Tag: Motley Fool

“Is the party over for the rally in technology shares?” a friend asked me at a barbecue over the weekend.

Like most of my mates, he knows what I do for a living. And like most of my mates he brushes over my objections that my crystal ball is no more functional than his own.

Since his question didn’t relate to personal financial advice, for which I’m not licensed, but general advice, for which I am, I decided to take the bait.

“Not by a long shot,” I said, before hastily adding, “In my opinion.”

Yes, the S&P/ASX All Technology Index (ASX: XTX) – which tracks 50 of Australia’s leading and emerging technology shares – is down 11% from its August 25 record highs.

It’s a similar pattern with US technology shares, where the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX) is also down 11% from its peak. Though the Nasdaq didn’t hit its all-time highs until September 2. (Yes, it’s really been less than 2 weeks since share prices on the Nasdaq began to lose ground.)

But you have to bear in mind that both of these indexes are packed with tech shares that saw their share prices absolutely explode over the previous 6 months.

Keep these explosive share price gains in mind

On the Australian All Tech index, that includes shares like Nextdc Ltd (ASX: NXT) where the share price is up 66% since March 16, and WiseTech Global Ltd (ASX: WTC) share price, up 163% since March 19.

On the US Nasdaq we have, of course, the industry behemoth, Apple Inc. (NASDAQ: AAPL).  Apple’s share price has gained 100% since March 23.

With those kinds of gains on the recent scoreboard, it’s little surprise that the Nasdaq 100 is still up 58% since March 23. And the Aussie All Tech index, while slipping again today, is still up 92% from that same date.

It’s also little surprise then that a retracement was due. Some profit taking and short-term consolidation.

“But,” I told my mate as he helpfully topped up my wine, “all of the tailwinds that have sent tech shares rocketing higher since March are still in place.”

Effective vaccine or no, the trend of working, shopping and socialising from home has taken off. Society simply won’t go back to functioning in the same way we were in January. That will continue to drive more revenue to the well-placed technology players as the demand for their products and services accelerates.

Tech shares should also continue to benefit from the same tailwinds that have driven the broader All Ordinaries Index (ASX: XAO) to a 33% gain since 23 March. Specifically, unprecedented levels of government stimulus from developed nations the world over. And equally unprecedented low interest rates, with the Reserve Bank of New Zealand the latest to be considering negative rates in 2021.

“Okay,” my mate conceded. “But what if Australia’s relations with China keep going downhill?”

But what about China?

Ah. Now we were getting somewhere.

While trade remains robust with our largest trading partner, the financial headlines have been trumpeting China’s plummeting investment levels in Australia.

This headline, as one example, comes from this morning’s The Guardian, ‘Chinese investment in Australia plummets 47% in a year as diplomatic tensions rise’.

This is the third year running that Chinese investment into Australia has dropped. And, according to the article, China is pulling out of Oz faster than its other interests:

ANU’s Prof Peter Drysdale, who leads the Chinese investment in Australia (Chiia) database, a unique resource collating how much and where money is being spent, said Australia was experiencing much sharper falls in investment than the global trend.

Globally, Chinese investors spent 9.8% less, compared with 47% less in Australia over the same period.

Now, on the surface, you’d think that missing out on billions of dollars in Chinese investment money would put further pressure on ASX share prices.

But, according to Catapult Group International Ltd‘s (ASX: CAT) executive chairman Adir Shiffman, the opposite is true. At least when it comes to technology shares.

As the Australian Financial Review reports, Shiffman says technology shares will actually benefit from Australia’s geopolitical tensions with China. That’s because China’s economic sabre rattling has exposed just how reliant Australia is on China, particularly its large appetite for our raw materials.

Shiffman says:

The combination of COVID-19 bringing technology into sharper focus, combined with increased awareness of the perilous nature of our export mix is good timing for tech. Tech exports generate more money per unit of energy put into making them and the customer base is more diverse and includes customers that are strategically aligned like the US and Europe.

