Tag: Motley Fool

The Biotron Limited (ASX: BIT) share price has rocketed higher on Monday after the release of an update.

In early trade the clinical stage biotechnology company’s shares were up as much as 47% to 14 cents.

They have since given back much of these gains but are still up 18% to 11.3 cents at the time of writing.

What did Biotron announce?

This morning Biotron provided the market with an update on the screening of select compounds against SARS-CoV-2 – the coronavirus that causes COVID-19.

According to the release, the company has concluded the first stage of its screenings and found that several compounds have been shown in laboratory cell-culture studies to have antiviral activity against SARSCoV-2.

These assays were run in Melbourne under contract by an Australian NATA accredited clinical trial speciality laboratory, 360biolabs.

A total of 47 Biotron compounds were screened in an industry standard cytopathic effect (CPE) cell-culture assay. The compounds which demonstrated promising activity in the first assay then underwent confirmatory testing in a second anti-SARS-CoV-2 assay.

This led to a subset of 15 compounds that had activity against SARS-CoV-2 being successfully identified.

Biotron’s Managing Director, Michelle Miller, commented: “The results to date are encouraging. There is a need for new ways to treat this disease, and Biotron believes that these results open up a promising new therapeutic pathway. The results underscore the versatility of Biotron’s approach to designing and developing drugs to target serious virus infections.”

What now?

The company advised that its focus will now be on building on this preliminary stage screening program to include a new series of recently designed and synthesised compounds.

Screening of these additional new compounds is expected to conclude before the end of 2020.

Management hopes that within these new compounds there will be potent, druggable compound that can be progressed to testing in animal models of COVID-19 disease and ultimately clinical trials.

Also pushing higher this morning following a COVID-19 related update is the CSL Limited (ASX: CSL) share price. It has signed an agreement to supply Australia with vaccines next year.

More reading

• How to invest in coronavirus vaccine stocks
• Why Afterpay, ASX, Mesoblast, & Sydney Airport shares are dropping lower
• 3 ASX shares I’d happily buy every month
• Why Tesla shares skyrocketed in August
• 4 of the best ASX shares to buy before 2021

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 CSL Ltd. 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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If you have any spare cash sitting in your account, now would be the time to invest in these quality ASX shares. As the S&P/ASX 200 Index (ASX: XJO) fell heavily last Friday and is down again today, I don’t believe these ASX shares will be trading at bargain prices for long.

Below, I have carefully selected what are I think are the best 4 ASX shares to own before the end of the year.

Altium Limited (ASX: ALU)

The Altium share price hasn’t fared too well since the coronavirus pandemic swept the world. The 3D printed circuit board maker revealed it missed its full-year 2020 target of revenue above US$200 million. Altium recorded US$189.1 million in revenue for FY20, a rise of 10% on the prior year. Net profit after tax dived 42% to US$30.9 million.

The company reaffirmed its commitment to a 2025 target for market dominance of US$500 million in revenue and 100,000 subscribers. However, that achievement may be delayed 6-12 months due to COVID-19 impacts.

The Altium share price is trading at $34.05, 20% down from its all-time high of $42.76 in February.

CSL Limited (ASX: CSL)

This global biotech leader in developing and delivering life-saving medicines has been hit from the latest market sell-off. Just last month on the back of its positive FY20 results, the CSL share price topped at $317.99. It’s now trading at $286.96.

CSL recently reassured investors that its 5% plasma collection drop was only short-term and the company had taken measures to address this. Further, CSL’s ongoing partnership with the University of Queensland (UQ) and the Coalition for Epidemic Preparedness Innovations (CEPI) for the development of a COVID-19 vaccine is expected to be 12-18 months away.

Northern Star Resources Ltd (ASX: NST)

Every portfolio should have at least one established gold company, and Northern Star or Newcrest Mining Limited (ASX: NCM) should be on your list.

The rising spot price of gold has led to Northern Star rewarding shareholders with a special dividend thanks to its bumper FY20 results. The Northern Star share price is up 16.6% since the start of the year to $13.18 and it could go much higher due to the economic uncertainty in global markets.

Furthermore, the gold mining and exploration company has invested US$800 million to acquire 50% of Kalgoorlie Consolidated Gold Mines (KCGM). The recent acquisition will undoubtedly underpin future growth through its Fimiston Super Pit, said to be the biggest open pit gold mine in Australia.

