Tag: Motley Fool

If I had $3,000 to invest in three small cap ASX shares I’d be happy to buy the three ideas in this article.

Many of my previous top small cap ideas have grown so much they’re no longer small caps. Citadel Group Ltd (ASX: CGL) is being taken over whilst Redbubble Ltd (ASX: RBL) is now worth over $1 billion. There’s no official definition of a small cap, but I think a $1 billion market capitalisation is a good milestone. So I need to choose other ideas that still count as small caps. 

These three small caps look compelling to me:

City Chic Collective Ltd (ASX: CCX)

This business is a retailer of plus-size women’s clothing, accessories and footwear. The City Chic share price has fallen around 10% over the past month after it was announced that the ASX share wasn’t successful with its bid for Catherines, a US retailer.

It’s disappointing that City Chic didn’t win the auction. However, I think it’s a good sign that City Chic didn’t bid too much because it shows respect for shareholder capital and management are focused on long-term returns.

Besides, City Chic is seeing opportunities to buy other brands in this current difficult retailing environment and it can also try to take make share. Its balance sheet is currently in a very strong position to be able to do this.

I’m quite bullish about the long-term prospects for the City Chic share price. It’s growing nicely in Australia and it’s expanding strongly in the northern hemisphere. It sells a high proportion of its goods online, which makes it well suited to the current COVID-19 era.

At the current City Chic share price it’s trading at 23x FY22’s estimated earnings.

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This ASX share is a listed investment company (LIC) that hunts for companies with market caps between $100 million and $1 billion.

It’s a high-conviction manager, it usually holds approximately 10 positions that it wants to be invested in for the long-term (generally for five years or longer). It has an industrial focus with no resources exposure or very early stage business exposure. It’s ESG aware when it makes investment picks.

Some of its existing investment picks are small caps like MNF Group Ltd (ASX: MNF), Enero Group Ltd (ASX: EGG) and Over The Wire Holdings Ltd (ASX: OTW).

Aside from liking the existing investments, there are two other attractive elements about NAOS Small Cap Opportunities Company.

The NAOS Small Cap Opportunities Company share price is currently trading at a 17% discount to the pre-tax net tangible assets (NTA) of $0.71 at 31 August 2020. It also offers a grossed-up dividend yield of 9.7%.

Bubs Australia Ltd (ASX: BUB)

Bubs is a high-risk, high-reward ASX share small cap.

The Bubs share price has drifted 24% lower since 24 August, but the company’s revenue and distribution continues to grow. I think this is an opportunistic time to buy part of a fast-growing business.

In FY20 alone it saw total revenue increase 32% to $62 million and infant formula sales jumped 58% to $30 million. Direct sales to China grew 32% and export markets outside of China saw a five fold increase of revenue.

COVID-19 has caused lumpy demand for the infant formula business’ products, whilst restrictions are hampering the daigou channel. But I believe this is just a short-term issue for the small cap ASX share.

Over the longer-term I think Bubs is headed for cashflow positive status, positive earnings before interest, tax, depreciation and amortisation (EBITDA) as well as growing profit margins.

Bubs may not shoot the lights out every single quarter, but I believe the next two or three years will show continued progress on its international growth strategy. Vietnam and other non-China countries could become particularly pleasing markets for Bubs.

More reading

• $3,000 invested in these 3 ASX shares could make you a fortune over the next 10 years
• The Bubs (ASX:BUB) share price is down 42% in 12 months: Is it a buy?
• I waited 10 years before pouncing on this stock
• 3 ASX shares now trading at crazy cheap prices
• ASX 200 falls 0.7%, UK and travel shares drop

Tristan Harrison owns shares of NAO SMLCAP FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO and MNF Group Limited. The Motley Fool Australia has recommended Over The Wire 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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The tech sector has been in fine form on Tuesday and is charging notably higher.

So much so, the S&P/ASX All Technology Index (ASX: XTX) is storming 1.8% higher in afternoon trade.

This is despite the benchmark S&P/ASX 200 Index (ASX: XJO) trading roughly flat.

Two tech shares that have really caught the eye on Tuesday are listed below. Here’s why they have just hit record high:

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price surged higher and hit a record high of $1.44 earlier today. When the AI-powered sales enablement automation platform provider’s shares hit that level, it meant they were up exactly 100% since the start of the year. Investors have been fighting to get hold of Bigtincan’s shares this year due to its very strong performance in FY 2020 despite the pandemic. 

