Tag: Motley Fool

  • Harvey Norman share price drops despite record FY20 results

    Nick Scali lounge

    The Harvey Norman Holdings Limited (ASX: HVN) share price has fallen to $4.28 in morning trade. This follows the release of positive company results for the financial year ending 30 June 2020.

    At the opening bell, The Harvey Norman share price went up to $4.49 on FY20 news, before  dropping to $4.28 at the time of writing.

    How did Harvey Norman perform in FY20?

    The multi-national retailer company reported a record result for its full-year earnings. Harvey Norman delivered total sales revenue of $8.46 billion in FY20. A major catalyst for this was a shift in consumer behaviour as a result of the coronavirus pandemic.

    On the bottom line, underlying net profit after tax and non-controlling interest increased to $462.16 million, up 30.9% from FY19.

    Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $742.47 million, an increase of 20.1%.

    Harvey Norman recorded a positive cash flow from operating activities to $1.1 billion, which grew 183% while earnings per share also rose 15.4% to 39.19 cents.

    The company’s balance sheet remains healthy with the value of net assets standing at $3.48 billion, up from $3.2 billion.

    Harvey Norman has a net cash balance of $15.35 million. This compares to a net debt position of $626.47 million in the prior year.

    The board declared a fully franked dividend of 18 cents per share to be paid on 2 November. This is an increase on the 12 cents declared on 1HFY20 results.

    COVID-19 impact

    Temporary overseas store closures during COVID-19 affected FY20 sales performance figures. Government subsidies relieved some pressure with wages and assistance support of $22.28 million and property-related support and assistance of $9.81 million.

    In Australia, certain franchisees were eligible for the Government JobKeeper support which helped with the retention of employees.

    What did management say?

    Harvey Norman chair Gerry Harvey said:

    Globally, the 2020 financial year was a year of unique challenges. The drought and bushfires last summer, followed by COVID-19, had a significant impact in the 8 countries where we, or our franchisees, trade.

    Pleasingly, customers continued to engage strongly with our brands and importantly, as we are in the lifestyle / home retail space, the customer was appreciative of the shopping experience, spaciousness and easy parking at the physical franchised complexes and stores, whilst embracing the ease of connection to our brands digitally and the important convenience of home delivery and click and collect. The results achieved in 2020, are a testament to the strength of our model.

    FY21 outlook

    Management has noted the outlook going into FY21 remains unknown due to the global impact from coronavirus. However, the company saw a sales uptick in the last quarter in Australia and has accelerated in July and August.

    Furthermore, Harvey Norman advised that overseas sales have improved in its company-operated stores following the decision to loosen restrictions to the public.

    About the Harvey Norman share price

    The Harvey Norman share price has made a stunning recovery since plummeting to a 52-week low of $2.33 in March. Whilst trading almost 10% lower than the $4.87 reached the month before, the Harvey Norman share price has fallen 2.3% in year-to-date trading.

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    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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  • Cash Converters share price edges higher on FY 2020 results

    cash converters staff member examining gold bracelet under magnifying glass

    The Cash Converters International Ltd (ASX: CCV) share price is climbing higher this morning as the company announced its full year results. At the time of writing, the Cash Converters share price has risen to 22 cents, which is 4.76% above yesterday’s close.

    Cash Converters has been severely impacted this year by COVID-19 with the pandemic decimating the company’s ability to open its 705 stores around the globe. Customers have also been impacted by the financial fallout from COVID-19 which has negatively affected the company’s lending demand and revenue. Surprisingly, however, lockdown restrictions have lead to an uptick in loan settlement rates and retail revenue, which has seen the Cash Converters share price recover strongly from its March lows.

    Cash Converters full year results

    Despite the obvious headwinds caused by the pandemic, Cash Converters posted revenue of $279 million, down only 0.9% on the prior year.

    The most significant impact to revenue and earnings occurred in the final quarter of the financial year, with personal and vehicle finance demand reducing as customers benefitted from government stimulus measures. Early settlements occurred at a higher rate than prior quarters and a decline in demand and eligibility impacted origination volumes. This resulted in gross loan books falling 24.2% year on year to $160.0 million.

    Conversely, store operations demonstrated counter cyclical retail behaviour complimented by particularly strong online sales of home entertainment and technology items. Although store sales trended lower in the final months of FY 2020 as inventory levels decreased, turnover remained above the monthly average of the prior year’s, as did the gross profit margin.

