Tag: Motley Fool

Are ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) a buy today?

We’ve just heard some important news regarding banking regulations. You can read our full coverage here, but in a nutshell, the Australian Securities and Investment Commission (ASIC) will lose the power to oversee responsible lending practices across the banking sector. In effect, this means banks will no longer be punished if borrowers mislead the banks over their income or ability to repay their loans.

The market is certainly taking this news as excellent for the banks, with ASX bank shares leading the share market gains today. The CBA share price closed today’s session up 2.88%. The gains were more pronounced with the other three majors. The Westpac Banking Corp (ASX: WBC) share price was up 7.39%, while National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Limited (ASX: ANZ) shares rallied 6.49% and 6.35% respectively.

So is this a good reason to buy the banks, or is the market overreacting here?

An ASX bank share bonanza?

Whilst this news is undoubtedly good for the ASX bank shares, I don’t think it will make a material difference to the companies’ long-term prospects. I’m not sure how many customers were battering down ANZ’s or Westpac’s doors with loan applications that turn out to be dishonest, but I doubt it’s in sufficient numbers that warrant a 6% increase in these bank’s market capitalisations.

My Fool colleague, Tony Yoo, quoted Karen Cox from the Financial Rights Legal Centre in his coverage earlier today, who stated the following about this development:

The problem people are having right now is too much debt and not enough income. The government’s solution is to take on more debt with fewer protections. Unsustainable debt hurts real people and is a short-sighted fix for a flailing economy.

I agree.

The economic damage wrought by the coronavirus pandemic is the single largest threat the banks are facing right now. Evidence points to a sharp trend in Aussies’ increasing their savings rates in 2020 so far, quite dramatically too. That’s not congruous with an appetite for credit, which is what funds the banks’ profits. I see this regulatory change as a tinkering, rather than a game-changing policy. Will it cause societal harm? Possibly. Will it result in a windfall to the banks? I doubt it.

Therefore, I don’t think today’s change is a good reason to buy the banks right now, especially at their new, higher share prices. Instead, I would continue to stay away from this sector until conditions improve. And that might not be for a while.

More reading

• Will the Reserve Bank cut the cash rate again in October?
• Why the Brickworks (ASX:BKW) share price is soaring higher today
• ASX 200 up 1.5%: Big four banks rocket higher, Premier Investments delivers record profit
• Why ASX bank shares are rocketing up Friday
• Why Adbri, Brickworks, Northern Star, & Westpac shares are surging higher today

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank 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.

The post Are ASX bank shares a buy after lending rules eased? appeared first on Motley Fool Australia.

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High-yielding ASX dividend shares with yields over 8% are increasingly hard to find in 2020. Far more common are the ASX dividend shares with trailing yields of more than 8% but which have fallen from grace after admitting their dividend payments are going the way of the dodo in 2020.

Take Westpac Banking Corp (ASX: WBC). On the surface, this company looks like a dividend no-brainer with a trailing, fully franked yield of 9.95% (or 14.21% grossed-up). But do some easy digging on this company and you’ll find that, although it paid a healthy $1.74 in dividends per share in 2019, there has been nothing but a $1.3 billion fine coming out of Westpac in 2020 (so far anyway). That’s your classic dividend trap.

So, here are 2 ASX dividend shares that do happen to have grossed-up yields of more than 8%, but which I happen to think are sustainable going forward.

2 ASX dividend shares with yields over 8%

Telstra Corporation Ltd (ASX: TLS)

Telstra is my first high-yielding dividend share. The Telstra share price has been on the slide recently, ever since its FY2020 earnings report hit the markets. Investors aren’t too keen on Telstra shares now since the company flagged that its earnings payout ratio wouldn’t be able to cover its 16 cents per share dividend in FY21. This is evidenced (in my view) by the Telstra share price being down nearly 18% since early August.