For the 12 months ended 30 June 2020, Bigtincan reported revenue growth of 56% to $31 million and annualised recurring revenue (ARR) growth of 53% to $35.8 million. Pleasingly, management is confident there will be more of the same in FY 2021. It provided ARR growth guidance of 36.9% to 48% year on year. I’m a very big fan of Bigtincan (but not its name!) and believe it would be a great long term option for investors.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has continued its incredible run and reached a new all-time high of $12.06 today. This online furniture and homewares retailer’s shares have now risen a staggering 355% since the start of the year.

As with Bigtincan, the catalyst for this has been its very strong performance this year despite the pandemic. The acceleration in the shift to online shopping this year led to Temple & Webster recording a 74% increase in revenue to $176.3 million in FY 2020. Things were even better for its operating earnings, which increased year on year from $1.5 million to $8.5 million. Pleasingly, its strong growth has continued early in FY 2021, putting the company in a position to deliver another impressive result next year.

More reading

• 2 ASX tech shares I’d buy with $10,000 
• Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
• 3 quality small cap ASX shares with very strong growth potential
• 4 unstoppable ASX shares to buy with $4,000
• 3 ASX tech shares that could take off in FY21

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’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO and Temple & Webster Group 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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If you’re on the lookout for blue chip ASX shares that you can buy and hold then I would suggest you check out the ones listed below.

I believe these quality companies have the potential to grow very strongly over the next decade. This could lead to their shares generating market-beating returns for investors during the 2020s.

Here’s why I rate them highly:

REA Group Limited (ASX: REA)

The first ASX blue chip share that I think would be a great buy and hold option is property listings company REA Group. The last few years have not been easy for the company. It has had to contend with a mini housing market crash and then of course the pandemic. But despite this, REA Group has managed to come out on top and deliver solid profit growth. I believe this demonstrates the strength of its business model.

The good news is that house prices are being tipped to rise next year once the pandemic passes. This is likely to lead to higher listing volumes and could result in an acceleration in its profit growth in the near future. Especially given its new revenue streams, costing cutting, and potential price increases.

SEEK Limited (ASX: SEK)

Another top blue chip ASX share to buy and hold is SEEK. It is the owner and operator of online employment sites in Australia and a number of international markets. I’m a big fan of the company due to its dominant position in the ANZ market and its rapidly growing Zhaopin business in China.

It is the latter that I’m most excited about. With Zhaopin quickly becoming one of the leaders in the massive China market, SEEK looks well-positioned for growth over the long term. Management certainly agrees. It is is aiming to grow SEEK’s revenue to $5 billion later this decade. This will be more than triple the $1,577.4 million it recorded in FY 2020.

More reading

• 3 outstanding blue chip ASX shares to buy in October
• Is it time to buy Telstra and these high quality ASX 200 shares?
• Where to invest $10,000 into ASX shares immediately
• 3 ASX tech shares that are still in the buy zone
• ASX 200 rises 1%, SEEK (ASX:SEK) jumps 9%

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended REA Group Limited and SEEK 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 (REITs) real estate investment trusts have had a pretty interesting year, to say the least. Due to their unique structure, REITs have always been a popular investment, particularly for dividend income investors. Since REITs are not subject to corporate tax laws in the same way as other ASX companies, they are usually entitled to pass on their dividend distribution payments without paying tax (of course, this also means the distributions don’t usually come with franking credits).

But, like with many sectors, the coronavirus pandemic has upended the playing field for REITs. So are any worth buying in 2020 and beyond for a decent income investment?

What’s wrong with ASX REITs in 2020?

REITs work on a very simple premise – they are designed to return rental income to shareholders from the land that the company owns.

Most REITs fall into one (or more) of three buckets: residential, commercial and industrial. Residential REITs typically own apartments, retirement villages and other land that people live on or in. Commercial REITs tend to own office buildings, business parks or shopping centres. Industrial REITs fall more into a ‘warehouse’ categorisation and own distribution centres and the like.

So what’s the problem here? Well, think about the effects that the coronavirus pandemic has brought to the world. Two of the biggest trends to emerge this year have been a shift to working from home, and online shopping and e-commerce. Starting to see the problem now?

