Wilson Asset Management has released its December 2020 investment update for its 7 listed investment companies including WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

Here's how the fund performed last month, and the ASX shares it has been buying to deliver a strong investment portfolio performance. 

WAM Capital

The WAM Capital investment portfolio focuses on undervalued growth opportunities in the ASX. The portfolio has increased 22.8% in the financial year to date, outperforming the index by 7.1%. 

In December, WAM Capital investment portfolio outperformed the All Ordinaries Index (ASX: XAO). The ASX shares that led to its outperformance included affordable accommodation and services provider Ingenia Communities Group (ASX: INA) and mortgage broker and financial solutions provider Australian Financial Group Ltd (ASX: AFG). 

WAM Capital is focused on translating portfolio returns into a market leading, sustainable source of income for its shareholders. The company has more than a decade of increasing or steady dividends, and currently has a fully franked dividend yield of approximately 7%. 

WAM Leaders 

The WAM Leaders portfolio takes a much more active approach to investing in the highest quality Australian companies. The portfolio has increased 17.1% in the financial year to date, outperforming the S&P/ASX 200 Index (ASX: XJO) by 3.9%. 

The portfolio's outperformance in December was driven by ASX shares in the materials and mining sector.

IGO Ltd (ASX: IGO) is an exploration and mining company producing nickel, copper and gold. Its share price ripped 45% in December following stronger nickel and copper prices, as well as the company's acquisition into the lithium sector. WAM sees the entry into lithium as one that aligns with its long term strategic plan to support the structural shift into battery storage. IGO noted that electric vehicle sales are expected to grow approximately 18% per annum through to 2030. 

BHP Group Ltd (ASX: BHP) was also another significant contributor, driven by higher iron ore, oil, nickel and copper prices. WAM expects oil prices to be supported by a continued recovery in COVID-related demand such as travel and industrial production in the near term. WAM is also constructive on nickel and copper for the same reasons relating to electric vehicle sales that were noted in IGO. 

The post 4 ASX shares that helped this fund outperform in December appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

At the time of writing, the Pointsbet share price is up another 3.90% to $13.80 per share.

While the company has not made any major announcements since its annual general meeting in November 2020, a number of announcements from competing US sports betting companies and fresh US sports betting turnover data has helped set a bullish tone for the PointsBet share price in the new year. 

Record turnover for New Jersey sports betting 

New Jersey took in a record US$1 billion worth of sports bets in December 2020, the latest in a string of monthly records for US sports betting. 

With the NFL playoffs underway in a lead up to the Super Bowl, January 2021 is expected to set new records for the industry.  

Not only does New Jersey represent the biggest sports betting state in the US, but also the birthplace of PointsBet US. In FY20, PointsBet's New Jersey FY20 turnover was $307.3 million, which generated a net revenue of $6.8 million. This makes up approximately 30% of the group's FY20 turnover of $1.15 billion. This result represented an online turnover market share in New Jersey of approximately 6.25% in FY20. 

Competing bookmakers deliver significant growth 

DraftKings and FanDuel are currently the two biggest bookmakers in the US. 

DraftKings saw a 98% year-on-year revenue surge to US$132.8 million in the latest quarter, reported on 13 November 2020. In the quarter, it raised its full-year 2020 revenue range to US$540 million to US$560 million, which translates to 25%–30% annual revenue growth. 

The company also provided a 2021 revenue guidance of US$750 million to US$850 million, which equates to 45% year-over-year growth using the midpoints. 

"The resumption of major sports such as the NBA, MLB and the NHL in the third quarter, as well as the start of the NFL season, generated tremendous customer engagement," said DraftKings CEO Jason Robins.

Foolish takeaway

The US sports betting market is still in its early days with a number of states still working towards legalisation. Morgan Stanley and JP Morgan are bullish on the sector, estimating the US sports betting and iGaming industry to be a US$12 billion opportunity by 2025.

Looking ahead for the PointsBet share price, the company has announced its intentions to launch its sportsbook and iGaming product in Michigan in the third quarter of FY21 and iGaming product in New Jersey in the second half of FY21.

The post Why the PointsBet (ASX:PBH) share price is hitting record highs appeared first on The Motley Fool Australia.

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Lina Lim 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. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Credit Suisse released a series of share price upgrades for big four ASX bank shares on Thursday, with Australia and New Zealand Banking Grp Ltd (ASX: ANZ) emerging as its preferred pick in the banking and financials sector. 

Big four ASX bank upgrades 

Commonwealth Bank of Australia (ASX: CBA)

The CBA share price target was increased from $74.80 to $82.00 with a neutral rating. Despite the increase in price target, the CBA share price closed at $86.33 on Thursday, or a 5% downside to Credit Suisse's new price target. 

National Australia Bank Ltd (ASX: NAB) 

Credit Suisse raised its NAB share price target to $26.00 or a 9% upside to its previous close. The broker takes a positive view on NAB with an outperform rating. 

Westpac Banking Corp (ASX: WBC) 

The Westpac share price target was also upgraded to $22.50 or a 7% upside to its previous close with an outperform rating. 

ANZ

The ANZ share price has been the best performing bank amongst its peers in FY21, surging 32% in the last six months. Despite the surge, the ANZ share price is still 7% short of where it started 2020. 