Pointsbet Holdings Ltd (ASX: PBH)

Pointsbet has been creating huge tailwinds in the past month. The corporate bookmaker reported an unexpected strong FY20 result and more specifically, a new 5-year exclusive partnership with major United States media company NBC Sports.

The Pointsbet share price has gone from its March lows of $1.10 to $13.69. That is an increase of more than 1200% in the space of 6 months! At the moment, the Pointsbet share price is in a trading halt pending a capital raising to eligible shareholders following its completed $200 million institutional placement. The funds will be used to support marketing costs across the United States, and further client acquisition and retention.

Pointsbet shares are expected to resume normal trading on 9 September.

More reading

• CSL share price higher on COVID-19 vaccine news
• New to investing? More ASX growth shares to buy now
• More radical action from RBA likely after Victoria’s extends harsh lockdown
• Share price opportunities to buy this week
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points

Aaron Teboneras owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and 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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When you are building a portfolio of ASX shares, I believe there are some companies you should consider never selling. To paraphrase Warren Buffett, the best holding period is forever. That’s because time is your greatest advantage as a retail investor. When left to work its magic, the snowball that is compound interest has the potential to grow your ASX share portfolio wealth exponentially.

Careful consideration must be given to ASX shares you plan to hold forever. In my opinion, these need to possess some crucial characteristics:

• A wide moat – This is basically a competitive advantage such as a network effect, first-mover advantage, high switching costs or high barriers to entry.
• Optionality – The ability to diversify and pivot the business to growth markets.
• Financial fortitude – Having a strong balance sheet with lots of cash and little debt.

On that note, here are five ASX shares in my own portfolio that I plan on holding on to forever.

5 ASX shares I plan on never selling 

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

ASIA is on my list because it provides market capitalisation weighted exposure to a geographic location that will be an economic powerhouse long into the future. This diversification helps to balance my portfolio, whilst giving me access to fast growing innovative stocks such as Alibaba and Tencent.

Mercadolibre Inc (NASDAQ: MELI)

Mercadolibre isn’t technically an ASX share. However, it is one of my highest conviction holdings. Often referred to as the eBay Inc (NASDAQ: EBAY) of Latin America, the stock has grown far beyond that. The eCommerce company now has a massive payment processing network called Mercado Pago, that provides another huge growth driver for the stock.

This optionality, when combined with the share’s top dog status, should provide market beating returns well into the future.

Nanosonics Ltd (ASX: NAN)

Nanosonics is a leader in the disinfection of ultrasound probes. This ASX share has been a long-term market beater and I think this will continue. Operating with the ‘razor and blade’ business model, Nanosonics is successfully growing its installed base of trophon® and trophon® 2 machines. Nanosonics can then sell more high margin consumables products and boost profitability.

ResMed Inc (ASX: RMD)

ResMed is a leader in the treatment of sleep apnea. Sleep apnea is a hugely underdiagnosed condition that can have significant impacts on a sufferer’s quality of life and health. As the company and physicians continue to further education regarding the condition, I can see a greater adoption of ResMed’s products.

Furthermore, the company’s move into data and internet connected devices should provide optionality in the future.

Xero Limited (ASX: XRO)

If you run a small or medium sized business, you’ve probably heard of Xero. Xero provides its customers with a best-in-class cloud accounting solution. Its customers have primarily been in Australia and New Zealand, however the business is also expanding into the United Kingdom and the United States. 

I believe the digitisation of tax and accounting reporting across the globe is a nice tailwind that Xero can ride to significantly increase profitability. Another reason I love this ASX share is that it has a third-party marketplace for products that work with Xero. Apple, Inc (NASDAQ: AAPL) and Atlassian Corporation PLC (NASDAQ: TEAM) are great examples of this high margin revenue.

More reading

• New to investing? More ASX growth shares to buy now
• New to investing? ASX growth shares to buy now
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Why I would invest $100,000 across these fantastic ASX shares
• ASX All Technology Index swells with new additions

Lloyd Prout owns shares of BetaShares Asia Technology Tigers ETF, MercadoLibre, Nanosonics Limited, and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Atlassian, and MercadoLibre. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends eBay and recommends the following options: long January 2021 $18 calls on eBay and short January 2021 $37 calls on eBay. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF and Nanosonics Limited. The Motley Fool Australia has recommended Apple and ResMed 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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Selling gold to buy dirt-cheap stocks may not seem to be a sound move at first glance. Economic risks are high, and gold’s defensive status may help to protect investors from further volatility in the stock market.

