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Predictably unpredictable? Or unpredictably predictable?

Trying to guess the next direction of daily share price moves on the ASX is like trying to guess whether the next roulette spin comes up black or red. You’ll get it right sometimes, but never for long.

Trying to guess US President Donald Trump’s next policy move is a different story.

Trump has long prided himself on his unpredictable negotiating style. Whether its international trade deals, historic peace negotiations, or domestic budget proposals, one day he appears open to compromise only to slam the door the next day before once more cracking that door open.

The idea is to keep your opponents on the back foot, consumed by doubt. And it’s a tactic that’s clearly served Trump well.

But here’s the thing.

If you base your style on unpredictability, the unpredictable become predictable.

Let me reach back to an article I penned yesterday to show you what I mean. (You can read that article here.)

Yesterday I pointed out how our modern 24/7 connected world has handed big name politicians a larger impact on daily share price swings than at any time in history. I used 2 headlines from the Sydney Morning Herald to illustrate that point.

Here’s the first one, published on Tuesday, ‘ASX set for more gains as Wall Street bounces higher on Trump, stimulus’.

And here’s the second one which was published Wednesday, ‘Wall Street dives as Trump orders halt to stimulus talks until after election’.

In light of that, yesterday I wrote:

If you’re prone to motion sickness, you may want to reach for the Dramamine. With the last 3 years as a guide, President Donald Trump’s policy backflips have a penchant for repeating themselves.

Indeed, we didn’t have to wait long.

This morning I ran across this headline in the Australian, ‘Markets rise after Trump flip on stimulus’.

Yesterday (overnight Aussie time) Trump tweeted, “The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support & 123 Billion Dollars for Paycheck Protection Program for Small Business.”

Predictable or not, it’s important for investors to have a plan they’re comfortable with when dealing with today’s constant stream of coronavirus news, and the accompanying political wrangling over central bank and government stimulus packages.

Stay nimble or stay the course?

If you’re happy to monitor your portfolio on a daily basis and potentially sell in and out of shares based on your expectations of coming share price moves, then you may like this advice Bloomberg reports from Terence Wu:

Assuming that Trump doesn’t flip-flop on his stance on the fiscal stimulus package, we think remnant hopes of reviving the risk-on, reflation trade may be put to rest for now.

Wu, a currency strategist in Singapore at Overseas-Chinese Banking Corp., warned investors should “stay nimble on shifting political winds”.

Tracie McMillion, global head of asset allocation strategy at Wells Fargo Investment Institute, takes a different view. One more closely aligned with us Fools.

Addressing the barrage of coronavirus headlines warning of the rapid new spread across Europe and the Americas, McMillion told Bloomberg:

It’s important to look through those headlines and the disruption that they’re causing and look to the potential for better growth next year and the potential for market gains possibly through the end of this year and into next year.

Turning our attention to the S&P/ASX 200 Index (ASX: XJO), the potential candidates for share price gains this year and into next year are myriad.

Tracking the budget’s likely gainers

One area that analysts are particularly keen on in the wake of the Government’s new budget is the industrial sector.

The federal budget contains $1.5 billion to spur the Australian manufacturing sector, as well as $14 billion in new infrastructure spending. That should offer a welcome tailwind for the share prices of well-run logistics property owners.

One share that’s still trading well below its February levels is Stockland Corporation Ltd (ASX: SGP). Stockland’s 31 logistics properties total 1.3 millionsq m, with an ownership interest valued at $2.9 billion.

Stockland isn’t uniquely invested in logistics. In fact, its residential footprint in considerably larger. But the new budget, relaxed lending rules and continued record low interest rates should help the residential side of its business as well.

Stockland’s share price reached 11-year highs on 20 February. From there, the share price crashed 67% through to 23 March. It’s come roaring back from that low, up 124% at time of writing.

But that still leaves Stockland’s share price down 27% from the 20 February peak.

If it can regain that high in 2021, which I believe is quite possible, that represents a 37% gain from today’s share price.

Of course, Stockland is just one of many strong ASX shares likely to see share price gains as the Australian and global economies soak up record government stimulus and get back up to speed.

Happy investing.

More reading

• ASX 200 up 0.8%: Big four banks higher, CSL rises on vaccine update, Zip rockets
• 5 things to watch on the ASX 200 on Thursday
• Why you should wait another month to invest in ASX shares
• Has the Afterpay (ASX:APT) share price stalled?
• ASX 200 finishes 1.3% higher after federal budget

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. At the time of writing, the benchmark index is up 1.15% to 6,105.5 points.