Credit Suisse raised its ANZ share price target from $26.20 to $28.00 with an outperform rating. This points to an upside of 14% to ANZ's closing price on Thursday of $24.60. 

Overall, the broker anticipates a significant dividend recovery in F21 for all banks with potential capital management as soon as FY22. 

Economic recovery taking shape

A number of domestic economic developments have pointed to the recovery establishing reasonable momentum, supported by the recent lifting of lockdown restrictions in Victoria.

In the RBA's December board meeting, it noted that expectations for GDP growth in the September and December quarters had been upgraded over the preceding month, and employment had also recovered faster than anticipated. 

A rebound in household consumption was also seen as well, following a record contraction in the June quarter. 

More bank-specific data has also pointed to a significant improvement in loan deferrals and signs of life in housing credit growth.  

The post This broker calls ANZ (ASX:ANZ) shares as the preferred bank pick appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Can't stop, won't stop 

While other buy now, pay later shares (BNPL) have chopped back and forth throughout FY21, Afterpay has continued to set new record highs, seemingly just weeks apart. 

Apart from pioneering the BNPL industry, the Afterpay share price has lifted higher off the back of a number of recent announcements and developments. 

Broker updates 

Brokers certainly seem to love the Afterpay share price, with Morgan Stanley the most recent broker to raise its share price target. 

On Thursday, Morgan Stanley lifted its price target from $120.00 to $136.00 with an overweight rating. The broker anticipates strong first half FY21 performance as downloads of the Afterpay app continue to surge in the US and UK.

However, it is weary of the strong Australian dollar that could weaken earnings. 

A new US player emerges

Affirm, a US-based BNPL successfully raised US$1.2 billion in an initial public offering (IPO) at an offer price of $49 per share. Its debut on Wednesday saw its shares close at $97.24, almost double its offer price. This momentum carried over to Thursday where it closed 18% higher to $114.95. 

The surging Affirm share price has ballooned its market capitalisation to approximately US$27 billion, very close to Afterpay's current market cap of approximately A$35 billion. 

In FY20, Affirm recorded 6.2 million customers, 6,500 merchants and US$4.6 billion in gross merchandise volume. 

By comparison, Afterpay is a global business with 11.2 million active customers and 63,800 active merchants as of 30 September 2020. The company also achieved $4.1 billion in sales in just first quarter FY21 alone. 

Pending further global expansion 

There are a number of exciting geographic expansions that could see Afterpay continue its global dominance. This includes the company's pending approval from the Bank of Spain to acquire Pagantis in Europe and the development of a strategy to tackle the South Asia market. 

The post The Afterpay (ASX:APT) share price just set a new all-time record high appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Goldman Sachs released a report on Wednesday that believes the temporary terminal connectivity issues could weigh on Tyro's medium-term growth prospects. 

Terminal connectivity issues 

Tyro has disclosed that its first half total transaction volume (TTV) was $12.118 billion, which was 3.7% ahead of Goldman's forecasts. However, this was offset by the connectivity issues that have indicated to reduce Tyro's TTV by around 5% to what would otherwise be expected for that period, said Goldman. 

The connectivity issues are reported to impact 19% of its merchants, or 6,300 merchants. A further 11% or ~3,650 have been impacted but have multiple terminals on site, allowing for the working terminals to still be used. Around 70% of merchants are not affected by this issue at all. 

The company advised it has a team of 250 personnel working to replace the affected terminals and indicated that a "majority" of merchants should be back online by the end of this week and balance in the course of next week. 

Goldman observes that the direct impact on Tyro's lost merchant fees should be "relatively immaterial". However, the impact on potential lost revenues for its merchants "could be material" and estimates a loss of "$57.5 million to 230 million", assuming merchants are not able to find an alternative basis to process sales. 

Tyro has said that once connectivity is restored, it will be in a position to consider compensation for customers and other options. 

Alongside this, Goldman is also concerned about the possibility that merchants may churn to alternative service providers regardless of compensation received. The broker cited that on social media, several merchants indicated they bought a Square terminal as a workaround. 

Furthermore, the report fears that future market share gains may slow as a result of reputational damage and delayed/lost opportunity for future partnerships such as its partnership with Bendigo and Adelaide Bank Ltd (ASX: BEN).

Lower Tyro share price target 

Goldman lowered its 12 month Tyro share price target from $3.65 to $3.15 with a neutral rating. This represents a 11% upside to Tyro's close on Wednesday. Its lower price target was driven by anticipated lower new customer growth rate assumptions.

The post Outage issues could weigh on growth for the Tyro (ASX:TYR) share price appeared first on The Motley Fool Australia.

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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

ASX buy now pay, later (BNPL) shares have pushed higher across the board on Thursday. At the time of writing, the Afterpay Ltd (ASX: APT) share price is 7.37% higher, eyeing its previous record all-time high of $123.40 and Zip Co Ltd (ASX: Z1P) shareholders can breathe a sigh of relief as its shares are 4.4% higher. 

Elsewhere, the Sezzle Inc (ASX: SZL) share price is 6.62% higher following its record fourth quarter results announced on 12 January 2021. 

