Tag: Motley Fool

On Monday the S&P/ASX 200 Index (ASX: XJO) was out of form and started the week with a small decline. The benchmark index fell 0.2% to 5,952.3 points.

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

ASX 200 expected to storm higher.

The ASX 200 looks set to storm higher on Tuesday after a very positive start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 37 points or 0.6% higher this morning. On Wall Street the Dow Jones rose 1.5%, the S&P 500 climbed 1.6%, and the Nasdaq stormed a sizeable 1.9% higher.

Tech shares likely to rise.

It is starting to look like the tech rout on Wall Street is finally over. This follows a second consecutive night of strong gains for the tech-focused Nasdaq index. This could mean it will be a positive day for locally listed tech shares such as Appen Ltd (ASX: APX) and Xero Limited (ASX: XRO) on Tuesday.

Oil prices rise.

It could also be a good day for energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) on Tuesday after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.9% to US$40.61 a barrel and the Brent crude oil price has risen 1.3% to US$42.48 a barrel. Global economic recovery hopes supported oil prices.

Gold price rebounds.

The shares of Evolution Mining Ltd (ASX: EVN), Northern Star Resources Ltd (ASX: NST), and other gold miners could be on the rise today after the gold price rebounded. According to CNBC, the spot gold price is up 1.15% to US$1,887.60 an ounce on Friday night. This follows the softening of the U.S. dollar on Monday.

Coles dividend.

Coles Group Ltd (ASX: COL) becomes the first of a number of blue chip shares paying their shareholders dividends this week. The supermarket giant is scheduled to pay eligible shareholders a 27.5 cents per share fully franked final dividend today. Elsewhere, a large number of REITs are going ex-dividend this morning and are likely to trade lower.

More reading

• Leading brokers name 3 ASX shares to buy today
• 3 cheap ASX shares in the buy zone today
• How to make money by investing in ASX 200 shares
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• How this small-cap fund manager is shooting the lights out year after year

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 Xero. The Motley Fool Australia owns shares of Appen Ltd and COLESGROUP DEF SET. 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 continue to believe that ASX dividend shares are the best way for investors to generate an income in the current low interest rate environment.

Luckily, there are plenty of quality options for investors to choose from right now.

Two that I would buy today are listed below. Here’s why I like them:

BWP Trust (ASX: BWP)

The first ASX dividend share to consider buying is BWP. It is a real estate investment trust (REIT) that invests in and manages commercial assets across Australia. The majority of these assets are leased to home improvement giant, Bunnings Warehouse.

Due to the strength of the Bunnings business, and also the fact that the retail giant is owned by major BWP shareholder Wesfarmers Ltd (ASX: WES), I believe the company is in a strong position to grow its income and distribution at a consistent rate over the next decade. Based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield.

Dicker Data Ltd (ASX: DDR)

Another dividend share to consider buying is Dicker Data. It is a leading wholesale distributor of computer hardware and software across the ANZ region. I’m a very big fan of the company due to its strong market position, growing vendor agreements, positive industry tailwinds, and its new distribution centre. Once the latter is constructed it will give Dicker Data significant room to expand its operations and boost its revenue.

Another positive is the way the company has been performing during the pandemic. For the first half of FY 2020, Dicker Data reported a 30.4% increase in half year profit before tax to $42 million. This means it is on course to lift its dividend to 35.5 cents per share this year. Based on the current Dicker Data share price, this equates to a fully franked 4.5% dividend yield.

More reading

• Will the Reserve Bank cut the cash rate again in October?
• Where to invest your Telstra (ASX:TLS) dividends
• Why retirees should buy these safe and strong ASX dividend shares
• 2 high yield ASX dividend shares to buy this week
• Why Dicker Data, Harvey Norman, Rhipe, & Senex shares are pushing higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of Wesfarmers 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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Exchange-traded funds (ETFs) have grown explosively over the past decade or 2 to become a mainstream way of investing in ASX shares (as well as other assets).

In a different manner to share investing, ETF investors pay special attention to an ETF’s underlying market capitalisation. That’s because an ETF with a small volume of funds under management (FUM) generally has a higher chance of being wound-up, or else encountering other issues like slippage. An ETF’s market cap doesn’t represent the value of the underlying securities, but the value of the capital invested in it.

As such, many investors see an advantage in going with a provider that offers the largest FUM base for the chosen asset class that investor wants exposure to.