Four shares that have climbed more than most today are listed below. Here’s why they are storming higher:

The Downer EDI Limited (ASX: DOW) share price is up 3% to $4.88. This gain appears to have been driven by a broker note out of Morgan Stanley this morning. Its analysts have upgraded Downer’s shares to an overweight rating with an improved price target of $5.60. It believes the company is well-positioned to benefit from the Federal Budget.

The ELMO Software Ltd (ASX: ELO) share price has jumped over 10% to $5.81 after announcing a major new acquisition. ELMO is acquiring UK-based Breathe for an initial payment of 18 million pounds (A$32.4 million) using a combination of cash and scrip. Breathe is a fast-growing, scalable human resources platform for small businesses. Its annualised recurring revenue (ARR) as of 31 August 2020 stood at 3.6 million pounds (A$6.5 million) and has been growing at over 30% annually.

The Netwealth Group Ltd (ASX: NWL) share price has surged 6.5% higher to $17.01 following the release of its first quarter update. During the three months ended 30 September, Netwealth recorded an 8% or $2.5 billion increase in funds under administration (FUA). This was driven by net inflows of $1.9 billion and favourable market movements of $0.6 billion.

The Sezzle Inc (ASX: SZL) share price has stormed 7% higher to $8.55. This follows the release of its third quarter update. For the three months ended 30 September, the buy now pay later provider reported a sizeable 231.5% year on year increase in underlying merchant sales (UMS) to US$228 million (A$318 million). This was driven by a 178.1% year on year increase in active customers to 1.79 million, a 178.3% lift in active merchants to 20,890, and strong repeat customer growth.

More reading

• BNPL ASX shares are running hot today
• This is why the Netwealth (ASX:NWL) share price just jumped 9% to a record high
• Why the Sezzle (ASX:SZL) share price is surging 11% higher today
• Why the ELMO Software (ASX:ELO) share price is on watch today
• Are these the best small cap ASX shares to buy for FY 2021?

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 Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Elmo Software and Sezzle Inc. 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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Buy now, pay later (BNPL) shares are running hot today after a couple of quarterly updates.

In response to those updates, the Afterpay Ltd (ASX: APT) share price is up 1.8% and the Zip Co Ltd (ASX: Z1P) share price is up 7%.

The entire BNPL sector is still expanding at a rapid rate. There is plenty of room for them all to grow at this stage. The success of others could mean promising things for the rest of the industry that haven’t released a September 2020 update yet.

Sezzle Inc (ASX: SZL)

Sezzle reported a strong set of numbers in its update for the quarter for the three months to 30 September 2020.

The BNPL operator reported underlying merchants sales (UMS) increased 231.5% year on year to US$228 million, up 21.4% quarter on quarter.

Merchant fees as a percentage improved to 5.8%, up from 5.6% from at June 2020 and 5.2% from 30 September 2019. Rising margins is a good sign for Sezzle.

Active consumers rose 178.1% year on year to 1.79 million (and was up 21.5% quarter on quarter) and active merchants rose by 178.3% year on year (and grew 29.7% quarter on quarter).

One of the most pleasing aspects of the BNPL company’s update was that its active consumer repeat usage grew to 89%, which meant that repeat usage has increased for 21 straight months. This is an important part of lowering loss rates and improving the net transaction margin. Sezzle now has an annual run rate of almost US$1 billion.

The Sezzle share price is currently up by 7.1%.

Splitit Ltd (ASX: SPT)

Splitit is another high-growth BNPL operator and it reported a strong set of growth numbers.

It said that merchant sales volume (MSV) grew by 214% year on year to US$70.9 million. This helped gross revenue soar 318% to US$2.4 million.

Total merchants jumped 117% year on year to 1,400 and total shoppers grew 97% year on year to 362,000.

Splitit said that self-onboarding is now live in the US, it added over $3 billion of addressable online merchant sales in the third quarter of FY20 and it has expanded into the professional services vertical in the US and Australia with QuickFee Ltd (ASX: QFE).

The Splitit share price is up more than 1% right now.

Is it time to buy shares?

The growth of the BNPL sector is undeniable. If you’ve been a medium-to-long-term shareholder in any of these players then you’re probably sitting on good gains.