Of course, I didn’t have this quote at hand to deliver to my mate over the weekend barbecue. Nor could I tell him that Catapult’s share price was up 257% from its 25 March low.

But I did get him to reconsider sounding the death knell for ASX tech shares.

Indeed, in my opinion, the best is still ahead in this rapid growth sector.

More reading

• Did Apple and Tesla stock splits signal the stock market top?
• ASX 200 Weekly Wrap: ASX 200 hits 4 straight weeks of losses
• 3 five-star ASX stocks to buy right now
• 3 exotic ASX tech ETFs you might want to add to your portfolio today
• Brokers name 3 ASX shares to buy right now

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 Apple and Catapult Group International Ltd. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Apple and Catapult Group International 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 How the China rift could spur these ASX tech share prices to new records appeared first on Motley Fool Australia.

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I’m a big fan of A2 Milk Company Ltd (ASX: A2M) and believe it is a great long term option for investors.

However, I feel there are a few warning signs at present which indicate that the a2 Milk share price could underperform in the near term.

What are these warning signs?

Heavy insider selling.

The first warning sign to be aware of is the rampant insider selling that has been taking place in recent weeks. A large number of executives have been selling millions of dollars’ worth of shares. This includes its chairman, its CEO, its chief growth and brand officer, and its Asia Pacific chief executive. The latter offloaded over NZ$15 million of shares at the end of August.

Rising short interest.

Another warning sign is the company’s rising short interest. A growing number of short sellers are betting on the a2 Milk share price losing value in the near future. Over the last three months short interest has grown from 3.8% to 6.2%. This makes a2 Milk the 15th most shorted share on the Australian share market at present.

Inventory concerns.

A final warning sign is the company’s increasing inventory. At the end of FY 2020, a2 Milk reported a 36% increase in total inventories to NZ$147.3 million. As there are concerns that the panic buying from the pandemic may have brought forward sales from future periods, investors appear worried that the company will have excess stock on its hands. In fact, the company recently advised that it is seeing an unwind of third quarter pantry stocking in the early part of FY 2021.

What should investors do?

As I said at the start, I believe a2 Milk could be a great long term option. This is due to its popular brand, modest market share in China, and potential value accretive acquisitions thanks to its hefty cash balance.

But given the aforementioned warning signs, if you want to buy and hold its shares, I would suggest you consider buying half your desired holding now and then the other half when the current uncertainty eases.

More reading

• I’d buy A2 Milk (ASX:A2M) shares this week
• 3 ASX 200 shares I’d buy right now
• 3 ASX shares for beginners to buy
• Top brokers name 3 ASX shares to sell today
• Why you shouldn’t be concerned by the high PE multiples of ASX tech shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 warning signs for the a2 Milk (ASX:A2M) share price appeared first on Motley Fool Australia.

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The Austal Limited (ASX: ASB) share price is up 2.85% to $3.25 this morning after the Australian shipbuilder announced a new acquisition. Today’s Austal share price movement compares to the S&P/ASX 200 Index (ASX: XJO) which is also up 0.5% to 5,891 points at the time of writing.

Let’s take a look at Austal’s new purchase.

What’s the deal?

Austal has purchased Modern American Recycling and Repair Services of Alabama assets.  The new acquisition, from former owner World Marine of Alabama, includes a 20,000 ton ‘Pete B’ Panamax-class floating dry dock, 100,000 square feet of covered repair facilities and 15 acres of waterfront property along the Mobile River.

The purchase boosts Austal’s new construction and service strategy by securing launch and deep-water berthing capability to support future construction efforts. This will aid building new steel ships and increasing service and repair capacity. 

The acquisition of the assets is less than $10 million and will be funded by the company’s cash holdings. As at 30 June 2020, Austal cash on hand balance was at $272.4 million.

About Austal’s USA division

Austal USA is one of the largest shipbuilders in the United States, along with General Dynamics and Huntington Ingalls. Austal’s headquarters and manufacturing facility is located on 164 acres of land along the Mobile River.

