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It has been another disappointing day of trade for the Telstra Corporation Ltd (ASX: TLS) share price on Thursday.

The telco giant’s shares have continued their decline and dropped 1.5% to a 52-week of $2.81.

This means the Telstra share price is now down almost 29% from its 52-week high.

Why is the Telstra share price at a 52-week low?

Investors have been selling Telstra’s shares since the release of its full year results in August.

While Telstra’s result was largely in line with expectations, its FY 2021 guidance was weaker than expected due to coronavirus impacts.

This spooked investors because, as it stands, Telstra’s guidance for the year ahead implies that a dividend cut will be necessary.

Some analysts have suggested 12 cents per share will be the dividend it pays in FY 2021, which has led to its shares falling accordingly.

Is this a buying opportunity?

I believe this is a fantastic buying opportunity and remain optimistic that a dividend cut will be avoid.

This could be achieved if Telstra changes its dividend policy from an earnings-based one to a free cash flow-based policy.

Last week, James Gerrish from Shaw and Partners explained on LiveWire Markets why he believes the company’s dividend can be sustained.

Mr Gerrish explained: “On an earnings basis, the 16c dividend is not sustainable given TLS will likely generate around 14c EPS in FY21 & FY22 before rising from there, however TLS have shifted their dividend focus to be more heavily aligned with free-cashflow (FCF). In terms of that number, which seems to now be the key for the dividend, it’s expected to be around 23c in FY21 & FY22 and rising from there.”

Clearly, with 23 cents per share of free cash flow expected in FY 2021, it would be more than enough to fund a 16 cents per share dividend.

Mr Gerrish added: “Given the rhetoric around free-cash-flow that we saw at the recent result, it seems likely that the market is too bearish on the sustainability of the TLS dividend given its being anchored to EPS, not FCF.”

I completely agree with this view and would be a buyer of Telstra’s shares ahead of rival TPG Telecom Ltd (ASX: TPG).

More reading

• Interest rates to stay low for years? Buy these ASX dividend shares
• 2 top ASX dividend shares I would buy for income this week
• 3 retirement myths you can’t afford to believe
• The best ASX blue chip shares to buy after the market selloff
• Are telco shares winners now that everyone’s staying home?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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.

The post Telstra (ASX:TLS) share price hits a 52-week low: Is this a buying opportunity for investors? appeared first on Motley Fool Australia.

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The Temple & Webster Group Ltd (ASX: TPW) share price has been on form again on Thursday.

In morning trade the online furniture and homewares retailer’s shares stormed almost 5% higher to a record high of $10.35.

Why did the Temple & Webster share price storm higher?

As well as getting a lift this week from news that fellow online retailer Kogan.com Ltd (ASX: KGN) continued its meteoric sales growth in August, Temple & Webster’s shares were given a boost today from a broker note out of Goldman Sachs.

According to the note, the broker has retained its buy rating and lifted its price target to $11.50 from $9.70.

This price target implies potential upside of over 16% from its last close price.

Why is Goldman Sachs bullish on the company?

Goldman Sachs has been looking at the ecommerce market and believes both Temple & Webster and Redbubble Ltd (ASX: RBL) are well-positioned for growth in the coming years.

Its analysts commented that both companies: “have some similar characteristics: strong market positions in their respective verticals, negative working capital beneficiaries, limited (TPW) to no (RBL) inventory risk, well-established supply and logistic networks accommodate the recent rapid acceleration in online commerce and large potential addressable markets.”

The broker believes that both companies will benefit for three key reasons.

It explained: “We believe both business will continue to benefit from structural tailwinds: (1) migration to online commerce, a trend we believe will continue unabated even as economies return to “normal” post-Covid, (2) strong market positions in their categories based on a multi-year lead they have against competitors that should be sustained provided they keep reinvesting in their business, and (3) growth to be materially greater than Australia GDP over our forecast period which should provide ongoing operating leverage.”