They probably have a lot of customer growth and underlying sales growth to go because of how large the potential addressable online market is. Particularly because of this difficult COVID-19 period. 

All the BNPL players are growing internationally. But the big question is how profitable will they be in the future?

Will merchants demand lower fees if BNPL is not bringing in as much growth? Does the future of the BNPL sector point towards a couple of large players like PayPal and Afterpay. Or is there enough room for all of them to be growing and profitable?

I’m just not sure. There is a lot of growth expectations built into the current share prices of Afterpay, Zip, Sezzle and Splitit. They keep delivering on near term expectations, but the long-term for all of them seems less obvious to me.

I’m cautious about businesses that aren’t making a profit (or close to a profit), particularly when there’s a lot of competition in the sector.

For me, there are other share opportunities that seem like better choices and can generate good cashflow without needing large amounts of debt funding.

More reading

• ASX 200 up 0.8%: Big four banks higher, CSL rises on vaccine update, Zip rockets
• The Splitit (ASX:SPT) share price is up today. Here’s why.
• Why the Sezzle (ASX:SZL) share price is surging 11% higher today
• Why I would buy Afterpay (ASX:APT) and these ASX growth shares
• Has the Afterpay (ASX:APT) share price stalled?

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 ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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 morning, Damstra Holdings Ltd (ASX: DTC) shares are pushing higher after the company announced it had completed one of the final steps in its takeover deal of Vault Intelligence Ltd (ASX: VLT). At the time of writing, the Damstra share price is trading 4.78% higher at $2.19.

What did Damstra announce?

The Damstra share price is on the rise after the workplace solutions provider last night announced it had received Federal Court approval of its Vault takeover. As of today, the scheme is legally effective meaning the much anticipated takeover is a done deal. Vault shares will cease trading on the ASX from close of market today.

The announcement follows on from a release last Friday which advised that Vault shareholders had voted in favour of the takeover.

Damstra will be issuing 44 million new securities as compensation for the deal.

What Vault does

Vault is an online software-as-a-service (SaaS) business that specialises in the development of workforce performance technologies. It aims to deliver significant productivity benefits to organisations, whilst managing the risk, safety, security and protection of their workers – largely similar to what Damstra does.

Vault technology empowers businesses with two platforms which are Vault Enterprise and Vault Solo. The platforms can be enhanced through mobility and internet-of-things (IoT) wearables to deliver tangible benefits in workforce performance and protection. Damstra will look to integrate these platforms into its own expansive solutions offering.

Vault currently services over 1 million people around the world throughout 30 different industries.

What now for the Damstra share price?

Shareholders will be pleased with this deal getting over the line and this is reflected in the impressive Damstra share price gain today. The deal was first brought to light in early July, with Vault shareholders soon to receive 1 Damstra share for every 2.9 shares held in Vault.

The Damstra share price has been on an extraordinary run since the start of this year. It has pushed all worries of the pandemic aside to gain more than 106% this year. The Damstra share price has gained a huge 21% in the last two days alone.

More reading

• Top ASX Stock Picks for October 2020

Daniel Ewing owns shares of Damstra Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) is on course to continue its excellent winning run. The benchmark index is up 0.9% to 6,090.5 points.

Here’s what has been happening on the market today:

Big four banks push higher again.

It has been another positive day for the big four banks on Thursday. At lunch, all four are pushing higher, with Westpac Banking Corp (ASX: WBC) shares leading the way with a gain of almost 1.5%. Investors have been buying the banking giant’s shares this week after analysts at Macquarie upgraded them from neutral to an outperform rating.

CSL COVID-19 vaccine update.

The CSL Limited (ASX: CSL) share price is on the rise today after providing a further update on its COVID-19 vaccine plans. The biotherapeutics company has signed a final agreement with the Commonwealth of Australia for the supply of 51 million doses of the University of Queensland-CSL COVID-19 vaccine candidate (V451), should clinical trials be successful. Subject to progress in the current Phase 1 study, the first subject for the Phase 2b/3 is expected be enrolled in December 2020. After which, it is aiming to complete its recruitment by March 2021.

Transurban AGM.

