Nervousness has re-entered the chat this month. Increasing conflict, supermarket inquiries and record gold prices paint an uneasy scene. Yet, the fear of higher — or at least the same for longer — interest rates is front of mind for investors.

The cost of money, which is determined by interest rates, can have severe consequences on companies. This is especially true for businesses dependent on debt. A second bout of rate rise-inducing inflation could be catastrophic for those already on the edge.

Second wave of inflation

Expectations of approaching rate cuts have arguably fuelled much of the market rally before the recent souring. At its peak, the ASX All Ord index was up more than 7% in under three months. But those gains have now been vaporised.

Earlier this month, the monthly consumer price index (CPI) out of the United States gave investors pause for thought. The country's March inflation figure rose to an annualised rate of 3.5%, increasing month-on-month from 3.2% — depicted below. That's not the direction you want when aiming for 2%.

The conflict between Israel and Iran could exacerbate the issue.

Australia's Treasurer, Jim Chalmers, said, "It's not hard to imagine an escalating conflict in the Middle East putting upward pressure on inflation, just when we've been making welcome and encouraging progress in that fight."

In 1973 and 1974, inflation rapidly resurged, instigating those crushingly high interest rates that some may recall. The situation emerged following an oil embargo on the US. A retaliatory action after $2.2 billion of aid was provided to Israel during the Yom Kippur War.

The uncanny resemblance to 1973 could be causing some apprehension among investors.

The chart above shows that crude oil prices have surged 15% since December last year.

What happens next is unknown. However, I'm wary of history rhyming — taking Warren Buffett's sage advice of "Never lose money". That's why I avoid companies carrying a load of debt on the balance sheet.

Which ASX All Ord shares could be in danger?

Two handy measures for gauging a company's financial strength are the debt-to-equity and interest coverage ratios. The first provides insight into the level of debt, while the second shows the extent of the debt's burden on profitability.

Three ASX All Ord shares that I think could be poorly positioned for higher interest rates are:

• Zip Co Ltd (ASX: ZIP)
• Finbar Group Ltd (ASX: FRI)
• Elanor Investors Group (ASX: ENN)

Zip carries a lot of debt to facilitate buy now and pay later purchases. Meanwhile, Finbar Group holds $282 million worth of debt to construct apartment buildings. Lastly, Elanor is heavily indebted to finance its real estate portfolio.

If rates were to rise again, consumer spending would deteriorate further. That's a bad situation for a BNPL company, leveraged cash-tight constructors, and REITs with a heavy skew towards retail property.

Instead, I'd hold ASX All Ord shares with conservative balance sheets.

The post 3 ASX All Ord shares at risk if inflation storms back appeared first on The Motley Fool Australia.

Shares in the property developer closed only slightly in the green, up 0.69% at the close of trade. However, on release of the news earlier today, the Finbar share price jumped as much as 3.4% to 74.5 cents.

Earthworks development

According to the update, Finbar advised that earthworks on the company's landmark Civic Heart project will commence in January 2021.

The decision by the company to begin significant works comes off the back of a strong sales momentum recorded across its portfolio. Finbar received 60 sales for Civic Heart apartments, worth $59 million, prompting it to begin development works.

During October, Finbar had secured the sale of 47 apartments to the value of $31.3 million. This translates to more than $1 million in sales per day. The company noted that the sales achieved in October reflect its highest on record since 2017. This is extremely positive news, according to the company, given the circumstances of how COVID-19 has affected the Western Australian housing market.

The Civic Heart project is located on a site 8,208 metres squared, situated in one of South Perth's most anticipated mixed-use developments.

Once finished, the building will feature two towers housing 309 residential apartments, four penthouses, and 25 ground floor commercial tenancies.

The entire project's end value is estimated to be around $408 million.

What did Finbar's Managing Director say?

Finbar Managing Director, Mr Darren Pateman, made comment on Perth's rental market, which has seen its lowest vacancy levels in 30 years. Mr Pateman said that while this was driving buyer demand, investors were cautiously returning to the market.

After a prolonged absence from the Perth market, we are currently seeing the return of investors as a result of the tight rental market and more buoyant conditions across the market in the wake of the pandemic.

This rental market tightening coupled with record low interest rates is also encouraging tenants to enter the market as buyers which is helping with the sale of our entry level product.

The return of investors is also a key element in addressing the current rental shortage across Perth which is predicted to increase in 2021.

In addition, Mr Pateman went on to talk about the improved sales activity across the sector as a result of new and existing arrivals. This includes returning West Australians, interstate and overseas migrants seeking a COVID-free state.