“These underpin the retention of our Buy rating on both stocks, noting we believe the potential long-term upside for RBL could be substantially greater if its execution becomes more consistent,” it concluded.

Goldman Sachs has a buy rating and $5.20 price target on Redbubble’s shares.

More reading

• Why De Grey, Scentre, Splitit, & Temple & Webster shares are pushing higher
• 3 ASX tech shares that are still in the buy zone
• Redbubble (ASX:RBL) and this ASX share have more than doubled in 2020
• 2 of the best ASX tech shares to buy and hold until 2025
• 3 ASX shares for beginners to 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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Splitit Ltd (ASX: SPT) share price is trading higher today as the company announced a partnership with competing buy now, pay later (BNPL) provider QuickFee Ltd (ASX: QFE). The Splitit share price is currently trading 0.97% higher at $1.56.

Meanwhile, QuickFee has entered a trading halt after announcing a $17.5 million capital raising to fund its ‘interest free’ partnership with Splitit.

Splitit is a somewhat unique play on BNPL, providing credit card based instalment solutions to businesses and retailers. Conversely, QuickFee offers a payment platform for professional services firms, allowing clients to pay by instalment while the firms receive payment in full. Hence, working in largely the same way as BNPL provider Afterpay Ltd (ASX: APT).

Splitit partners with QuickFee

The Splitit share price is moving higher as the company announced the QuickFee deal would enable the clients of accounting and law firms in the US and Australia to pay their fees on credit cards using Splitit’s instalment solution.

Splitit will be integrated directly to QuickFee’s payments portal, complementing the existing finance offering to clients and firms. Through the new product offering using Splitit technology, QuickFee has an opportunity to expand its customer base to include smaller firms that typically fall outside its credit risk framework. This could grow its addressable market for the new interest free product by 650,000 accounting and law firms in the US alone.

QuickFee share price halted

QuickFee has entered the strategic agreement with Splitit to expand its addressable market. QuickFee is funding the rollout through a placement to raise $15 million, and a share purchase plan that aims to raise a further $2.5 million.

The funds raised will substantially scale up the customer acquisition team, predominantly in the US, to fund the significant anticipated growth of the receivables book with the Splitit opportunity. There will also be money spent on research and development for future product releases.

The new interest free product broadens QuickFee’s product suite in line with the company’s strategy of becoming a market leader in the advice now, pay later market.

What now for the Splitit share price

At this point, it’s difficult for Splitit to determine the economic benefits of the QuickFee partnership due to the contingent nature of results. As such, we can assume the move is an effort to catch up and potentially differentiate itself from BNPL giants Afterpay and Zip Co Ltd (ASX: Z1P). The Splitit share price has been on a tear this year, gaining more 130%, driven by huge revenue growth.

More reading

• Why City Chic, Fortescue, Nearmap, & Zip shares are dropping lower today
• ASX 200 down 0.8%: Fortescue (ASX:FMG) tumbles, Afterpay (ASX:APT) sinks lower
• Why De Grey, Scentre, Splitit, & Temple & Webster shares are pushing higher
• Is the Openpay (ASX:OPY) share price a bargain?
• 5 things to watch on the ASX 200 on Thursday

Daniel Ewing 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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Before 2020, infrastructure investments were all the rage for ASX dividend investors.

Cast your mind back to 2019 and interest rates were being dropped to (what was then) record lows. The ASX was exploding, partly as a result. Investors were beginning to gobble up dividend-paying ASX shares in an attempt to replace the government bonds and term deposits that were quickly becoming impotent as true, inflation-beating investments.

And among the favourite dividend shares being gobbled up were infrastructure companies. These companies were some of the ‘safest’ dividend shares on the market, or so many investors believed. As such, these were the shares in the hottest demand from dividend investors. These investors believed the kinds of cash flows these companies offered were far more robust than other ASX dividend shares like Commonwealth Bank of Australia (ASX: CBA). From end to end in 2019, Transurban Group (ASX: TCL) shares rose roughly 30%, as did Sydney Airport Holdings Pty Ltd‘s (ASX: SYD).

