Tag: Motley Fool

The best placed ASX copper shares are enjoying some healthy share price gains as the price of copper trades at levels not seen in more than 2 years.

At the current price of US$6725.50 per tonne, copper has gained 37% since its 20 March lows.

You’ll find copper used extensively in construction areas such as plumbing and roofing, as the metal is highly resistant to corrosion. As nations move to revive their economies after the coronavirus slowdowns, that should help drive continued strong demand.

But copper’s main appeal is its superior electrical conductivity. Its widely used in buildings’ wiring, but also faces a likely surge in demand as electric vehicle (EV) production begins to take off.

John Forwood is the portfolio manager at the Lowell Resources Fund and he has a keen eye on the burgeoning EV market. But rather than guess at which battery technology – and hence which metals – will win the technology race, he’s focusing on copper. As noted by Australian Financial Review, Forwood says:

The way we really like to play the electrification theme – all the charging stations, the cars themselves – require a lot more copper. So that’s probably the safest bet. Rather than trying to pick battery chemistry – is it going to be cobalt, is it going to be titanium, is it going to be tin or zinc or whatever. Every month, there’s a new battery chemistry that gets touted.

If the demand for copper continues to outpace new supply, it should bring more good news to OZ Minerals Limited (ASX: OZL) shareholders.

What does Oz Minerals do?

Based in South Australia, OZ Minerals is a mining company primarily focused on copper. It owns and operates the high-quality Prominent Hill copper-gold mine and the Carrapateena advanced exploration copper-gold project. Both sites are located in South Australia.

OZ Minerals also has extensive operations in Brazil and an exploration project in Sweden.

How has the OZ Minerals share price been performing?

Oz Minerals’ share price is down 8% from 3 September, when shares were trading at 5-year highs.

As you’d expect, the company’s share price fell hard alongside the copper price in the first months of the global pandemic, dropping 45% from 20 January through 23 March. Since that low, the share price is up 131%, putting it up 31% so far in 2020.

By comparison the S&P/ASX 200 Index (ASX: XJO) is down 12% year-to-date.

The Oz Minerals share price is unlikely to leap another 131% any time soon. But with copper inventories running low and demand likely to remain strong, this is one share you might want to add to your portfolio.

More reading

• The Aussie dollar at a critical juncture and could turn fortunes for these ASX stocks
• 2 ultra-cheap ASX ETFs any investor can add to a share portfolio
• 2 must buy ASX 200 shares to snap up right now
• Is the Transurban (ASX:TCL) share price a secret cash cow?
• Why the Telstra (ASX:TLS) share price could be under pressure in 2021

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

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It certainly has been a difficult month for the Zip Co Ltd (ASX: Z1P) share price.

Since this time last month, the buy now pay later provider’s shares have crashed a disappointing 38% lower.

This makes it the worst performer on the S&P/ASX 200 Index (ASX: XJO) over the period ahead of IOOF Holdings Limited (ASX: IFL) and Nearmap Ltd (ASX: NEA).

Why is the Zip share price down 38% in a month?

There have been a couple of catalysts for the underperformance of the Zip share price this month.

The first has been a major tech selloff on Wall Street’s Nasdaq index, which has weighed heavily on the local tech sector.

In addition to this, news that payments giant PayPal intends to launch its own buy now pay later offering in the United States in the final quarter of 2020 has weighed heavily on its shares.

While Zip’s US-based QuadPay business has a large and growing customer base in the country, it has nowhere near the same traction as market leaders Afterpay Ltd (ASX: APT) and Klarna.

Therefore, there are fears that smaller players such as QuadPay and Sezzle Inc (ASX: SZL) could get drowned out by the arrival of this behemoth in the market. Especially given how PayPal already has such a vast footprint in the lucrative market.

Is the Zip sell off a buying opportunity?

While the arrival of PayPal in the market is definitely a blow, it is worth remembering that the US market is estimated to be worth $5 trillion a year.

This means there’s plenty of room for multiple players to operate successful and profitable businesses in this market.

In light of this, I think a long term and patient investment in Zip’s shares could generate strong returns for investors over the 2020s.

Though, given the risks involved, it may be best to restrict the investment to just a small part of a balanced portfolio.