Yes, neither of these trends are good news for commercial REITs. If a company that was previously hiring out an entire office block now finds itself with half of its workforce working from home, is it really going to keep paying full price for a building it now only uses half of? Not for long, I’d wager.

It’s a similar story with shopping centres. Retail and shopping were already moving online before the pandemic, but the accelerator is now pushed to the floor. I’m not sure REITs like Scentre Group (ASX: SCG), which owns the Westfield branded malls in Australia and New Zealand, has an especially bright future ahead of it. And with residential evictions now on ice as well, I’m not sure the business case for residential REITs is too crash hot either (not that I don’t support the policy).

The only REITs I’m banking on…

That leaves industrial REITs, which is the group I would isolate from the others as the only REIT worth investing in in 2020. Industrial REITs are rare growth area. E-commerce is fuelled by warehousing and distribution centres. For example, industrial REIT Goodman Group (ASX: GMG) has recently inked a deal with online titan Amazon.com Inc (NASDAQ: AMZN) to house a fulfilment centre for 20 years. It already has a similar arrangement with Coles Group Ltd (ASX: COL). There’s something I’d be willing to invest in. BWP Trust (ASX: BWP) is another industrial REIT I would consider. It leases its warehouses to Wesfarmers Ltd (ASX: WES) for Wesfarmers’ Bunnings Warehouse chains.

When it comes to REITs, I think you need to ask yourself ‘what’s the future of this company’s assets’ before you commit to any of them. The game has changed for REITs in 2020, so you’d better make sure you know the new rules.

More reading

• 2 reliable and quality ASX dividend shares to buy
• Here are the 10 most popular ETFs on the ASX
• Will the Reserve Bank cut the cash rate again in October?
• Why retirees should buy these safe and strong ASX dividend shares
• Is Lendlease (ASX:LLC) the new Goodman Group (ASX:GMG)?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen 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 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 owns shares of COLESGROUP DEF SET and Wesfarmers Limited. 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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The Atomo Diagnostics Ltd (ASX: AT1) share price has charged 4% higher today on the back of a positive announcement. At the time of writing, the Atomo share price is trading at 38.5 cents, up 4.05%.

This is in comparison to the All Ordinaries Index (ASX: XAO) which is marginally in positive territory, up 0.2% to 6,149 points.

Let’s see why the Atomo share price is surging today.

Expanded partnership

The Atomo share price is on the move since the company updated the market advising it had expanded a partnership with Access Bio Inc. The agreement will see the launch of Atomo’s rapid COVID-19 antigen test in Australia, New Zealand and India.

The nasopharyngeal swab test is designed to screen for antigens produced in response to COVID-19 infections at the point of testing. This differs to the current nasal swab testing in Australia, which uses molecular PCR assays to test for coronavirus.

Atomo’s rapid test provides results after 10 minutes, as opposed to the general test kit, which is sent to a central laboratory for processing. The company said that the early identification is a breakthrough is controlling outbreaks.

In addition, Atomo noted that its rapid antigen test has the potential to work alongside its COVID-19 rapid antibody test. The latter detects whether a patient has developed antibodies to the virus, most accurately after 15 days of exposure.

Atomo will purchase the finished product from Access at a fixed price per unit. Estimated revenue earnings were not provided as Atomo seeks regulatory approvals in Australia, New Zealand and India.

The rapid antigen test is already marked for professional use in Europe and has seen significant sales thus far. In the United States, the Food and Drug Administration (FDA) is currently pending an Emergency Use Authorisation (EUA) for the new test kit.

Management comments

Atomo Co-founder and Managing Director, John Kelly, was pleased with Atomo’s new expanded partnership. He said:

Atomo is delighted to have secured rights to market a quality US manufactured rapid antigen test from a trusted partner. We believe that having the ability to screen for both acute infection and prior exposure at the same time, with results delivered after 10 minutes at the point of testing, could be game-changing in the way we diagnose COVID-19.

Furthermore, Mr Kelly validated the effectiveness of the company’s antigen test kit. He added:

Antigen tests have been proven to provide good detection of COVID-19 infection in the early stage onset of symptoms. Combined with our TGA-approved rapid antibody test for COVID-19 that reliably detects exposure to the virus over a longer period, we believe that a combo rapid screen will offer excellent performance outside of laboratory settings where reliable testing is most needed.