The Laybuy Holdings Ltd (ASX: LBY) share price is 8% higher after announcing record third quarter results today. Some laggards include Splitit Ltd (ASX: SPT), Openpay Group Ltd (ASX: OPY) and Humm Group Ltd (ASX: HUM), which haven't seen the same level of gains.  

While ASX BNPL shares are grinding higher, a new US-based BNPL initial public offering (IPO) soared on its debut yesterday, demonstrating investor appetite for fintech IPOs and BNPL shares. 

US BNPL Affirm doubles on debut 

Affirm is a US-based BNPL player with a classic product that allows shoppers to pay for purchases in fixed amounts over time without deferred interest, hidden fees or penalties. In FY20, the company recorded 6.2 million customers, 6,500 merchants and US$4.6 billion in gross merchandise volume. 

The company raised $1.2 billion in an initial public offering at an offer price of $49 per share. Its shares surged to $97.24 at the market close on Wednesday, an almost 100% gain. 

The surging Affirm share price has ballooned its market capitalisation to around US$23 billion on FY20 revenues of US$509.5 million. This values the company at approximately 45 times FY20 revenue. 

What about ASX BNPL shares? 

If we looking at the major ASX BNPL shares with operations in the US, it's the Afterpay share price that has surged the most today.

At its current market cap of $31 billion with FY20 revenue of $502.7 million, the company appears to be more expensive, trading at a revenue multiple of 62. That said, the Afterpay share price delivered some of the best returns in 2020. The company has expressed its intention to maintain its growth trajectory by expanding into the rest of Europe and develop a strategy for the South Asia market. 

In comparison, the Zip share price has seemingly gone nowhere recently. The company currently has a market cap of $3 billion with FY20 revenue sitting at $161 million. It trades towards the lower end of the spectrum with a FY20 revenue multiple of just 18.

The post Could this be why Afterpay (ASX:APT) and other BNPL shares are soaring today? appeared first on The Motley Fool Australia.

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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

But when the company's share price started to turn in the wrong direction, it fell and it fell fast. 

It wasn't just the trading update

Polynovo released a trading update on 12 January 2021 which saw its shares crash 13% on the day.

But it wasn't just the trading update to point the finger at for Polynovo's significant share price decline. Its shares had already slumped from $3.88 to $3.39 or 12% before the announcement, almost a tell tale of the bad news brewing. 

Furthermore, the S&P/ASX 200 Health Care (ASX: XHJ) has also fallen 4.3% in the new year. Adding further insult to injury for the healthcare sector.  

Bell Potter disappointed with first half FY21 trading update 

Bell Potter reports: "Polynovo announced a relatively disappointing trading update, with 1H FY21 sales growth of 31% vs the pcp well below our forecasts, consensus and management expectations".

In the company's November 2020 annual general meeting, Polynovo's NovoSorb BTM product experienced very strong growth from $9.3 million in FY19 to $19.06 million in FY20.

Polynovo managing director Paul Brennan said at the time the company would "continue to harness this momentum to double our revenues again in FY21".

Bell Potter's report notes that "expectations were broadly that sales would double in FY21 vs FY20".

It noted that management also "tempered expectations around growth for the second half given the uncertainty in patient volumes". 

The broker did highlight some small positives including management's strong update on new accounts, with successful customers additions and ongoing efforts to drive growth with integrated distribution networks. Those new customers may start to become more active users of Novosorb BTM in the coming months, especially if patient volumes recover well in a post-vaccine environment. 

Overall, Bell Potter reduced its Polynovo share price target from $3.20 to $2.90 with a hold rating. The Polynovo share price is trading up 4.48% at $2.80 at the time of writing. 

The post Why this broker sees little upside to the Polynovo (ASX:PNV) share price right now appeared first on The Motley Fool Australia.

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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The Pointsbet Holdings Ltd (ASX: PBH) share price has finally made some headway. At the time of writing, PointsBet shares are trading hands for $12.98 per share, putting them up almost 10% this year and teasing their previous record closing price of $13.28 on 2 September 2020. 

Much of these year-to-date gains occurred yesterday, after Pointsbet announced it had entered into a multi-year partnership to be the official gaming partner of the Detroit Red Wings (hockey) and Little Caesars Arena. The strategic deal includes a brand new Pointsbet sports bar coming to Little Caesars and signage during Detroit Red Wings' games this upcoming season.

Pointsbet share price finally going somewhere 

Before yesterday's announcement, the Pointsbet share price has seemingly gone nowhere since its game-changing deal with NBCUniversal was announced last August. The deal almost doubled the Pointsbet share price in a single day from $7 to $13. 

The partnership will push the Pointsbet brand and products in front of the largest sports audience of any US media with exclusive television and digital sports betting integrations. 

From a cost perspective, Pointsbet has committed a total marketing spend of US$393 million in progressively increasing amounts over the 5-year media partnership, together with incentives payable to NBC for customer referrals. NBC will also take a 4.9% ownership stake in the Pointsbet company. 

Competing US bookmakers reporting strong results 

Elsewhere, William Hill plc reported significant growth in the US in its trading statement for the unaudited 52 weeks ended 29 December 2020. William Hill US went live in five states and launched mobile in five states, leading to 121% net revenue growth in the fourth quarter. Its sports betting apps and sports book odds are also featured in both ESPN and CBS Sports, two of America's leading sports media brands. 

