra (ASX:TLS) share price is a buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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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.

Investing in the stock market is a proven way to grow wealth over time, and the sooner you get started, the better. But deciding how to invest can be challenging. If you opt for a collection of individual stocks, you’ll need to spend time researching each company and making sure it’s the right fit for your portfolio. If you go with index funds, you won’t have to put in the same amount of legwork, but you may lose out on certain benefits that individual stocks have to offer.

For many investors, index funds are actually a good way to go. But here’s why you may want to hand-pick your stocks instead.

Hand-picking your stocks allows you to choose companies that fit in with your personal investing strategy and appetite for risk. Say you’re really not keen on putting airline stocks in your portfolio because you think that’s a risky prospect given the hit the industry has taken during the coronavirus pandemic. If you buy S&P 500 Index (INDEXSP: .INX) funds, you’ll be stuck with airline stocks in your portfolio, whether you like it or not. By choosing your own stocks, you avoid companies or industries you’d rather steer clear of.

2. You can avoid stocks that don’t align with your ethics

Some people buy stocks because they believe in a company’s growth potential. Other people buy stocks because they believe in the products or services being offered by a particular company, or because they believe in its mission. As just mentioned, when you buy index funds, you don’t get to dictate which stocks land in your portfolio and which don’t. This means that if you have a problem with a specific company from an ethical standpoint, you could end up having to invest in it anyway.

Imagine you’re not a fan of tobacco companies. Since Philip Morris International Inc (NYSE:PM) is part of the S&P 500, if you buy funds based on that index, you’ll end up owning its shares, which could pose a moral dilemma for you.

3. You’ll have the potential to beat the market

Index funds aim to match the performance of the indexes they’re tied to – not beat it. If you want your portfolio to deliver returns that exceed those of the broader market, then you’ll need to assemble your own mix of stocks – ones with supreme growth potential and a clear edge over the competition. Beating the market isn’t easy, but with the right approach, it can be done – but not with index funds.

What’s the right move for you?

Ultimately, the decision to buy individual stocks versus index funds should boil down to how confident you are in your ability to choose the right companies, and how much time you’re willing to spend in the process. If you’re up for the challenge, then hand-picking stocks could be a great strategy that rewards you over time. But if you’d rather keep things simple on the investing front, then there’s nothing wrong with reverting to index funds and enjoying the automatic diversity they allow for.

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

More reading

• This ASX share is recession-proof
• 3 unstoppable ASX shares to buy with $3,000
• Telstra share price and 1 other ASX telecom trading near all time lows
• $10,000 invested in the CSL (ASX:CSL) IPO is worth how much now?
• 2 robust ASX 200 blue chip shares to buy today

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

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A fund manager has revealed his tip for an ASX share that might actually prosper during an economic downturn.

Pengana Capital Group Ltd (ASX: PCG) portfolio manager Chris Tan told The Motley Fool that his fund had kept an eye on automotive parts provider Bapcor Ltd (ASX: BAP) for “a long time”.

“It was always just a bit too expensive and COVID-19 allowed us the opportunity to buy it,” he said.

“We probably started buying in late February or early March, but we had done a lot of work on it and were able to just keep adding as it went down into the crazy times.”

Bapcor shares have risen almost 150% since the depths of the COVID-19 panic. They were trading for $7.85 at close of trade on Monday, after they were as low as $3.15 in late March.

“We see that as a business that is really, really resilient,” Tan said in this week’s Foolish Q&A. 

“Recession-proof almost.”

Tan explained that in times of economic distress, consumers tended to avoid buying new cars, preferring to maintain existing vehicles for longer.

“(With) new car sales shrinking for two years in a row, the fleet of second hand or older vehicles on the road is just getting larger,” he said.

“Bapcor will make their money servicing or supplying mechanics who service the after-warranty or second-hand car market.”

After performing a capital raising, the company is also in fine shape structurally.

“They’re now poised to consolidate more smaller competitors. So there’s good industry structure as well,” said Tan.

“There’s really [only] two main players, Bapcor and Repco… And there’s an Asian growth story further down the line as well.”