So to meet this end, here are the largest 10 ETFs trading on the ASX today, listed in descending order of market capitalisation. The data comes from Commonwealth Bank of Australia (ASX: CBA)’s CommSec brokering platform.

The 10 most popular ETFs on the ASX

ASX ETF	Market Capitalisation
Vanguard Australian Shares Index ETF (ASX: VAS)	$5.83 billion
SPDR S&P/ASX 200 ETF (ASX: STW)	$3.62 billion
iShares S&P 500 ETF (ASX: IVV)	$3.3 billion
iShares Core S&P/SAX 200 ETF (ASX: IOZ)	$2.95 billion
Vanguard MSCI Index International Shares ETF (ASX: VGS)	$2.25 billion
BetaShares Australian High Interest Cash ETF (ASX: AAA)	$2.15 billion
Vanguard U.S. Total Market Shares Index ETF (ASX: VTS)	$1.92 billion
iShares Global 100 ETF (ASX: IOO)	$1.83 billion
Vanguard Australian Property Securities Index ETF(ASX: VAP)	$1.66 billion
Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU)	$1.59 billion

What does this ETF table tell us?

It’s no surprise that the top 2 funds are market-wide ASX index funds. These funds are popular for passive investing into every share in either the S&P/ASX 200 Index (ASX: XJO) — or the S&P/ASX 300 Index (ASX: XKO) in VAS’s case. If an investor is looking for simple, easy exposure to Australian shares, then these funds are a cheap and easy choice.

We also have a couple of US-focused ETFs as well in IVV and VTS. The US markets are especially popular for ASX investors as well as it has always been a safe and rewarding country to invest in. And with globe-dominating companies like Apple Inc (NASDAQ: AAPL) and Amazon.com Inc (NASDAQ: AMZN) at the top of these funds, it’s not hard to understand why.

VGS, VEU and IOO are also popular, with these ETFs providing an avenue for access to international shares outside the US. VEU excludes US companies entirely, while IOO and VGS blends companies like Apple and Amazon with other international giants like Nestle and Unilever.

Finally, we have 2 sector-specific ETFs with AAA and VAP. AAA is a cash-only ETF that invests in cash deposits and pays out dividend distributions every month. VAP instead tracks an index of REITs (real estate investment trusts) like Scentre Group (ASX: SCG) that are traded on the ASX and are a popular choice for income investors.

Foolish takeaway

Whilst an ETF’s size isn’t normally a deciding factor for most ASX investors, it’s still useful (and interesting, in my view) to see which funds, assets, and sectors attract the most interest.

More reading

• ASX 200 finishes flat, A2 Milk shares drop 10%
• Cimic (ASX:CIM) share price flat on new market updates
• 3 top ASX ETFs to buy for long-term growth
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher
• ASX 200 shares to buy for housing boom

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

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Two men face 10 years’ in prison for alleged illegal share market manipulation.

Former director of Quantum Resources Ltd (now known as Nova Minerals Ltd (ASX: NVA)) Avrohom Mordechai Kimelman and Don George Evans of Inglewood, WA, appeared in Perth Magistrates’ Court on Friday facing multiple charges.

The Australian Securities and Investments Commission accused Kimelman and Evans of conspiring to manipulate NVA’s share price in November 2015.

Evans, who did not work for the company, acquired 1.5 million NVA shares on 5 and 6 November 2015. The corporate watchdog alleges he held inside information at the time.

The non-public tip related to NVA’s plans for a reverse-merger with a technology company from Israel. The combined company would have “likely” listed on the NASDAQ.

ASIC also alleges Evans told this information to other people between 4 and 6 November.

Records show NVA shares went from 3 cents at the end of October to 8 cents by 13 November 2015.

As well as the market manipulation charge, Evans faces 6 counts related to the acquisition of the shares and 3 counts involving telling others about the merger.

At the time of the alleged violations, a 10-year jail term was the maximum penalty for each of market manipulation, insider trading and forwarding inside information.

The maximum punishment was boosted in March 2019 to 15 years in prison.

The cases for both men were adjourned until 18 December.

More reading

• ASX 200 finishes flat, A2 Milk shares drop 10%
• Cimic (ASX:CIM) share price flat on new market updates
• 2 ASX tech shares I’d buy with $10,000 
• I think it’s time to jump on the A2 Milk (ASX:A2M) share price
• 3 top ASX ETFs to buy for long-term growth

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 S&P/ASX 200 Index (ASX: XJO) finished down 0.2% today, ending at 5,952 points.