Austal’s investment into its US operations seeks to increase the value of the target project by three-fold. It is estimated that new shipbuilding projects will be around $2 billion per year from 2022.

Is the Austal share price too cheap to ignore?

The Austal share price has fallen 14% since the start of the year, but recovered 42% since its March lows of $2.25. While the company is steering ahead in the right direction, I think it would be best to wait to see how Austal tracks with its shipbuilding projects. COVID-19 has already affected its commercial ferry market. As constructing new warships takes considerable manpower, I would be cautious in the changing climate.

More reading

• ASX 200 up 0.4%: Macquarie guidance disappoints, Cleanaway sinks on CEO behaviour reports
• Why now is a good time to buy ASX defence shares
• Is the Westpac share price still a buy for dividends?
• How to position your ASX share portfolio for a downturn
• The Boral (ASX:BLD) share price back in the M&A spotlight as Stokes buys another 45m shares

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

The post Why the Austal (ASX:ASB) share price is moving today appeared first on Motley Fool Australia.

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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) is on course to start the week on a positive note. The benchmark index is currently up 0.4% to 5,883.9 points.

Here’s what is happening on the market today:

Macquarie guidance disappoints.

The Macquarie Group Ltd (ASX: MQG) share price has come under pressure on Monday after the investment bank provided guidance for FY 2021. Macquarie revealed that the pandemic is weighing heavily on its performance and its profits are expected to be down materially this year. It expects to report a 35% decline in profit in the first half and then a 25% decline in the second half. I estimate this will mean a full year profit of $1,903 million, down 30.3% year on year.

Cleanaway CEO’s poor workplace behaviour.

The Cleanaway Waste Management Ltd (ASX: CWY) share price has tumbled lower today after reports of poor workplace behaviour by its CEO, Vik Bansal. This morning it responded to the reports, advising that it takes the allegations of misconduct in the workplace very seriously. As such it has undertaken an investigation and will now implement a range of measures. These include executive leadership mentoring, enhanced reporting, and monitoring of the CEO’s conduct. Mr Bansal has acknowledged that his behaviour should have been better. In a separate announcement, it advised of the surprise retirement of its chief financial officer, Brendan Gill.

Bank shares push higher.

The big four banks have started the week positively. All four banks are pushing higher and supporting the ASX 200 index. The best performer in the group has been the National Australia Bank Ltd (ASX: NAB) share price. NAB’s shares are up almost 1.2% at the time of writing.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Whitehaven Coal Ltd (ASX: WHC) share price with a 7% gain. This follows a rise in coal prices on Friday. The worst performer has been the Cleanaway share price following the aforementioned reports of poor workplace behaviour by its CEO.

More reading

• Why the Austal (ASX:ASB) share price is moving today
• Why Cleanaway, De Grey, Macquarie, & Zip shares are dropping lower
• Is the Westpac share price still a buy for dividends?
• How to position your ASX share portfolio for a downturn
• The Boral (ASX:BLD) share price back in the M&A spotlight as Stokes buys another 45m shares

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.

The post ASX 200 up 0.4%: Macquarie guidance disappoints, Cleanaway sinks on CEO behaviour reports 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.

Competition in the race for a coronavirus vaccine is hotter than ever, as a smattering of companies make steady headway through their clinical trials. Early leaders like Moderna (NASDAQ: MRNA) are facing new pressure from pharmaceutical giants such as Pfizer (NYSE: PFE) and AstraZeneca (NYSE: AZN) as the market recognises the increasing probability of multiple competing vaccine products by next year. At the same time, investors are carefully scrutinising the competitors to determine which will have the manufacturing and distribution capabilities that will be required to capture a significant portion of global demand. 

How can investors prepare for multiple companies to produce a successful coronavirus vaccine, given that it’s difficult to predict which efforts will succeed at all? Maintaining a diverse portfolio of the most promising contenders is one possible answer to this question, but it isn’t enough. Tossing vaccine developers’ stocks into a basket doesn’t account for the effect of competition on each company’s market share or its bottom line. Let’s envision a hypothetical situation in which two companies create an effective coronavirus vaccine to explore the effect of the competitive landscape.

