Tag: Motley Fool

The De Gray Mining Limited (ASX: DEG) share price bolted more than 11% this morning after the company released promising drilling results.

What were the results?

Earlier today De Gray Mining provided the market with a drilling update from the Aquila and Crow Zones at the company’s Hemi Gold Discovery.

Drilling results from the Aquila Zone reported minimisation extending to 400 vertical meters. Additional highlights included;

• 39m @ 1.3g/t Au from 389.0m including 8m @ 2.8g/t from 415m in
• 10.2m @ 2.5g/t Au from 254.0m in HERC111D
• 5.0m @ 3.3g/t Au from 407.7m in HERC105D
• 6.0m @ 1.7g/t Au from 268.0m in HERC110D
• 2.0m @ 7.1g/t Au from 211.0m in HERC100D

RC Drilling results from the Crow Zone identified a new lode, with mineralisation identified to over 400 meters. Additional highlights from the zone included;

• 6m @ 2g/t Au from 41m in HERC202, and 16m @ 1.5g/t Au from 72m and 23m @ 2.8g/t Au from 95m (incl 3m @ 8.9g/t Au from 104m)
• 9m @ 3.9g/t Au from 138m in HERC207 (incl 2m @ 14.7g/t Au from 138m)
• 4m @ 4.1g/t Au from 420.0m in HERC111D, and 6.0m @ 1.9g/t Au from 445.0m

De Gray’s management noted that the Hemi Gold Discovery site continues build, with encouraging results from the Aquila and Crow Zones.

More on De Gray Mining

De Gray is a mining company based in Western Australia that focuses on gold exploration and development activities. The company has 100% ownership of the Mallina Gold Project in the Pilbara region which is also the site of the Hemi Gold Project.

The Hemi Project is made up of zones including Aquila, Brolga, Brolga South and Crow. In late April, De Gray completed a $31.2 million capital raising to fund the ongoing exploration of the Hemi Project.

In response, the De Gray Mining share price has rallied more than 200% since late April, with the company has also benefiting from the surging spot gold price.

Foolish Takeaway

The De Gray Mining share price is trading more than 8% higher at the time of writing at around 78 cents. The company’s shares have been sold-down slightly after hitting an intra-day high of 82 cents earlier today.

More reading

• De Gray Mining share price lifts on strong results
• De Grey share price rising following mine extensions
• Azure Minerals share price rockets 24% on acquisition news
• Why De Grey, Openpay, Woodside, & Zip shares are dropping lower

Motley Fool contributor Nikhil Gangaram 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 AMP Limited (ASX: AMP) share price surged to a high of more than 11% this morning despite the wealth manager announcing a 42% plunge in profits.

Underlying profit fell to $149 million in 1H20, down from $256 million in 1H19, due to the impacts of the coronavirus pandemic. 

COVID-19 bites into AMP earnings

AMP reported that earnings across its businesses were affected by COVID-19. The Australian wealth management business saw a 42.7% decline in earnings as funds flowed out of the business thanks to the Government’s early release of superannuation scheme. 

Cash outflows were $4.4 billion during the half, with the exit of some corporate superannuation mandates also impacting cash flow by $1.3 billion. Assets under management decreased by 10%, reflecting the impact of COVID-19 on investment markets.

AMP Bank earnings dropped 29.6% with a credit loss provision of $24 million to manage potential mortgage defaults related to COVID-19. During the half, the bank continued to grow its mortgage book and retail deposits despite the uncertainty and strong competition. The residential mortgage book increased 2.9% to $20.5 billion.

AMP says credit quality remains strong with mortgages in arrears representing 0.78% of the mortgage book.

Earnings fell 40% in the AMP Capital business which saw a reduction in sponsor capital valuations and transaction fees. A 39% decline in performance and transaction fees was reported due to the slowdown in transaction activity during the pandemic. 

Capital position and dividend

AMP remains well-capitalised with $1.4 billion in surplus capital above target requirements. As a result, the company has announced a series of capital management initiatives to return $544 million to shareholders.