Here the main highlights from the ASX today:

A2 Milk Company Ltd (ASX: A2M) share price suffers after FY21 update

The A2 Milk share price fell around 10% today after giving an outlook update for FY21.

In the update A2 Milk reminded investors that it gave an outlook statement for FY21 when it delivered its FY20 result.

COVID-19 is causing a lot of uncertainty and last month A2 Milk warned there could be the potential for a softening of economic activity and there could be other impacts on participants within the supply chain.

In-particular, A2 Milk warned that there was a risk a flow-on effect of pantry destocking continuing into FY21 following the strong sales uplift in the third quarter of FY20 and lower than anticipated sales to retail daigous in Australia, due to reduced tourism from China and international student numbers.

Well, now those issues appear to be hurting revenue expectations for the upcoming result. A2 Milk said there has been additional disruption to the corporate daigou (reseller channel), particularly because of the stage 4 lockdown in Victoria.

Ultimately, A2 Milk said that there has been a contraction in the daigou channel beyond its previous expectations and there hasn’t been the replenishment orders that would typically be expected by this point.

The disruption is expected for the rest of the first half of FY21. That’s not good news for the near-term A2 Milk share price. Daigou channel sales represent a large proportion of infant formula sales across both Australia and New Zealand.

However, A2 Milk also said that based on the continuing strong growth of its China business and the performance of the rest of the business, the company thinks it’s a single channel logistics issue with continuing strong underlying consumer demand in China.

A2 Milk also confirmed that all other areas of the business is strong, including the liquid milk businesses in Australia and the USA, with the China business also performing strongly.

The company boasted of strong market share and brand awareness in China. Management thinks this confirms the effectiveness of its marketing.

Once the daigou disruption is reduced, A2 Milk thinks the second half will be strong and deliver overall growth over FY21.

A2 Milk gave some numbers expectations for the upcoming results.

Group revenue for the first half of FY21 is expected to be between NZ$725 million to NZ$775 million. That means A2 Milk is expecting revenue to fall by 4% to 10%, down from last year’s NZ$806.7 million.

However, for the full 2021 financial year it’s expecting revenue to be between NZ$1.8 billion to NZ$1.9 billion. That would represent growth of between 4% to 10%, up from NZ$1.73 billion in FY20.

In FY21 the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be “in the order” of 31%.

Synlait Milk Ltd (ASX: SM1)

The Synlait share price fell around 7% after giving its FY20 result to the market.

The dairy business reported that revenue rose 27% to $1.3 billion, with consumer-packaged infant formula sales up 15% and lactoferrin sales up 46%.

Synlait’s EBITDA increased by 13% to $171.4 million and net profit after tax (NPAT) declined by 9% to $75.2 million.

Graeme Milne, Chair of Synlait, said: “Synlait’s financial performance was resilient when viewed against the backdrop of COVID-19. The company remains solid and highly profitable with EBITDA growing strongly demonstrating the strength of our core infant and lactoferrin businesses.

“Our NPAT performance did reduce reflecting investments made in new facilities and acquisitions over the past two years to achieve our growth ambitions. We are however well positioned to grow earnings off our current asset base.”

In FY21 the company is expecting a similar, or slight improvement, on the FY20 net profit result with management expecting lower demand in the first half of FY21 because of higher stock levels in the supply chain.

Piedmont Lithium Ltd (ASX: PLL) share price soars

The lithium business announced a binding sales agreement with Tesla. It’s a five-year fixed-price binding agreement with an optional five-year extension.

The agreement represents around a third of Piedmont’s planned production of 160,000 tonnes per annum for the five-year term.

The Piedmont Lithium share price shot up 77% today. Since 11 September 2020 it has risen 189%.

More reading

• Cimic (ASX:CIM) share price flat on new market updates
• I think it’s time to jump on the A2 Milk (ASX:A2M) share price
• Is the run over for ASX lithium shares after Tesla’s battery day? 
• 2 ASX shares I think are cheap today
• Piedmont Lithium (ASX:PLL) share price rockets 83% higher on Tesla deal

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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 Cimic Group Ltd (ASX: CIM) share price has remained relatively flat despite two positive updates, one announced on Friday and the other today.

At the time of writing, the Cimic share price is 0.78% up at $19.45. This compares to the S&P/ASX 200 Index (ASX: XJO) which is 0.1% higher at 5,968 points.