Pointsbet's major US competitor, DraftKings Inc (NASDAQ: DKNG) has also rallied strongly in 2021, with year-to-date returns sitting at 17%. 

The post The Pointsbet (ASX:PBH) share price is up 10% this year appeared first on The Motley Fool Australia.

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Lina Lim 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. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Big brokers have come off their holiday breaks this week with updates on a number of ASX 200 shares. Here are the broker downgrades from 12 January 2021 to watch out for. 

AGL Energy Limited (ASX: AGL) 

The AGL share price has fallen more than 40% in the last 12 months, despite a market leading 7.80% dividend yield. 

The energy company recently slashed its FY21 guidance, now expecting underlying profit after tax to be between $500 million and $580 million, down from the previous guidance range of $560 million to $660 million.

As a result, Credit Suisse lowered its AGL share price target from $12.60 to $11.00 with an underperform rating. This represents a downside of 9% to its share price of $12.07 at close of trade today. 

ASX Ltd (ASX: ASX) 

The ASX share price has struggled to deliver shareholder return in 2020,  slumping 10% over the year. The most notable event for ASX last year was on 16 November, where a software glitched caused an embarrassing all-day outage. 

Credit Suisse lowered its ASX share price target from $73.00 to $71.00 with an underperform rating. This follows a similar logic to that of Goldman Sachs, which maintained a sell rating for ASX shares on 20 December 2020.

Goldman described the company at the time as "expensive given headwinds" after the company's mixed performance, with weaker derivatives and over-the-counter (OTC) markets but solid performances across its listings and issuer services, trading services and equity post-trade services. 

Magellan Financial Group Ltd (ASX: MFG) 

Goldman Sachs remains sell rated on Magellan with a price target of $50.70. The broker's commentary highlights Magellan's funds under management falling 1.6% from $103.0 billion to $1.1.4 billion during December.

The key drivers of Goldman's stance was the fund's underperformance. Relative performance was soft in December, with the Global Fund underperforming the benchmark by -2.7%, following an -8.8% underperformance in November. The broker believes that Magellan is most negatively exposed to the recent US senate run-off elections which could result in lower performance fees and funds under management.  

Citi also lowered its Magellan share price target from $60.00 to $56.50 with a neutral rating. While Credit Suisse lowered its price target from $58.50 to $55.00. 

The post Which ASX 200 shares have been slapped with price downgrades this week? appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

What a year 2020 was for iron ore. The steel-making metal soared to a 7-year high while ASX iron ore miners delivered market leading returns on improved profitability and record dividends. 

The Goldman Sachs commodities team is bullish on commodities and iron ore in 2021. Its 2021 sector outlook and themes report released on Wednesday points to recovering global demand, low inventories and supply constraints and a weakening US dollar to support commodity prices.

In this report, the BHP Group Ltd (ASX: BHP) share price has emerged as the broker's top iron ore pick. 

Bullish but valuations are fair

Despite the bullish sentiment for commodities and iron ore, Goldman views the sector as 'fairly valued based on a discounted cash flow (DCF) basis'. 

As a result, other ASX iron ore miners such as Rio Tinto Ltd (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) received neutral ratings after both companies soared in 2020 and early 2021. 

Goldman rates BHP share price as a buy 

BHP has emerged as the preferred pick based on valuation, commodity mix, better operating performance and more compelling medium to long-term production growth. 

Goldman raised its BHP share price target to $48.70 with a buy rating. This represents an upside of around 5%, and does not include its current dividend yield of 4.50%. 

The broker says that "BHP's portfolio is in a very strong position" and forecasts a "circa 65% increase in EBITDA and doubling of free cash flow (FCF) in FY21".

The company's strong financial performance will be underpinned by a fall in capex to US$7 billion as major minerals projects are completed, but also driven by positive copper prices and a recovery in met coal and oil prices in CY21. 

The report does flag BHP's softer December quarter due to production disruptions across copper, iron ore and oil. However, points to improved production moving forward with higher copper production, improved coal demand and oil acquisitions being finalised. 

Long term, the broker is positive on BHP's organic growth options, particularly in oil where it sees a possible 50% growth in volume to +150 million barrels of oil equivalent (MMboe).

At the time of writing, the BHP share price is trading up 0.41% at $46.19.

The post The BHP (ASX:BHP) share price is Goldman Sach's top pick for iron ore appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The Treasury Wine Estates Ltd (ASX: TWE) share price has halved in the last 12 months as China-related policies continue to depress the company's earnings and growth trajectory.  

While previous broker updates were cautiously optimistic for the Treasury Wine share price, the latest data from Goldman Sachs points to more risks ahead. 

US wine sales moderating 

Nielsen provides suppliers, importers, distributors and retailers with comprehensive US retail wine sales and direct-to-consumer wine shipment data.

The latest figures from Nielson point to moderating wine sales at the industry level after an extended period of COVID-19 driven growth. However, Treasury Wine sales captured continued to underperform the market, said Goldman.

The broker noted that the appreciating Australian dollar is likely to make the company's exports less competitive in key markets compared to other export competition. The Australian dollar/US dollar has rallied to an almost 3-year high of 77 cents in recent weeks. 