Read The Motley Fool’s full exclusive interview with Chris Tan right here.

More reading

• Why NEXTDC (ASX:NXT) and these ASX 200 shares just hit record highs
• Why Woolworths is too expensive right now
• ASX 200 ends higher, Link (ASX:LNK) share price shoots 24% higher
• Ignore EBITDA and P/E ratios? This fundie does
• Why the Bapcor (ASX:BAP) share price just zoomed to a record high

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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 ASX shares that seem unstoppable with how much they have grown this year and how much growth potential they still have.

Businesses that are winning now could keep winning over the longer-term. Think of a business like CSL Limited (ASX: CSL) – it has been delivering for a very long time.

Here are three ASX shares that seem unstoppable and could be worth buying today:

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi seemed like a business that could have been flattened when Amazon first arrived in Australia a few years ago. But it hasn’t done badly, indeed JB Hi-Fi has continued to thrive.

Despite the COVID-19 environment being supportive of new e-commerce businesses, JB Hi-Fi has continued to grow strongly.

In FY20 its total sales increased by 11.6% to $7.9 billion, underlying earnings before interest and tax (EBIT) shot up 30.5% to $486.5 million and underlying net profit after tax (NPAT) gained 33.2% to $332.7 million. The final dividend was increased by an astonishing 76.5%.

The company’s sales in July 2020 continued to be strong. JB Hi-Fi Australia total sales growth was 42.1% over the month. The Good Guys total sales growth for July 2020 was 40.4%. JB Hi-Fi New Zealand total sales growth for the month was 9.1%.

The ASX share also reported that its August sales were looking good, with strong online sales in Victoria.

I’m not sure how much JB Hi-Fi will grow over the rest of FY21, but I think it could continue to be a good option. Particularly after the economy-boosting budget that was just released by the Australian government.

At the current JB Hi-Fi share price it’s trading at 17x FY21’s estimated earnings.

Kogan.com Ltd (ASX: KGN)

This difficult COVID-19 period has made a large number of people try out online retailers such as Kogan.com which sells a large amount of products including phones, computers, cameras, appliances, furniture, clothes, tools, cars and so on.

FY20 showed a strong year of growth, gross sales rose by 39.3%, gross profit grew by 39.6%, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) went up 57.6% to $49.7 million and net profit surged 55.9% to $26.8 million. The active customer base jumped 35.7% to 2,183,000.

The second half of FY20 showed even stronger numbers – gross sales, gross profit and adjusted EBITDA grew by 62.5%, 68.3% and 74.1% respectively.

The ASX share’s growth has continued into August 2020. Gross sales in August grew by 117% year on year, gross profit went up 165% and adjusted EBITDA rocketed higher by 466%.

Aside from being an online retail play, which Kogan.com is doing very well at, it’s also a broader e-commerce play. It sells a variety of other products like insurance, credit cards and superannuation. If it can attract some of its newer customers to take up those extra services, it will add incrementally to profit at a good margin.

At the current Kogan.com share price it’s trading at 37x FY23’s estimated earnings.

Redbubble Ltd (ASX: RBL)

Redbubble is a leading marketplace business for artist-produced products like wall art, masks, clothing and phone cases. It operates both Redbubble and TeePublic.

The ASX share has seen a surge of customers which has helped propel its financial results forward. In FY20 it grew its marketplace revenue by 36%, gross profit went up 42%, operating EBITDA jumped 141% and it generated free cash inflow of $38 million, compared to an outflow of $0.2 million in FY19.

The fourth quarter of FY20 saw marketplace revenue grow by 73%. In July 2020 it saw marketplace revenue grow by 132% with similar growth levels in the first two weeks of August.

An online marketplace can benefit from very pleasing networks effects. Not only does it benefit from economies of scale, but it also can generate interest simply by being one of the biggest operators. The more products that are on sale, the more potential customers it will attract. The more customers there are, the more potential sellers that will be drawn to Redbubble.

At the current Redbubble share price, it’s priced at 33x FY20’s free cashflow.