What does Cimic do?

The Cimic Group provides a range of services to the infrastructure, resources and property markets. These include construction, mining, mineral processing, engineering, concessions, and operation and maintenance services. 

The company operates in more than 20 countries throughout Asia Pacific, the Middle East, North and South America, and Sub-Saharan Africa.

Ventia contract extension

Cimic Group’s 50% owned associate, Ventia, has been awarded a contract extension. The 18-month extension will provide asset maintenance services to the New South Wales Land and Housing Corporation (LAHC).

Ventia will earn $124 million in base contract revenue, with a further $160 million should it provide additional programs. It will deliver maintenance, project and program services in Sydney, Newcastle and the Hunter Valley.

Ventia Group defence and social infrastructure executive Derek Osborn said:

The award of this extension is testament to the exceptional service delivered by our team throughout our 18-year relationship with NSW Land and Housing Corporation, and from the outset of this contract.

I’m pleased that this extension provides the opportunity to continually innovate and improve our service for the benefit of LAHC, its tenants and the wider communities.

The original contract was awarded to Ventia in April 2016, with the new extension taking the term up to December 2022.

Thiess contract extension

The group’s global mining services provider, Thiess, was awarded a contract extension by Glencore on Friday. The 18-month extension will provide mining services at Mount Owen in the Hunter Valley, Australia.

It is projected the commitment will generate A$340 million revenue for Thiess, which will strengthen its balance sheet.

The deal sees Thiess provide mine planning, design and execution, drill and blast, overburden removal and coal mining services.

Thiess managing director Douglas Thompson was pleased with the company’s effort, saying:

For more than 25 years we have delivered industry-leading, specialised mining techniques at Mt Owen, leading to higher resource recovery, increased plant efficiency and reliable material movement for our client.

Our team looks forward to continuing our long association with Glencore and the Hunter Valley community.

Cimic advised that the contract extension would start in July 2021.

Cimic share price summary

The Cimic share price fell to a multi-year low $11.87 in the March bear market. Since then Cimic has pushed higher following the overall rebound of ASX shares. However, as investor confidence wears thin, the Cimic share price is 40% down from the beginning of the calendar year.

More reading

• ASX 200 finishes flat, A2 Milk shares drop 10%
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher
• ASX 200 shares to buy for housing boom
• 3 ASX shares with dividend yields above 10%
• 3 cheap ASX shares in the buy zone today

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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The S&P/ASX 200 Index (ASX: XJO) and All Ordinaries Index (ASX: XAO) are starting to look firmer following recent weakness in ASX tech shares and a broad-based sell off in the Nasdaq. This could be a window of opportunity to explore some leading names in the tech sector. Here are two ASX tech shares I’d consider buying with $10,000. 

2 ASX tech shares I’d buy today

1. Megaport Ltd (ASX: MP1) 

Connectivity and network services provider Megaport is one step closer to earnings before interest, taxes, depreciation and amortisation (EBITDA) breakeven following a strong performance in FY20. The company delivered a 66% increase in revenue to $58 million, a 24% increase in customers to 1,842 and a 45% increase in its number of services (ports, connections, routers and internet exchanges) to 16,712. 

Megaport previously raised $50 million in April to further strengthen its balance sheet and is using the proceeds of the capital raising to further accelerate sales, product development and platform opportunities in the near and medium term. At 30 June 2020, the company had $166.9 million in cash. Megaport is getting closer to delivering the scale and revenue it needs to reach EBITDA breakeven, which it anticipates achieving in FY21.

Overall, COVID-19 has been a tailwind for many ASX tech shares. I believe Megaport is currently experiencing significant growth with a pathway to profitability. With many ASX tech shares looking stronger after the recent tech sell-off, the Megaport share price might be one to watch. 

2. Bigtincan Holdings Ltd (ASX: BTH) 

Bigtincan has truly taken off following its strong FY20 results. The Bigtincan share price jumped more than 10% on the day of its FY20 results to close at a near all time record high of $1.00. One month on, and its share price has soared another 35% to currently trade at $1.35 (at the time of writing).

The company is a provider of software that brings together sales content management, customer facing training, coaching, onboarding and document management to help companies increase sales win rates, reduce expenses and improve customer satisfaction. In FY20 the company delivered a 56% increase in revenue to $31 million with a significant $71.9 million cash at hand. It had previously achieved significant contract wins with big names such as DXC Technology Co (NYSE: DXC), Sephora USA and Nike Inc (NYSE: NKE).