About the Atomo share price

Since listing on the ASX in April, the Atomo share price is almost flat, down around 1%. In light of the company’s new developments, I think that Atomo has a lot to offer in the current environment. Both tests could prove to be game-changing in identifying affected COVID-19 patients who can then isolate themselves from the public.

Should the company overcome its regulatory hurdles, I believe the Atomo share price could push significantly higher from today’s valuation. With a market capitalisation of $213 million, I’m confident there is a lot of runway for this medical device company.

More reading

• Atomo (ASX:AT1) share price rockets 10% on new agreement

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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ASX gold stocks are under pressure lately, but this could be a good time to buy this often-overlooked miner, according to a leading broker.

Never mind that our listed gold producers just can’t seem to catch a break. No one wants to buy them during a risk-on session when the S&P/ASX 200 Index (Index:^AXJO) is running higher.

But investors have also been reluctant to buy gold when risk aversion comes back to the fore as the favoured safe-haven asset at the moment is the US dollar. There’s an inverse correlation between the greenback and the precious metal.

ASX gold stocks set for Santa Rally

So gold is stuck in no-man’s land for the moment. But as I’ve written previously, I think this will change during the US Presidential Election as Trump is refusing to hand over power peacefully if he loses the race.

This means the Newcrest Mining Limited (ASX: NCM) share price, Evolution Mining Ltd (ASX: EVN) share price and Northern Star Resources Ltd (ASX: NST) could enjoy a Santa Rally.

Latest ASX gold stock on the “buy” list

But there’s another stock that’s worth putting on your watchlist. This is the SSR Mining Inc CDI (ASX: SSR) share price, which is the latest gold stock to appear on UBS’ “buy” list.

“We initiate on SSR with a Buy rating due to its attractive valuation and strong free cashflow,” said the broker.

“The share price is trading at a ~20% discount to our NPV which is based on US$1,900/oz gold price.”

Marigold could finally bloom

SSR merged with Alacer Gold and its two key assets are Copler and Marigold. Copler has proven to be a consistent performer in 2020 following the completion of the Sulfide plant in 2019 at a cost of around US$660m.

Marigold is a different story. It’s generated next to no free cashflow over the past three years due to poor ore grades. Capex was also high as the miner had to put in new equipment like haul trucks and a rope shovel.

However, Marigold may be turning a corner following the investment. UBS expects a step change in free cashflow in 2021 due to a lift in production from ~230,000 ounces of gold a year (kozpa) now to 270kozpa due to better grades.

Potential catalyst for SSR share price

“At Marigold, the key opportunity in our view for a step change in valuation is exploration success,” added the broker.

“Management are drilling and targeting high grade sulphide mineralisation. Early intercepts of high grade gold at Trenton Canyon are promising, but this remains early stage.”

But be forewarned. SSR’s group production growth is lower than its peers, although the bad news may be in the share price.

SSR share price looking cheap despite risks

UBS noted that the SSR share price is on a FY21 enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EBITDA) multiple of ~4 tomes. This compares to its peers at 7 to 8 times.

SSR also has a better free cash flow yield of around 15% when its peers are between zero and 10%.

UBS’s price target on the stock is $33 a share.

More reading

• One ASX tech share to buy today ahead of government cash splash
• The latest 3 ASX stocks that brokers just upgraded to “buy”
• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today
• Is this the ASX 200 dividend share you can hold into retirement?

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited and Newcrest Mining Limited. 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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Yet another employee underpayment crisis has struck, sending one bank’s shares tumbling on Tuesday.

Bank of Queensland Limited (ASX: BOQ) stock had dived 6.6% at the time of writing, to trade at $5.93. The shares were as high as $7.68 in February.

The freefall came as the company admitted an employee pay review uncovered “irregularities” in remuneration and superannuation payments.

BOQ announced it would charge an expense of $11 million to its 2020 financial year bottom line because of the discovery. 

The amount consists of $2.4 million already paid to the Australian Taxation Office as part of the Superannuation Guarantee Amnesty. Another $8.6 million was reserved for future remediation.

“We will get this right and we will make sure our people, past and present, receive every cent they are owed. This is an absolute priority,” said BOQ chief executive George Frazis.

The Finance Sector Union of Australia (FSU) stated 750 employees were short-changed.

According to the union, it first raised concerns about missing super with BOQ 18 months ago.

“While that issue was resolved, it is disappointing that the bank failed to follow through and properly audit its payroll at the time,” the FSU stated.

