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The PointsBet Holdings Ltd (ASX: PBH) share price has cooled down to a 50% increase since its game changing partnership with NBCUniversal. Has the market already priced in the company’s potential or is there still an opportunity to hop onboard the PointsBet share price? 

PointsBet front and centre 

PointsBet is partnering with one of the most iconic and trusted media brands in the United States with the largest sports audience. Its broadcast network reaches all US TV households and its regional sports networks are well positioned in legalised sports betting markets. The partnership will involve US$393 million marketing spend from PointsBet in progressively increasing amounts over the 5-year media partnership. NBC will also receive incentives for customer referrals and issued skin in the game with a 4.9% interest stake in PointsBet. The partnership, marketing spend and interest stake value the deal at nearly US$500 million. 

Is the PointsBet share price valuation an issue? 

The partnership has seen PointsBet balloon to a $1.8 billion valuation on just $75 million revenue in FY20. The revenue to market capitalisation valuation is similar to many buy now, pay later companies. Despite the ballooning valuation, I don’t see this as an issue. The PointsBet share price should continue to improve dependent on its ability to secure key sports betting access, partnerships and key performance milestones. Its recent capital raising places the company in a strong position to pursue growth opportunities and marketing spend to acquire customers and market share in the US. Conversely, the lack of announcements could see interest and sentiment drop for the PointsBet share price. Much like buy now, pay later companies that soared in July and August following announcements such as new SME credit products and expanding into new geographies, the recent lack of news has seen share prices come back to earth. 

A significant market opportunity 

The US sports betting market is a significant revenue opportunity. Investment banks Morgan Stanley and JPMorgan Chase & Co. have both estimated the potential combined online and retail sports betting market to be worth approximately US$12 billion by 2025. 

More recently, the state of New Jersey has seen a V-shaped recovery in sports betting turnover. The state set a new monthly record for any US jurisdiction permitting legal wagering with US$668 million of wagers in the month of August. This clears the previous record by more than US$100 million. From a bookmaker perspective, sportsbooks won US$39.5 million of the dollars wagered, or approximately 5.9% of turnover. 

Foolish takeaway

PointsBet is cashed up with a game changing partnership under its belt. This should see a significant improvement in its ability to acquire customers and gain market share in the US. The restart of major sports leagues in the US should see an improvement in market conditions and betting volumes. However, PointsBet will need to continue to step into new states to scale the opportunity at hand. The current volatility in the general market is a risk for the PointsBet share price, but I don’t see the company has being overvalued either. 

More reading

• PointsBet (ASX:PBH) share price higher on U.S. expansion news
• Should you buy the PointsBet (ASX:PBH) share price after its capital raising? 
• Why Accent, Afterpay, Nine, & PointsBet shares are dropping lower today
• Why the PointsBet (ASX:PBH) share price tumbled 21% lower today
• Top ASX growth shares to buy in September 2020

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

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In morning trade on Wednesday the PolyNovo Ltd (ASX: PNV) share price is pushing higher with the market.

At the time of writing the medical device company’s shares are up 1.5% to $2.22.

This latest gain means the PolyNovo share price is up a very solid 19% year to date despite the pandemic.

Why is the PolyNovo share price pushing higher today?

Investors have been buying the company’s shares this morning after it announced the appointment of a distributor in Finland.

According to the release, the company has appointed Helsinki based Innova Medical Oy to sell its NovoSorb Biodegradable Temporising Matrix (BTM) product in Finland.

NovoSorb BTM is a dermal scaffold for the regeneration of the dermis when lost through extensive surgery or burn. It can be used to temporarily close the wound and aid the body in generating new tissue.

In addition to the above, management advised that there have already been four surgical applications of NovoSorb BTM in the country with three surgeons on a chronic leg stump wound, burns, and also scar revision.

Positively, the surgeons have reportedly reached skin graft closure stage on two of these with excellent results to date.

The company’s Managing Director, Paul Brennan, was pleased with the news and expects it to boost sales in the continent in the near future.