Finbar share price summary

The Finbar share price has been climbing higher over the past few weeks, gaining more than 15%. Shares in the property developer fell to 52 cents in March after achieving a 52-week high of $1.01 in February. The company has a market capitalisation of $202.7 million and a price-to-earning (P/E) ratio of 31.

The post What happened with the Finbar (ASX:FRI) share price today appeared first on The Motley Fool Australia.

The news initially dropped the property developer's share price down to 72.5 cents before lifting higher to 75.5 cents, up 3.4% in mid afternoon trade. However, the Finbar share price later again retreated, sliding back down to close at 72 cents, down 1.37%.

Let's take a closer look.

What does Finbar do

Located in Western Australia, Finbar is engaged in property development. The company focuses on developing medium-to-high density residential buildings and commercial offices. Finbar operates in apartments, commercial, retail, and leasing.

Riverena apartment completion

Finbar advised today that its Riverena development in Rivervale, Western Australia, had reached practical completion. The end value across all residential lots is estimated to be $52 million.

Despite the impact of COVID-19, the project has secured $22.2 million in pre-sales with 56 apartments under contract. Owner occupiers make up the majority of buyers, accounting for 70% of sales to day. About 20% of the apartments under contract were attributed to first homebuyers.

Settlement on the pre-sold units at Riverena is expected to start in November, with revenue to contribute to FY21's earnings.

What did management say?

Commenting on the achievement, Finbar managing director Darren Pateman said:

The Riverena project is part of a significant investment in the growing Rivervale precinct which will benefit local residents and businesses in the area, and will lead on to the continuation of our developments in the precinct on other land in which we have an interest.

The sales secured at the project to date indicate a growing confidence in the market which can be attributed in part to recent government stimulus measures and the strength of the WA economy in relation to other states and countries.

This improvement in sentiment has resulted in October 2020 on track to be the largest sales month in two years, which again points to a gradual recovery in the Perth residential market.

Mr Pateman called on the Western Australia government to remove the foreign buyers' surcharge, saying he believed the added cost had stopped overseas investor activity and could prevent sustained growth in the housing market. He added:

Confidence in the WA market is improving and it is important to keep that momentum moving in the right direction by encouraging investors back into the market, and we believe removing the foreign buyers' surcharge will contribute significantly to that whilst further boosting employment for the construction sector generally.

About the Finbar share price

The Finbar share price has skyrocketed over the past week, jumping more than 17%. At a current market capitalisation of $197 million, the Finbar share price looks to be recovering some lost ground. Shares in the property developer fell to 52 cents in March after achieving a 52-week high of $1.01 in February.

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

Finbar reported that its revenue increased by 56.2% to $53.4 million and its net profit after tax grew by 251.5% to $6.64 million. 

The results were boosted by return to net positive value of Karratha and East Perth investment properties as well as the profits from the sale of completed stock and settlements at Stage 1 Palymra East, which marked the only project completion for the year to date. 

It's anticipating full year profit after tax of approximately $14 million for FY20. 

Finbar currently has $102 million of completed stock available for sale, with $57 million of that attributable to Finbar after joint venture interests. It has sold down an average of $6.1 million per month in the first half of FY20. 

It finished with $31.2 million in cash, having repaid $12 million in bank facilities relating to Palmyra. 

The company's Board decided to declare a fully franked dividend of $0.02 per share, which was a decrease of 33% from last year's interim 3 cents per share dividend. 

The share price will be on watch tomorrow for the reaction to this result. 

The post This small cap just grew profit by 251% appeared first on The Motley Fool Australia.

I'm not surprised, if I were living in China at the moment I'd be pretty nervous about the coronavirus with the rate of infections and deaths.

According to the Australian Financial Review, the shutdown in China due to the coronavirus has caused a rush of Chinese buyers looking for a safe haven. The China property portal Juwai.com has seen a 300% increase in the number of enquiries for Australian property over the past week.

The AFR quoted a few property agents confirming that they had seen a large increase of interested buyers who are "desperate to buy".

I'm not surprised that there's a large increase of interest in Australia. Most Aussie cities are a long way from the action, although the world is linked with air travel.

The property market is already seeing a strong rise in property prices, particularly Sydney and Melbourne, due to Australia's lower interest rates, relaxed lending rules and the fact that the Liberals won the Federal election last year.

Another rush of Chinese buyers would be good news for every ASX share related to property. I'm thinking of shares like property portal businesses REA Group Limited (ASX: REA) and Domain Holdings Australia Ltd (ASX: DHG), property builders like Mirvac Group (ASX: MGR), Finbar Group Limited (ASX: FRI) and Stockland Corporation Ltd (ASX: SGP), as well as construction businesses such as Brickworks Limited (ASX: BKW) and CSR Limited (ASX: CSR). Even the banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) could see an indirect benefit. 