China woes continue 

Goldman describes the significant changes in trend in the China related data as 'unsurprising'. It notes a slowdown in both Chinese imports from Australia and Australian alcohol export data. However, the full extent of the impact of the temporary deposit measures from China will only be known in the company's next update.

The report also noted the effects of the rising Australian dollar is also impacting its Chinese pricing, with an increase in key products on Chinese e-commerce websites. 

Lower Treasury Wine share price target 

As a result, Goldman's 12-month price target was lowered to $8.60 or a downside of 4.7% to its current price of $9.01, at the time of writing.

The broker outlines a number of upside and downside risks that could play out 2021. Key upside risks include a decline in the Australian dollar, a faster recovery of trading in the US operations and better than expected outcome from the final stage of China's anti-dumping investigation. 

While key downside risks included further deterioration in China's trade dispute and macro, further execution issues from direct strategy in the US, risks of misalignment of significant inventory build with demand, margin pressure from retail partners and further appreciation of the Australian dollar. 

The post Goldman Sachs sees more pain for the Treasury Wine (ASX:TWE) share price appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Goldman Sachs has summarised its key takeaways on loan deferrals and the improvements it has observed in the big four ASX banks. We take a closer look.

Big four ASX banks analysis 

Westpac Banking Corp (ASX: WBC) currently has the most substantial share of deferrals, which can be explained by its large balance sheet, according to Goldman. 

Adjusting for balance sheet size, Australia and New Zealand Banking Group Ltd (ASX: ANZ) would appear to have the largest proportion of its loan book on deferral, sitting at 3%, down from 5% in October. National Australia Bank Ltd (ASX: NAB) has the least, with 1%, down from 3% in October. The Commonwealth Bank of Australia (ASX: CBA) sits in the middle with total deferrals of 2.5%. 

In the six months of available data, Goldman observes that NAB and Bank of Queensland Limited (ASX: BOQ) have seen the biggest net improvement in mortgage deferrals as a percentage of 31 May 2020 balances. 

Consistent with disclosure provided in its FY20 result, ANZ's mortgage deferrals fell away significant back in October, but it still experienced the least improvement on this measure. 

Private credit growth steady in November 

The Reserve Bank of Australia (RBA) has also provided updates on private credit for November 2020. In the month, business lending momentum remained weak and was down -0.2% month-on-month (vs. -0.3% in September).

That said, on a year-on-year basis, lending growth is positive, up by 0.9% given the solid trends seen in March and April from efforts by corporates/SMEs drawing down credit to support cashflows amidst the COVID-19 disruptions. 

The update cited housing credit growth showing signs of life, increasing 0.3% month-on-month in November, while year-on-year growth remained unchanged at 3.4%.  

Owner-occupier growth remains the driver of total mortgage growth and was up 0.5% month-on-month in October, while investor lending remains subdued at -0.1% year-on-year. Personal credit remains very soft and was flat month-on-month with year-on-year trends running at -12.4%. 

Overall, private and housing credit growth has remained steady in November, which feeds into the recent recovery for the big four ASX bank shares.

The post Loan deferrals down, big four ASX banks up? appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The Afterpay Ltd (ASX: APT) share price has taken a breather in recent weeks after running to an all-time record high of $123.40 on 18 December 2020. Despite the company's ballooning valuation, big brokers are still edging their Afterpay share price targets higher. 

Recent breather for the Afterpay share price 

The Afterpay share price has been choppy in recent weeks, largely driven by movements in the broader market and tech sector. The company has not announced any market sensitive news or updates since 2 December 2020 regarding new monthly sales milestone in November. 

US politics has been a key driver of the heightened level of volatility in the tech sector. Last Thursday, the Democrats were poised to take control of the Senate, threatening increased regulation. 

The control of the Senate spells good news for incoming President Joe Biden's agenda on issues including healthcare, the environment, government reform and the economy. Experts see this victory as a potential rotation away from tech shares into more cyclical sectors, similar to what the market experienced back in October and November last year. 

Brokers keen on Afterpay 

Citi is the first broker to upgrade its Afterpay share price target in the new year. The broker raised its price target from $97.75 to $115 with a neutral rating on Tuesday. 

Other brokers have yet to provide updates for Afterpay in 2021. 

Morgan Stanley previously retained an overweight rating with a $120 price target on 3 December 2020. The broker notes that Afterpay's November sales were ahead of expectations and operations appear to be on track. 

Credit Suisse initiated coverage on 7 December 2020 with an outperform rating and $124 price target. The broker anticipates a strong growth outlook to underpin strong financial performance and investor returns. 

Goldman Sachs retained its neutral rating and $99.90 price target on December 7. There was no change in rating or target after reviewing the November milestone. 

Afterpay in 2021 

Afterpay has hinted at a few things that investors can look forward to in 2021. 

Its first steps into the rest of Europe is currently pending the approval from the Bank of Spain. The company's acquisition of Pagantis in Europe will allow the company to launch into Spain, France and Italy immediately. 

Afterpay is also eyeing the South Asia market after establishing a base in Singapore. While no official plans are set, the company is looking to develop a strategy to enter this new market. 