More reading

• ASX 200 down 1.2%: Westpac hit with $1.3bn penalty, Brickworks disappoints, tech shares lower
• Where next for the Zip (ASX:Z1P) share price?
• BrainChip (ASX:BRN) and Afterpay (ASX:APT) were among the most traded shares on the ASX last week
• New $280 million ASX tech share listing Wednesday
• What you need to know about Tyro’s share price roller coaster 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 Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nearmap Ltd. and Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

Online payments giant PayPal (NASDAQ: PYPL) is seeing a surge in new accounts and engagement amid the COVID-19 pandemic, and it’s doing everything it can to capitalise on the moment. During its second-quarter earnings call in late July, PayPal CFO John Rainey shared plans to invest an additional $300 million in new products and improvements in the second half of the year.

And the pace of product rollouts has been torrid. CEO Dan Schulman says he expects the number of product releases in the second half of 2020 to equal the number of new products released in the previous six years of his tenure at PayPal. Here’s what the company’s been up to and what it means for investors.

Accelerating the product pipeline

At the start of the year, Schulman talked about the need for PayPal to increase its presence in stores in order to achieve his aspiration of reaching 1 billion users transacting through PayPal nearly every day. The impact of COVID-19 has accelerated that product pipeline.

The company rolled out QR codes in the PayPal app and cash-transfer app Venmo last quarter. It’s since partnered with CVS Health to integrate the QR codes into their POS systems, and it’s looking for additional partners.

Schulman views QR codes as the fastest way for PayPal to expand its in-store presence. He also sees an opportunity to grow in-store payments with debit and credit cards. The company is releasing a Venmo credit card later this year. It expanded its partnership with Mastercard to bring the PayPal Business debit card to more countries earlier this month.

Lastly, PayPal also wants to use contactless payments technology to facilitate payments. It already has long-standing deals in place with dozens of global payment card companies to use their tokenization technology. The challenge it faces is overcoming the restrictions on access to phone hardware, which is particularly cumbersome on Apple devices.

PayPal isn’t neglecting online payments, either. It launched an installment payment program last month called Pay in 4, which allows merchants to receive funds on a purchase upfront while consumers pay for the purchase in installments. The product moves the company’s brand further up the sales funnel from the checkout page to the product page, where consumers can see the option to pay over time.

PayPal is also working on several other online payment services, including more ways for consumers to use PayPal online at more merchants, the ability to pay in different ways (e.g., credit card rewards, digital currency), and deeper integration with Honey, its web browser extension that automatically searches out deals on products and services being searched by the user.

Relying on the network and ecosystem

Most of PayPal’s new products aren’t actually monetized directly. Pay in 4, for example, doesn’t cost merchants anything and consumers aren’t paying interest, either. That’s a unique proposition that few other companies can offer. That’s because PayPal sees increased engagement from users that use Pay in 4 or in-store payment options across its other products, which offsets the costs of those new offerings.

It’s this network effect that’s enabling rapid development and experimentation with new products and gives PayPal an advantage in pricing. It’s the same strategy fellow fintech leader Square (NYSE: SQ) has been following for several years. But Square is only planning to release one or two major new products on its consumer side per year. PayPal just released or expanded three products in the last month: Pay in 4, the business debit card, and Instant Transfer.

PayPal’s faster product release schedule is supported by its larger network. It had 346 million active accounts between PayPal merchants and consumers, Venmo, and Honey as of the end of the second quarter. That’s far more than Square’s 30 million Cash App users and an undisclosed number of Square merchants.

In turn, PayPal’s producing tons of free cash flow – $2.2 billion in the second quarter alone. By comparison, Square’s free cash flow was sitting around $500 million on a trailing-12-month basis before the impact of COVID-19. As such, PayPal has a lot of room to experiment with new products.

An additional $300 million in incremental product investment will still allow PayPal to grow free cash flow and expand its operating margin, while also taking advantage of one of the biggest periods of opportunity in the company’s history.

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

More reading

• Share price opportunities to buy this week
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Why the Zip share price is plummeting 15% today
• PayPal scares investors in BNPL shares, time to sell?
• Afterpay and Zip shares sink lower after PayPal announces Pay in 4 BNPL product

Adam Levy owns shares of Apple and Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Mastercard, PayPal Holdings, and Square. The Motley Fool recommends CVS Health and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Apple, Mastercard, and PayPal Holdings. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Westpac Banking Corp (ASX: WBC) share price is pushing notably higher on Friday.

At the time of writing the banking giant’s shares are up a sizeable 6% to $17.38.

Why is the Westpac share price storming higher?