What kind of world would we live in where people weren’t using Transurban’s tolled-roads, or flying in and out of Sydney Airport, investors might have asked. I wrote an article back then describing how many investors saw these companies as ‘bond proxies’, or companies with dividends so safe they could be treated as a fixed-income investment.

Well, 2020 has given that answer and broken this thesis in the most brutal of fashions.

Dividend heroes to zeroes

The coronavirus pandemic has comprehensively destroyed the notion that any company’s dividend can be regarded as ‘safe’ or bond-like. Transurban has been forced to slash its dividend payouts in 2020. Sydney Airport has cancelled its interim dividend entirely.

But that in turn begs the question: what role can infrastructure shares play at all in a 2020 dividend portfolio? After all, it’s not just Transurban and Sydney Airport that have cut their dividend in 2020. A range of other former ASX dividend heavyweights have also slashed shareholders’ payouts (as I alluded to earlier). That includes all four of the major ASX banks, Ramsay Health Care Limited (ASX: RHC), Woolworths Group Ltd (ASX: WOW), BHP Group Ltd (ASX: BHP) and Woodside Petroleum Limited (ASX: WPL).

So it’s not like infrastructure shares are alone in this conundrum. Still, investors have always been attracted to infrastructure companies because of the dividend safety discussed earlier, as well as the perception of these companies owning ‘real assets’ that offer additional perks like inflation-hedging.

Holding infrastructure investment shares in 2020

So what place do infrastructure investments have in a 2020 portfolio? Well, I think there’s still merit in this area for a post-COVID world. Although many infrastructure companies have been buckling under the pandemic, others have been doing just fine. Gas pipeline owner APA Group (ASX: APA) is one such example. It has managed to deliver to its investors a dividend increase this year. That’s not a feat many other companies can boast of.

If you’d like a well-rounded portfolio of infrastructure shares instead of trying to pick one or two winners, there’s a couple of solutions. The Vanguard Global Infrastructure Index ETF (ASX: VBLD) is one such option. It’s an exchange-traded fund (ETF) that holds 139 infrastructure shares from around the world. It offers a trailing dividend yield of 3.37% on current pricing and holds energy retailers, railroad companies, airports, and ports, among others.

The Magellan Infrastructure Fund (ASX: MICH) is another option. It’s an actively managed fund that holds between 20 to 40 shares and offers a trailing yield of 4.19%.

If it’s infrastructure investment you want, either of these funds would make a nice, balanced option, in my view.

More reading

• 3 retirement myths you can’t afford to believe
• The ASX shares set to gain from government’s gas-led recovery
• 5 things to watch on the ASX 200 on Wednesday
• Is the Sydney Airport (ASX:SYD) share price a cheap buy?
• 5 things to watch on the ASX 200 next week

Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia owns shares of APA Group, Transurban Group, and Woolworths Limited. The Motley Fool Australia has recommended Magellan Infrastructure Fund and Ramsay Health Care 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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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. At the time of writing the benchmark index is down 0.95% to 5,898.9 points.

Four ASX shares that have fallen more than most today are listed below. Here’s why they are dropping notably lower:

The City Chic Collective Ltd (ASX: CCX) share price has dropped 7% lower to $3.15. Investors have been selling the fashion retailer’s shares after it was unsuccessful acquiring the ecommerce assets of US-based plus-size retailer Catherines. These assets were being sold off following the bankruptcy of Ascena Retail Group. City Chic was in pole position to acquire the assets but was ultimately outbid.

The Fortescue Metals Group Limited (ASX: FMG) share price has sunk almost 6% lower to $16.33. The catalyst for this was a pullback in the iron ore price overnight. According to CommSec, the spot iron ore price fell 3.4% to US$124.20 a tonne on Wednesday night. In addition to this, a broker downgrade by Morgan Stanley last week is being covered in the media today and could be weighing on sentiment.