I think this view is a little too pessimistic. That’s because, although Telstra’s earnings will be lower this financial year, the company will likely still have more than enough free cash flow to cover a 16 cents per share dividend regardless. That would give Telstra a dividend yield of 5.59% on current prices, or 8% grossed-up with Telstra’s full franking. As such, I think Telstra is a great option for dividend income in 2020. I think patient investors will be rewarded with this company, especially if its 5G investments bear fruit.

WAM Research Limited (ASX: WAX)

WAM Research is my second high-yield dividend share. It’s a listed investment company (LIC) which basically means it’s a company which buys and sells shares on behalf of its investors. In WAM Research’s case, it tends to look for undervalued growth companies on the ASX, which it sees as having a reasonable chance of appreciating in value. Some of its current holdings (as of 31 August) include Elders Ltd (ASX: ELD), Brickworks Limited (ASX: BKW) and Adairs Ltd (ASX: ADH).

I love WAM Research for its strong history of delivering both growth and income for its shareholders. Since 2010, this LIC has returned an average of 15.1% per annum (before fees and taxes). Much of this stellar return has come in the form of dividend payments.

WAM Research will pay two dividends in 2020 – one paid in April and one due to be paid next month. Both dividends will come in at 4.9 cents per share. That gives WAM Research a projected yield for 2020 of 6.53%, or 9.33% grossed-up with full franking. And the best thing about this dividend is its sustainability. WAM Research tells us that it has 34.9 cents per share left in its profit reserve, which can fund this dividend for another three years at least. That’s some decent certainty and makes WAM Research a great income investment in 2020 in my view.

More reading

• Why the Telstra (ASX:TLS) share price could be under pressure in 2021
• Where to invest your Telstra (ASX:TLS) dividends
• Forget term deposits and buy Coles (ASX:COL) and this ASX dividend share
• Telstra (ASX:TLS) share price is one of the latest ASX buy ideas from brokers
• Buy these ASX dividend shares to beat low interest rates

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited and WAM Research Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Telstra Limited. The Motley Fool Australia has recommended Elders 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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It wasn’t that long ago that Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) were small cap shares and largely unknown to the average investor.

Today they are multi-billion dollar companies and among the most popular shares on the S&P/ASX 200 Index (ASX: XJO).

Anyone that picked up shares when they were still small caps will have generated mouth-watering returns.

I think this demonstrates why a little exposure to the small side of the market can be a good thing for a portfolio.

But which small cap shares should you be looking at? Three small caps that I think have a lot of potential are listed below:

Bigtincan Holdings Ltd (ASX: BTH)

The first small cap to watch is Bigtincan. It is a provider of enterprise mobility software. This increasingly popular software allows sales and service organisations to increase sales win rates, reduce expenditures, and improve customer satisfaction through improved mobile worker productivity. It has a large number of blue chips using its software. This includes banking giant Australia and New Zealand Banking GrpLtd (ASX: ANZ), Nike, and Sephora.

Clover Corporation Limited (ASX: CLV)

Clover is a specialist ingredients producer that manufactures ingredients such as the highly sought-after omega-3 oils that go into infant formula, supplements, and baby food products. It has been growing at a strong rate over the last few years thanks largely to the increasing demand for ingredients from infant formula market. While uncertain trading conditions could bring this positive run to an end in FY 2021, I believe this is only a short term headwind and its growth will accelerate again once the conditions ease.

Volpara Health Technologies Ltd (ASX: VHT)

A final small cap to watch is Volpara. It is a Software-As-A-Service (SaaS) company that uses algorithms and artificial intelligence to improve the early detection of breast cancer. It achieves this by analysing mammograms and associated patient data. After which, the software is able to provide clinical decision support and practice management tools in a cost-effective way. The company is currently generating NZ$19.1 million in annual recurring revenues (ARR) but estimates that it has a US$750 million ARR opportunity in breast cancer screening. 

More reading

• The Zip (ASX:Z1P) share price is down 38% in a month: Is this a buying opportunity?
• Why this fundie still sees an ASX tech share surge
• Is the Soul Patts (ASX:SOL) share price a buy?
• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%
• ASX 200 down 1.2%: Westpac hit with $1.3bn penalty, Brickworks disappoints, tech shares lower

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 Clover Limited, VOLPARA FPO NZ, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BIGTINCAN FPO and VOLPARA FPO NZ. 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 Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)? appeared first on Motley Fool Australia.