$344 million will be returned via a special dividend of 10 cents a share, fully franked. Up to $200 million will be returned via an on-market share buy-back. This indicates the wealth manager considers its shares good value, which may account for today’s share price increase. Nonetheless, AMP said that following the payment of the special dividend, it did not expect to declare a final FY20 dividend. 

What’s next for AMP earnings? 

Following the sale of its AMP Life business, AMP is focused on delivering transformational strategy and navigating the current uncertain economic environment.

CEO Francesco De Ferrari said, “We expect conditions to remain challenging. However, we also see opportunities emerging over the longer term as we transform AMP to be a simpler client-led and growth-oriented business.” 

More reading

• ASX down 0.55%: Telstra maintains its dividend, Treasury Wine shoots higher, AMP’s special dividend
• Why AMP, Premier Investments, QBE, & Treasury Wine shares are storming higher
• Top brokers name 3 ASX shares to sell today
• Why you should buy ASX shares in this resilient market
• AMP and 2 other ASX 200 shares to watch this week

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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The tech rally is dead!

Long live the tech rally!

In an article I penned yesterday, I shared 3 of my favourite Warren Buffett investing adages. I won’t rehash all of that today.

But part of one of Buffett’s investing pearls is that you should think long-term, and ignore the ups and downs. That’s great advice. Not only will you sleep better, you’ll almost certainly make more money in the share market over time.

What got me thinking about this particular Buffett mantra was an article in Bloomberg yesterday. One which wholly ignored this advice, and may well have scared some trigger-happy investors into selling their shares in big technology companies like Facebook, Inc. (NASDAQ: FB) and Amazon.com, Inc. (NASDAQ: AMZN).

Here’s the relevant excerpt from the Bloomberg article:

An oddity is occurring as the stock market grinds back to an all-time high: Big tech is getting left behind.

A risk-on rotation rippling across markets has the tech-heavy Nasdaq 100 flirting with a third straight loss — which would be its longest slide since March…

Risking hypocrisy…

At risk of hypocrisy by focusing on the daily moves here, I can’t help but point out that yesterday (overnight Aussie time) the NASDAQ-100 (INDEXNASDAQ: NDX) gained 2.6%. That puts the Nasdaq 100 — comprised of the 100 largest companies on the broader tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) — less than 1% below last Thursday’s all-time high.

And some of the biggest of the big tech shares led the way. Amazon’s share price gained 2.7%. And Facebook’s share price closed up 1.5%.

Perhaps the biggest story in the big tech space is Tesla Inc (NASDAQ: TSLA).

Following its announcement for a planned five-for-one stock split, the Tesla share price rocketed 13.1% by Wednesday’s closing bell in US markets. In after-hours trading, Tesla shares are up another 0.7% at time of writing. And this is a company with a US$290 billion (AU$406 billion) market cap we’re talking about.

Year-to-date, the Tesla share price is up 261%. And if you’d bought Tesla shares back on 2 July 2010 you’d be sitting on a gain of 7,998%.

Pity the short sellers!

ASX tech share prices soaring

It’s not just the US tech companies seeing their share prices rocket.

Australia’s leading tech shares leapt out of the starting gate this morning, continuing their march higher.

Now obviously not every ASX tech share is seeing its share price rocket. But a look at this morning’s performance of the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) gives us a good indication of how the sector is performing.

And with ATEC’s share price up 1.3% at the time of writing, it looks to be doing quite well.

If you’re not familiar with ATEC, the exchange traded fund (ETF) holds some of Australia’s largest tech companies. It only recently began trading on the ASX, launching on 6 March. You’re probably aware that wasn’t the best time to launch a new ETF, as the broader market was in freefall at the time. And indeed, ATEC’s share price fell 34% by 23 March.

Reflecting the strength of the Australian tech companies it holds, ATEC’s share price is up 86% since its 23 March low. That’s easily enough to cover its losses from its first few weeks, with the share price now up 22% since its inception.

That’s the broader market.

Now let’s focus in on one of the ASX’s shining tech stars. Namely, Whispir (ASX: WSP).