The post Big brokers still love the Afterpay (ASX:APT) share price appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A major disappointment for Mesoblast came in December on its remestemcel-L product trial. This is used for ventilator dependent patients with moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection. 

The Mesoblast share price spiralled 45% lower when the trial was reported to be unlikely to meet the 30-day mortality reduction endpoint at the planned 300 patient enrolment. 

Despite the trial shortcomings, Bell Potter maintained a speculative buy recommendation on Mesoblast shares on 23 December 2020. The broker updated its Mesoblast share price target to reflect the trial, lowering the price target from $7.40 to $5.10. This is more than twice today's price of $2.46, down 5.38% at the time of writing. 

COVID-19 ARDS trial 

Bell Potter believes that remestemcel-L is unlikely to be approved for COVID-19 ARDS treatment on the basis of this trial. The broker thinks that at best, they may get a path forward to identify the correct patient population and clinically meaningful endpoint for a confirmatory trial. 

While Mesoblast has stated that it remains committed to developing remestemcel-L for both COVID-19 ARDS and non-COVID-ARDS, Bell Potter thinks otherwise.

Its report said: "It may be best now for the company and its partner Novartis to focus their efforts on non-COVID-ARDS if they do get any clinically meaningful signals from this trial, as they are likely to have more control over the trial".

Combined with the evolving treatment landscape for COVID-19 with new vaccines, antibodies and other experimental treatments, the broker decided to remove COVID-19 ARDS from its modelling for remestemcel-L. 

Chronic Heart Failure (CHF) trials 

On Monday, Mesoblast announced that it had treated 537 patients with chronic heart failure with its rexlemestrocel-L product. The trial found that one single does provides a substantial and durable reduction in heart attacks, strokes and cardiac death in patients with CHF. Results show that the incident of heart attacks and strokes were reduced by 60 per cent over a follow-up period of 30 months. Based on the observed reduction in morality and morbidity in this trial, Mesoblast intends to meet with the FDA to discuss a potential approval pathway. 

The results coincide with Bell Potter's view that its CHF therapy may not reduce the number of heart failure related hospitalisations but significantly reduces the risk of a patient dying from cardiac causes. The broker observes that Mesoblast's therapy seems to work best when treated at an earlier stage in Class II patients vs. the more severe Class III patients. 

The report believes that path forward is "focusing on Class II CHF patients, with reduction in morality as a primary endpoint". However, it is likely that Mesoblast will be required to do a confirmatory Phase 3 trial focused on class II patients with mortality as a primary endpoint. 

Revised Mesoblast share price target with next catalyst 

Bell Potter's revised model led to a large decrease in NPAT forecasts for FY21 and FY23 and a large increase in net loss forecast for FY22. This was driven by lower revenue due to the removal of COVID-19 ARDS. 

The broker sees the next catalyst for the Mesoblast share price is its results from Phase 3 trial for chronic discogenic lower back pain (CLBP). These results were expected in December 2020.

The post Why 1 broker thinks the Mesoblast (ASX:MSB) share price can run higher  appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Australian retail turnover rose 7.1% in November 2020, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures.   

The rise was led by Victoria, which saw its retail sales surge by 22.4% as Melbourne retail stores were able to trade for a full month in November. Excluding Victoria, turnover increased 2.6%. 

ASX retail shares have largely reported upbeat earnings, especially in the months of November and December. Here are the industries and ASX retail shares that have benefitted from improved retail conditions. 

Industry level breakdown 

At the industry level, clothing, footwear and personal accessory retailing jumped by 26.7%. 

Coinciding with the strong performance for this segment, Accent Group (ASX: AX1) released a trading update on 7 January 2021 citing stronger than expected sales in November and December. The company is now expecting group earnings before interest, tax, depreciation and amortisation (EBITDA) for the half year ended 27 December 2020 to be in the range of $95 million to $98 million, which represents a growth of between 40–45% on the prior corresponding period. 

Department stores also experienced a significant uplift in turnover with a 21.1% increase. This has helped the likes of Kmart and Target owner Wesfarmers Ltd (ASX: WES) hit all-time record highs on the back of strong earnings across the group's retail businesses.

Household goods retailing also improved 12.7%. Nick Scali Limited (ASX: NCK) recently updated its profit guidance following better than anticipated container availability during the months of November and December, which lead to increased delivery volumes. The company now expects unaudited net profit after tax for the six months to 31 December 2020 to be $40.5 million, up approximately 100% on the prior corresponding period.

Other household retailers such as Temple & Webster Group Ltd (ASX: TPW) and Adairs Ltd (ASX: ADH) have also experienced a recent resurgence in share price.

Elsewhere, cafes, restaurants and takeaway food services increased 6.7% while food retailing fell 0.3%. Total retail turnover rose 13.3% when compared to November 2019. 

E-commerce trend continues 

The growing dominance of e-commerce is also clear in these latest numbers. Online sales made up 11% of total retail turnover in November 2020, compared to 10.4% in October 2020, while in November 2019, online retail contributed 7.2% to total retail turnover. 

The post Retail sales rose 7% in November to boost ASX retail shares appeared first on The Motley Fool Australia.