But all three of these ASX shares have seen very strong share price performances recently, so I’m keeping that in mind and also looking at other share opportunities at the moment.

More reading

• The Redbubble (ASX:RBL) share price is up 320% in 2020: Can it go higher?
• If you LOVE a Bunnings sanga, you might LOVE the stock…
• 2 hot e-commerce ASX shares to buy today
• Why this Federal Budget is good for many ASX shares
• Why the JB Hi-Fi (ASX:JBH) share price could soar into Christmas

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 CSL Ltd. and Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. 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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Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPG) are both trading near their all-time lows right now. The Telstra share price has certainly taken a beating over the last few years. The TPG share price seems to be following suit. Could they be worthy of an investment at current prices?

Performance

Telstra share price

The coronavirus pandemic was surprisingly harsh on the Telstra share price. To be honest, with such a large portion of the population working remotely, I’m surprised that the share price hasn’t recovered more. Almost every company I look at has either bounced back from the March lows or even exceeded previous highs in some instances. Telstra has gone in the opposite direction.

After a brief period of recovery between April and July, the Telstra share price has fallen dramatically. On 12 August, the Telstra share price plummeted from around $3.38 all the way down to $3.11 in a single trading day. After this, the price continued to fall, and currently sits around $2.78 today. Telstra’s all-time low share price sits at $2.55, which occurred at the very end of 2010. Since then the price rapidly recovered from $2.55 all the way up to $6.60 in 2015. It has been on a downward trend ever since. Its current price looks to be on its way for another retest of the telco’s all-time low. Will Telstra hold its ground here and begin to rise? 

TPG share price 

TPG is a relatively new company to the ASX, being listed around 30 June 2020. Its shares first listed at $8.49 and unfortunately have steadily fallen since then, down to today’s price of around $7.50. Twice this year already it has come close to its all-time low of $7.01. I’m curious now as to whether TPG will follow Telstra’s lead and continue down to that level again.

In my view, both companies represent a potential buying opportunity if they can hold their ground above these lows.

Dividends

Investors looking for a holistic analysis will be pleased to know that Telstra offers a current dividend yield of 5.78%. TPG has no history of issuing dividends, however when TPG announced a merger with Vodafone Hutchinson Australia in June, investors were treated to a ‘special dividend’ of around 52 cents per share. However, this special dividend does not really constitute a dividend yield.

Both the Telstra share price and the TPG share price are currently sitting low, however Telstra is ahead of TPG with the dividend factored in. 

Potential 

It’s hard to compare Telstra to TPG considering the age difference of the companies. TPG is certainly the up-and-comer in the telecom sector and obviously trying to take market share from Telstra. However, Telstra’s long history of being a strong company and a blue-chip stock mean it has loyal investors and a sizeable footprint in the market. Its ability to capitalise on future trends will often put Telstra ahead of its competitors, particularly for future developments.

One of those potential future developments is the 5G network. Telstra is in prime position to take advantage of any potential future rollouts of a 5G Network. They are also a large carrier of the Apple iPhone. Apple has recently hinted that its latest iPhone may be 5G compatible, so this could be a potential catalyst in the making. Telstra generally has its finger in every pie and while it may not be the latest and most exciting telecom on the block, it’s certainly a force to be reckoned with.

Foolish takeaway

In my personal opinion Telstra and TPG are 2 completely different companies and therefore quite hard to truly compare.

I see Telstra as more compatible for long-term investors, potentially those seeking more stable returns and a solid dividend payout.

TPG, on the other hand, is an exciting new contender that’s only been on the market for less than 6 months.

If I was looking to hedge my bets I might take a position in Telstra for stability and income and TPG for growth potential. The merger between TPG and Vodaphone was certainly an interesting move and could lead to an evolution of both the company and its competitive position in the market.

More reading

• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Why I would buy these ASX dividend shares in October
• 4 high quality ASX blue chip shares to buy right now
• 3 reasons the Telstra (ASX:TLS) share price is a buy
• 2 quality ASX dividend shares to buy before the RBA meeting

Motley Fool contributor Glenn Leese has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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