Biotechs may be outmatched by pharmas

Let’s assume that one of two vaccine race winners is a biotech company along the lines of Moderna, and that the other company is akin to an established multinational pharmaceutical company like Pfizer. Let’s also assume that the smaller and leaner biotech company earns the appropriate regulatory approvals to sell its candidate two months before the pharma company as a result of initiating the development process slightly faster at the start of the pandemic. This is a reasonable assumption, as Moderna dosed its first clinical trial participant on March 16, whereas Pfizer and its collaborator BioNTech (NASDAQ: BNTX) didn’t start until more than a month later. Finally, let’s assume that the competing prophylactics are indistinguishable in terms of their safety, tolerability, and efficacy so that they’re easier to compare. 

Right off the bat, it’s obvious that the smaller company will struggle to manufacture enough doses to meet demand. Pfizer plans to produce at least 100 million doses this year, and around 1.3 billion doses of its inoculation using its manufacturing facilities by the end of next year if its candidate earns regulatory approval. Moderna, with minimal manufacturing capacity of its own, has initiated a slew of collaborations with larger companies that will only yield several hundred million doses in the same timeframe. Over the next decade, Moderna’s collaboration with Lonza (OTC: LZAGY) provisions for up to one billion doses per year, meaning that it will only match Pfizer’s output after a lengthy lag.

Biotech vaccine developers will also be at a major disadvantage when it comes to product distribution. Pfizer and other large pharma companies maintain relationships with hundreds of different distributors worldwide. This means that when customers, such as hospitals, seek to purchase the company’s vaccine, there is already a conduit in place that is able to facilitate the exchange. This conduit would reduce the amount of additional work and transaction costs required of the buyer and the seller alike. In contrast, many biotech companies like Moderna have no such infrastructure, so they’d need to build it from scratch to sell products at scale, incurring substantial costs and slowing vaccine deployment.

Plan your coronavirus portfolio accordingly

The implications of these disparities in manufacturing and distribution are difficult to overstate. In the first few years after safe and effective vaccines hit the market, larger competitors will be dominant simply because they won’t need to scale up their operations as aggressively or make as many new partnerships to match global demand.

At best, a company like Moderna would get a slice of the market early on. At worst, it might struggle to maintain its position in the face of a larger competitor flooding the market with a less expensive yet equally effective product. The fact that the smaller company had a head start or an abundance of government funding through Operation Warp Speed (OWS) for research and development doesn’t necessarily help it establish a massive foothold in the market.

If more than one company successfully produces a coronavirus vaccine, the next few years will probably be the most favorable for a company like Pfizer rather than one like Moderna. This isn’t to say that you should avoid including biotechs in your coronavirus portfolio because they’re too small to compete with the larger fish. Instead, it’s prudent to weigh your investments according to each company’s demonstrated ability and concrete plans to serve demand at a mass scale. Doing so will ensure that you’re less exposed to potential downsides from weaker-than-expected sales stemming from insufficient manufacturing output, while also leaving you exposed to the upside from successful vaccine deployment. If you’re lucky, you’ll have a handful of different winners in your back pocket.

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

More reading

• Coronavirus vaccine race: 7 key things you’ll want to know
• AstraZeneca coronavirus vaccine clinical trial paused
• How to invest in coronavirus vaccine stocks
• In the race for a coronavirus vaccine, can there be multiple winners?

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

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a solid gain. At the time of writing the benchmark index is up 0.5% to 5,890.5 points.

Four shares that have climbed more than most today are listed below. Here’s why they are pushing higher:

The Althea Group Holdings Ltd (ASX: AGH) share price has jumped 11% to 64.5 cents. Investors have been buying the cannabis company’s shares after it announced that its Canada-based Peak Processing Solutions business has obtained its Standard Processing Licence from Health Canada. Management notes that this is a major milestone and means that commercial operations can immediately commence in Canada.