Whispir is a software-as-a-service (SaaS) company. It provides a communications workflow platform for businesses to automate their interactions with customers and other stakeholders. A service that’s clearly seen booming demand in the age of social distancing and remote working.

In intraday trading, the Whispir share price is up 3.8%. Year-to-date the share price is up more than 160%. And that comes despite its precipitous share price plunge of 56% from 21 February though 23 March. If you were lucky enough to buy shares on 23 March, by the way, you’d be sitting on a gain of 472% today.

Whispir’s sky-high potential wasn’t lost on the Motley Fool’s own Anirban Mahanti. He recommended members of his Extreme Opportunities service buy shares of Whispir back on 11 September 2019, less than 3 months after it started trading on the ASX.

Members who followed Anirban’s advice and bought shares at $1.41 would, at time of writing, be sitting on a gain of 186%. That is if they kept their focus on the long-term and didn’t join in the panic selling in February and March.

With all the recent share price gains in technology shares, you’ll hear some bears saying they couldn’t possibly go much higher. But then the bears have been saying that for years.

So long as you’ve got a longer-term investment horizon, I believe there should be far more share price gains to be had in Australian and international tech shares.

More reading

• Stock split watch: Could Amazon be next?
• Is BetaShares Australia 200 ETF the best ASX ETF?
• ASX investors have been buying these international shares
• Tesla plans five-for-one stock split
• Why Tesla stock jumped 32.5% in July

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Facebook, Tesla, and Whispir Ltd and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon, Facebook, and Whispir 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 Fiji Kava Ltd (ASX: FIJ) share price soared 89.66% higher this morning to reach an intraday high of 16.5 cents. This came before the Fiji Kava share price pulled back to 12.5 cents and was placed in a trading pause, pending a further announcement. The commotion resulted from the company’s announcement it has signed a major agreement with BioCeuticals, a company owned by Blackmores Limited (ASX: BKL).

Fiji Kava produces natural ‘noble kava’ products for the complementary and alternative medicine market which is estimated to exceed US$210 billion by 2026 globally. It is focused on providing an alternative to prescription medications to promote sleep, soothe and calm the nerves, support muscle relaxation and relax the mind. The products are Theapeutic Goods Administration (TGA) and Food and Drug Administration (FDA) compliant.

Major agreement highlights

Fiji Kava has announced a non-exclusive licence agreement with BioCeuticals to develop a co-branded product for release in Australia and New Zealand. It will see BioCeuticals use the noble kava extract for its AnxioCalm product. AnxioCalm is a herbal medicine to support symptomatic relief of mild anxiety, tension and stress.

In addition, AnxioCalm products will be co-branded with Fiji Kava’s ‘Authentic Fiji Kava’ trademark on each product sold. It will be made available through BioCeuticals’ extensive network of qualified healthcare practitioners across Australia and New Zealand.

The agreement follows progress being made on Fiji Kava’s commercial strategy to grow the availability of its Fijian noble kava. It now has cornerstone retail agreements with Coles Group Ltd (ASX: COL) supermarkets in Australia, Green Cross Pharmacy in New Zealand and has also expanded its eCommerce presence on Amazon.com in the United States. Additionally, it is exploring opportunities to access Chinese marketplaces.

Fiji Kava will supply BioCeuticals with noble kava via its agreement with Pathway International.

CEO comments

Understandably, Fiji Kava founder and CEO, Zane Yoshida, was pleased and said:

“This is another milestone for the company that will not only increase the availability of our noble kava in Australia and New Zealand, but is another strong endorsement by a leading healthcare provider of the quality and uniqueness of our Fijian noble kava…

Fiji Kava will continue to scale-up its production in Fiji to produce required inventory to meet the growing demand from the BioCeuticals licence agreement and other recent business development advancements such as ranging in Coles Supermarkets nationally”.

About the Fiji Kava share price

Before the pause in trade, the Fiji Kava share price was trading at 12.5 cents, representing a 43.68% increase in today’s trade. It has a market capitalisation of around $12 million.