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According to the latest Westpac Banking Corp (ASX: WBC) Weekly economic report, the banking giant expects the Reserve Bank to cut the cash rate on 6 October.

Chief Economist Bill Evans commented: “In a speech on Tuesday, the Deputy Governor of the Reserve Bank gave a fairly clear hint that the Board is set to cut the cash rate and other key policy rates at its October Board meeting.”

This is despite the meeting falling on the same day as the Federal Budget.

Mr Evans explained: “The prospect of the RBA ‘sitting back’ to assess the Budget, which has been seen as the ‘norm’ in previous years is not appropriate for these unique times.”

“We now expect the RBA to cut the overnight cash rate to 10 basis points; to adopt a 10 basis point three year bond target; and to adjust the rate on any new drawdowns of the Term Funding Facility to 10 basis points. All these rates are currently set at 25 basis points, which the Governor has generally described as the effective lower bound for the cash rate,” he added.

When will rates increase again?

If Westpac’s forecasts prove accurate, it will be some time before the cash rate is heading higher again.

The bank is currently forecasting that the cash rate will remain on hold at 0.1% until at least June 2022, which is where its forecast period ends.

In light of this, I think it could be upwards of five years until rates are back to “normal” levels.

As a result, I continue to believe the share market will be the best place to generate an income over the coming years.

But which dividend shares should you buy? Two of my favourite options for income investors are commercial property company and Bunnings landlord BWP Trust (ASX: BWP) and agricultural property company Rural Funds Group (ASX: RFF).

As well as offering generous yields at present, I believe both companies have the potential to grow their earnings and distributions at a solid rate over the 2020s.

More reading

• Why the Brickworks (ASX:BKW) share price is soaring higher today
• ASX 200 up 1.5%: Big four banks rocket higher, Premier Investments delivers record profit
• Why ASX bank shares are rocketing up Friday
• Why Adbri, Brickworks, Northern Star, & Westpac shares are surging higher today
• Why the Westpac (ASX:WBC) share price is storming 6% higher

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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No-one likes regulation.

Well, except when it keeps the rivers and streams clean.

But no-one likes financial regulation.

Well, except when it ensures dodgy financial advisers are sternly — appropriately — dealt with.

Okay, but no-one likes banking regulation.

Well, except when the Royal Commission uncovers such disgraceful behaviour that, frankly, we’ve stopped being shocked.

Okay, but the Treasurer doesn’t like banking regulation…

…

…

At least, not the regulation that requires banks to meet ‘responsible lending’ rules, if today’s media reports are right.

According to the Nine/Fairfax news sites today:

“The objective is to replace a philosophy of “lender beware” with a “borrower responsibility” principle to make sure credit is available.”

Oh, and:

“In a win for mortgage brokers, they will no longer be subject to responsible lending obligations…”

Right.

I guess that was what Royal Commissioner Hayne recommended?

Nope.

Commissioner Hayne wrote:

“My conclusions about issues relating to the NCCP Act can be summed up as ‘apply the law as it stands’.”

So who wants these changes?

Well, the Banking Association and the Master Builders were happy.

Oh. I see.

To be fair, the idea of letting credit flow more freely is a worthwhile goal.

As long as the credit goes to the right people.

You know, responsible people.

Who can responsibly meet their obligations.

So, responsible lending rules should be completely appropriate, shouldn’t they?

Apparently not.

Let me leave you with this thought:

Think about the logic here.

The government wants banks to make loans they can’t currently make because they’re obligated to lend responsibly.

In other words, the extra credit will flow to loans that are currently deemed irresponsible.

Let that sink in…

Fool on!