However, the precious metal’s high price and low valuations on offer across the stock market could mean that equities provide a more attractive long-term capital return outlook.

The recovery potential for dirt-cheap stocks

While there are a wide range of dirt-cheap stocks on offer at the present time, history suggests that this situation will not last in perpetuity. No period of economic weakness or stock market decline has ever remained in place over the long run. Eventually, global GDP growth has always returned to positive figures and the operating environment for stocks has improved. This has always led to rising stock prices, and a shift towards a sustained bull market.

Therefore, investors who are able to buy undervalued shares today may be able to generate strong returns in the coming years. Certainly, in the coming months, equity prices may disappoint. There could even be a second stock market crash. However, on a long-term basis, stocks seem to offer greater scope for capital gains than other assets, such as gold.

Gold’s high price

Dirt-cheap stocks may also be more attractive because of gold’s high price. It has reached a new record high in 2020 due partly to factors such as continued low interest rates and an increasingly risk-off sentiment among investors.

While this has helped to push the gold price higher, buying any asset when it is trading at a record high may not be a sound move. It means there may be less scope for capital gains, since investors may already have priced in favourable conditions. For example, in gold’s case, investors may have accounted for a period of weak global economic growth by sending the precious metal’s price to a record level.

Changing investor sentiment

Although dirt-cheap stocks may have attracted some investors to equity markets earlier this year, thereby causing a rebound, many investors continue to be relatively risk averse at the present time. As such, gold’s price may yet move higher in the short run, while stock prices could continue to be volatile.

However, investor sentiment is very likely to change over the long run in response to an improving economic outlook. This may shift the focus of investors away from defensive assets, such as gold, towards riskier assets with greater growth potential, such as stocks. The end result could be a disappointing performance from gold, and a return to a sustained bull market in equities.

As such, now could be the right time to sell gold and buy dirt-cheap stocks. They appear to offer greater scope for capital returns ahead of a likely recovery.

More reading

• 4 of the best ASX shares to buy before 2021
• 5 ASX shares I will never sell
• CSL share price higher on COVID-19 vaccine news
• New to investing? Here are 5 ASX dividend shares to buy now
• How long can capitalism be paused before it kills us all?

Motley Fool contributor Peter Stephens 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 CSL Limited (ASX: CSL) share price is pushing higher on Monday after making a major COVID-19 announcement.

At the time of writing the biotherapeutics company’s shares are up 1% to $281.56.

What did CSL announce?

This morning CSL announced that it has signed a heads of agreement with the Australian Government to supply 51 million doses of University of Queensland’s potential UQ-CSL V451 COVID-19 vaccine to Australia. The first doses are scheduled for release from mid-2021 following successful clinical trials.

A separate heads of agreement has been signed between CSL and AstraZeneca for the expected manufacture of approximately 30 million doses of the Oxford University vaccine candidate AZD1222 for supply to Australia. The first doses of this alternative vaccine are scheduled for release early 2021, following successful clinical trials.

In addition to this, the company has signed a funding deed with the Australian Government in order to ready its facilities for the manufacture of the AZD1222 vaccine candidate, and provide an additional COVID-19 vaccine option for Australians.

CSL’s CEO & Managing Director, Paul Perreault, commented: “The social and economic impact of the COVID-19 pandemic has brought a high level of urgency to the task of developing a vaccine against the SARS-CoV-2 virus, and to manufacture a successful vaccine at high quality and in sufficient quantities.”

“CSL has been working at pace to respond to the pandemic and has invested significant resources in the rapid development and large-scale manufacture of UQ-CSL V451, along with a number of other therapeutic programs.”

“Together with partners including the University of Queensland and Coalition for Epidemic Preparedness (CEPI), our development and manufacturing teams have been working extremely hard to advance this program to ensure the availability of a safe and effective vaccine should clinical studies prove successful,” he added.

The company’s influenza vaccines business, Seqirus, will hold regulatory responsibility as the marketing authorisation holder. Production of the vaccine to support late stage clinical trials has commenced at CSL’s biotech manufacturing facilities in Broadmeadows, Melbourne.

Will these vaccines work?

Although the results from the pre-clinical and early clinical studies for UQ-CSL V451 are very promising, management warned that it is impossible to predict the level of success the candidate will have in late stage clinical trials.