More reading

• Brokers have upgraded 3 ASX shares to the buy zone. Here’s why
• Coles shares vs Woolworths shares. Which is a better buy?
• 2 safe and strong ASX dividend shares to buy during the COVID-19 crisis
• Top ASX dividend shares to buy in August 2020
• Why the Coles share price just hit a new record high

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Amazon. 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 profit reporting run has barely begun but ASX coal and energy stocks are already facing a new challenge in the upcoming AGM season.

A group of more than 100 shareholders in Whitehaven Coal Ltd (ASX: WHC) have filed a resolution to get the miner to shutter its business, reported the Australian Broadcasting Corporation (ABC).

The group, which is led by activist shareholder Market Forces, will put the question to Whitehaven shareholders at the miner’s next annual general meeting.

It wants management to close down its operations and return the capital to shareholders.

Resolution for revolution

The Whitehaven share price is already under considerable pressure from the COVID-19 fallout and is trading close to a four-year low.

While no one expects the resolution to pass with a majority vote (not even Market Forces), it doesn’t have to to get the desired effect.

By persistently putting the question of climate change in front of the company, management will have to think more deeply about this issue.

Threat to coal assets

Activist shareholders argue that there is a risk that Whitehaven’s assets will be worth little as “stranded assets”. These are assets that no one wants as the world moves away from fossil fuel.

Whitehaven dismisses the risk and have pointed out that their coal is primarily used in steel production.

Australia must love steel as we’ve built the country on the back of iron ore exports like the likes of Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).

Coal indispensable to iron ore?

You need carbon to make steel and the carbon comes from coal. But some experts point out that there are available technologies to manufacture steel without coal.

The debate over the risk of stranded assets wont’ be settled at Whitehaven’s AGM. But this won’t stop Market Forces from lodging similar motions with New Hope Corporation Limited (ASX: NHC), Beach Energy Ltd (ASX: BPT) and Cooper Energy Ltd. (ASX: COE).

New Hope is a coal miner, while the other two are oil and gas companies.

Fossil fuel risks growing

Activist shareholders are unlikely to stop with there. They are plotting their move on the industry titans like Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO).

ASX energy companies are already under pressure from the global recession triggered by COVID-19. Demand for oil have plunged due to the partial shutdown of major economies to control the outbreak.

This is forcing energy giants to announce large asset write downs. These aren’t quite stranded assets just yet, but it’s hard to see what can break the industry out of the entrenched downtrend.

More reading

• 5 things to watch on the ASX 200 on Thursday
• The BHP share price is up 10% in a month: Is it too late to invest?
• 5 things to watch on the ASX 200 on Wednesday
• Broker sees top returns for iron ore miners BHP and Rio
• Has the ASX 200 finally taken off?

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. Connect with me on Twitter @brenlau.

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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With reporting season in full swing, Australia’s leading broker houses are exceptionally busy. Many have updated their analysis coverage on blue-chip ASX companies ahead of full-year FY20 results.

Three brokers are bullish on these 3 ASX shares in particular. Here’s why.

Appen Ltd (ASX: APX)

UBS has placed a price target of $41 and a ‘buy’ rating on the tech darling, suggesting a 10% upside on the current price of $36.22 at the time of writing. Its previous target was as low as $32 for the company.

The broker is optimistic about the outlook of the AI industry generally. It sees Appen’s recent hiring activity as a positive indication of progress in its North American business development.

It was also buoyed by the news from Appen’s previous earnings guidance that it was stepping up investment in its supply chains. UBS sees the company’s continuation of this aggressive investment strategy throughout COVID-19 as a strong sign of high confidence.

The UBS broker forecasts earnings per share of 66.5 cents for FY20, and a further upscale of 92.5 cents in FY21 alongside an increased dividend.

Appen will report full-year performance on 27 August, but having reached a record high share price of $38.47 last month, I expect this ASX share to continue to outperform.

Downer EDI Limited (ASX: DOW) 

Having reported a statutory net loss after tax of $150 million in FY20 as part of yesterday’s full-year results, Credit Suisse still believes the jack of all trades contractor will outperform moving forward.

According to the broker, Downer’s FY20 results didn’t contain any surprises in terms of operating income and net profit. And Credit Suisse is impressed by the company’s urban services operations and exposure to government contract work for FY21.