The Nearmap Ltd (ASX: NEA) share price has dropped 3.5% lower to $2.38. As well as being caught up in general tech sector weakness, this morning the aerial imagery technology and location data company announced the opening on its share purchase plan. Nearmap is aiming to raise $20 million at the lower of the institutional placement price of $2.77 or a 2.5% discount to the five-day volume weighted average price on 5 October.

The Zip Co Ltd (ASX: Z1P) share price has fallen over 5% to $6.10. Investors have been selling Zip and other tech shares today after the Nasdaq rebound ran out of steam overnight. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is down a disappointing 1.7%.

More reading

• 3 ASX growth shares I’d buy right now
• Why the Splitit (ASX:SPT) share price is on the move today
• ASX 200 down 0.8%: Fortescue (ASX:FMG) tumbles, Afterpay (ASX:APT) sinks lower
• Why the Fortescue (ASX:FMG) share price is underperforming its peers today
• 3 ASX tech shares that are still in the buy zone

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

The post Why City Chic, Fortescue, Nearmap, & Zip shares are dropping lower today 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.

After reviewing the adverse event that caused AstraZeneca plc (NYSE: AZN) to pause the clinical trials of its coronavirus vaccine, AZD1222, an independent review determined there’s nothing to worry about.

Or at the very least, there’s not enough evidence to determine whether there is something to worry about.

“After independent review, these illnesses were either considered unlikely to be associated with the vaccine or there was insufficient evidence to say for certain that the illnesses were or were not related to the vaccine,” the clinical trial organizers for the phase 2/3 U.K. clinical trial wrote in the participant-information sheet, which was updated on Friday.

The volunteers developed “unexplained neurological symptoms including changed sensation or limb weakness,” which is a little more descriptive than simply calling it an “unexplained illness,” as AstraZeneca did when it acknowledged that the clinical trials had been paused last week.

The U.K. clinical trials testing AZD1222 have restarted, but the 30,000-participant U.S.-based clinical trial remains on hold while the drugmaker waits for the monitoring committee for that study to sign off on restarting the study.

During its investor-day presentation yesterday, Pfizer Inc. (NYSE: PFE) said that there hadn’t been any pauses in the clinical trials of its coronavirus vaccine, BNT162b2, which it is developing with BioNTech SE (NASDAQ: BNTX). Pfizer continuously monitors the safety data, and an independent data-monitoring committee (DMC) reviews the data weekly. Pfizer isn’t privy to whether adverse events are in patients given the active vaccine or placebo, but the DMC gets unblinded data, so they can eliminate adverse events in patients receiving placebo as obviously not caused by the active vaccine.

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

More reading

• AstraZeneca resumes UK clinical trials of its coronavirus vaccine after a safety pause
• Pfizer says it could know if its COVID-19 vaccine candidate works in October
• The surefire vaccine winner following AstraZeneca’s COVID-19 trial pause
• What if more than one company wins the coronavirus vaccine race?
• Coronavirus vaccine race: 7 key things you’ll want to know

Brian Orelli, PhD and 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 Coronavirus vaccine trial adverse event was probably unrelated to treatment appeared first on Motley Fool Australia.

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

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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.

After reviewing the adverse event that caused AstraZeneca plc (NYSE: AZN) to pause the clinical trials of its coronavirus vaccine, AZD1222, an independent review determined there’s nothing to worry about.

Or at the very least, there’s not enough evidence to determine whether there is something to worry about.

“After independent review, these illnesses were either considered unlikely to be associated with the vaccine or there was insufficient evidence to say for certain that the illnesses were or were not related to the vaccine,” the clinical trial organizers for the phase 2/3 U.K. clinical trial wrote in the participant-information sheet, which was updated on Friday.