More reading

• Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
• Will the Reserve Bank cut the cash rate again in October?
• Here’s why the Plenti (ASX:PLT) share price zoomed 13% higher today
• Are foreign currencies worth investing in?
• Want to invest in US shares? This ETF is a top option

Motley Fool contributor Scott Phillips 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 Is the Treasurer destroying the village to save it? appeared first on Motley Fool Australia.

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The Plenti Group Limited (ASX: PLT) share price has been a very disappointing performer since landing on the ASX boards at $1.66 this week.

But thankfully for shareholders of the technology-led consumer lending and investment company, it is on course to finish its first week as a listed company in style.

On Friday the Plenti share price was up as much as 13% to $1.38. It has faded a touch in afternoon trade but is still up a solid 7% to $1.31 at the time of writing.

What is Plenti?

Plenti is a technology-led consumer lending and investment business which provides borrowers with efficient, simple, and competitive loans.

It also provides investors with the opportunity to earn attractive returns by lending money via its peer-to-peer platform.

Plenti has been operating since 2014 and has funded approximately $870 million in loans to over 55,000 borrowers. These loans are predominantly to creditworthy borrowers in the automotive, renewable energy, and personal lending verticals.

One company which appears to have faith in the Plenti business model is auto listings giant Carsales.Com Ltd (ASX: CAR).

It owns 16,085,286 shares in the company, which is the equivalent of a 9.53% stake.

Why is the Plenti share price zooming higher today?

Today’s gain appears to be due largely to news that the government is easing responsible lending rules.

This is expected to reduce the barriers in switching credit providers, which could be a positive for lenders like Plenti.

In addition to this, I suspect bargain hunters could be swooping in today after its disappointing decline this week

Prior today, for example, the Plenti share price was trading at $1.22. This was a massive 26.5% lower than its IPO price and appears to have caught the eye of some investors.

Should you buy the dip?

I think there are a lot of unknowns with Plenti at this stage and so I wouldn’t be in a rush to buy shares.

Instead, I would suggest investors keep their powder dry and wait to see how its loan book performs over the next 12 months or so.

In the meantime, as boring as they may be, I think investors would be better off sticking with Westpac Banking Corp (ASX: WBC) and the rest of the big four. Especially after the government’s decision to relax responsible lending rules.

More reading

• Plenti (ASX:PLT) share price crashes lower after its IPO
• New $280 million ASX tech share listing Wednesday

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended carsales.com 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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When you hear an investor list off different asset classes that one can invest in, sometimes ‘foreign currencies’ are thrown into the mix, along with your usual suspects like ASX shares, bonds, gold or property.

Most of us only convert our Australian dollars into something else when we need to go on holiday, rather than as an investment activity. But is this an untapped avenue investors should explore?

It’s relatively easy to own foreign currency these days, either digitally or physically. You can always go down to your nearest bank branch and change your dollars to euros, pounds or yen. Many ASX banks such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) also allow you to open foreign currency accounts, where you can keep your chosen currencies alongside your normal bank accounts.

There are also foreign currency exchange-traded funds (ETFs) available. The BetaShares US Dollar ETF (ASX: USD) is one such option, but there are more out there, including for other currencies like the euro and the pound sterling.

Are currencies an investment?

Some people do make a living trading currency. Currencies shift in value every day, so there are definite opportunities in these moves to make profits. But currency is, by definition, a store of wealth, rather than a wealth-producing asset. You can turn cash into an investment with a term deposit or other cash instrument. But these days, the potential for this is not what it used to be, even for currencies outside the Aussie dollar, with interest rates at near-zero in the countries that issue the world’s major currencies. As such, I don’t see any real value in holding foreign currency as a ‘buy-and-hold’ investment.

But what about currencies as a hedge? It might not feel like it to us, but the Aussie dollar is a volatile currency by global standards. Think about it. Just this year, our dollar has been worth as little as 55 US cents and as much as 74 US cents at various times.

Our dollar tends to fall in times of global uncertainty (like we saw in the share market crash in March), so holding some of your cash in US dollars might be a good way to hedge against a global share market crash.