He said, “The Innova Medical Oy team have been engaged with us for some time. The evaluation surgeries were completed with donated product, however we expect sales to commence shortly.”

What next for PolyNovo?

This could be the first of a number of similar agreements in Europe that underpin its growth in the region.

Mr Brennan explained that the company “expects to announce further European market entries in the near term.”

More reading

• Got $3,000? Buy these exciting ASX growth shares
• 2 exciting ASX healthcare shares to buy for the long term
• Are biotech shares like Polynovo (ASX:PNV) a better buy than Afterpay?
• Up 9.2% in 1 day, is the Clinuvel Pharmaceuticals (ASX:CUV) share price a buy?
• 2 exciting ASX growth shares to buy in September

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 POLYNOVO FPO. 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 an eventful year for the Zip Co Ltd (ASX: Z1P) share price.

The buy now pay later provider’s shares have been as low as $1.05 in March and as high as $10.64 in August.

Today they are trading in the middle of this range at $6.06.

Where next for the Zip share price?

Given its rollercoaster ride in 2020, investors will no doubt be trying to figure out where the Zip share price will be going next.

While I suspect that its shares could go notably higher from here if it continues its impressive growth in the coming quarters, I thought I would take a look to see what brokers are predicting.

The bulls.

There are a couple of brokers that are bullish on Zip and have positive ratings on its shares.

Ord Minnett has an accumulate rating and a $6.45 price target, whereas Morgans has an add rating and lofty $10.28 price target.

The latter price target implies potential upside of almost 70% over the next 12 months.

Its analysts are positive on its outlook thanks to its international expansion, the Zip Business launch, and its partnership with eBay Australia.

The bears.

The likes of Macquarie, Citi, and UBS all have the equivalents of sell ratings on the company’s shares at present.

Macquarie is the most bearish in the group with its underperform rating and $4.80 price target. This price target implies potential downside of almost 21% for the company’s shares.

Whereas UBS has a sell rating and $5.50 price target and Citi has a sell rating and $6.70 price target. The latter is now higher than where Zip’s shares are trading currently.

Should you invest?

While my preference remains Afterpay Ltd (ASX: APT) at current prices, I still think Zip would be a great long term option for investors.

As you can see from the varying opinions above, knowing where the Zip share price will go in the near term is highly unpredictable. However, over the long term, I’m confident it will be going notably higher from here.

This is thanks to its international expansion, new verticals, and the growing popularity of the payment method.

More reading

• Why the Xero (ASX:XRO) share price can hit $100 again in 2020
• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 2 stunning ASX growth shares to buy and hold
• 5 things to watch on the ASX 200 on Wednesday
• Is the Afterpay (ASX: APT) share price a buy? 

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Xero Limited (ASX: XRO) share price rocketed 4.4% higher in yesterday’s trade to lead the S&P/ASX 200 Index (ASX: XJO) winners list.

Why did the Xero share price surge?

There were no new announcements from the Aussie software company but that didn’t stop heavy buying by investors.

The latest surge comes amid a broader sell-off in technology shares, particularly in the US-based Nasdaq.

It’s been a tough few weeks for tech investors who have seen the likes of Xero and Afterpay Ltd (ASX: APT) track US tech stocks lower.

But it seems like the Xero share price has met some support in the market and bounced back strongly.

Will the ASX tech share again rocket past $100 per share?

I think the Xero share price could be on the move again in this morning’s trade. US tech stocks performed strongly overnight and the ASX 200 looks set to rise.

That’s good news for investors but I think the medium-term outlook also has a lot to like.

Xero has continued to acquire and retain customers despite the coronavirus pandemic. The company has a clear, steady expansion plan with a mix of organic and inorganic (i.e. from acquisitions) growth.

That could see the company take big strides towards achieving the growth that is promised by its current 4,417 price-to-earnings (P/E) ratio.

If the company can continue to grow while keeping customer churn numbers low, I think the Xero share price is a good chance to hit $100 per share again in 2020.

Foolish takeaway

ASX tech shares have been under pressure in recent weeks but we could be seeing a turning point.