The volunteers developed “unexplained neurological symptoms including changed sensation or limb weakness,” which is a little more descriptive than simply calling it an “unexplained illness,” as AstraZeneca did when it acknowledged that the clinical trials had been paused last week.

The U.K. clinical trials testing AZD1222 have restarted, but the 30,000-participant U.S.-based clinical trial remains on hold while the drugmaker waits for the monitoring committee for that study to sign off on restarting the study.

During its investor-day presentation yesterday, Pfizer Inc. (NYSE: PFE) said that there hadn’t been any pauses in the clinical trials of its coronavirus vaccine, BNT162b2, which it is developing with BioNTech SE (NASDAQ: BNTX). Pfizer continuously monitors the safety data, and an independent data-monitoring committee (DMC) reviews the data weekly. Pfizer isn’t privy to whether adverse events are in patients given the active vaccine or placebo, but the DMC gets unblinded data, so they can eliminate adverse events in patients receiving placebo as obviously not caused by the active vaccine.

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

More reading

• AstraZeneca resumes UK clinical trials of its coronavirus vaccine after a safety pause
• Pfizer says it could know if its COVID-19 vaccine candidate works in October
• The surefire vaccine winner following AstraZeneca’s COVID-19 trial pause
• What if more than one company wins the coronavirus vaccine race?
• Coronavirus vaccine race: 7 key things you’ll want to know

Brian Orelli, PhD and 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 Coronavirus vaccine trial adverse event was probably unrelated to treatment appeared first on Motley Fool Australia.

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

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Yesterday, overnight Aussie time, the United States Federal Open Market Committee locked in investors’ long-term relationship with TINA.

If you’re not familiar with the acronym, it stands for ‘there is no alternative’. Meaning with interest rates effectively zero, investors seeking returns have little choice but to invest in shares.

The Fed said it “expects to maintain an accommodative stance of monetary policy” until the US reaches established inflation levels of 2% and maximum employment. This likely means near zero rates until at least 2023. And where the Fed leads, most other major central banks across the world will follow.

The reaction in US markets was mixed, with the Dow Jones Industrial Average Index (DJX: .DJI) edging higher while the Nasdaq Composite (NASDAQ: .IXIC) lost 1.3%. But the mid and longer-term implications of years of record low rates and trillions of dollars more in quantitative easing (QE) from the US Fed and other central banks signal strong tailwinds for share prices.

But haven’t share markets been selling off?

With that said, share markets never march higher in a straight line. After racing up at record paces since the mid-March troughs, US and Aussie markets have given back some of those share price gains in recent weeks as investors take the opportunity to pocket some profits.

That’s seen the S&P 500 Index (SP: .INX) fall 5.5% from its 2 September all-time highs.

The S&P/ASX 200 Index (ASX: XJO), still nearly 18% below its own all-time highs set in February, is down more than 4.0% since 19 August.

Now it’s certainly possible share prices could fall further from here in the short term. In fact, strategists at JPMorgan Chase & Co. point out that a pending US$200 billion (AU$270 billion) share sale by pension and sovereign wealth funds could drag shares lower.

However, as Bloomberg reports, JP Morgan’s strategists remain optimistic, believing any short-term retracements present buying opportunities:

For the medium to long term, we still see plenty of upside given still low overall equity positioning. A retreat in equity and risk markets over the coming weeks would likely represent a buying opportunity.

Strategists at Goldman Sachs concur, forecasting that the recent pullback in share prices is near its end.

Goldman’s strategists wrote (as quoted by Bloomberg):

Despite the sharp sell-off in the past week, we remain optimistic about the path of the U.S. equity market in coming months. Since the financial crisis, the typical S&P 500 pullback of 5% or more has lasted for 20 trading days and extended by 7% from peak to trough, matching the magnitude of the most recent pullback if not the speed.

But with technology shares having led the rally higher, and currently leading the markets lower, are the tech share price gains over?