A target price of $4.70 was placed on the ASX share, with an FY21 dividend yield of approximately 4.5% and earnings per share of 30 cents expected over the next 12 months.

Downer’s shares are trading at $4.30 at the time of writing, suggesting a 10% upside based upon the broker’s forecast.

Coles Group (ASX: COL)

Citi has placed a target price for the supermarket giant of $21.40, representing a 13% increase from its current share price of just a nudge under $19.

The broker sees Coles as a ‘buy’, spurred by buoyant trading conditions for the grocery business that it believes will continue for at least the next 6 months.

In addition to the high likelihood of elevated sales growth, Citi asserts that the earnings and dividend stability of Coles is a major tailwind for the company.

Coles will announce results for the full FY20 year on 18 August, but the broker expects an FY21 dividend yield of 3.2% and a 5% growth of earnings per share over the 12 months to 72 cents.

More reading

• Coles shares vs Woolworths shares. Which is a better buy?
• 2 safe and strong ASX dividend shares to buy during the COVID-19 crisis
• Is BetaShares Australia 200 ETF the best ASX ETF?
• Whatever happened to WAAAX shares?
• 3 stellar ASX tech shares to buy for the long term

Motley Fool contributor Toby Thomas owns shares of Appen Ltd and Downer EDI Ltd. The Motley Fool Australia owns shares of Appen Ltd and COLESGROUP DEF SET. 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 tale of the 2 supermarket titans. Both large-cap businesses in the same industry, in a battle to win market share and be the dominant retailer.

Pricing wars and marketing tactics have been a common theme between the 2 multi-billion-dollar companies. Coles Group Ltd (ASX: COL) introduced the ‘Little Shop’ promotion and Woolworths Group Ltd (ASX: WOW) closely followed suit with the ‘Lion King Ooshie’ collectables. A clever strategy to strengthen brand loyalty, as customers were obsessed with these plastic toys.

Marketing feats aside, non-cyclical earnings have seen the Coles and Woolworths share prices run higher since the start of the year – up by 26% and 11%, respectively. While this could be attributed to the pantry stocking of late, both companies have been drivers of top-line growth in recent times.

Here’s a closer look at how Coles and Woolworths stack up.

Coles Group Ltd (ASX: COL)

Demerged from its parent company Wesfarmers Ltd (ASX: WES) back in November 2018, the Coles share price has been on tear, hitting a record high of $19.16 yesterday. Clearly, investors are wanting to snap up some shares before the company reports its results to the market next week on 18 August.

Goldman Sachs is expecting sales to be at $37.5 billion and its earnings before interest and tax (EBIT) at $1.39 billion – an increase on last year’s results of 7.7% and 5.1%, respectively. FY20 net profit after tax (NPAT) is estimated to be around $928.2 million. While its full-year results will only reveal Coles’ performance to the end of 30 June 2020, I believe the company has a good runway ahead due to its defensive qualities and strong balance sheet.

Despite Coles’ growth trajectory, I would class the company as a hold for any investor based on valuation grounds – its market cap (at the time of writing) is currently $25.37 billion. I believe there will be a slight pullback in the Coles share price, which could open up the opportunity to pick up some shares at a discounted rate.

Woolworths Group Ltd (ASX: WOW)

The conglomerate’s share price was trading relatively flat during the first half of the year, but has surged 14% higher across the past 2 months.

Mixed results are anticipated from the industry giant when it releases its FY20 scorecard on 27 August. According to Goldman Sachs, group sales are expected to increase to $63.52 billion – up 5.9% from the year before. Though most of the heavy lifting will be done by its supermarket business with sales totalling $41.88 billion (a rise of 7.2%), other areas such as its hotels chain are forecast to drag down overall growth. The hospitality business is said to fall to $1.31 billion in sales from the comparable year, a drop of 21.5%. Underlying NPAT is also expected to decline by 3.1%, down to $1.573 billion.