The post The coronavirus could cause a Chinese stampede for Aussie property appeared first on The Motley Fool Australia.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) higher 0.98% to 5,778.30
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) higher 0.95% to 5,838.40
• AUD/USD at US 72 cents
• Gold at US$1,282.98 an ounce
• Brent Oil at US$59.55 a barrel

The best-performing ASX 200 share today was funds management company Magellan Financial Group Ltd (ASX: MFG), its share price rose 10.3% after giving some guidance yesterday about its half-year result.

Shares of waste disposal business Bingo Industries Ltd (ASX: BIN) went up 6.9% today with investors liking Bingo's suggestion of disposing an asset to address the ACCC's concerns about an acquisition.

The oil price rose over the past day, sending the share prices of some resource businesses higher including the Beach Energy Ltd (ASX: BPT) share price which went up 5.2% and Oil Search Limited (ASX: OSH) shares went up 2.6%.

The Platinum Asset Management Limited (ASX: PTM) share price ended the day down 3.5%, after warning that it would generate little in the way of absolute return performance fee income.

Shares of Finbar Group Limited (ASX: FRI) rose 11.3% today with the builder company announcing a buy-back of shares.

The Cimic Group Ltd (ASX: CIM) share price went up 1.1% won a $155 million coal contract in Queensland.

Finally, shares of Western Areas Ltd (ASX: WSA) rose 1.5% after updating the market about the progress made at its Odysseus Project.

Here are some of today's top stories:

• Traders are betting heavily on these 5 shares falling
• Why the Mayne Pharma share price is sinking again today
• 3 ASX shares I'll hold til I'm 100
• Top brokers name 3 ASX shares to buy today

Magellan has proven to be a very good share to own since inception, but today's rise may mean it's not cheap any more, consequently there may be better shares to buy on the ASX.

The post ALL ORDINARIES finishes higher Wednesday: 8 shares you missed appeared first on The Motley Fool Australia.

It's a good question because property is a huge asset class and worth considering, but an investment is only worth going for if it will make you money.

Property prices have been going down for a while now. Most buyers during the past year will have a paper loss. Any investors will be facing a paper loss and the negative cashflow thanks to negative gearing.

But, that doesn't mean that it's impossible to profit from the property sector. It doesn't even mean taking on debt! All you need is some money to invest in businesses on the ASX.

Here are three different groups of ideas:

ASX Banks

One of the most common ways to get exposure to the property sector is through ASX banks. Indeed, the ASX banking sector is largely a bet on Australia's housing market.

Obvious examples are larger banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) as well as smaller banks like Bank of Queensland Limited (ASX: BOQ) and Bendigo and Adelaide Bank Ltd (ASX: BEN).

Real estate investment trusts (REITs)

Commercial property is also a way to get invested in property. Again, you don't have to buy a property outright yourself, you just have to own a tiny piece of an ASX REIT such as National Storage REIT (ASX: NSR), Goodman Group (ASX: GMG) and Rural Funds Group (ASX: RFF).

Property builders and owners

There are a number of property builders out there that profit from every project they complete such as Stockland Corporation Ltd (ASX: SGP) and Finbar Group Limited (ASX: FRI).

Retirement village builders and operators are exposed to similar positives and negatives, as well as the ageing tailwind. Some of the examples in this space are Ingenia Communities Group (ASX: INA) and Aveo Group (ASX: AOG).

Property-related businesses

Finally, there are many property-related businesses that service the property or its owner in some way. For example, there are property advertisers like REA Group Limited (ASX: REA) and property product businesses such as Reece Ltd (ASX: REH) and DuluxGroup Limited (ASX: DLX).

Foolish takeaway

The current housing market trend shows that houses may not be as safe for your money as they're cracked up to be.

There are other ways to get exposure that are much more likely to be profitable over the next few years than an investment property. Currently, I think Rural Funds Group, REA Group and Reece could be the best options to go with.

The post How can you profit from property without owning a house? appeared first on The Motley Fool Australia.

He is also a key figure in Thorney Opportunities Ltd (ASX: TOP) and Thorney Technologies Ltd (ASX: TEK).

In the interview he said that whilst fintech shares are running hot, there is plenty of opportunity for fintech shares to be successful due to major banks not investing where they should, therefore leaving them open to disruption.

He also said that a number of shares were trading with hefty multiples, but earnings are growing and balance sheets are more effective than in previous years. Earnings multiples shouldn't be relied on in isolation for valuation.

Some of the shares he said that he likes are Hub24 Ltd (ASX: HUB), Onevue Holdings Ltd (ASX: OVH), Finbar Group Limited (ASX: FRI), Decmil Group Limited (ASX: DCG) and Southern Cross Electrical Engineer Ltd (ASX: SXE).