    This resulted in the merchant actually increasing its operating net profit before tax (NPAT) to $19.6 million which was an increase of 63.2% on the year before. Earnings before interest, taxes, depreciation and amortisation (EBITDA) also increased as it finished the year 51.5% higher at $62.1 million. Despite this, Cash Converters still posted a statutory net loss after tax of $10.5 million.

    Outlook

    With a strong balance sheet and a diversified store network, Cash Converters aims to consolidate its position as a lender and retailer of first choice for customers moving forward.

    However, with Victoria recently entering stage 4 restrictions to combat COVID-19 infections, the company’s Melbourne metropolitan stores have been temporarily closed. Nonetheless, Cash Converts believes it is well set up as a result of the significant investment made into the Company’s online retail and lending operations.

    The company also believes that “the ultimate impact of COVID‐19 is yet to be fully realised by Australia’s economy. And as Australia emerges from ‘lock‐down’, Cash Converters remains well positioned to benefit from a wider economic recovery.”

    With today’s rise, the Cash Converters share price has recovered 120% from its March low but is still down by 8.3% in year-to-date trading.

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    Motley Fool contributor Daniel Ewing 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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  • Why Costa, Flight Centre, Polynovo, & Pointsbet shares are storming higher

    The S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a disappointing decline. At the time of writing the benchmark index is down a sizeable 0.9% to 6,072.2 points.

    Four shares that have not let that hold them back are listed below. Here’s why they are storming higher today:

    The Costa Group Holdings Ltd (ASX: CGC) share price has jumped over 8% higher to $3.21 following the release of its half year results. For the six months ended 28 June 2020, Costa posted revenue of $612.4 million. This was an increase of 6.8% on the prior corresponding period. On the bottom line, Costa reported a net profit after tax of $45.8 million. This is an increase of 12% on the prior corresponding period.

    The Flight Centre Travel Group Ltd (ASX: FLT) share price is up 4% to $13.10. This morning analysts at Morgan Stanley retained their overweight rating and $16.00 price target on the travel company’s shares. The broker estimates that Flight Centre has enough liquidity to see it through to the end of next year. In light of this and its solid performing corporate business, it believes a re-rating of its shares could be coming in the medium term.

    The Polynovo Ltd (ASX: PNV) share price has stormed 7.5% higher to $2.17. News that the medical device company’s chairman has been buying shares following a drop this week appears to have boosted sentiment. David Williams picked up 500,000 shares on market for an average of ~$2.04 per share on Thursday.

    The Pointsbet Holdings Ltd (ASX: PBH) share price has rocketed 55% higher to $11.63. Investors have been buying the sports betting company’s shares following its full year results release and the announcement of a partnership with NBC. In respect to the former, Pointsbet tripled its revenue in FY 2020 despite the disruption caused by the pandemic.

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    *Returns as of 6/8/2020

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    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 Pointsbet Holdings Ltd and POLYNOVO FPO. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and 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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  • Why a2 Milk, Appen, Huon, & Newcrest shares are tumbling lower

    red arrow pointing down, falling share price

    In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a disappointing note. At the time of writing the benchmark index is down 1% to 6,063.1 points.

    Four shares that are falling more than most today are listed below. Here’s why they are tumbling lower:

    The A2 Milk Company Ltd (ASX: A2M) share price is down 2% to $17.65. This morning analysts at Citi retained their sell rating and $17.20 price target on this infant formula company’s shares. It believes recent substantial insider selling is a bad sign. Especially at a time when the company is facing excess inventory and longer term regulatory risks, geopolitical issues, and increased competition.

    The Appen Ltd (ASX: APX) share price is down 6% to $36.20. Investors have been selling the artificial intelligence company’s shares after analysts at Credit Suisse downgraded them to an underperform rating with a reduced price target of $29.00. This follows a weaker than expected half year result from Appen. A big second half will be required to meet its guidance for FY 2020, but the broker notes that it is facing currency headwinds.

    The Huon Aquaculture Group Ltd (ASX: HUO) share price has fallen 2% to $3.18. This follows the release of the salmon producer’s full year results and the announcement of an equity raising. This morning Huon completed its institutional placement, raising $64 million at a discount of $3.00 per share. These funds will be used to pay down its debt.   