The company is clearly building momentum and forecasts FY21 revenue to be in the range of $41 to $44 million. Its $71.9 million cash position also means the company can pursue and accelerate growth opportunities and explore any potential strategic mergers and acquisitions moving forward. I believe Bigtincan could be a leading ASX tech share to watch closely into the future.

More reading

• Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
• 3 mid cap ASX shares to buy for strong potential returns
• 3 quality small cap ASX shares with very strong growth potential
• 3 ASX tech shares that could take off in FY21
• These exciting small cap ASX shares could be stars of the future

Lina Lim 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, MEGAPORT FPO, and Nike. The Motley Fool Australia has recommended BIGTINCAN FPO, MEGAPORT FPO, and Nike. 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 A2 Milk Company Ltd (ASX: A2M) share price has fallen around 10% in response to a trading update.

What was in the update?

In the update A2 Milk reminded investors that it gave an outlook statement for FY21 when it delivered its FY20 result.

COVID-19 is causing a lot of uncertainty and last month A2 Milk warned there could be the potential for a softening of economic activity and there could be other impacts on participants within the supply chain.

In-particular, A2 Milk warned that there was a risk a flow-on effect of pantry destocking continuing into FY21 following the strong sales uplift in the third quarter of FY20 and lower than anticipated sales to retail daigous in Australia, due to reduced tourism from China and international student numbers.

Well, now those issues appear to be hurting revenue expectations for the upcoming result. A2 Milk said there has been additional disruption to the corporate daigou (reseller channel), particularly because of the stage 4 lockdown in Victoria.

Ultimately, A2 Milk said that there has been a contraction in the daigou channel beyond its previous expectations and there hasn’t been the replenishment orders that would typically be expected by this point.

The disruption is expected for the rest of the first half of FY21. That’s not good news for the near-term A2 Milk share price. Daigou channel sales represent a large proportion of infant formula sales across both Australia and New Zealand.

However, A2 Milk also said that based on the continuing strong growth of its China business and the performance of the rest of the business, the company thinks it’s a single channel logistics issue with continuing strong underlying consumer demand in China.

A2 Milk also confirmed that all other areas of the business is strong, including the liquid milk businesses in Australia and the USA, with the China business also performing strongly.

The company boasted of strong market share and brand awareness in China. Management thinks this confirms the effectiveness of its marketing.

Once the daigou disruption is reduced, A2 Milk thinks the second half will be strong and deliver overall growth over FY21.

Actual guidance

A2 Milk gave some numbers expectations for the upcoming results.

Group revenue for the first half of FY21 is expected to be between NZ$725 million to NZ$775 million. That means A2 Milk is expecting revenue to fall by 4% to 10%, down from last year’s NZ$806.7 million.

However, for the full 2021 financial year it’s expecting revenue to be between NZ$1.8 billion to NZ$1.9 billion. That would represent growth of between 4% to 10%, up from NZ$1.73 billion in FY20.

In FY21 the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be “in the order” of 31%.

Why I think the A2 Milk share price is a buy today

I think A2 Milk is one of the best businesses in the S&P/ASX 200 Index (ASX: XJO). Being able to buy A2 Milk at a price that’s 10% cheaper than last week is an attractive idea to me.

These types of short-term problems can prove to be good long-term opportunities. Is A2 Milk going to be fundamentally challenged forever by this? No, in my opinion.

Indeed, Melbourne is about to leave stage 4 restrictions and Australia’s overall COVID-19 position is steadily improving. Plus, A2 Milk is making up for it with stronger local sales in China.

The company is still expecting revenue growth over FY21 with a pretty stable EBITDA margin.

The A2 Milk share price has been hit hard today, but it still has very strong international growth credentials in Asia and the US. By March 2022 I think A2 Milk shares can bounce back strongly – which is pretty short-term in share market terms.

More reading

• 2 ASX shares I think are cheap today
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher
• Why a2 Milk, Blackmores, Ramelius, & Synlait Milk shares are tumbling lower
• a2 Milk (ASX:A2M) share price on watch after guidance update
• 10 fantastic ASX shares to buy in October

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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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Exchange-traded funds (ETFs) can be an investor’s best friend. ASX ETFs provide instant diversification and can be used to invest in the broader market or a concentrated sector or geography.