Today’s gain appears to be news of favourable changes to responsible lending laws and a positive broker note out of Goldman Sachs.

In respect to the latter, this morning the leading broker reiterated its buy rating and trimmed its price target ever so slightly to $19.80.

This price target implies potential upside of 14% over the next 12 months excluding dividends. Including dividends this potential return increases to approximately 20%.

Why is Goldman Sachs bullish on Westpac?

The broker notes that Westpac has reached an agreement with AUSTRAC to settle the civil proceedings commenced in November last year in relation to its contraventions of the Anti-Money Laundering and Counter-Terrorism and Financing Act.

Westpac has agreed to pay a civil penalty of $1.3 billion, the largest in Australian corporate history.

While this penalty is larger than it originally expected ($900 million) and is likely to have a big impact on its earnings in FY 2020, the broker believes the lifting of this dark cloud could be a big positive for the company’s shares.

It commented: “With this significant overhang for the stock now behind it, at a digestible incremental financial cost, we expect the stock to begin to re-rate (currently trades at a 17% PER discount to peers, versus in line historically), and reiterate our Buy.”

Foolish Takeaway.

I think Goldman Sachs is spot on with its assessment and would suggest investors consider buying Westpac’s shares before they begin to re-rate.

Especially if you’re on the lookout for a source of income in this low interest rate environment.

Based on its last close price, Goldman Sachs estimates that Westpac’s shares offer investors a fully franked 6.5% FY 2021 dividend yield and an 8.2% FY 2022 dividend yield.

More reading

• 5 things to watch on the ASX 200 on Friday
• Westpac (ASX:WBC) share price hits 4-month low. Is it time to buy the ASX bank?
• ASX 200 down 1.2%: Westpac hit with $1.3bn penalty, Brickworks disappoints, tech shares lower
• Why Afterpay, Evolution, Westpac, & Whitehaven shares are sinking lower today
• Westpac (ASX:WBC) share price on watch after settling AUSTRAC case for $1.3 billion

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 Australian dollar could be at a decisive point as it slumped from its two-month high. Investors should be paying attention as our dollar could fall further and change the fortunes for a range of ASX stocks.

The Aussie battler was trading close to US74 cents early last month but retreated sharply to be around US70 cents this morning.

It’s resting on a psychologically important support line. If it gives up a little more ground, it could easily give up another cent or two. That may not sound like much, but don’t be fooled.

Australian dollar sways ASX stocks

A US1 cent change is a big move on currency markets and it can have a material impact on profits for S&P/ASX 200 Index (Index:^AXJO) stocks.

There are a few “push” and “pull” factors working in unison to knock the Aussie off its perch. The deputy governor of the Reserve Bank of Australia (RBA), Guy Debelle, jawboned our dollar in a speech this week.

RBA taking wind out of Aussie dollar’s sail

He hinted that direct intervention by the RBA to bring down the dollar is one of the arrows in the RBA’s quiver in its fight to support economic growth.

That would be a radical move as the RBA is/was a firm believer in a free-floating dollar – but we live in radical times.

Another push factor is the growing number of economists forecasting another interest rate cut in the next month or two. The cash rate stands at a record low of 0.25% but Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB) are tipping the rate to fall to 0.1%.

US dollar on the attack

On the pull side, the US dollar is gaining ground against all major currencies, including ours. Europe is shutting down economy yet again to curb growing COVID-19 cases, and that’s forcing investors to scurry to the safety of the greenback.

What happens to the Aussie in the next few days could determine where it’s heading over the next few months.

How ASX stocks are affected by the Australian dollar

ASX-listed companies are impacted by the exchange rate in a few ways. They either generate income and/or incur costs in US dollars.

UBS picked the three large cap ASX stocks in its portfolio with most to lose or gain from the AUD/USD exchange rate.

The 3 ASX stocks most impacted by the Aussie

These are blood treatment giant CSL Limited (ASX: CSL), hearing implant maker Cochlear Limited (ASX: COH) and logistics group Brambles Limited (ASX: BXB).

While these companies are also exposed to other currencies, especially the Euro, the broker doesn’t think we will see much movement in the AUD/EUR exchange rate.

This means all the action will be centred on the Aussie’s battle with the greenback.