The Transurban Group (ASX: TCL) share price is dropping lower on Thursday after providing its annual general meeting update. Although the toll road operator revealed a meaningful improvement in its traffic volumes, it appears as though the market was expecting even better. The company also revealed that it is looking for equity partners for its Greater Washington Area assets. It expects this to release significant capital into the business.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Thursday has been the Zip Co Ltd (ASX: Z1P) share price with a 7% gain. This follows the release of a positive third quarter update from one of its rivals. The worst performer on the index has been the Growthpoint Properties Australia Ltd (ASX: GOZ) share price with a 2% decline. This is despite there being no news out of the property company today.

More reading

• Why ARB, Accent, Bigtincan, & Transurban shares are dropping lower today
• CSL (ASX:CSL) share price higher on COVID-19 vaccine update
• 5 things to watch on the ASX 200 on Thursday
• Why you should wait another month to invest in ASX shares
• Has the Afterpay (ASX:APT) share price stalled?

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. 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.

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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.

India’s e-commerce market is a growth hotspot right now thanks to increasing internet penetration in a country of nearly 1.4 billion people. According to third-party estimates, the e-commerce market in India could clock a compound annual growth rate of over 18% through 2024.

Not surprisingly, competition in the space has intensified this year with the entry of new players such as Reliance Retail’s JioMart. But American giant Amazon.com, Inc (NASDAQ: AMZN) isn’t giving its rivals an inch in India as it goes all out to boost its share in this lucrative e-commerce market, which could be worth $99 billion by 2024 as per Goldman Sachs Group Inc (NYSE: GS) estimates. The Jeff Bezos-led company has decided to turn up the heat on its rivals in India during the upcoming festive season sales.

Amazon’s latest ploy to boost sales in India

Amazon recently said in a blog post that it has recruited more than 100,000 neighborhood stores, local shops, and mom-and-pop stores (known as kirana stores in India) to boost its sales during the coming festive season in the country. Of these, 20,000 retailers are a part of the Local Shops on Amazon platform that the company launched in April this year.

Only 5,000 offline retailers and local shops were a part of the program at launch, indicating that the company has done well to scale up its distribution network at an impressive pace to expand the program to 400 cities. Meanwhile, Amazon has included more than 15,000 local store owners in the Pay Smart Store program, which allows customers to buy products from stores by scanning their QR codes and pay using a variety of options.

And Amazon has enrolled more than 28,000 shops in its “I Have Space” delivery program. With this initiative, the e-commerce giant is partnering with local shops that act as last-mile delivery stations. Amazon estimates that these different programs will help it deliver a wide range of products during the upcoming sale season, from “daily essentials to large appliances and from home décor items to gifts and fresh flowers.”

Amazon is also promising same/next day deliveries to customers who purchase items from stores that are a part of the Local Shops platform. All in all, the company has set itself up nicely for the festive sales season in India this year, which is expected to generate $7 billion in sales as per RedSeer Consulting — a nice jump from the prior-year period’s sales of $3.8 billion.

Nearly 160 million people are expected to shop online during this year’s festive season, compared to 135 million last year. So it is important for Amazon to scale up its presence in India ahead of this lucrative sales season and replicate the success it saw during the Prime Day sale held in early August.

The two-day Prime Day sale in India saw the involvement of more than 91,000 small and medium businesses, which helped the company record more than $600 million in sales. The addition of more offline shops for the upcoming festive season could help it do even better this time.

A look at the bigger picture

Amazon’s foray into local shops and retailers in India should pay off in the long run, as online retail accounts for only a small portion of the country’s overall retail market. Goldman Sachs estimates that online retail will account for 11% of India’s retail space in 2024, indicating that there is still a lot of room for growth, as the number of internet users in India is expected to keep growing.

There are approximately 690 million internet users in India at present, a number that’s expected to jump to a billion in the next five years as per a third-party estimate. As a result, India’s e-commerce market should enjoy secular growth — and Amazon is pulling the right strings to take advantage of this multi-billion dollar opportunity.

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

More reading

• This is my favourite ASX share right now
• ASX investors were buying Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) shares last week
• Which ASX REITs are still worth buying in a post-COVID-19 world?
• Here are the 10 most popular ETFs on the ASX
• Where will Amazon be in 10 years?

Harsh Chauhan has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Splitit Ltd (ASX: SPT) share price has risen today after the company released record growth results.

The Splitit share price jumped to $1.72 at market open, but has since retreated. At the time of writing, shares are trading up 1.5% to $1.56.