The Xero share price doesn’t look cheap by any means but it could still be a good buy for growth. As of Tuesday’s close, the company’s shares are still well below their all-time high of $103.48 per share reached earlier this month.

I think the Aussie tech share is worth watching in early trade as the market looks set to rebound.

More reading

• Where next for the Zip (ASX:Z1P) share price?
• Correction or crash for ASX 200 shares?
• Is the Coles (ASX:COL) share price a buy after renewable energy deal?
• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 2 stunning ASX growth shares to buy and hold

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

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Benjamin Graham is not someone you hear being talked about with the same reverence as the legendary Warren Buffett. Yet Mr Graham is regarded as one of the greatest investors of all time, and the father of value investing. He was even Mr Buffett’s teacher and mentor for a time. Today, despite the fact Ben Graham died in 1976, Buffett still speaks very highly of him and cites his foundational work Security Analysis as one of the greatest books on investing ever written, even though it was penned back in 1934.

I have to admit, I haven’t read Security Analysis in full, although I have devoured a few of the seminal chapters.

A quote for the ages

But there is one of Benjamin Graham’s quotes that I think stands out above the rest. It’s a quote that I think all investors who want to build wealth through the share market should know, and even more importantly, understand. It goes like this:

The market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion. Hence the prices of common stocks are not carefully thought out computations, but the resultants of a welter of human reactions.

So perceptive was this quote, Buffett himself used a version of it in his 1993 letter to the shareholders of Berkshire Hathaway Inc (NYSE:BRK.A)(NYSE: BRK.B):

As Ben Graham said: ‘In the short-run, the market is a voting machine — reflecting a voter-registration test that requires only money, not intelligence or emotional stability — but in the long run, the market is a weighing machine.’

Ballots and scales

So what is it about this quote that makes it so helpful for ordinary investors like you or me? Well, I think the answer is perspective. It tells us what is happening on the markets on any given day — voting. It’s voting that has pushed up the Afterpay Ltd (ASX: APT) share price by 150% in 2020 so far. It’s voting that has condemned AMP Limited (ASX: AMP) to lose a third of its market capitalisation this year. And it’s voting that caused the American initial public offering (IPO) of Snowflake Inc (NYSE: SNOW) to spectacularly double last week. Over time, these moves will be ‘weighed’ by the market, and if they were based on fundamentals, the market will hold them true.

This quote helps us understand that it’s ok to ignore this ‘voting’ or noise and let the market do what it does best — weighing. As long as you buy good quality companies, and hang around long enough, the market will reward you for your patience. There might be some bumps, drops, corrections and crashes along the way. But if you make sound investing decisions and hold your nerve, Graham’s wisdom tells us things will normally work out in our favour. 

More reading

• Warren Buffett’s 3 best-performing stocks so far this year: Are they buys now?
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Aussies trading this US share 5700% more than Uber
• The Snowflake (NYSE:SNOW) share price is up 90% in two days
• Overwhelming demand made Warren Buffett-backed Snowflake the biggest software IPO ever

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 Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Snowflake Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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 Sezzle Inc (ASX: SZL) share price will be one to watch this morning after the release of an update.

What did Sezzle announce?

This morning the buy now pay later provider announced that it has formed a business partnership with Ally Lending.

It is the B2B2C lending arm of Ally Bank, the banking subsidiary of Ally Financial (NYSE: ALLY). Ally Financial is a leading digital financial services company with US$184.1 billion in assets.

Ally Lending enables monthly fixed-rate instalment-loan products that extend up to 60 months in length and US$40,000 per instalment plan through a fully digital application process.

What is the partnership?

According to the release, the partnership between Ally Lending and Sezzle will give Sezzle merchants and shoppers access to long term financing options.

Management believes this complements its existing short-term, interest-free offering, without adding any balance sheet impact to Sezzle.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, commented: “Our collaboration with Ally Lending enhances our customer financing offerings, making it possible for consumers to better manage their finances. Ally’s dedication to its customers and commitment to innovation aligns with our own vision and culture – making this partnership a good fit for us.”