I think that the Woolworths share price is a fairly valued at the moment at its current price of $40.34. With stage 4 restrictions in Victoria and fears of a new coronavirus wave sweeping NSW, the group’s retail and hotel segments will be greatly impacted as a result. In light of this uncertainty, I will be keeping my powder dry for now until I am confident Australia has passed the pandemic.

Foolish takeaway

Coles and Woolworths have both benefitted from grocery hoarding and a shift from eating out to dining home. According the Australian Bureau of Statistics, these past few months have seen the biggest rise in retail sales, however the surge in demand will return back to normality once the pandemic subsides.

If I had to choose between the two, Coles shares would be my pick as I believe the company is positioned for greater earnings and more reliable growth in the long-term.

More reading

• Brokers have upgraded 3 ASX shares to the buy zone. Here’s why
• 2 safe and strong ASX dividend shares to buy during the COVID-19 crisis
• 2 ASX dividend shares to buy with $5,000 today
• Top ASX dividend shares to buy in August 2020
• Why the Coles share price just hit a new record high

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

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Telstra Corporation Ltd (ASX: TLS) is the latest S&P/ASX 200 Index (ASX: XJO) company to announce its full-year earnings for FY2020, which were divulged this morning. Evidently, the market didn’t really like what it saw, given that the Telstra share price is down around 5.6% at the time of writing to $3.20.

I can see why investors are a little sceptical of our largest ASX telco today. Telstra reported earnings within its guidance range. But the $7.4 billion of earnings before interest, depreciation, tax and amortisation (EBITDA) was 9.7% lower than FY2019’s earnings. As a Telstra shareholder myself, I’m not too worried though. The coronavirus pandemic was always going to have something of an impact on Telstra’s numbers, which ended up impacting around $200 million in earnings. And the NBN is still draining money away from the telco.

But there was one bright spot for me as a shareholder. It was the announcement that Telstra will be continuing to pay a dividend worth 8 cents per share.

In a year where former dividend heavyweights like the ASX banks, Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) have been deferring, slashing or cancelling their dividend payments, Telstra is a pillar of strength in my view. With the Telstra share price of $3.20, the 8 cents per share dividend equates to an annualised dividend yield of 5%. Including Telstra’s full franking credits, this yield grosses-up to 7.14%.

You could do a lot worse in this era of record-low interest rates!

What about Telstra shares and 5G?

But dividend income alone isn’t all I see in the future of Telstra shares. The company is also heavily investing in the next generation of mobile technology: 5G.

5G promises to overhaul the way we use the internet. Its potential applications range from NBN-beating speeds with low latency to the Internet of Things (IoT). In its earnings report this morning, Telstra told investors that it expects its 5G coverage “will reach around 75% of the Australian population by June 2021”. I’m confident Telstra’s market dominance will be extended into the 5G realm due to the company’s first-mover advantage. It is already well ahead of its competition (including the newly merged TPG Telecom Ltd (ASX: TPG)) in its 5G investments and rollout. This could lead to a new and lucrative stream of revenue for Telstra very soon.

Foolish takeaway

All in all, I think Telstra shares represent a great investment today, despite the company’s patchy earnings report. In my eyes, you are getting a dividend heavyweight offering a sustainable 7.14% grossed-up yield, with a potentially lucrative 5G growth avenue right in front of it. Not a bad offering in these uncertain times, I reckon!

More reading

• Why AGL, Breville, CBA, & Telstra shares are dropping lower today
• ASX down 0.55%: Telstra maintains its dividend, Treasury Wine shoots higher, AMP’s special dividend
• Why the Telstra share price has tumbled 5% this morning
• Telstra hits guidance and declares 16 cents per share FY 2020 dividend
• 5 things to watch on the ASX 200 on Thursday

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

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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) has given back its morning gains and is dropping lower. At the time of writing the benchmark index is down 0.6% to 6,096.2 points.

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

The AGL Energy Limited (ASX: AGL) share price has crashed 9.5% lower to $15.35. This follows the release of the energy company’s full year results. AGL Energy reported an underlying profit after tax of $816 million. This was a 22% decline on the prior corresponding period but within its guidance range. It appears to be its guidance that has spooked investors. It expects underlying profit after tax of $560 million and $660 million in FY 2021.