The BrainChip Holdings Ltd (ASX: BRN) share price is up 2% to 66 cents. This morning BrainChip announced that it has validated the Akida Neuromorphic System-on-Chip (NSoC) design with functional silicon. The Akida NSoC is a complex integrated circuit that includes multiple interfaces, Data-to-Event Converters, a CPU complex, on-chip memory, and a neuron fabric to implement a complete neural network with no external components required.

The Rio Tinto Limited (ASX: RIO) share price is up a solid 3% to $103.05. As well as getting a boost from a rise in the iron ore price, this morning Macquarie reiterated its outperform rating and $114.00 price target on the mining giant’s shares. It notes that Rio Tinto is continuing to benefit from strong iron ore prices.

The Starpharma Holdings Limited (ASX: SPL) share price has stormed 7% higher to $1.71. This follows the release of an update on its antiviral nasal spray. According to the release, its SPL7013 spray is virucidal, inactivating more than 99.9% of SARS-CoV-2. This is the virus that causes COVID-19. In light of this, the company is now rapidly advancing development, regulatory, manufacturing, and commercialisation activities.

More reading

• Rio Tinto could pull a shock move to end crisis
• 3 booming ASX shares for the new space age
• BrainChip (ASX:BRN) share price rockets 24% higher on Akida update
• Turn $6k into $60k, a guide to growth investing
• ESG investing after the Rio (ASX:RIO) resignations

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 Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings 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 Why Althea, BrainChip, Rio Tinto, & Starpharma shares are pushing higher appeared first on Motley Fool Australia.

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Rio Tinto Limited (ASX: RIO) might have booted out its CEO and two other senior executives, but critics still hold concerns about its governance.

Shareholder anger over the destruction of Juukan Gorge in May forced the mining giant into Friday’s bloodletting after 3 weeks of defending its processes. 

The Gorge was a location of great historical and cultural value in Western Australia.

ACCR legal counsel James Fitzgerald told The Motley Fool that the sackings were “just the first step”. The chief of superannuation fund HESTA, Debby Blakey, is still calling for an independent review – as is the National Native Title Council.

But what can Rio Tinto tangibly do to fix its culture and satisfy investor fury?

Rio Tinto is considered an Anglo-Australian company, being listed both on the ASX and on the London exchange (Rio Tinto plc (LON: RIO)).

One theory is that, despite the majority of its profits coming out of Australia, the company is dominated by British executives at the highest level.

And those European executives aren’t as sensitive to the destruction of Australian properties considered important to the local population.

Business Council of Australia president Tim Reed had a simple solution to this problem.

“I do think that companies need to be in close contact with the communities that they are a part of and the communities that they serve,” he told Sky News on Sunday.

“If moving the headquarters from London back to Australia enables Rio to do that then given the majority of their activity is here, I think that could be a very positive thing for the company to look towards.”

‘Very regrettable’ situation at Rio Tinto

The Business Council represents some of the largest publicly listed companies in Australia, including Rio Tinto. But Reed was honest about the impact of the mining giant’s actions.

“I think the situation at Rio is very regrettable and let’s not lose sight of the real impact here which is on the local Indigenous communities who forever have lost a deep part of their heritage, and that’s a loss to all of us here in Australia.”

National Native Title Council chief executive Jamie Lowe said Indigenous communities are not anti-development.

“They just want to be able to protect their most significant cultural heritage sites.”

He said reforms were needed in the entire industry, not just Rio Tinto.

“We do fear that if this is the behaviour of a company thought to have sector-leading standards, what is the risk another Juukan Gorge-type incident will happen again, without sector-wide reforms?”

Rio Tinto needed to engage with local communities regardless of where they are in the world, according to Reed.

“They are a global business and it would be just as devastating if something like this were to happen in another country as well.”

Rio Tinto’s share price was up 3.39% in early trading Monday to hit $103.25 at 11.03 am.