“CSL’s focus is to produce a safe and effective vaccine. It is important that on completion of clinical trials, the public has confidence in UQ-CSL V451, which makes use of the well-established recombinant protein technology platform, and Seqirus’ proprietary adjuvant MF59, which has an extensive safety track record in humans,” Mr Perreault said.

The same applies for AZD1222. Its early trials have been very promising, but it is not a guarantee of future success.

Will CSL’s other businesses be disrupted?

Despite taking on the mammoth task of manufacturing tens of millions of doses of the AZD1222 vaccine, CSL’s manufacturing of its current product portfolio will not be disrupted.

Mr Perreault explained: “We are pleased that we can produce the AZD11222 without compromising the production of our core products – influenza vaccines and plasma and recombinant protein therapies – and provide a second option for a COVID-19 vaccine candidate to Australia.”

“Acknowledging that CSL is the only company in Australia with manufacturing facilities capable of producing this vaccine, we thank the Australian Government for their support, ensuring Australia has access to onshore COVID-19 vaccine production and supply. Our facilities will require modifications in order to fulfil the compliance requirements for working with vector-based vaccines, as well as the addition of skilled personnel and further capital investment.,” he concluded.

More reading

• 4 of the best ASX shares to buy before 2021
• New to investing? More ASX growth shares to buy now
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Here’s how to make a $1 million portfolio by investing $1,000 a month
• How to earn a passive income of $50,000 with ASX dividend shares

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 CSL Ltd. 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 final third of my 15 ASX share starter portfolio is allocated to dividend shares. Historically, ASX dividend shares have been strong performers as a group. Furthermore, a significant portion of the S&P/ASX 200 Index (ASX: XJO) return is made up of dividends and franking credits.

Here are 5 great ASX dividend shares that pay solid yields:

Jumbo Interactive Ltd (ASX: JIN)

Jumbo recently signed an extension to its resale agreement with gambling giant Tabcorp until 2030. This provides the online lottery ticket seller with strong visibility in the medium term. A growing lottery-as-a-service business also provides the stock with great optionality. Jumbo currently pays a 2.6% dividend yield, or 3.7% grossed up for franking credits. 

Macquarie Group Ltd (ASX: MQG)

Macquarie is the only bank that I would buy on the ASX. Why? Because the “millionaire maker” doesn’t just apply to the bank’s rich clients, but also to investors. Macquarie has more international exposure, as well as an investment banking arm which provides greater optionality than the other major banks. It currently pays a partially franked 3.4% dividend yield.

Rural Funds Group (ASX: RFF)

Rural Funds must be one of the most stable businesses on the ASX. The business owns and leases agricultural properties to strong tenants such as Treasury Wine Estates Ltd (ASX: TWE). A benefit of dealing in a required field like agriculture, is that Rural Funds can implement long-term contracts, with inbuilt growth. Rural Funds currently yields a generous 4.76%.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is a Fool favourite. The diversified investment house has been a great ASX dividend share for long-term investment. Soul Patts has never failed to pay a dividend to shareholders since listing on the ASX. What’s more, this dividend has increased every year since 2000. Soul Patts currently pays a 2.77% dividend yield, or 3.95% grossed up for franking credits. 

Wesfarmers Ltd (ASX: WES)

Wesfarmers is another mature and diversified business with a long track record of success. Wesfarmers has done so well by effectively allocating capital over long periods of time. A great example of this is its investment and sale of the Coles Group. With a significant amount of cash from that sale, I expect some exciting announcements in the future. In the meantime, Wesfarmers has a number of strong brands like Bunnings and Kmart that allow it to pay a 3.13% dividend yield, or 4.47% grossed up for franking credits. 

More reading

• More radical action from RBA likely after Victoria’s extends harsh lockdown
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• 3 ASX shares every retiree should own
• Here’s how to make a $1 million portfolio by investing $1,000 a month
• How to earn a passive income of $50,000 with ASX dividend shares

Lloyd Prout owns shares of Jumbo Interactive Limited and Macquarie Group Limited and expresses his own opinions. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Jumbo Interactive 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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Capitalism is effectively on hold in the year of the COVID-19 pandemic.

Most developed nations, including Australia, have had to hand out massive public assistance to their citizens and businesses to save them from going broke.

The effectiveness of those schemes have varied from country to country.