The Breville Group Ltd (ASX: BRG) share price has dropped 5.5% to $25.77. This morning the appliance manufacturer released its full year results. Breville delivered a 25.3% increase in revenue and an 11.2% increase in normalised net profit after tax to $75 million. Investors may have been expecting an even stronger result.

The Commonwealth Bank of Australia (ASX: CBA) share price is down 2.5% to $72.35. This appears to have been driven by a broker note out of Morgan Stanley this morning. The broker still has concerns over the bank’s credit quality and suspects that dividend restrictions could remain in place in 2021. As a result, it has held firm with its underweight rating and cut its price target to $62.00.

The Telstra Corporation Ltd (ASX: TLS) share price has fallen almost 6% to $3.19 following the release of its full year results. Investors have been selling Telstra’s shares despite it achieving its guidance and maintaining its 16 cents per share dividend in FY 2020. This selling may be due to concerns over the pandemic’s impact on its performance in FY 2021. Management expects a negative COVID-19 impact of $400 million.

More reading

• Telstra just announced its dividend! Are Telstra shares now a buy?
• ASX down 0.55%: Telstra maintains its dividend, Treasury Wine shoots higher, AMP’s special dividend
• Why the Telstra share price has tumbled 5% this morning
• Breville share price on watch as dividends climb 10.8% higher
• Telstra hits guidance and declares 16 cents per share FY 2020 dividend

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

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Secos Group Ltd (ASX: SES) share price is up 6.9% today after a major new pet supply contract delivers material improvement in FY20 results.

Located in Melbourne, the group is a leading developer and manufacturer of sustainable packaging materials. It supplies biodegradable resins, packaging products and high-quality cash films to a global customer base and has sales offices around the world including Malaysia, China, Mexico and the United States.

Material improvement in FY20 results

The Secos share price rise reflects a significantly improved profit and loss position anticipated for the year ended 30 June 2020. Unaudited FY20 net loss is expected to improve 71.5% to $1.2 million.

Additionally, the group achieved positive earnings before interest, taxation, depreciation and amortisation (EBITDA) in the second half, with a net loss of less than $0.1 million. The financial improvement has been driven by growing demand for its biodegradable products, significantly increased plant utilisation, lower interest costs and operational and manufacturing efficiencies.

In FY20, unaudited financial headline numbers include:

• Revenue from ordinary activities up 0.9%. $21.039 million in FY20 vs $20.848 million in FY19
• Gross profit is up 129%. $3.383 million in FY20 vs $1.478 million in FY19
• Expenses are down 33.2%. $3.512 million in FY20 vs $5.257 million in FY19
• Net loss for the period has improved 71.5%. $1.186 million in FY20 vs $4.170 million in FY19

The group’s fully audited accounts will be released on 27 August 2020.

Pet supply contract secured

Secos announced a significant supply contract this week with leading US pet company, JC USA Inc, a wholly owned subsidary of the Jewett-Cameron Trading Company. The contract is for the supply of compostable pet waste bags made from Cardia proprietary biopolymer resins. This supports an estimated $3 million in sales annually with growth potential as Jewett-Cameron grows its market reach and compostable pet waste bags sales.

There are more than 89 million dogs in the USA and a similar number in Western Europe, according to Statista. And Secos says pet owners are more focused on finding environmentally-friendly ways to manage their pet’s waste and reduce the use of conventional plastic bags and eliminate micro plastic pollution.

About Secos share price

The Secos share price has surged 6.9% to 16 cents at time of writing. It has a market capitalisation of $66.2 million.

More reading

• Brokers have upgraded 3 ASX shares to the buy zone. Here’s why
• Coles shares vs Woolworths shares. Which is a better buy?
• Telstra just announced its dividend! Are Telstra shares now a buy?
• Why AGL, Breville, CBA, & Telstra shares are dropping lower today
• ASX down 0.55%: Telstra maintains its dividend, Treasury Wine shoots higher, AMP’s special dividend

Motley Fool contributor Matthew Donald 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 The Secos share price has climbed more than 6% today. Here’s why appeared first on Motley Fool Australia.

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