    The Newcrest Mining Limited (ASX: NCM) share price has dropped 3.5% to $31.06. Investors have been selling Newcrest’s shares after a pullback in the gold price overnight. The precious metal came under pressure after the U.S. dollar and Treasury yield rose following comments by the U.S. Federal Reserve. At the time of writing the S&P/ASX All Ordinaries Gold index is down 3%.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk and Appen 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 Paradigm share price is up today. Here’s why

    The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is slightly higher today, up 0.38% at the time of writing to $2.66. This came after the company released its annual report for the year ended 30 June 2020.

    What were the FY20 results?

    Paradigm reported a revenue of $4.7 million in FY20, up 44.67% compared to the 2019 financial year. The revenue included interest income and an R&D tax incentive. 

    The biotech company posted a net loss of $12.3 million for FY20, 21.30% lower than the loss for the same period in FY19. There were nil asset impairments in FY20. R&D spending and employee expenses were both lower compared to the prior financial year.

    The company had earnings per share of -6.12 cents in FY 2020 compared to earnings per share of -10.93 cents in FY 2019.

    Paradigm had cash of $103.9 million at 30 June 2020, compared to cash of $72.3 million at 30 June 2019.

    Paradigm interim chair Paul Rennie said the company was about to start pivotal Phase 3 clinical trials in the USA and EU. “… we look forward to advising the market about our progress with the submissions to the EMA, the FDA and the TGA in the coming months.”

    About the Paradigm share price

    Paradigm is a biotechnology company that is developing a drug for the treatment of osteoarthritis. It has been listed on the ASX since 2015.

    In July 2020, Paradigm announced that it had observed a mean pain reduction of 65% across 10 patients on a 12-week program after being treated with Zilosul under an FDA-approved program in the USA. This was the company’s first FDA-approved program.

    In June 2020, Paradigm was added to the S&P 300 list of the biggest 300 companies by market capitalisation.

    In April 2020, Paradigm raised $35 million from investors at a price of $1.30 per share.

    The Paradigm share price is up 149% since its 52-week low of $1.08, however, it is down 9.73% since the beginning of the year. The Paradigm share price is up 86.81% since this time last year.

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    Motley Fool contributor Chris Chitty 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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  • ‘Ethical’ share investors sell too quickly after bad news

    investor touching ethics button on a digital screen

    A new study has found stock investors concerned with ethical issues ‘overreact’ in protest.

    AMP Limited (ASX: AMP) and Rio Tinto Limited (ASX: RIO) have recently hit the headlines for negative environmental, social and governance (ESG) issues.

    A Monash University study found investors and fund managers who wanted to sell the shares in protest would have been better off waiting 90 days after a scandal.

    Monash Business School researcher, Dr Bei Cui, said there is definitely a pattern of sell-offs after a company is rocked by an ESG crisis. She commented, “The research findings show traders have an opportunity to buy these stocks at a discount and then sell at a profit. It also suggests that investors wishing to reduce exposure following bad ESG news can sometimes be better off waiting, in some cases up to 90 days after the announcement — to execute the necessary trades at a better price.”

    The research analysed more than 331,000 ESG events over 19 years and their impact on the share prices of large and mid-cap companies.

    A sudden drop in a company’s share price does have a protest impact. 

    But the Monash study guides investors who want to both minimise their financial loss and eliminate exposure to an unethical company.

    Local companies under fire

    AMP has been rocked by a series of scandals extending back two years, including fee-for-no-service, the financial services Royal Commission and several sexual harassment cases.

    Rio Tinto has been criticised this year for blowing up the Juukan Gorge site in Western Australia, despite protests from archaeologists and Indigenous groups about its cultural significance.

    This week the mining giant announced some of its executive bonuses would be cut as a result, but that action and its internal report was panned as insufficient.

    “The report from the Rio Tinto board review does not deliver any meaningful accountability for the destruction of some of the most significant cultural sites in Australia,” said Australian Council of Superannuation Investors Chief Executive, Louise Davidson. “The company should explain why greater accountability was not applied in light of this disaster,” she added.

    Dr Cui’s research also found a company’s share price often starts trending up or down several days before the actual ESG event, suggesting information leaks are at play.

    What about good ESG?

    The good news is that companies that announce positive ESG news underperform the market afterwards. This means bargains could be snapped up by ethical investors.

    Australia and New Zealand shareholders lead the way in supporting ESG, with 63.2% of capital invested in ethical companies.

    According to Monash, this is a higher percentage than in Europe, the United States, Japan and Canada.