Record Q3 growth

Splitit told the market it had achieved a record third quarter for the period ending September 30.

The global payment solutions provider reported its merchant sales volume grew strongly to US$70.9 million, up 214% year-on-year (YoY). This was underpinned by an acceleration of the merchant and shopper base which increased 117% and 97% YoY, respectively. The continued expansion of merchant acceptance launched late in Q3.

The average order volume (AOV) also jumped, hitting above US$1,000, up 30% on the prior corresponding period. This was in line with the company’s strategy of attracting larger merchants selling higher value items to customers.

Overall, gross revenue climbed 318% YoY to reach US$2.4 million. The company advised revenue growth was much higher than the merchant sales volume. This was due to merchants adopting Splitit’s funded model, resulting in increased gross merchant fees.

Partnerships

Splitit’s merchant self-onboarding feature is now live in the United States and will enter other geographical markets in Q4 FY20 and Q1 FY21. The new addition is expected to allow merchants to add Splitit with offering instalments within minutes.

In addition, Splitit has partnered with QuickFee Ltd (ASX: QFE), opening up a US$450 billion addressable market in the US and Australia. The service enables clients of accounting and law firms to pay their fees on credit card, using QuickFee’s payments portal. Splitit will look to integrate its product offering, complimenting the existing financing option to customers.

What did management say?

Splitit CEO Brad Paterson said heading towards Q4, the company was excited to report another record quarter with rapid growth. He added:

The continued uptick in MSV and addition of new customers is further proof that today’s shoppers are turning to Splitit to better use their own earned credit. Especially now, we are pleased to offer shoppers a responsible instalment payment solution, while at the same time, helping brands drive value by cost-effectively converting more site visitors into buyers.

For this reason, we continue to see today’s most forward-looking companies choose Splitit to partner with. We are also seeing positive momentum for the option to self-onboarding through our partnership with Stripe, which has now been activated in the US. Q4 has started very strong and we are confident in our continued growth trajectory throughout the remainder of the year.

More reading

• QuickFee (ASX:QFE) share price lower after capital raising to support Splitit partnership
• ASX 200 drops 1.2%, Mineral Resources (ASX:MIN) fell 9%
• Why the Splitit (ASX:SPT) share price is on the move today
• Why De Grey, Scentre, Splitit, & Temple & Webster shares are pushing higher

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

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to extend its winning streak. At the time of writing, the benchmark index is up 0.8% to 6,083.1 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The ARB Corporation Limited (ASX: ARB) share price is down 1% to $29.77. The catalyst for this decline appears to be a broker note out of Ord Minnett this morning. According to the note, the broker has downgraded the auto accessories company’s shares to a lighten rating with an improved price target of $24.00. Ord Minnett made the move on valuation grounds after a strong gain in recent months.

The Accent Group Ltd (ASX: AX1) share price is down 1% to $1.70. This is despite there being no news out of the footwear-focused retailer today. However, prior to today, the Accent share price was up over 34% since the start of August. This could mean that some investors have decided to take a bit of profit off the table today.

The Bigtincan Holdings Ltd (ASX: BTH) share price has fallen 1% to $1.33. This follows the announcement of an acquisition this morning by the sales enablement software platform provider. Bigtincan has entered into an agreement to acquire Denmark-based Agnitio for 15 million Danish kroner (A$3.3million). Agnitio is a pioneer in sales enablement for the life sciences sector, with sustainable annualised recurring revenue (ARR) of A$1.6 million.

The Transurban Group (ASX: TCL) share price has dropped over 1% to $13.98 following the release of its annual general meeting update. At the meeting the toll road operator revealed that its quarterly traffic volumes have made a significant improvement across the Sydney, Brisbane and North America markets since the period of peak restrictions. It also advised that it has commenced a process for the potential introduction of equity partners into its Greater Washington Area assets. It expects this to release significant capital into the business.

More reading

• Why all eyes will be on the Bigtincan (ASX:BTH) share price on Thursday
• Are these the best small cap ASX shares to buy for FY 2021?
• ASX 200 finishes 1.3% higher after federal budget
• ASX 200 up 0.4%: Big four banks push higher, Westpac upgraded, ARB impresses
• Why a2 Milk, Afterpay, ARB, & SEEK shares are pushing higher today

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 BIGTINCAN FPO. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Accent Group, ARB Limited, and BIGTINCAN FPO. 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 CSL Limited (ASX: CSL) share price is pushing higher today after the release of an announcement.