This is wage theft: union

BOQ announced that it had appointed “third parties” to help with identifying and remediating underpayments.

FSU National Secretary Julia Angrisano criticised the delay in getting the backpay out to workers.

“It is not acceptable that staff are being forced to wait until March 2021 to have their correct pay reinstated,” she said.

“This is wage theft and we are calling on the Bank of Queensland to accelerate the repayment program to pay affected employees immediately.”

The wage scandal comes after a string of other ASX companies like Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Super Retail Group Ltd (ASX: SUL) mop up similar mishaps.

COVID-19 blows out BOQ’s impairment expense

The bank also flagged Tuesday that its financial year 2020 loan impairment expense would be $175 million pre-tax. That includes a $133 million COVID-19-related provision.

“The revised provision reflects the anticipated lifetime losses on the current portfolio relating to the impacts of COVID‐19,” said Frazis.

“We are very pleased to see many of our customers returning to work and re‐opening their businesses and will continue to work closely with those that require further assistance.”

BOQ’s 2020 financial year results will be revealed on 14 October.

More reading

• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today
• Bank of Queensland (ASX:BOQ) share price on watch after COVID and employee underpayment update
• These are the 10 most shorted ASX shares
• ASX 200 finishes the week with a bang

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 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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I think that Magellan Global Trust (ASX: MGG) could be a dream share for a retiree because it offers many things that retirees need.

About Magellan Global Trust

Magellan Global Trust is a listed investment trust (LIT) which invests in global businesses. It’s operated by one of the country’s leading investment managers, Magellan Financial Group Ltd (ASX: MFG).

At the last monthly update it said that the fund size was $2.34 billion of assets.

In terms of fees, it has an annual management and admin fee of 1.35% per annum. This seems fairly high compared to many exchange-traded funds (ETFs), however it’s the net performance that matters most. Some fund managers are worth their fees. Others aren’t.

Here are some of the reasons that retirees may really like Magellan Global Trust:

International diversification

I think that many Aussie retirees could do with diversifying their portfolios away from Australian shares. There are plenty of good ASX shares, but the ASX only accounts for 2% of the global market capitalisation.

Over the last decade I think it has been quite clear that it’s the international tech blue chips that have generated the best profit growth and shareholder returns. It’s hard to say where the best place for investing will be in the 2020s, but I think owning some high-quality global shares is always a good idea.

It’s that focus on high quality which is exactly what Magellan Global Trust tries to do. It says that it “seeks to invest in a focussed portfolio of outstanding global companies and seeks to purchase investments when they are trading at a discount to their assessed intrinsic value.”

What businesses make it into the portfolio? At the end of August 2020 its largest 10 holdings were (in alphabetical order): Alibaba, Alphabet, Atmos Energy, Facebook, MasterCard, Microsoft, Reckitt Benckiser, Tencent, Visa and Xcel Energy.

Magellan Global Trust tries to build its portfolio with a mix of growth and defensive businesses. That’s why there are some defensive energy businesses in the holdings.

Strong total returns

The LIT has done well since inception in October 2017, it has outperformed the MSCI World Net Total Return Index (AUD) by 1.4% per annum (after all expenses and fees) with an average return per annum of 12.5%.

Those numbers include the COVID-19 crash, which have hurt returns. The unlisted Magellan Global Fund, which is very similar and has been running over a decade, has returned an average of 16.1% per annum over the past 10 years.

Targets a 4% distribution yield

Most retirees are looking for a bit of yield from their portfolio. Too much focus on income could lead to poor capital growth returns, but Magellan Global Trust aims to pay out a 4% distribution yield from its diversified, largely growth-focused, portfolio.

Considering how low interest rates are in Australia right now, I think that’s a solid starting yield which will grow over time if Magellan Global Trust’s net asset value (NAV) per unit grows too.

Is the Magellan Global Trust share price a buy?

At the current Magellan Global Trust share price, it’s trading at a 5.5% discount to the current intraday indicative NAV per unit of $1.8833.

That’s not a large discount, but it’s better than nothing. I think it’s an attractive combination to be able to buy, at a discount, an ASX share that has outperformed the global share market over the past three years by more than 1% per annum.