Here are a few of my favourite ETFs on the market right now.

Vanguard Australian Shares Index ETF (ASX: VAS)

I’m a big fan of this ASX ETF for broad market exposure to the S&P/ASX 300 Index (ASX: XKO).

Some investors may be worried about home bias, where you overinvest in your local market. However, I think Aussie investors should have a large holding of Australian shares to reduce currency risk in their investments.

There’s also the boost that franking credits on Australian shares can provide, which is why I like this ASX ETF.

ETFS FANG+ ETF (ASX: FANG)

This ETF Securities fund provides exposure to some of the top tech stocks in the world. The fund comprises large holdings in US and other global tech stocks including the ‘FAANG’ group comprising Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ:NFLX) and Alphabet Inc (NASDAQ: GOOG).

The ETFS FANG+ ETF is up 44.2% since its inception in late February. This ASX ETF offers diversified exposure concentrated in the tech and telecom space with a management cost of 0.35% p.a. 

ETFS Reliance India Nifty 50 ETF (ASX: NDIA)

This ETF Securities ETF provides a exposure to the Indian economy by attempting to track its Nifty50 benchmark index.

The ETFS Reliance India Nifty 50 ETF uses a full-replication strategy to track the index which means very similar holdings and weightings to the benchmark.

I think India’s economy is set to boom in the coming decades. It is forecast to be the world’s third largest by 2030, according to research by Standard Chartered. We could also see Australia diversify trade away from China towards India, which is good for business.

The coronavirus pandemic hit the Nifty50 hard, but now could be a good time to buy this ASX ETF on the cheap.

More reading

• Why you’re better off investing in ASX shares in 2020 than paying off the mortgage faster
• Buy Fortescue and this ASX dividend share for a source of income
• The 3 best ETFs for passive investing
• How to make $1 million from ASX shares
• Is a passive ASX investing strategy for you?

Motley Fool contributor Ken Hall owns shares of Vanguard Australian Shares Index. 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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Cochlear Limited (ASX: COH) shares have not had a good year in 2020 so far. After topping out at a new (and still standing) all-time high of $251.55 back in February, the Cochlear share price is today asking just $200.50 at the time of writing. That’s more than a 20% discount to the February high watermark. Now just because a share has pulled back 20% from its most recent high, this does not mean it’s automatically ‘on sale’ or a ‘good deal’. But it does merit some digging in my view, particularly when the company in question is as high calibre as Cochlear.

Lend me your ears…

Cochlear is one of the most successful ASX shares in the healthcare space. It famously pioneered the ‘Cochlear implant’ – a hearing aid device now universally recognisable. The company has continued to remain in the vanguard of hearing aid technology and is still a market leader in the space. It now has a truly global presence, with 20% of its sales now coming from emerging markets. It holds a 60% share of its global product market.

However, like many ASX companies, both Cochlear and its shares have been under pressure this year due to the coronavirus pandemic. In its FY2020 earnings report released last month, Cochlear reported a loss of $238.3 million for the year on revenues of $1.35 billion, mostly due to surgery deferrals as a result of the pandemic. As such, the company will not be paying a final dividend in 2020.

Why is the Cochlear share price a buy today then?

I think Cochlear is worth a good look today, even after its disappointing earnings report. Yes, Cochlear has taken a massive hit this year. But the market that it serves (people with a hearing impairment) hasn’t gone anywhere. Cochlear serves a large customer base with inelastic demand for its products. Many of the company’s patients are born with a hearing impairment, which means they have a fair chance of being Cochlear customers for life. The company already has a dominant position in advanced economies around the world and as incomes rise in emerging markets, more and more potential customers are finding Cochlear as well.

As such, I think the pullback we’ve seen in the Cochlear share price this year presents a solid buying opportunity. Quality companies like Cochlear don’t go on sale often, and so I think this is a rare chance to open a position or double-down if you already have one.

More reading

• How to be the next Warren Buffett with ASX shares
• Why Atlas Arteria, Cochlear, Telix, & Treasury Wine shares are dropping lower
• The Aussie dollar at a critical juncture and could turn fortunes for these ASX stocks
• Top brokers name 3 ASX shares to sell today
• Forget BrainChip (ASX:BRN) and buy and hold these outstanding ASX shares

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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 20% off: Here’s why I think the Cochlear (ASX:COH) share price is a buy today appeared first on Motley Fool Australia.

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