At the time of writing the biotherapeutics company’s shares are up over 1% to $295.62.

What did CSL announce?

This morning CSL announced that its Seqirus vaccines business has signed a final agreement with the Commonwealth of Australia.

This agreement is for the supply of 51 million doses of the University of Queensland-CSL COVID-19 vaccine candidate (V451), should clinical trials be successful.

According to the release, it also includes an up-front financial commitment from the Government to support the clinical and technical development activities that CSL will need to assume in order to progress V451.

Furthermore, if clinical trials are successful, the agreement secures access to onshore production and supply of the vaccine for Australia.

What is V451?

The company advised that it has been working hard to respond to the current COVID-19 pandemic and has invested significant resources in the rapid development and large-scale manufacture of V451, along with a number of other therapeutic programs.

Pleasingly, the large-scale Phase 2b/3 clinical study for V451 is almost ready. Management notes that it will be a randomised, observer-blinded, placebo-controlled study across numerous countries and upwards of 100 sites.

The study will evaluate efficacy, immunogenicity, and safety in adults aged 18 years and above.

Subject to progress in the current Phase 1 study, the first subject for the Phase 2b/3 would be enrolled in December 2020, with the goal of completing recruitment by March 2021.

Management commented: “We are committed to demonstrating the vaccine is safe and effective prior to availability in the market. Discussions have already commenced with the Australian Therapeutic Goods Administration (TGA) to ensure this goal is met, while also making the vaccine available to the Australian population in the shortest possible time.”

In addition, CSL advised that it is working to engage partner organisations to assist with production of further doses with the goal of providing broader access to the vaccine, should clinical trials be successful.

This is on top of the agreement the company has signed with the Government to manufacture the Oxford University/AstraZeneca vaccine candidate (AZD1222) if successful.

Though, given the risk, effort, cost and uncertainty associated with the development of these novel vaccines, management warned that it is too early to calculate the financial impact of these activities.

More reading

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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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Unearthing the best stock picks for October 2020 may be a challenging task due to economic uncertainty. However, it could produce high returns.

The uncertain economic outlook could provide investors with an opportunity to find attractive stock picks. Many high-quality businesses are trading at low prices due to the challenging trading conditions they currently face. As such, their valuations may be relatively attractive on a long-term view.

By focusing on unpopular sectors, companies with a long track record of growth and those businesses with solid financials, you could buy sound businesses at low prices. Doing so may not transform your portfolio returns in October, or even in 2020. But it could lead to impressive capital returns in the long run.

Searching for top stock picks in unpopular sectors

Some of the best stock picks in October 2020 may be trading in industries that are facing a difficult near-term outlook. The weak prospects for the global economy could cause lower profitability for sectors such as oil and gas, financial services and other industries that are reliant on consumer spending while sentiment is at multi-year lows.

Investors may naturally steer their search for the best shares away from unloved sectors. They may be relatively risky in the short run. However, due to their wide margins of safety, they could offer a relatively attractive risk/reward investment opportunity for long-term investors. And, since many stocks in the same industry may be viewed unfavourably by investors, there may be severe mispricings on offer.

Defensive characteristics

Today’s most attractive stock picks may be those that offer some defensive characteristics. This does not mean that they are immune to a weak economic outlook that is likely to last for many months beyond October 2020. However, it could mean that they have the capacity to survive a difficult period for their industry and the wider economy.

As such, checking company annual reports and recent updates provides guidance as to the strength of a business. For example, it may have undrawn credit lines that can be used should economic conditions worsen. Or, it may have a history of outperforming its sector peers during more challenging periods for the economy. By investing in stocks with some defensive characteristics, you may be able to overcome a likely period of slower growth in the coming months.

Past performance can act as a guide

Companies with impressive returns prior to 2020 could prove to be some of the best stock picks at the present time. For many businesses, this year has been a hugely challenging period that may not provide an accurate means of assessing their long-term prospects. As such, using past performance over recent years may provide investors with a superior means of assessing the strength of a company’s outlook.

Certainly, the future is a known unknown. But by purchasing those companies with wide margins of safety, defensive characteristics and a long track record of growth, you may be able to improve your portfolio returns in the coming years.

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

The post 3 steps I’d take to find top stock picks for October appeared first on Motley Fool Australia.

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