Holding some US dollars is a good strategy if you regularly invest in US shares, such as Apple Inc (NASDAQ: AAPL). I myself tend to hold a cash position in both US dollars and Aussie dollars, with regular top-ups for the US dollar account when the exchange rate is decent. 

Foolish takeaway

I wouldn’t class foreign currencies as assets in their own right, but you can manage your cash positions a little better by utilising other currencies, especially if you regularly invest overseas. As with all investments, make sure you’re not paying too much in fees though!

More reading

• Want to invest in US shares? This ETF is a top option
• Why the Brickworks (ASX:BKW) share price is soaring higher today
• Fund managers have been buying Kogan (ASX:KGN) and this ASX share
• The Nearmap (ASX:NEA) share price is down 28% in September: Time to buy?
• 2 ASX shares I would recommend to a beginner investor

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 Apple. The Motley Fool Australia has recommended Apple. 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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Investing in United States-listed shares is something that more and more Aussie investors want to do. Whilst our own S&P/ASX 200 Index (ASX: XJO) is a top place to invest your money, there are simply companies over in the US that are a cut above our banks and miners. The two largest companies on the ASX 200 are CSL Limited (ASX: CSL) and Commonwealth Bank of Australia (ASX: CBA). These are both proud companies with long and prosperous histories (both used to be government-owned businesses, coincidentally).

But they pale in comparison with the two largest companies in the US – Apple Inc. (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT). The US simply has a far larger range of global companies than the ASX, and also a far larger capital base. There’s a reason our home-grown Atlassian Corporation (NASDAQ: TEAM) isn’t Atlassian Limited. It’s because it lists on the Nasdaq, rather than the ASX.

SPY vs SPY

So, if you want to invest in the US, what are your options? US focused exchange-traded funds (ETFs) are a great place to start. These funds hold baskets of US shares and are normally very cheap, even compared with our own ASX ETFs.

By far, the most popular US index is the S&P 500 Index (SP: .INX). This index holds 500 companies (shocker) that are selected on a range of factors including liquidity, size and profitability. You can invest in this index on the ASX through the iShares S&P 500 ETF (ASX: IVV), which charges a management fee of 0.04% per annum.

You could also try the BetaShares Nasdaq 100 ETF (ASX: NDQ). Rather than tracking the 500 largest companies, NDQ instead only holds 100 of the largest companies listed on the tech-heavy Nasdaq by aiming to track the NASDAQ-100 (NASDAQ: NDX). As such, this ETF has a far heavier focus on tech stocks, which some investors might like. But it also charges a higher management fee of 0.48% per annum.

The best US shares ETF?

My personal favourite US ETF is the Vanguard US Total Market Shares Index ETF (ASX: VTS). Unlike the S&P 500, this ETF holds more than 3,500 US companies, which means it has more exposure to the smaller side of the market. It also holds the shares that don’t make the cut for the S&P 500, including the popular electric car maker Tesla Inc (NASDAQ: TSLA). VTS is marginally cheaper than IVV as well, charging a paltry 0.03% management fee per annum.

Foolish takeaway

Whilst I think any of these US-based ETFs would make a good choice for an Aussie investor, VTS is my favourite pick of the bunch with NDQ a close second. Low fees, exposure to some of the best companies in the world, and massive diversification, all in one fund. What more could you want? 

More reading

• 2 ASX shares I would recommend to a beginner investor
• 2 ultra-cheap ASX ETFs any investor can add to a share portfolio
• Where to invest your Telstra (ASX:TLS) dividends
• 3 top ASX tech shares to buy in 2020
• Buy BetaShares NASDAQ 100 ETF (ASX:NDQ) and these ETFs today

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Atlassian, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and CSL Ltd and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, and BETANASDAQ ETF UNITS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It isn’t only ASX big bank shares that are storming higher today. The Brickworks Limited (ASX: BKW) share price is also surging and is the best performing large cap this afternoon.

Shares in the building materials group rallied 6.8% to $19.95 during lunch time trade and is on top of the S&P/ASX 200 Index (Index:^AXJO) leader board.