Nucleus Wealth head of investments Damien Klassen said the government was forced into such intervention to fight a specific macroeconomic effect.

“We don’t want bankruptcies to snowball into more job losses, into a housing market crash, into more defaults and so on,” he wrote on the Nucleus blog.

“So, by delaying the start, it creates a calm spot, the eye of the storm.”

However, it has had to be careful to not damage the economy with a second subsequent effect.

“We don’t want the lack of bankruptcies to mean that the over-indebted who aren’t paying their bills start bringing down people who weren’t over-indebted. This is the second half of the storm.”

Governments were hoping for a short and sharp shutdown of the economy before a V-shaped recovery followed.

But an effective treatment, cure or vaccine hasn’t come along quickly. And most countries are now dealing with a prolonged recession and even a second wave of the virus.

Everyone agrees we have to get back to capitalism

Klassen said governments would now be tempted to push out more assistance, but questioned whether that would be wise.

“The issue is that the second [effect] grows bigger every day. By pulling the first lever again, if we don’t get a cure or vaccine, then there is now a much larger problem.”

It’s a dilemma with no easy answers.

S&P Global Ratings predicts prolonged negative pressure on corporate results as government support eventually runs out.

“We believe more pain is likely in companies’ earnings amid the weakest macroeconomic environments in decades,” said S&P Global Rating credit analyst Richard Timbs.

“The fallout from the pandemic has yet to fully play out across the Australian and New Zealand corporate landscape.”

The ratings agency stated government stimulus would “remain a key swing factor” in any recovery.

The Business Council of Australia (BCA) is a group that represents, among others, Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Limited (ASX: ANZ), Macquarie Group Ltd (ASX: MQG), AGL Energy Limited (ASX: AGL), BHP Group Ltd (ASX: BHP), Coca-Cola Amatil Ltd (ASX: CCL), Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), Telstra Corporation Ltd (ASX: TLS), Scentre Group (ASX: SCG), Qantas Airways Limited (ASX: QAN), and ASX Ltd (ASX: ASX) itself.

BCA chief Jennifer Westacott admitted on television last week that the current situation of heavy subsidies is artificially inflating corporate results.

“We always knew that JobKeeper was sort of like a blunt but necessary instrument. But it has had this weird effect,” she told Sunrise.

“[Companies] are on a bit of a sugar hit. We’ve got to stay on the timetable to move off JobKeeper and get things back to normal because it is having that distortionary effect.”

According to Westacott, “real-world data” suggests Australian businesses have lost $30 billion from their bottom line.

But how do we return to capitalism?

Westacott said next month’s federal budget would have a bearing.

“Part of the job, I think, of the October budget is to get the confidence back in the community and in business so that people start spending money again,” she said.

“You’ve got to carefully reopen things so you can get activity going again.”

According to Klassen, given the choice between “short term pain for a large amount of economic gain” and “short term gain for a large amount of economic pain”, governments inevitably choose the latter.

“The rules are rolling off around the globe — my expectation is that this will create at least some sense of normalcy,” he said.

“But there are already countries extending provisions until the end of the year or beyond. [This] makes it difficult to assess when the eye of the storm will pass, and the second half will begin.”

And what if we don’t return to capitalism?

There is an alternative: Things never return to the way they were.

That COVID-19 has changed the economic and market fundamentals forever.

“We have a checklist of a dozen decisions that governments and central banks can make that will eventually suspend capitalism,” Klassen said.

“A few of the items have already been checked off the list. The more that get implemented, the closer we get to a genuinely new paradigm.”

But a complete reworking is unlikely. Klassen said capitalism will be permanently suspended only if government actions “become increasingly radical”. 

“Effectively central banks and governments bailing out and propping up most failing businesses, turning the world’s capital markets into a herd of state-owned entities that will ‘kill the village in order to save it’.”

More reading

• 4 of the best ASX shares to buy before 2021
• 5 ASX shares I will never sell
• 3 reasons why I’d sell gold to buy dirt-cheap stocks today
• CSL share price higher on COVID-19 vaccine news
• New to investing? Here are 5 ASX dividend shares to buy now

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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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Following reporting season, you should have a much clearer picture of how your ASX shares are tracking along and whether it’s time to re-adjust your portfolio. Reading and understanding a company’s reports will reveal its financial health and future growth profile.