More reading

• Why Althea, BrainChip, Rio Tinto, & Starpharma shares are pushing higher
• ESG investing after the Rio (ASX:RIO) resignations
• Rio’s CEO walks the plank…
• ASX 200 drops 0.8%, Nearmap (ASX:NEA) sinks
• ASX 200 down 0.95%: Rio Tinto (ASX:RIO) CEO exits, Nearmap (ASX:NEA) sinks lower

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

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The S&P/ASX 200 Index (ASX: XJO) has started the week in a positive fashion. In late morning trade the benchmark index is up 0.4% to 5,882.8 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Cleanaway Waste Management Ltd (ASX: CWY) share price is down 6.5% to $2.35. Investors have been selling the waste management company’s shares amid reports of poor workplace behaviour by its CEO, Vik Bansal. This morning it responded to the reports, advising that it takes the allegations of misconduct in the workplace very seriously. An investigation was conducted and Mr Bansal has acknowledged that his behaviour should have been better. In a separate announcement, it revealed the retirement of its chief financial officer, Brendan Gill.

The De Grey Mining Limited (ASX: DEG) share price has fallen 3% to $1.39. This morning the gold exploration company announced that it has received commitments for a placement of approximately 83.4 million shares priced at $1.20 per share to raise $100 million before costs. This placement price represents a sizeable 16.4% discount to the last close price. Managing Director, Glenn Jardine, commented: De Grey has never been better placed to achieve our goal of realising a Tier 1 gold project at Hemi.”

The Macquarie Group Ltd (ASX: MQG) share price is down 4% to $120.92. Investors have been selling the investment bank’s shares after it provided guidance for FY 2021. It expects to report a 35% decline in profit in the first half and then a 25% decline in the second half. I estimate that this will mean a full year profit of $1,903 million, down 30.3% year on year.

The Zip Co Ltd (ASX: Z1P) share price has continued its slide and is down almost 6% to $5.64. The buy now pay later provider’s shares have come under pressure this month amid concerns over increasing competition in the United States. This follows PayPal’s announcement of the impending launch of its Pay in 4 product.

More reading

• Why the De Grey Mining (ASX:DEG) share price tumbled 13% lower today
• Macquarie (ASX:MQG) share price sinks lower on FY 2021 guidance update
• 3 personal finance tips to help strong investing
• Afterpay (ASX:APT) share price facing new competitive pressure
• Why BrainChip, Evolution, Nearmap, & Zip shares are tumbling lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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.

The post Why Cleanaway, De Grey, Macquarie, & Zip shares are dropping lower 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.

Since the beginning of the COVID-19 pandemic, high hopes have been placed on the potential for a vaccine. The U.S. government established Operation Warp Speed, a program with the goal of accelerating the development of safe and effective novel coronavirus vaccines. Biopharmaceutical companies both large and small shifted resources to focus on COVID-19 vaccine research.

Today, these efforts are closer to paying off than ever before. But what’s the real state of the coronavirus vaccine race? Here are seven key things you’ll want to know.

1. Who the leaders are right now

There are currently 180 COVID-19 vaccine programs in development, according to the World Health Organization (WHO). Thirty-five of those vaccine candidates are being evaluated in clinical studies with the rest in preclinical testing. Nine of the 35 clinical-stage COVID-19 vaccine candidates are in late-stage testing.

Chinese drugmakers Cansino Biologics, Sinopharm, and Sinovac Biotech are developing four of the late-stage coronavirus vaccine candidates. Russia is already allowing a COVID-19 vaccine developed by Moscow’s Gamaleya Research Institute of Epidemiology and Microbiology to be administered to some individuals, although the vaccine is still in late-state testing.