More reading

• 2 ultra-cheap ASX ETFs any investor can add to a share portfolio
• 2 must buy ASX 200 shares to snap up right now
• Is the Transurban (ASX:TCL) share price a secret cash cow?
• Why the Telstra (ASX:TLS) share price could be under pressure in 2021
• 5 things to watch on the ASX 200 on Friday

Brendon Lau owns shares of CSL Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL 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.

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The tech sector has been uncharacteristically out of form in recent months following weakness on Wall Street’s Nasdaq index.

While this is disappointing if you’re already a shareholder of these tech companies, I see it as a big gift to non-shareholders.

The two ASX tech shares listed below, for example, are down heavily from their 52-week highs. I feel this could be a great entry point for a long-term focused investment. Here’s why:

Appen Ltd (ASX: APX)

The Appen share price is down over 25% from the 52-week high it reached just under a month ago. This means that the artificial intelligence services company’s shares are now changing hands at 37x estimated FY 2022 earnings. While this is still a premium to the market average, I think it is more than fair given its positive long term growth outlook.

Due to its leadership in the data preparation market for machine learning and artificial intelligence, I believe it is well-placed to continue delivering strong earnings growth over the 2020s. Last month IDC forecast spending on artificial intelligence to double in four years to US$110 billion. That’s a compound annual growth rate of 20.1% for the 2019 to 2024 period. It commented: “Companies will adopt AI — not just because they can, but because they must.” This bodes well for Appen.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price has bounced back recently but is still trading approximately 14% lower than its 52-week high. I think this has left it trading at a very attractive level for investors that are looking for buy and hold options.

Pushpay is a leading donor management and community engagement platform provider for the church market. Although this is a niche market, it certainly is a very lucrative one. Management is aiming to win a 50% share of the medium to large church market, which it estimates to be worth US$1 billion a year in revenue at present. Given the quality of its platform and the shift to a cashless society, I feel very confident it will achieve its goals.

More reading

• 3 top ASX tech shares to buy in 2020
• New to investing? I would invest $500 into these exciting ASX shares
• 2 top ASX shares I’d buy with $2,000 right now
• Top brokers name 3 ASX shares to buy today
• 2 stunning ASX growth shares to buy and hold

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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 Should you buy Appen (ASX:APX) and Pushpay (ASX:PPH) shares after the tech selloff? appeared first on Motley Fool Australia.

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

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

Tesla Inc‘s (NASDAQ: TSLA) new battery technology promises to accelerate the growth of the electric-vehicle market and widen its lead over its rivals.

So says Deutsche Bank analyst Emmanuel Rosner. On Wednesday, Rosner raised his rating on Tesla’s shares from hold to buy and boosted his price forecast from $400 to $500. His new target represents potential gains for shareholders of roughly 27% from the stock’s current price near $395.

Rosner applauded Tesla’s goal of slashing its battery costs by more than half in the next three years, which he says could significantly improve its sales volumes and profit margins. In turn, he expects Tesla to produce more than 2 million electric vehicles and $15 in earnings-per-share by 2025. Thus, he urges investors to use the stock’s recent pullback to buy shares at a sizable discount to its recent highs.

Is Tesla’s stock headed to $500?

Following Rosner’s upgrade, news broke that California plans to phase out gasoline-powered cars as a means to battle climate change. Governor Gavin Newsom issued an executive order requiring all new passenger vehicles sold in the state to be zero-emission by 2035. It also requires state agencies to work with businesses to “accelerate deployment of affordable fueling and charging options”. 

If California’s leadership in the battle against climate change spurs other states to enact similar plans, it could hasten the adoption of electric vehicles. That would be a boon for industry leader Tesla, and it could drive its shares to $500 and beyond in the coming years.

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

More reading

• Why this fundie still sees an ASX tech share surge
• How Elon Musk’s Tesla delivered a body blow to these ASX stocks
• Elon Musk’s ‘Battery Day’ could see these ASX mining shares soar, and volatility hits the markets
• Tesla’s ‘Battery Day’ is a dud; stock tumbles
• Ecograf (ASX:EGR) share price moves after Tesla’s Battery Day presentation

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

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

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I think that there are some good listed investment companies (LICs) out there that are worth investing in for high dividend yields of over 6.5%.

That sounds more attractive to me than not earning anything in the bank because of low interest rates. 

What is a LIC?

A LIC is a company which invests in other assets or shares on behalf of shareholders. There are plenty of LICs on the ASX which are managing money for shareholders.