Ally Lending’s President, Hans Zandhuis, was pleased with the partnership and appears confident it will help consumers and businesses through the tough economic environment.

Mr Zandhuis commented: “We empathize with the economic situation millions of Americans now face. We’re proud to partner with Sezzle to offer budget-friendly, responsible financing options, so consumers can feel more secure when making the purchases they need.”

With the Sezzle share price down 45% from the 52-week high it reached less than a month ago, investors will no doubt be hopeful this news is the catalyst to recovering some of these declines.

More reading

• The Sezzle (ASX:SZL) share price is up 15% this week
• How an ASX share turns $100 into $1,000
• Why the Sezzle share price is zooming 8% higher today
• BNPL shares like Afterpay (ASX:APT) and Zip (ASX:Z1P) are soaring today. Here’s why
• The Sezzle (ASX:SZL) share price has now fallen 45% in 2 weeks as air continues to go out of the BNPL sector

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Yesterday, the S&P/ASX 200 Index (ASX: XJO) made it 2 for 2 in terms of losses for this week so far, recording a 0.66% loss to end the day at 5,784 points. Since reaching a post-March high of 6,148 points on 10 June, the ASX 200 is now down 5.9% from those highs and at a 3-month low. If we keep going in this general direction, the ASX 200 might be looking at official ‘correction’ territory (a correction is normally defined as a 10% drop from the most recent high).

Things seem to be going that way too. The ASX 200 has been in a general downtrend for around a month now. The 6,000 point threshold that I previously described as a ‘rut’ the ASX 200 was stuck in has now been decisively broken. So, is this a healthy correction for ASX 200 shares, or might we be heading for a full-blown market crash (a fall of 20%+) and a new bear market?

ASX 200 shares: Correction or crash?

Corrections and crashes are rather nonsensical terms. It doesn’t really matter a whole lot to anyone if a ‘dip’ is 9.9% or 10%. Yet we give them different names anyway.

Regardless of the terminology, times like this can be scary for all of us investors. Seeing weeks or months worth of gains wiped out is never nice. It’s even less enjoyable to contemplate ASX 200 shares going back to anywhere near the levels they were in March and April.

Still, the moves we have been seeing recently were almost inevitable, in my view. The coronavirus pandemic is unfortunately still rampant, damaging confidence and running a wrecking ball through both the Australian and global economies. Budget deficits continue to climb to extraordinary and unprecedented levels, whilst the economic recovery in Australia is still struggling to get off the ground. We heard this week that Britain might be on the brink of going back into coronavirus lockdown, which has caused UK shares to plummet this week as well.

Add to that extraordinary tensions over in the United States leading up to November’s presidential election, exacerbated by the recent death of US Supreme Court Justice Ruth Bader Ginsburg, and we have a melting pot of uncertainty.

How to invest in this new world

So how does one possibly make long-term investments in this scary world right now? Well, I think the best path is to ignore the noise and focus on the companies you already own or plan to buy. It doesn’t mean much to Woolworths Group Ltd (ASX: WOW) for example, if the ASX 200 falls 1% on one day, what happens in Britain or how the US presidential election goes. If I owned Woolies shares, I would be thinking about how it plans to grow and thrive in a post-COVID world. Same for Afterpay Ltd (ASX: APT), Telstra Corporation Ltd (ASX: TLS) or any other company.

I’m still keeping more cash than usual around in case markets do happen to take a big tumble in the next few months. But I’m also trying not to let the noise of the markets get in the way of keeping the long term firmly in focus. That’s an attitude I think all ASX investors can employ as well, regardless of whether what we are seeing this week becomes a correction or a crash…. or not much at all.

More reading

• Why the Xero (ASX:XRO) share price can hit $100 again in 2020
• Is the Coles (ASX:COL) share price a buy after renewable energy deal?
• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 5 things to watch on the ASX 200 on Wednesday
• The next ASX stock to be rocked by board shakeup after Rio Tinto (ASX:RIO)

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Coles Group Ltd (ASX: COL) share price is one to watch after the Aussie supermarket group announced a new 10-year renewable energy deal.