There are 4 late-stage COVID-19 vaccine candidates targeting the U.S. market:

• Pfizer (NYSE: PFE) partnered with BioNTech (NASDAQ: BNTX) to develop BNT162b2, a vaccine that uses modified messenger RNA (mRNA) to spur the body to produce antibodies to the novel coronavirus SARS-CoV-2.
• Moderna (NASDAQ: MRNA) is also developing an mRNA vaccine candidate, mRNA-1273. 
• AstraZeneca (NYSE: AZN) teamed up with the University of Oxford to develop AZD1222, which delivers genetic material from the SARS-CoV-2 spike protein using a weakened version of the adenovirus (a common cold virus).
• Johnson & Johnson (NYSE: JNJ) is starting its late-stage testing of Ad26.COV2.S this month.

2. When a vaccine will likely be available

There’s no way to be completely sure when a COVID-19 vaccine will be available. It’s possible that problems could arise in clinical studies. For example, AstraZeneca recently paused its late-stage clinical trial of AZD1222 due to a serious adverse reaction in a participant.

However, the chances appear to be reasonably good that a coronavirus vaccine will receive FDA emergency use authorization (EUA) before the end of 2020. Pfizer and BioNTech expect to seek authorization for BNT162b2 in October if late-stage testing goes well. AstraZeneca and Moderna might not lag too far behind.

It’s possible that there will be a phased roll-out of early COVID-19 vaccines. One potential scenario would be for healthcare workers and high-risk individuals to receive the vaccine first, followed by the rest of the population.

3. How safe and effective the vaccines will be

We won’t know how safe and effective individual COVID-19 vaccines will be until they’ve completed late-stage testing. However, to secure an EUA the FDA must determine that the benefits of the vaccine outweigh the risks. The agency has stated that it will review “the target population, the characteristics of the product, the preclinical and human clinical study data on the product, and the totality of the available scientific evidence relevant to the product” before granting an EUA. 

To win full FDA approval, a COVID-19 vaccine will have to demonstrate at least 50% efficacy in a placebo-controlled clinical study. It will also need to meet the general safety requirements for previously approved vaccines for infectious diseases. 

4. How many doses will be required

Most of the coronavirus vaccines in late-stage testing require two doses, typically administered four weeks apart. Johnson & Johnson’s investigational COVID-19 vaccine, however, requires only one dose.

5. How much a coronavirus vaccine will cost

Coronavirus vaccines will be provided to all Americans at no cost. Healthcare providers, though, could charge insurers for the cost of administering the vaccines.

6. Which vaccines could be in the second wave

Three COVID-19 vaccines are currently in phase 2 clinical testing, according to the WHO. These include vaccines developed by Novavax (NASDAQ: NVAX), German biotech CureVac (NASDAQ: CVAC), and Chinese drugmaker Anhui Zhifei Longcom. Inovio Pharmaceuticals (NASDAQ: INO) is awaiting FDA approval to begin phase 2 testing of its coronavirus vaccine candidate as well.

7. Which stocks are poised to win the most

Any of the stocks of companies that win FDA EUA or approval for their respective COVID-19 vaccines will likely perform well. However, the smaller biotech stocks would almost certainly enjoy bigger gains than the big pharma stocks. This could mean that BioNTech and Moderna could be the biggest winners among the leaders in the coronavirus vaccine race.

Keep in mind, though, that there’s still a risk that the vaccine candidates will stumble in clinical testing. The safer stocks to buy, therefore, will be those of large drugmakers such as AstraZeneca and Pfizer since the companies have enough product diversification to withstand a setback in their COVID-19 vaccine programs.

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

More reading

• 3 exotic ASX tech ETFs you might want to add to your portfolio today
• AstraZeneca coronavirus vaccine clinical trial paused
• How to invest in coronavirus vaccine stocks
• This is the one investment Warren Buffett says almost everyone should make
• In the race for a coronavirus vaccine, can there be multiple winners?

Keith Speights owns shares of Pfizer. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson. 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 race: 7 key things you’ll want to know 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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Cheap small cap stocks can be hard to find. Typically, they have a market capitalisation of between $50 million and $500 million. These smaller companies can get a bad rap for being more volatile than their larger ASX counterparts. However, there are a couple of great reasons to look at small cap stocks to add to your portfolio.