Some of them are very large and have been around for decades like Australian Foundation Investment Co.Ltd. (ASX: AFI) and Argo Investments Limited (ASX: ARG) which invest in ASX blue chips.

There are other LICs that focus on small caps and can be quite volatile like WAM Microcap Limited (ASX: WMI).

Plenty of LICs offer pretty good dividend yields, but some offer even bigger yields than most:

WAM Leaders Ltd (ASX: WLE)

WAM Leaders is a LIC operated by Wilson Asset Management (WAM). The lead portfolio manager of WAM Leaders is Matthew Haupt who has managed the portfolio of large caps over the past few years.

On the dividend side of things it has a high dividend yield of 8.1%, grossed-up, at the current WAM Leaders share price. That yield includes the forward dividend guidance of a 3.5 cents per share payment.

At 31 August 2020 the LIC’s had delivered a gross return (before fees, expenses and taxes) of 10.6% per annum since May 2016, outperforming the S&P/ASX 200 Accumulation Index by 3.5% per annum. That’s solid outperformance. Over the prior 12 months its gross outperformance had been 10.7%.

It’s this strong level of performance (and outperformance) that allows the LIC to pay a solid dividend.

Large caps are generally seen as safer and more stable, which allows WAM Leaders to invest confidently. While many large cap ASX shares cut their dividends because of the pandemic, WAM Leaders has been able to still grow its dividend.

Naos Emerging Opportunities Company Ltd (ASX: NCC)

This LIC has a very high dividend yield. When grossed-up, it offers a yield of 10.5% at the current Naos Emerging Opportunities share price.

It aims to invest in small cap ASX shares with market capitalisations under $250 million. Many investors don’t venture into that area of the market, so there can be some exciting opportunities to be found at good prices.

Some of its current investments include Experience Co Ltd (ASX: EXP), Saunders International Ltd (ASX: SND) and Contango Asset Management Ltd (ASX: CGA).

Industrial small cap shares have found things tough in 2020 with the impacts of COVID-19. However, despite that, Naos Emerging Opportunities can still point to an average return per annum of 10.1% (after expenses but before fees) since inception in February 2013.

The high dividend yield seems fairly safe for the next few years as the LIC has maintained of grown its dividend very year since FY13. It has a profit reserve of 32.7 cents per share, which amounts to about four years at the current dividend level.

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is the final LIC in this article. It has increased its dividend each year over the past five years, including through this difficult COVID-19 pandemic period.

There are two main things to know about Future Generation. It donates 1% of its net assets to youth charities, which is particularly useful in this COVID-19 era.

Future Generation offers excellent diversification because it’s invested in around 20 funds of different Australian fund managers who work for free. Each of those portfolios probably represents at least 10 holdings. So there are lots of underlying shares for good diversification. 

Future Generation has a fairly high dividend yield, it has a grossed-up yield of 6.6%.

The LIC has delivered outperformance compared to the S&P/ASX All Ordinaries Accumulation Index. Over the past three years Future Generation’s gross portfolio return has beaten the index by an average of 2.1% per annum.

Foolish takeaway

All three of these LICs offer high dividend yields, which is nice for income investors. I’d be happy to buy all three at the current prices, though I think I’d prefer Future Generation because of the attractive net tangible asset (NTA) discount of around 11%.

More reading

• 3 star ASX income shares for 2021
• How to generate $1,000 a month in dividends
• Give yourself a payrise, buy these 3 ASX dividend shares
• ASX dividend share WAM Leaders (ASX:WLE) flags dividend boost
• 2 ASX shares perfect for beginners in 2020

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and WAM MICRO FPO. The Motley Fool Australia owns shares of EXPERNCECO FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Premier Investments Limited (ASX: PMV) share price will be one to watch this morning following the release of its full year results for FY 2020.

How did Premier Investments perform in FY 2020?

For the 12 months ended 25 July 2020, the retail conglomerate posted a 2.1% decline in revenue to $1.25 billion.

This was due largely to store closures during the pandemic and offset slightly by a 48.8% jump in online sales to a record of $220.4 million. The Peter Alexander brand also delivered record sales, up 16.3% to $288.2 million for the year.

It was thanks partly to its higher margin online sales that Premier Investments was able to grow its earnings strongly during the 12 months despite its overall sales decline. The company recorded an impressive 29% increase in net profit after tax to $137.75 million.

This allowed the board to declare a fully franked final dividend of 36 cents per share, down slightly from 37 cents per share a year earlier. However, this brought its full year dividend to 70 cents per share, which was flat year on year.