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    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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  • Australian Finance Group share price down 4% despite strong results

    mortgage broker

    The Australian Finance Group Ltd (ASX: AFG) share price is down almost 4% this morning after the mortgage group reported a 15.3% increase in profits despite economic upheaval.

    The coronavirus pandemic has resulted in a flurry of lodgements as borrowers search for better deals on their mortgages, boosting AFG’s bottom line. 

    What does AFG do? 

    AFG began as an aggregator, providing mortgage brokers with access to products and support. It has now diversified to offer business finance, insurance, and AFG-branded and securitised products throughout Australia. One of the country’s largest mortgage provider companies, AFG has around 2,975 finance brokers offering customers a choice of more than 3,800 financial products from a range of lenders.

    What did AFG report?

    AFG reported its best financial result to date, with NPAT of $38.1 million, a 15.3% increase on FY19. Underlying NPAT increased 27% to $36.3 million. AFG reported residential settlements of $34.1 billion in FY20, up 8.9% on FY19. Business settlements were up 167% to $346 million. This gave a combined residential and commercial loan book of $163 billion at the end of FY20, a 5% increase on FY19.

    A final dividend of 4.7 cents per share was declared, fully franked. In addition to the interim dividend of 5.4 cents, this represents a dividend yield of 6% over the past 12 months. 

    All divisions delivered growth with overall lodgements up 22% year on year. The company experienced a significant increase in lodgements as it navigated the initial impacts of COVID-19. Moving into the first quarter of FY21 lodgement activity remains robust, representing an increase of 28% on July 2019.

    CEO David Bailey said the residential business was well-placed to reap the initial financial benefit of increased lodgment activity, heading into the new financial year.

    However, he said uncertainty remained around the broader impact on the Australian economy for the balance of the new financial year. 

    What is the outlook for AFG?

    AFG has warned that the full scale of future disruption to residential and commercial lending markets is difficult to predict and likely not yet fully realised. Said Bailey:

    Our business model generates strong cash flow and is supported by a trail book that will generate cash flows which are actuarily reliable. AFG’s business model continues to be capital light, however we maintain a cautious outlook.

    In the meantime, the company is awaiting court approval of its proposed merger with Connective. The ACCC has cleared the transaction, which will create Australia’s largest mortgage aggregator.

    These 3 stocks could be the next big movers in 2020

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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    Motley Fool contributor Kate O’Brien 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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  • Dicker Data share price surges following interim results

    software code

    The Dicker Data Ltd (ASX: DDR) share price has surged 4.76% higher today after the release of results for the first half of the year to 30 June 2020.

    The Dicker Data share price is trading at $8.14 at the time of writing after finishing the day yesterday at $7.77.

    How did Dicker Data perform in 1H FY20?

    The Australian wholesaler and distributor of computer software and hardware delivered strong growth across all key metrics for 1H FY20.

    Dicker Data achieved a milestone breakthrough with a total revenue of $1,006.1 million, up 18.1% compared to the prior corresponding period. This was underpinned by growth in established and new vendors, increased gross profit margins, and maintenance and control of operation leverage.

    At country level, Australia and New Zealand grew revenues by 17.2% and 31.9%, respectively.

    On the bottom line, net profit after tax jumped 23.6% to $29.4 million.

    Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $47.1 million, up 27.6% from the previous $37 million realised.

    The company recorded a positive cash flow from operating activities of $30.3 million, an increase of $14.6 million.

    Earnings per share leapt 16% to 17.08 cents.

    Earlier this month, Dicker Data declared a full franked dividend of 7.5 cents per share to be paid on 1 September.

    How good is the outlook?

    Management noted that the business has proved resilient as the coronavirus outbreak continues. The recent surge in demand in remote work and virtual working stations across the company’s hardware and software portfolio highlighted the essential role played by IT distribution in enabling business continuity.

    Furthermore, Dicker Data anticipates demand to remain strong moving into the second half of the year by offering business support to its vendors post COVID-19.

    Over the next 12 months, construction of the company’s new distribution centre is expected to expand operations and help boost revenue growth.

    About the Dicker Data share price

    The Dicker Data share price has made a stunning recovery since plummeting to a 52-week low of $3.90 in March. While trading 11% lower than the $8.73 reached in June, the Dicker Data share price has risen 14.6% in year-to-date trading.