What’s this renewable energy deal all about?

Coles has signed a new deal that will see more than 90% of its electricity needs in Queensland come from clean energy sources. The deal, announced with CleanCo yesterday, comes into play from July 2022.

Coles will purchase 400 gigawatt hours (GWh) of electricity generated from wind and solar farms across Queensland. That includes power from the Western Downs Green Power Hub which is set to become Australia’s largest solar farm once completed.

The announcement, made by Coles yesterday, will reduce Coles’ electricity carbon dioxide emissions nationally by an estimated 20%, or 240,000 tonnes per year.

Crucially, Coles’ involvement will also secure the development of these key energy projects and create 800 local jobs in Queensland.

This follows similar renewable energy commitments from rivals Woolworths Group Ltd (ASX: WOW) and Aldi.

Woolworths raised $400 million to install solar panels across its stores in 2019 with more than 140 stores getting their energy from those panels.

Aldi announced in August 2020 that it plans to use 100% renewable energy in its Australian operations by the end of 2021.

What does this mean for the Coles share price?

I think there are a couple of potential implications for the Coles share price.

For one thing, the Aussie company looks like a genuine environmental, sustainability and governance (ESG) investment. The more that Coles invests in renewable energy and cuts CO2 emissions, the more ESG investors could look to buy.

That would be a good thing for the Coles share price with more potential demand. There’s also the potential for the supermarket giant to slash its electricity costs and reduce operating expenses.

That could flow through to the company’s earnings and its bottom line. Higher net income could see higher earnings per share which is also a good thing for investors.

Foolish takeaway

Apart from being a great outcome for environmental reasons, yesterday’s announcement could have some important implications for the Coles share price.

More reading

• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 5 things to watch on the ASX 200 on Wednesday
• Forget term deposits and buy Coles (ASX:COL) and this ASX dividend share
• The next ASX stock to be rocked by board shakeup after Rio Tinto (ASX:RIO)
• ASX 200 falls 0.7%, UK and travel shares drop

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

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The Kathmandu Holdings Ltd (ASX: KMD) share price will be on watch this morning following the release of the retailer’s first full year results since its transformative acquisition of the Rip Curl business.

How did Kathmandu perform in FY 2020?

For the 12 months ending 31 July 2020, Kathmandu reported a 48.7% increase in sales to NZ$801.5 million. This was driven by a nine-month contribution from the Rip Curl business and strong online sales growth. The latter was up 63% over the 12 months to NZ$106.4 million.

Kathmandu’s sales would have been notably stronger had it not been for the coronavirus pandemic. Management estimates the COVID-19 impact to its sales to be ~NZ$135 million. This comprises NZ$80 million retail and NZ$55 million wholesale.

On an underlying basis, Kathmandu’s earnings before interest, tax, depreciation and amortisation (EBITDA) came in 15.3% lower to NZ$83.4 million. This excludes the impact of IFRS 16 and one-off transaction and abnormal costs.

Statutory net profit after tax was down sharply to NZ$8.9 million. However, this includes NZ$18 million of one-off transaction costs, NZ$4.6 million of restructuring costs, and a NZ$2.6 million impact from the implementation of the IFRS 16 leasing standard.

In light of this profit decline, the company will not be paying a final dividend.

“A transformational year.”

The company’s CEO, Xavier Simonet, notes that FY 2020 was a transformational year for Kathmandu.

He said: “It has been a transformational year for us with the acquisition of Rip Curl and we are pleased with its integration into the Group over the last nine months. Unfortunately the Group faced significant unexpected challenges with COVID-19 restrictions and lockdowns.”

“We took decisive action early to reduce costs, adjust the operating structure of the business, and raised $207 million of equity. These initiatives have resulted in a strong balance sheet and healthy inventory level, which position us well for the future,” he added.

Despite the challenges, Mr Simonet was pleased with the way the company was able to adjust to the new normal thanks to its omni-channel strategy.  