As some ASX shares have performed better than others, it’s important to understand which companies present value and which could be riskier to put your hard-earned cash towards. On that note, below I have picked which ASX shares I would avoid buying during this economic crisis.

4 ASX shares I would avoid buying this year

Myer Holdings Ltd (ASX: MYR)

The Myer share price has been gaining back some ground since its fall to 8.3 cents in March. Today, the Myer share price can be picked up for 26.5 cents per share, up over 200% from its March low. However, looking at the last 12 months, this ASX share has fallen from 61.5 cents, a drop of almost 57%.

Last month, Myer released its latest update advising it had secured an amended debt facility of $340 million to see it through the pandemic. No covenants will be tested before FY20, given the significant impact on Myer’s operations during 2H20. Covenants for future periods will be tested quarterly, with the $340 million bank facility to be repaid by August 2022

Furthermore, Myer said that COVID-19 had severely impacted trading during the second half of FY20. The company has initiated cost control measures as well as rent relief and deferrals.

Myer is expected to report its FY20 results this Thursday 10 September.

QBE Insurance Group Ltd (ASX: QBE)

QBE has had a turbulent year, to say the least. The company reported its FY20 results in August which saw a monstrous net loss of US$712 million. This was followed in September by the shock exit of QBE’s CEO from an external investigation concerning workplace communications.

Investors have been quick to hit sell on this ASX share which has seen the QBE share price tumble from $15.19 in February to $9.82 today. That’s a decline of 35%, and over 8% in the last week from the board’s announcement of the new leadership change.

The insurance group warned its outlook remains uncertain as government actions continue to significantly impact revenue drivers. COVID-19 is expected to have a total cost of around US$600 million to QBE, including US$265 million of potential further net claims in the next 12-18 months.

The company’s decision to support customers through offering premium refunds, premium deferrals, extending credit and counselling services will likely further effect future earnings.

Southern Cross Media Group Ltd (ASX: SXL)

One of Australia’s largest media companies, Southern Cross reported a staggering decline of underlying net profit of $35.8 million in its FY20 results, down 51.6% on the prior year.

The company has experienced fierce headwinds from COVID-19 with revenue down 18.2% in both audio and television segments. Southern Cross suspended all dividend payments for FY21, and forecasts to resume paying dividends in FY22.

Shareholders have largely sold off their positions in this ASX share over the past 12 months. This time last year, the Southern Cross share price was fetching for $1.24 compared to just 15.5 cents now. This represents a freefall of 88%.

The media company is looking to recover its underlying earnings and reduce expenses to see it through the challenging climate. Southern Cross completed a recent capital raising of $169 million.

Scentre Group (ASX: SCG)

Scentre has been another poor performer on the ASX this year. The shopping centre operator’s HY20 results disappointed investors with a deep first-half statutory loss of $3.61 billion, down from a profit of $740 million in the prior corresponding period. COVID-19 restrictions prevented many shoppers from visiting its malls and weighed on valuations of retail property assets of the ASX share.

The leading retail property group indicated that the pandemic risks stretched into its balance sheet, despite $4.4 billion of liquidity available.

The company has accelerated customer engagement platforms and other programs to support revenue growth.

The Scentre share price is trading at $2.18, a drop of 47% from its 52-week high of $4.08.

More reading

• These are the 10 most shorted ASX shares
• ASX 200 plunges 3.1%, Afterpay suffers
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200
• How to build a recession-beating ASX share portfolio
• Myer’s share price is rocketing up. Here’s why.

Motley Fool contributor Aaron Teboneras 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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As a new share investor, the chances are you have a reasonable time horizon to invest. In my opinion, ASX growth shares are one of the best asset classes to invest in to compound and grow your wealth. That’s why two thirds of the starter portfolio is built on growth shares. Here is the second group of growth shares to buy now.

A2 Milk Company Ltd (ASX: A2M)

A2 Milk is my biggest ever investing mistake. After eying off the ASX growth share in mid-2015, I chose to invest in Telstra Corporation Ltd (ASX: TLS) instead. A2 Milk is now a 30-bagger in 5 years, whereas Telstra has more than halved!

Buy this long-term winner and don’t make the same mistake I did. The returns from this point forward will be nowhere close to the past, but as Motley Fool co-founder David Gardner likes to say, “winners, win”.