Wage subsidies.

Premier Investments advised that it became eligible for $68.7 million of global wage subsidies across seven countries during FY 2020, of which $49 million was received as of 25 July 2020.

Of the total amount, $35.5 million was passed directly through to eligible employees unable to work.

Circling back to its dividend, the Premier Investments board revealed that it considered the impact of wage subsidies on its profit and cash position. However, it determined that the net global government subsidies received were not required for the payment of the final dividend.

Smiggle closures.

Management notes that the impact of COVID-19 was particularly severe on the Smiggle business.

In light of this and to ensure Smiggle is best placed to rebound and grow post-COVID-19, management is making some big changes.

It intends to close the final four Smiggle stores in Hong Kong by the end of October. Up to 55 Smiggle stores out of 131 in the UK will be closed this financial year. Management intends to impair 100% of its UK assets, as well as those in Hong Kong, Singapore, Malaysia, and Ireland.

It will now focus on investing in Smiggle’s highly profitable global online presence.

Outlook.

Due to the uncertain economic environment, no guidance was given for the year ahead.

However, management believes the company is extremely well placed. This is thanks to its seven strong brands, fully integrated and highly profitable online channel, strong balance sheet, and high calibre board and management team.

More reading

• 5 things to watch on the ASX 200 on Friday
• The next ASX stock to be rocked by board shakeup after Rio Tinto (ASX:RIO)
• The 3 best ASX shares to buy before October
• 5 things to watch on the ASX 200 next week
• Is another stock market crash coming?

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

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The best thing I like about index-tracking exchange-traded funds (ETFs) is how ultra-cheap some of them are. An ETF represents an avenue to a market-equaling return. Most of us ASX investors try and beat the market in any given year. But this is hard – and having ‘the market’ in your portfolio can help balance out your returns if your portfolio has a bad year.

But when it comes to choosing an index for this end, there are still many choices. We’ll go over an obvious one, and a not-so-obvious choice.

2 ultra-cheap ASX ETFs

BetaShares Australia 200 ETF (ASX: A200)

This ASX ETF from BetaShares tracks an index we’d all be reasonably familiar with – the S&P/ASX 200 Index (ASX: XJO). This index represents the largest 200 public companies in Australia. CSL Limited (ASX: CSL) is the top stock in this index, but the big four ASX banks like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW) are also large constituents.

I like A200 because it is the cheapest Aussie ETF on the ASX today (to my knowledge anyway) with an annual management fee of 0.07%. That works out to be a cost of just $7 a year for every $10,000 you have invested. Even the famous-for-low-fees Vanguard Group offering can’t compete, with the Vanguard Australian Shares Index ETF (ASX: VAS) charging 0.1% per annum. For a simple and cheap avenue to all of your favourite Aussie companies, you can’t go wrong with this ultra-cheap ETF.

Vanguard U.S. Total Market Shares Index ETF (ASX: VTS)

As the name implies, this ETF tracks an index that covers the entire US share market. Don’t mistake this for an S&P 500 index fund. Even though the S&P 500 is a far more popular index in the ETF world, it only covers a selected group of 500 companies, rather than the 3,525 companies that VTS holds.

However, its top holdings will look very similar. You have the big tech shares like Apple Inc (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT) dominating, along with other companies like Visa Inc (NYSE: V), Johnson & Johnson (NYSE: JNJ) and even Tesla Inc (NASDAQ: TSLA), which hasn’t yet made it to the S&P 500.

The US houses some of (if not most) of the best companies in the world, so I think getting some exposure is a great idea for any investor. VTS charges a minuscule management fee of just 0.03% per annum (or $3 a year for every $10,000 invested), which I believe makes VTS the cheapest ETF on the ASX. You could do a lot worse than this ETF as a passive investment.

Foolish takeaway

There are many ASX ETFs available, but these 2 choices are by far the cheapest offerings in their respective fields. Both cover well-known and familiar indices, and so I think wither would make a top choice for any investors’ portfolio today.

More reading

• 2 must buy ASX 200 shares to snap up right now
• Is the Transurban (ASX:TCL) share price a secret cash cow?
• Why the Telstra (ASX:TLS) share price could be under pressure in 2021
• 5 things to watch on the ASX 200 on Friday
• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%

Sebastian Bowen owns shares of Johnson & Johnson, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths Limited. 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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