He explained: “Our omni-channel strategy and infrastructure capacity allowed us to rapidly scale up to meet the surge in online demand from March. In addition, following the easing of lockdown restrictions, we saw retail sales for Rip Curl and Kathmandu perform strongly in our core markets of Australasia, Europe and California, as consumers trended towards outdoor and recreation activities. Both Rip Curl and Kathmandu also enjoyed an exceptional post-lockdown winter sales performance in Australia and New Zealand.”

Outlook.

The company has had a mixed start to FY 2021 due to the COVID-19 pandemic.

Management advised that its performance has been impacted during the first seven weeks of FY 2021 due to Melbourne, Auckland, Hawaii, Bali, and airport store closures. This has led to a mixed same store sales performance over the period.

Though, it feels confident that demand will return to normal in these markets when stores reopen.

Mr Simonet commented: “Despite the challenges posed by COVID-19, the business remains strong financially and operationally. The balance sheet was significantly strengthened by the recent equity raise, our brands are well-positioned to capitalise on increased participation in outdoor, beach and surfing activities following the end of the lockdowns, and our investment into omni-channel capabilities allows us to quickly respond to shifts in consumer habits and strong growth in online demand.”

“Beyond the short-term impacts from lockdowns, our long-term strategy remains unchanged. Product innovation, brand differentiation, a key focus on sustainability, and a step change in digital transformation, will enable us to continue answering the needs of our customers and also inspiring them,” he concluded.

More reading

• Is the Coles (ASX:COL) share price a buy after renewable energy deal?
• 3 reasons I like the AGL Energy (ASX:AGL) share price today
• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 2 stunning ASX growth shares to buy and hold
• 4 ASX shares rated as strong buys by brokers

Motley Fool contributor James Mickleboro 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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AGL Energy Limited (ASX: AGL) shares have had a disappointing year. The AGL share price is down 32.9% this year and at a new 52-week low as the coronavirus pandemic has hammered industry revenues.

However, I still think the ASX energy share is in the buy zone at a certain price. Here are 3 reasons I like the AGL share price right now.

3 reasons I like the AGL share price

1. Non-cyclical earnings

One big reason I like ASX energy shares like AGL is for their non-cyclical earnings. Of course, times are tough right now but I see that as more of a function of pandemic restrictions than the business cycle.

Demand for energy is generally quite stable as households and businesses need to keep the lights on. It may be hard to see right now, but I like the AGL share price due to the non-cyclical earnings on offer.

2. Market position

AGL is one of the three big energy generators and retailers or ‘gentailers’ in Australia. The other two rivals are EnergyAustralia and Origin Energy Ltd (ASX: ORG).

These ‘big three’ hold immense market share and have historically controlled more than 60% of electricity generation capacity in New South Wales, South Australia and Victoria.

That means the AGL share price is underpinned by a very strong market position. Regulation is always a threat given the oligopoly-like market dynamics right now.

However, I think AGL will continue to be an industry leader. That puts it in a strong position to lead the charge on any changes like a push towards wind or solar.

3. Relative value

While on the subject of competitors, I like AGL based on its relative value.

The AGL share price currently trades at a price to earnings (P/E) ratio of 8.7x. That’s been pushed lower during the recent share price falls in 2020.

However, you’d expect to see the same across the board. That’s not entirely the case despite the Origin Energy share price falling 46.9% in 2020.

The Origin share price trades at a P/E ratio of 95.5x which could indicate that AGL is a good buy compared to its peers.

Foolish takeaway

The AGL share price has slumped lower and underperformed the S&P/ASX 200 Index (ASX: XJO) this year.

However, the ASX energy share could be moving into the buy zone in late 2020 after hitting a new 52-week low in yesterday’s trade.

More reading

• 5 ASX shares to avoid in October
• Why AGL Energy (ASX:AGL) and these ASX shares just hit new lows
• These were the worst performing ASX 200 shares last week
• 3 ASX shares that are trading at bargain prices
• Saudi oil price cut to hit ASX shares

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

The post 3 reasons I like the AGL Energy (ASX:AGL) share price today appeared first on Motley Fool Australia.

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