The strong get stronger

If you’ve even glanced at the financial news in the past months, you’ll know technology shares have been rocketing higher at a blistering pace. And that they’ve been giving some of those gains back in the past weeks.

The tech-heavy Nasdaq is down 8.3% since 2 September, more than twice as much as the Dow Jones. And the S&P/ASX All Technology Index (ASX: XTX) — which tracks 50 of Australia’s leading and emerging technology companies — is down 8.4% since 25 August.

While no one likes to catch a falling knife, Hyperion Asset Management Chairman, Tim Samway, remains highly bullish on the big tech shares.

As the Australian Financial Review reports, Samway says record low interest rates have hidden the impact of slow global growth on many other businesses since the GFC. “You have 10 years post the GFC where average businesses have struggled. The bad news is there is no joy in sight for those businesses.’

However, Samway adds:

Modern information driven businesses not reliant on GDP growth are either expanding their addressable markets, taking market share or doing both. The strongest platforms with global scale win most customers and disrupt the old world regional competitors. The strong get stronger in an internet enabled globalised world.

One of the tech shares Samway is bullish on is Amazon.com, Inc. (NASDAQ: AMZN).

The Amazon share price is up 64% so far in 2020, but he believes it could far higher, pointing out the e-commerce in China accounts for more than twice the market share it does in the United States. “You can draw your own conclusion about how far Amazon’s market share could rise from here. The number is substantial.”

3 ASX shares to ride the technology wave

If you’re looking for exposure to the biggest US technology shares, the Betashares Nasdaq 100 ETF (ASX: NDQ) holds the largest non-financial 100 companies listed on the Nasdaq. I won’t run through its holdings, but the top 10 are all household names. The ETF is down 9% since 3 September. Year to date, the NDQ share price is up 20%.

Of course, there are some great tech shares trading on the ASX as well. One way to get exposure to some of Australia’s largest and most innovative tech companies with a single investment is through the Betashares S&P/ASX Australian Technology ETF (ASX: ATEC).

ATEC only began trading on the ASX on 4 March and by 23 March, the share price was down 34%. Ouch!

But investors who held on were amply rewarded. The share price then leapt 109% to its record high on 25 August. Since 25 August, the ATEC share price is down 8%.

Finally, if you’re looking to invest in a single share, and not a whole basket, there’s online retail darling Kogan.com Ltd (ASX: KGN). The Kogan share price hit an all-time high on 18 August, up 208% in 2020. Since that high, the share price is down 10%.

But the Motley Fool’s own Scott Phillips isn’t dissuaded by these short-term pullbacks.

Scott first recommended Kogan in his investment advisory service, Share Advisor, on 28 September 2017. Members who followed Scott’s advice and held onto their shares are currently sitting on gains of 434%.

And, in case you’re wondering, Scott still has a buy recommendation on Kogan shares.

More reading

• Better buy: Amazon vs Netflix
• The Kogan (ASX:KGN) share price is up 180% in 2020: Is it still a buy?
• Buy BetaShares NASDAQ 100 ETF (ASX:NDQ) and these outstanding ETFs today
• Kogan (ASX:KGN) share price rises 9% on trading update
• Amazon’s Luxury Stores just dealt another blow to department stores

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and Kogan.com ltd and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon, BETANASDAQ ETF UNITS, and Kogan.com 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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Everyone loves a good underdog story and the underperforming Worley Ltd (ASX: WOR) share price could prove to be a rewarding one to watch.

Shares in the engineering contractor have slumped 38% since the start of 2020 when the S&P/ASX 200 Index (Index:^AXJO) shed around 11%.

Worley isn’t alone. Its peers have also been big laggards. The Downer EDI Limited (ASX: DOW) share price lost close to half its value while the Monadelphous Group Limited (ASX: MND) share price gave up a third of its market weight.

Downer and Worley share prices are post pandemic outperformers

But if history is any guide, at least two of these ASX stocks will outperform in the post COVID-19 world, according to Macquarie Group Ltd (ASX: MQG).