That’s ahead of the second-best performer, the Westpac Banking Corp (ASX: WBC) share price with its 6.5% gain and National Australia Bank Ltd. (ASX: NAB) share price on a 6.4% increase.

ASX big bank stocks are racing ahead on news that the federal government is planning on winding back responsible lending rules. This will make it much easier for banks to lend.

Broker upgrade sends Brickworks share price racing

In Brickworks case, the outperformance of the BKW share price coincides with a broker upgrade following its full year results.

Morgans upgraded the stock to “add” from “hold” as Brickwork’s FY20 results came in ahead of expectations.

While group earnings before interest and tax (EBIT) fell 34% to $206 million, that was still above Morgans’ estimate of $193 million.

“Overall, the results for the operational Brick businesses (particularly 2H results from Building Products Australia) were better than feared and Property earnings also slightly beat expectations,” said the broker.

Building activity showing signs of recovery

This was enough to offset weaker investment earnings contribution from Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Another positive was the outlook from Brickworks. The industry is doing it tough as the COVID-19 pandemic limits construction activity but there’s light at the end of the tunnel for the group’s Building Products Australia (BPA) division.

“Clearly, risks remain to activity levels in the largest detached housing markets of NSW and VIC (c60-65% of BPA revenue), with HomeBuilder proving less effective in Sydney and the impact of Government lockdowns in Melbourne remaining uncertain,” added Morgans.

“Nonetheless, BKW noted it’s possible that building activity across most of Australia could be stronger than expected over the next 6-12 months.”

North America a mixed bag

The group’s North American operations also stands to benefit from cost cutting initiatives in FY20 and recent acquisitions of Redland Brick and Sioux City Brick.

However, slowing non-residential and multi-res (higher margin) markets in NA could drag.

What is the BKW share price worth?

Nonetheless, this isn’t stopping Morgans from lifting its price target on the stock to $19.98 from $18.24 a share.

With the big run-up in the BKW share price though, this doesn’t leave much meat on the bone for investors.

Those looking for better returns may want to read this report from the experts at the Motley Fool. Follow the link below to find out more.

More reading

• ASX 200 up 1.5%: Big four banks rocket higher, Premier Investments delivers record profit
• Why ASX bank shares are rocketing up Friday
• Why Adbri, Brickworks, Northern Star, & Westpac shares are surging higher today
• Why this fund manager is backing ASX copper shares
• Why the Westpac (ASX:WBC) share price is storming 6% higher

Motley Fool contributor Brendon Lau owns shares of National Australia Bank Limited and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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 like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye today are summarised below. Here’s what these fund managers have been buying:

Baby Bunting Group Ltd (ASX: BBN)

A notice of initial substantial holder shows that Bennelong Australian Equity Partners has been buying this baby products retailer’s shares. According to the notice, over the last four months the fund manager has been building a position and buying shares in the price range of $4.1376 to $4.6999. This has led to Bennelong Australian Equity Partners accruing a total of 7,725,888 shares, which gives it a ~6.05% stake in the company.

The Baby Bunting share price is currently changing hands in the middle of the above price range at $4.48. This could be a sign that Bennelong Australian Equity Partners still sees a lot of value in its shares at this level. So, it may not be too late for investors to follow its lead.

Kogan.com Ltd (ASX: KGN)

A notice of change of interests of substantial holder reveals that Fidelity Management & Research (FMR) has been topping up its position in this ecommerce company. According to the notice, Fidelity picked up a total of 1,262,686 shares between 21 July and 16 September. The fund manager was buying shares in the range of $16.93 to $21.61. These purchases increased its holding to a total of 6,615,924 shares, which equates to a 6.26% stake.

Fidelity appears to have been impressed with Kogan’s stellar sales and profit growth during the pandemic. Pleasingly, this continued in August with the company recently reporting gross sales growth of 117% and adjusted EBITDA growth of over 466% for the month. I think that following Fidelity’s lead and buying shares for the long term would be a smart move.

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