It offers an attractive yield, international diversification and it’s quite defensive. At 31 August 2020, 16% of its portfolio was cash – which provides protection and ammunition for opportunities in case the global share market falls. I’d be happy to buy some Magellan Global Trust shares today, and buy more on price weakness. The US election could throw up some volatility.

More reading

• 3 great ASX blue chip shares I’d buy
• Top brokers name 3 ASX shares to buy today
• Leading brokers name 3 ASX shares to sell today
• ASX 200 drops another 0.8%, Magellan (ASX:MFG) reveals a large investment
• 2 ASX shares I would buy for growth and income

Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS. 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 I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and NZ$13.50 (A$12.51) price target on this infant formula company’s shares following its trading update. The broker estimates that a2 Milk Company’s daigou sales are down 75% compared to the prior corresponding period. And while its Chinese label sales have been stronger than the broker expected, it isn’t enough for positive sales growth in the first half. In light of this, Morgan Stanley doesn’t appear to be in a rush to change its rating. The a2 Milk share price is trading at A$14.67 this afternoon.

DEXUS Property Group (ASX: DXS)

Another note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $8.15 price target on this property company’s shares. It believes DEXUS could have a very tough 12 months due to weakness in the Australian office market. Outside this, the broker has suggested that a large scale share buyback is unlikely at the current level. It feels its shares would have to fall further before management would consider one. The DEXUS share price is fetching $8.99 on Tuesday.

Zip Co Ltd (ASX: Z1P)

Analysts at Citi have retained their sell rating and $6.70 price target on this buy now pay later provider’s shares. According to the note, one of the company’s biggest U.S. customers, Hoka One, has ditched Zip’s QuadPay business in favour of Afterpay Ltd (ASX: APT). It believes this is a sign of increasing competition in the lucrative market. And that’s before PayPal enters it with its BNPL offering. The Zip share price is trading below this price target at $6.38 this afternoon.

More reading

• The latest 3 ASX stocks that brokers just upgraded to “buy”
• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today
• The ASX shares that fund managers were buying this month
• Where to invest $1,000 into ASX shares 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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of A2 Milk and AFTERPAY T 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.

The post Leading brokers name 3 ASX shares to sell today appeared first on Motley Fool Australia.

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Technology shares on the ASX, and across the globe, have widely outperformed the broader market returns this year. That’s led some analysts to speculate that tech shares have rallied too hard and too fast. And, indeed, over the past few weeks, many technology shares have given back some of their gains, though most of the big names are still well up for the year.

But with new funding pouring in from both the private and public sectors, the recent correction could be short-lived, and tech shares could again run much higher.

What new funding is the Government providing?

Today, Prime Minister Scott Morrison is unveiling the fine print on $800 million of new government spending intended to boost Australia’s technology sector and help lift the economy out of its COVID-19 recession.

Much of the money is earmarked for the Government’s own agencies. According to the Australian Financial Review, $257 million will be used to “improve access to government services by expanding the Digital Identity Program”.

Another $420 million will go towards combining the Australian Business Register and the 31 registers administered by ASIC, “allowing businesses to quickly view, update and maintain their business registry data in one location”.

That leaves some $120 million which “will be allocated across more than a dozen new initiatives designed to help business adapt to technology.”

Foolish takeaway

The rapid adoption of technology by businesses and households since social distancing and lockdowns became a reality just 6 months ago isn’t going to fade away. In fact, as the Government’s new $800 million tech spending program demonstrates, it’s only likely to keep speeding up.

This should benefit most of the well-run tech shares on the ASX.

One that I believe looks particularly well-placed to ride the tech boom, and grab a slice of the government’s latest cash splash (either directly or indirectly), is Appen Ltd (ASX: APX).

Appen develops human-annotated training data for machine learning and artificial intelligence. Though no information has been released, to my knowledge, its Speech and Data Collection business looks well-aligned to assist with the Government’s $257 million improvement package for the Digital Identity Program.

Appen’s share price is up 52% year-to-date.

Though gaining strongly today, Appen’s share price is still down 22% from its 26 August all-time highs, offering a potentially lucrative entry point.

More reading

• The forgotten ASX gold stock that UBS is urging you to buy today
• Where to invest your Coles (ASX:COL) dividends this week
• The latest 3 ASX stocks that brokers just upgraded to “buy”
• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Is this the ASX 200 dividend share you can hold into retirement?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen 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 One ASX tech share to buy today ahead of government cash splash appeared first on Motley Fool Australia.

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