“The Contractors sector has underperformed ASX200 by 26ppt [percentage points] since the start of COVID 19 earlier in the year,” said the broker.

“Interestingly, DOW and WOR both significantly outperformed post containment of SARS back in 2003.”

Downer share price too heavily discounted

What could also help is how cheap the Downer share price is looking. The stock is trading on a FY21 price-earnings of 11.1 times, which is below the broader market and its own historical level.

Its reasonably bright outlook doesn’t support the big discount either. Around 70% of its customers are government departments and its transformation into a lower-risk services business is progressing well.

Multiple catalysts in FY21

Further, there are a few FY21 catalysts that could trigger a re-rating in the stock. The group is looking to sell its mining and laundry services businesses, and any progress on that front will be welcomed by the market.

Downer is also well placed to grow earnings this financial year. We might start to see evidence of higher earnings and stronger cash conversion at the next reporting season.

Macquarie rates the stock as “outperform” with a 12-month price target of $5.29 a share.

Top pick in the sector

However, the broker’s top pick for the sector is the Worley. The group posted a better than expected profit result last month but has little to show for the effort in terms of share price performance.

“WOR has acted quickly to manage costs and utilisation and has good leverage to expected medium term recovery in key end-markets,” said Macquarie.

“Our latest summation of global oil & gas capex budgets for 2020 shows -24% on pcp and +6% in 2021.

“Hence we are moving through the worst of capex cuts this year with modest improvement expected in CY21.”

The broker is recommending Worley as “outperform” with a price target of $13.46 a share.

More reading

• Why the Fortescue (ASX:FMG) share price is underperforming its peers today
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises 1%, SEEK (ASX:SEK) jumps 9%
• Meet the ASX sector that is cum-consensus upgrade for FY21
• SEEK (ASX:SEK) shares surge 9% today. Here’s why.

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited and WorleyParsons Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) is dropping lower and giving back much of yesterday’s gains.  The benchmark index is currently down 0.8% to 5,909 points.

Here’s what is happening on the market today:

Fortescue shares tumble on iron ore price pullback.

The Fortescue Metals Group Limited (ASX: FMG) share price has come under pressure on Thursday after a pullback in the iron ore price overnight. According to CommSec, the spot iron ore price fell 3.4% to US$124.20 a tonne on Thursday night. The Rio Tinto Limited (ASX: RIO) share price has dropped lower with Fortescue today.

Tech shares run out of steam.

The tech rebound has run out of steam on Thursday, with the likes of Afterpay Ltd (ASX: APT) and Nearmap Ltd (ASX: NEA) both dropping notably lower. This follows a pullback on the technology-focused Nasdaq index overnight. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is down 1.7%.

Big four banks largely positive.

The big four banks are fighting hard to get the ASX 200 into positive territory. Three of the big four banks are pushing higher at lunch. The best performer in the group is the National Australia Bank Ltd (ASX: NAB) share price with a gain of 0.8%. The only one not pushing higher today is the Commonwealth Bank of Australia (ASX: CBA) share price. It is down 0.3% at the time of writing.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Thursday has been the Scentre Group (ASX: SCG) share price with a 4% gain. This follows the announcement of a US$3 billion (A$4.1 billion) subordinated hybrid note issue in the United States market. The worst performer has been the Mineral Resources Limited (ASX: MIN) share price with a 7% decline following the iron ore price pullback. In addition to this, last week Morgan Stanley downgraded the company’s shares to an underweight rating.

More reading

• Why De Grey, Scentre, Splitit, & Temple & Webster shares are pushing higher
• Why the Fortescue (ASX:FMG) share price is underperforming its peers today
• Is the Openpay (ASX:OPY) share price a bargain?
• 5 things to watch on the ASX 200 on Thursday
• 3 ASX shares I wouldn’t touch with a 10-foot pole

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. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nearmap 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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