Firstly, they offer some potentially higher speculative returns. Secondly, they don’t always move with the main market, such as the S&P/ASX 200 Index (ASX: XJO). This can sometimes be a blessing in disguise.

The ASX 200 Index is looking a little flat right now. So, while it decides which direction it wants to move in, take a look at these two cheap small caps that are showing potential.

2 cheap small cap stocks to consider buying

BSA Limited (ASX: BSA)

About BSA

BSA Limited is a technical services organisation. It provides solutions to help clients implement the physical assets in the areas of building services, infrastructure and telecommunications. BSA runs its business and services through three main divisions – BSA Build, BSA Connect and BSA Maintain.

Additionally, BSA provides consulting services through its BSA Think arm. Consulting helps clients realise solutions by enabling them to tap into a knowledge and innovative ideas database in the following areas:

• Asset management
• Design and building information modelling (BIM)
• Energy management and sustainability
• Cost planning
• Project management
• Compliance and certification

BSA has a market cap of around $116 million. 

Opportunity

The BSA share price is currently selling for 27 cents at the time of writing. This is a substantial discount of more than 40% to its September 2019 highs of 46 cents. One thing I noticed about the BSA share price is that it has bounced higher several times before after reaching levels of 23 to 27 cents.

We are currently in that area of value again and, I believe, it’s an opportunity to pick up this small cap stock at a great price. A bounce here could see it back at levels higher than 40 cents, resulting in potential returns of 40% or more.

Financially, BSA is in a healthy position with assets exceeding liabilities. Consider BSA as one of the cheap small cap stocks for your portfolio.

Ava Risk Group Ltd (ASX: AVA)

About Ava

Ava Risk Group is a leading provider of risk management services and technologies. It services clients in the commercial, industrial, military and government sectors.

This company delivers solutions that are high tech and complex. It helps clients tackle risk management threats to perimeters, pipelines and data networks. Using bio metrics, card access control and locking, as well as secure international logistics, storage of high value assets and risk consultancy services, Ava delivers a suit of solutions. 

A point to note about Ava is that it actually has a group of companies with specialist skills under its brand:

• Future Fibre Technologies – a fibre optic, intrusion detection and location system specialist.
• BQT Solutions – a security card, bio metric reader and electromagnetic lock developer, manufacturer and supplier.
• Ava Global Logistics – a risk management specialist firm targeting the international logistics market.

Ava has a market cap of around $73 million. 

Opportunity

The Ava share price had been largely sitting in the range of 10 to 20 cents for around three years. In 2020 however, the Ava Risk Group share price has risen more than 100% to currently trade at 33 cents at the time of writing. Interestingly, the last time the Ava share price tried to break past the 30 to 36 cents range in 2016, it failed and fell back down to lows of around 15 cents. So we now have another opportunity to try and break past this resistance level. Breaking up and above 36 cents could see the share price attempt to revisit the previous lofty heights of more than $1.00 it saw in 2015.

Financially, Ava is in a healthy position with assets exceeding liabilities. 

Foolish takeaway

Cheap, small cap stocks can sometimes bring a world of trouble with them. These companies are often new or struggling financially.

The difference with these two companies is that they are financially healthy with asset bases exceeding their liabilities. Additionally, they have established businesses and client bases.

Buying small caps is no different to buying larger companies in that investors still need to do the appropriate research before jumping in. However, investors do need to be aware that smaller companies can often be more volatile than large caps. But having a small amount of exposure to cheap small caps in your portfolio can prove very rewarding if they perform well.

More reading

• Why Althea, BrainChip, Rio Tinto, & Starpharma shares are pushing higher
• Rio Tinto could pull a shock move to end crisis
• Why Cleanaway, De Grey, Macquarie, & Zip shares are dropping lower
• Coronavirus vaccine race: 7 key things you’ll want to know
• Why now is a good time to buy ASX defence shares

Motley Fool contributor glennleese 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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