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    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

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    Motley Fool contributor Aaron Teboneras owns shares of Dicker Data Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data 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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  • Tech company Limeade pushes higher following half year update

    digital screen of bar chart representing asx tech shares

    The Limeade Inc (ASX: LME) share price is pushing higher on Friday following the release of its half year results.

    At the time of writing the employee experience software company’s shares are up 2% to $1.50.

    How did Limeade perform in the first half?

    Limeade was a strong performer in the first half and appears to have navigated through the pandemic with minimal disruption.

    According to the release, for the six months ended 30 June 2020, the company recorded a 26% increase in subscription revenues to $27.4 million.

    Also heading in the right direction was its gross margin, which improved by 1 percentage point to 77.1%. Management advised that this reflects positive customer mix attributes, higher value contracts, and operational efficiencies.

    Pleasingly, operating expenses grew slower than its revenue. They increased 19% on the prior corresponding period to $22.3 million. Combined with its gross margin improvement, this ultimately supported a significant improvement in its earnings.

    Limeade posted a pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $0.7 million. This was an improvement of 58% on the prior corresponding period.

    At the end of the period the company had a strong balance sheet with cash of $28.4 million and no debt.

    Management commentary.

    Limeade Founder and CEO Henry Albrecht said, “Despite the global COVID-19 pandemic and recession, customer retention remains strong and long-term demand for our employee experience solutions has grown significantly. I’m thrilled to see the blue-chip enterprise Limeade customer base – and expert market influencers – recognize Limeade as a pioneer in accelerating both the digital and cultural transformation of work.”

    “We play in a huge, global market where modern technology is needed more than ever. And we have built a highly resilient and purpose-driven culture – one that innovates and delivers real customer value in all economic climates,” he added,

    Outlook.

    Management revealed that its total pipeline is up 61% from 30 September 2019 to $219 million. Of its qualified pipeline, $18 million sits within the ‘Finalist & Verbal’ pipeline and $57 million in ‘Develop & Prove’ pipeline.

    Together with its first half performance, this has given the company confidence to maintain its FY 2020 guidance. It continues to forecast revenues of $56.1 million, an EBITDA loss of $5.5 million to $6.5 million, and a net loss after tax of $7 million to $8 million.

    These 3 stocks could be the next big movers in 2020

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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

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  • 3 reasons why I’d buy cheap stocks today before the next stock market crash

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    Buying cheap stocks today may not be an appealing idea to many investors. After all, the prospects for the global economy continue to be very uncertain, and some companies may struggle to adapt to changing consumer tastes in a post-coronavirus world.

    However, low valuations within some sectors mean that now could be the right time to buy a diverse range of shares. They could outperform other mainstream assets and allow you to generate impressive returns.

    Cheap stocks that account for future risks

    While some cheap stocks are priced at low levels for good reason, others appear to be suffering from weak investor sentiment towards their wider industry and stock market. For example, some companies have solid balance sheets, strong cash flow and strategies that could produce improving financial performances in the coming years. Yet they have valuations that, in some cases, were last seen during the global financial crisis.

    Furthermore, their valuations suggest that investors have factored in many of the risks faced at the present time. For example, risks such as the ongoing threat of containment measures caused by coronavirus and political uncertainty caused by Brexit appear to be accounted for in the low valuations of many stocks. This could mean that now represents a buying opportunity, since they appear to offer wide margins of safety that may lead to impressive capital returns in the long run.

    A lack of other opportunities

    Buying cheap stocks now may also be a good move due to the lack of other opportunities for investors. Low interest rates mean that bonds and cash are unlikely to produce strong positive after-inflation returns over the medium term. Similarly, high house prices mean that investing in property may be unable to provide the level of returns than many investors currently desire.

    Therefore, buying a diverse range of stocks today could be a means of generating relatively high returns over the long run. The past performance of the stock market shows that it has always recorded new record highs after its bear markets and downturns. Buying shares while they are undervalued may enable you to benefit from its likely recovery following the market crash.

    The next market crash

    Of course, nobody knows when the next market crash will occur. It could take place imminently, or may be many years away. After all, many of the key risks facing investors have been present for a number of months. Therefore, cheap stocks today may fail to move even lower in price, thereby making them an attractive investment opportunity at the present time.

    Certainly, the stock market will not make uninterrupted gains. However, with many stocks currently appearing to offer wide margins of safety, now could be the right time to buy a range of them and hold them for the long run.

    Where to invest $1,000 right now

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    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

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    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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