Altium Limited (ASX: ALU)

Altium is another long-term winner that can continue to smash the market in the future. The printed circuit board software provider is operating in a growth industry. As the Internet of Things grows, Altium stands to benefit. The company has a long track record of setting and meeting lofty goals. The COVID-19 pandemic will have an impact in the short-term, but the future is bright for this ASX growth share.

Bigtincan Holdings Ltd (ASX: BTH)

Arguably the best named share on the ASX, Bigtincan is a software-as-a-service (SAAS)  business that provides sales enablement and automation software to enterprise clients. 

Bigtincan is in the early innings of what can be a massive growth story, and is the smallest company in this starter portfolio. With a market capitalisation of $433 million, the share will be volatile and comes with some risk. But if the company can continue to grow revenue at 30-40% in the medium term the stock will also have a lot of reward for shareholders.

CSL Limited (ASX: CSL)

CSL is the largest company on the ASX at more than $125 billion in market capitalisation. This provides a nice counterbalance to tiny Bigtincan. However, it doesn’t mean that you need to forgo amazing growth. The biotech company has a strong track record of double digit revenue and earnings growth. Given the quality of the business, I see this continuing in the future.

Xero Limited (ASX: XRO)

If you run a small or medium sized business, you’ve probably heard of Xero. Xero provides its customers with a best in class cloud accounting solution. These customers have primarily been in Australia and New Zealand, however the business is expanding into the UK and US. 

The digitisation of tax and accounting reporting across the globe is a nice tailwind that Xero can ride to significant profitability. Another reason I love this ASX growth share is that it has a third-party marketplace for products that work with Xero. Apple Inc. (NASDAQ: AAPL) and Atlassian Corporation (NASDAQ: TEAM) are great examples of this high margin revenue.

More reading

• 4 of the best ASX shares to buy before 2021
• 5 ASX shares I will never sell
• CSL share price higher on COVID-19 vaccine news
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• 4 exciting small cap ASX tech shares to watch

Lloyd Prout owns shares of Altium and BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium, Apple, and Atlassian. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post New to investing? More ASX growth shares to buy now appeared first on Motley Fool Australia.

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The Reserve Bank of Australia (RBA) may be forced to pump more stimulus into the financial system after Victoria extended its lockdown.

Victorian Premier Dan Andrews outlined an aggressive plan to eliminate COVID-19 before residents can return to “COVID normal”.

The plan to “eradicate” rather than “suppress” is condemned by many business leaders. It will come at a big cost to the state and national economies.

Negative reaction to Victoria’s road to reopening

The chief executive of Wesfarmers Ltd (ASX: WES) is a vocal critic. His retail conglomerate employs 30,000 Victorians and he told the Australian Financial Review that the Andrews government didn’t properly consult with retailers.

The federal government also couldn’t hide their disappointment with the overly ambitious plan. Australia’s September quarter GDP is almost guaranteed to cop another big blow after it crashed by a record 7% in the previous quarter.

More monetary stimulus for markets?

This is bad news for ASX share investors too, although the market will be looking to the RBA to provide a backstop.

After all, global equities are racing higher due to the liquidity dump by central banks around the world, and not by growth.

The probability of our central bank pulling harder on the quantitative easing (QE) and interest rate lever just went up!

Economists predicting bigger QE program

A Bloomberg survey of economists found that nearly two-thirds of respondents are predicting the RBA will increase QE by expanding bond purchasing.

UBS believes this will happen as soon as next month, while most others think it will happen towards the end of 2020 or early 2021.

Will the RBA cut rates to 0.1%?

The Reserve Bank could also cut record low interest rates further. This view isn’t as popular among economists with three out of 11 believing the cash rate will fall to 0.1% from 0.25%.

These economists also think the RBA will align its three-year yield target to the cash rate to further lower borrowing costs.

While these voices are in the minority, the survey was probably completed before Premier Andrew’s press conference yesterday.

Foolish takeaway

I won’t be surprised if economists are now crunching the numbers to quantify the cost of the Victorian lockdown with the state contributing to around a quarter of the national economic output.

This may mean the RBA will be forced to become more dovish. Its governor Philip Lowe indicated his reluctance to lower the cash rate in the past and ruled out the use of negative interest rates.

Negative interest rates are probably still off the table, but the cut to interest rates is looking increasingly plausible in my view – even though it could be more symbolic than anything.

More reading

• Share price opportunities to buy this week
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week
• ASX 200 plunges 3.1%, Afterpay suffers

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of Wesfarmers 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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