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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group, ADAIRS FPO, and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Lithium spot price recovery 

Much like booming iron ore prices sending the Fortescue Metals Group Limited (ASX: FMG), BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) share prices to record highs, recovering lithium prices has initiated a broad recovery in ASX lithium shares. 

On 6 January 2021, Pilbara reported a record December quarter 2020 shipment of 70,609 dry metric tonnes (dmt) on improving spodumene concentrate demand conditions. The update highlights a material uplift in lithium chemicals pricing within China, with the Platts battery grade lithium carbonate pricing assessment up 35% to date from its lows in August 2020. 

Previously, in the company's 2019 annual report, annual spodumene concentrate sales were achieving a selling price of US$674/dmt. By July 2020, prices had further weakened to US$410–423/dmt. 

Pilbara pushing ahead 

While a lithium price recovery is still in its early days, Pilbara has gone full steam ahead with an acquisition under the belt, focusing on cost and moving from moderated production towards full production. 

Back on 14 December 2020, the company launched a $240 million equity raising to acquire Altura Mining Limited (ASX: AJM). Pilbara neighbours Altura's operations, so the acquisition will allow the group to unlock significant exploration, logistics and infrastructure synergies. 

From a cost perspective, many ASX lithium shares such as Orocobre Limited (ASX: ORE) have been producing at or below cost amidst weak lithium prices.

Pilbara has been able to maintain low production costs despite its plants running at lower utilisation levels. In its September 2020 quarterly update, the company's unit cash operating costs stood at US$355/dmt, with unit costs trending towards its target of US$320–350/dmt. 

Pilbara Minerals managing director and CEO Ken Brinsden is pleased with how the new year has turned out. Looking ahead, he commented:

The significant amount of work we have undertaken over the past 18-months in improving lithia recoveries, reducing operating costs and refinancing our senior debt facility, together with the impending acquisition of the neighbouring Altura Lithium Project, means that Pilbara Minerals is well positioned to respond to a recovery in the lithium market and capitalise on improvements in market conditions.

At the time of writing, the Pilbara share price is up 0.64% for the day at $1.10 per share.

The post The Pilbara Minerals (ASX:PLS) share price is already up 25% in 2021 appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Energy commodities bouncing back

Brent crude oil has staged a significant recovery to the US$52 per barrel level. This compares to being range bound around the US$40 mark since June 2020.

Thermal coal prices have increased over 50% during the December 2020 quarter, brought on by China ramping up imports on non-Australian thermal coal. 

LNG prices have also surged to a six-year high of around US$15 per million British thermal units (MMbtu), from US$2/MMbtu in mid-2020. 

A number of supply-demand, weather and political forces continue to work in favour of sturdy energy prices. Since March 2020, key energy producers including OPEC+ and Glencore have focused on managing supply and curbing greenfield and expansion projects.

More recently, a number of regional economies have also emerged from COVID-19-related lockdowns, which could help demand-side fundamentals.

Bell Potter upgrades ASX energy shares 

Bell Potter reiterated buy recommendations for a series of ASX energy shares on 7 January 2021.

Beach Energy Ltd (ASX: BPT) had a share price target of $2.29, or an 19% upside to its closing price on Friday of $1.92.

The Cooper Energy Ltd (ASX: COE) share price target was 47 cents. This represents an upside of 17.5% compared to its closing price last week of 40 cents. 

Finally, Senex Energy Ltd (ASX: SXY) also received a buy recommendation with a price target of 40 cents. The Senex share price closed at 33 cents last week. 

These companies received buy recommendations on the basis that they each had uncontracted medium- to long-term production and are positioned to expand their existing assets to meet increased demand.

Other preferred ASX energy shares that received speculative buy ratings from Bell Potter included Byron Energy Ltd (ASX: BYE) with a price target of 42 cents, Comet Ridge Ltd (ASX: COI) with a 17 cent price target and Blue Energy Limited (ASX: BLU) with a 17 cent price target as well. These companies are far more speculative in nature, with market capitalisations of less than $200 million. 

The post Broker thinks these 6 ASX energy shares could go higher appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

About Castillo Copper 

Castillo Copper is an Australian-based explorer focused on copper across Australia and Zambia. The company is embarking on a strategic transformation to morph into a mid-tier copper producer. Castillo currently has four properties: 

• Mt Oxide project in the Mt Isa copper-belt district, north-west Queensland, which delivers significant exploration upside through having several high-grade targets 
• Four high-quality prospective assets across Zambia's copper-belt, which is the second largest copper producer in Africa 
• A large tenure footprint proximal to Broken Hill's world-class deposit that is prospective for zinc, silver, lead, copper and gold 
• Cangai Copper Mine in northern New South Wales, which is one of Australia's highest grading historic copper mines.

 The Big One deposit 

One of Castillo's priorities has been developing its Mt Oxide Project, especially progressing drilling campaigns at the Big One deposit. 

Today, the company announced "game changing assays", which significantly extend the known mineralisation at the high-grade Big One deposit. This discovery pushed the Castillo share price up by 47% to 6.5 cents at the time of writing. 

Castillo Copper's Managing Director Simon Paull commented:

We are delighted to receive assays of this calibre, especially with global copper supplies tight. There is now compelling evidence Big One Deposit is a shallow, high-grade copper-cobalt system that can potentially scale further. The Board is now ramping up forward development work and the modelling of a maiden JORC compliant resource.

There is an expected pause in drilling activities due to the commencement of the wet seasons across northern Australia. However, the company announced a geophysics campaign is being formulated to identify new bedrock conductors and potential test-drill targets. 

In addition, the board has instructed the Castillo geology team to commence modelling a JORC compliant resource based on available historic and fresh data. If the outcome of the geological modelling is positive, then the board expects to commence applying for a fresh mining lease.

The Castillo share price is up by 170% on this time last year. On current prices, Castillo has a market capitalisation of $65.92 million.

The post Castillo Copper (ASX:CCZ) share price rockets 47% on major copper discovery appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

ASX lithium shares have truly tested the resolve of long-term shareholders after more than two years of negative returns.

The industry has been in survival mode since lithium prices spiralled lower after spot prices peaked in 2018. This was driven by an influx of producers and supply, on dwindling demand. 

In recent months, the Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS) share prices have staged epic recoveries, delivering triple digit returns from their lows late last year. 

But taking a look at the bigger picture, the Orocobre and Galaxy share prices are still down a respective 30% and 27% from their 2018 highs. Pilbara is the only player to be eyeing a record all-time high after surging more than 250% since October. 

Lithium prices hit a 14-month high

Fastmarkets cites that China's battery-grade lithium carbonate prices have hit a 14-month high due to continued tight supply and producers hiking up prices further. 

The turning point for lithium prices is significant following more than two years of tumbling prices. Since 2018, lithium carbonate and hydroxide prices slumped by more than 50%, slashing the once highly profitable ASX lithium shares. 

In the case of Galaxy, the company has previously traded at a price-to-earnings (P/E) ratio of just 10. But in the company's half-year ended 30 June 2020 results, it delivered a net loss of US$22 million. 

Back in FY18, the company was selling lithium concentrate for an average of US$927 per dry metric tonne (dmt). These prices fell to an average of US$502/dmt in FY19. And US$398/dmt in the most recent 30 June 2020 results. 

Pilbara is the latest ASX lithium share to update the market about improving prices. Its December quarter shipments update cited improved spodumene concentrate demand conditions, with lithium carbonate pricing up 35% to date from its lows in August 2020. 

ASX lithium shares positioned for the future 

ASX lithium shares have wasted no time in gearing up for higher lithium prices in the medium-long term. 

Galaxy holds three lithium assets. Two of which are aimed to start construction and commissioning in 2022. Galaxy moderated production settings on its flagship resource, Mt Cattlin, to 50-55% of capacity to adapt to market conditions. However, the miner is examining the potential to ramp up Mt Cattlin production to full capacity, subject to inventory levels and prices.

Similarly, Pilbara also has the ability to rapidly increase production in response to rising prices. 

The post Are ASX lithium shares staging a comeback in 2021? appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

2020 was a breakthrough year for ASX mining shares, with commodities including gold, iron and copper running to multi-year highs.

Higher commodity prices brings to life many more prospective exploration projects, with a number of ASX mining shares delivering 1,000% returns last year . 

Chalice Mining Ltd (ASX: CHN) was one of the best performing ASX mining shares, running from 20 cents to close at almost $4.00 in 2020.

On 5 January 2021, Bell Potter upgraded the Chalice Mining share price target from $5.35 to $5.60. Here's why the broker sees significant upside in the exploration company. 

The Chalice growth story so far 

Chalice is a Perth-based exploration company, focused on base and precious metals. It has an experienced management and geological technical team whose members are recognised for their exploration success.

The company's strategy is to target tier-1 scale (net present value greater than US$1 billion) mineral projects. This by actively managing its exploration portfolio and undertaking high impact activity on its projects. 

Chalice advanced two gold projects to the point where they were sold for $107 million – far more than the cost of exploration – to larger companies for subsequent development. Chalice returned $25 million to its shareholders and retained significant funds for further exploration. 

Today, the company's assets comprise 2 new and significant discoveries, the Julimar project in Western Australia and the Pyramid Hill gold project in Central Victoria. Chalice also owns a number of minor exploration projects and royalty interests for a range of metals including gold, nickel, copper and vanadium. 

Chalice share price upgraded with buy rating 

The Chalice share price was upgraded from $5.35 to $5.60, or a 25% upside to its current share price. Bell Potter believes the company is well-funded to continue its major exploration program at Julimar, plus drilling programs at Pyramid Hill gold project and limited exploration on its other projects with cash currently estimated at ~$120 million. 

This funding will support even higher levels of drilling activity and associated economic studies at Julimar. The broker continues to regard the Julimar proejct as a world ranking one with potential to become a major new Tier-1 source of platinum-group elements. 

Foolish takeaway

ASX mining shares across the board, from giants such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) to microcaps, have all benefited from higher commodity prices. 

Chalice's recent capital raising was well-received by the market, and places the company in a position to deliver further drillings activity and economic studies for its two core projects in 2021. 

At the time of writing, the Chalice share price is trading up 3.57% at $4.64.

The post Here's what 1 broker thinks about the Chalice (ASX:CHN) share price appeared first on The Motley Fool Australia.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.