The main company that he mentioned was Mesoblast Limited (ASX: MSB). He said that in the past few years it has reduced in value by two thirds, yet now has a commercialised product, is generating real revenue and has three potential billion-dollar treatments in early stage trials. Indeed, he said "I believe Meso is destined to take its place as one of the world's truly great biotechs."

He thinks Mesoblast still represents "exceptional" value and may be about to deliver on its long-held potential.

Foolish takeaway

It's a big vote of confidence for Mesoblast, but it could be some time before it reaches sustainable profitability. It wouldn't be at the top of my personal watchlist, as biotechs aren't my thing, but that doesn't mean it can't grow strongly from here.

The post One of Australia's richest people reveals his latest share ideas appeared first on The Motley Fool Australia.

Will things be better on Wednesday? Here are five things that could shape the day's trade:

Australian share market expected to open flat.

According to the latest SPI futures, the local market is expected to open the day flat. This soft start comes despite a positive night of trade on Wall Street which saw the Dow Jones rise 0.5% and both the S&P 500 and Nasdaq climb 0.3% higher.

Commonwealth Bank results.

This morning the Commonwealth Bank of Australia (ASX: CBA) share price will be on watch when the banking giant releases its full-year results. According to a note out of Goldman Sachs, it is expecting a cash profit before non-recurring items of $9,089 million, which will be a decline of approximately 5.9% on the prior corresponding period. The broker has also forecast a $2.30 per share final dividend.

Result releases.

It isn't just Commonwealth Bank that is due to release its results. Embattled financial services company AMP Limited (ASX: AMP), casino and resort operator SKYCITY Entertainment Group Limited (ASX: SKC), and Tabcorp Holdings Limited (ASX: TAH) are scheduled to release their respective results this morning.

Oil prices positive.

Australian energy producers such as Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) could be given a lift on Wednesday after oil prices rose overnight. According to Bloomberg, the WTI crude oil price rose 0.1% to US$69.09 a barrel and the Brent crude oil price jumped almost 1% to US$74.46 a barrel.

Shares going ex-dividend.

A number of shares including Australian Foundation Investment Co.Ltd. (ASX: AFI), Finbar Group Limited (ASX: FRI), and OceanaGold Corp (ASX: OGC) are likely to drop lower this morning when their shares trade ex-dividend.

The post 5 things to watch on the ASX on Wednesday appeared first on The Motley Fool Australia.

There's a big group of home owners and investors out there who think their savvy investing is why their asset has done so well. Even now, there are people advising that property is the best investment and it's 'as safe as houses'.

However, many of the supporting factors for property price growth are now turning into headwinds.

Just before the house price boom in 2012, the RBA cash rate was as high as 4.75% and dropped all the way to 1.5% in mid 2017. Of course this decline would accelerate property price growth. Less than a year after the interest rate stopped declining, house prices in Sydney started falling.

Foreign investors have been driven back with controls in China and higher taxes in Australia.

Both political parties, particularly Labor, are promising to implement changes which are likely to reduce house prices somewhat.

The Royal Commission has led to pressure on banks and mortgage brokers to be more stringent on potential borrowers.

There is a large tide of interest only loans that are going to convert to capital repayments too. This will happen each year between now and 2021.

Australian wage growth has slowed considerably whilst other costs, such as petrol and electricity, have risen significantly.

An RBA interest rate rise would be another nail into property prices. Plus, that would help grow my deposit quicker.

As a prospective first home buyer, each of the above reasons will likely reduce house prices and perhaps help me buy quicker. I'd prefer not to have a loan ten, or even five, times my income like a lot of new buyers do.

But, it's not as simple as property prices decreasing and there being no other effects. There could be a lot of forced property sellers. People may reign in their spending, which would affect the whole economy and many listed shares like Wesfarmers Ltd (ASX: WES), JB Hi-Fi Limited (ASX: JBH) and Nick Scali Limited (ASX: NCK).

A rapidly declining house price would be bad for developers like Stockland Corporation Ltd (ASX: SGP) and Finbar Group Limited (ASX: FRI).

Declining construction work and retail spending could lead to job losses which could be bad for Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) with rising bad debts.

An above scenario could be bad for my own personal work earnings with Fool. Any other prospective first home buyer could also be at risk of an earnings decline or even a job loss.

Foolish takeaway

It would be impossible for house prices to fall significantly without there being second order effects. I hope that house prices do slowly decrease back to more regular house to income ratio levels, but no crashes. This would also make investors think before speculatively loading up on as much debt as possible.

The post As a prospective first home buyer, I don't want a housing crash appeared first on The Motley Fool Australia.

The ASX has plenty of property shares to choose from, that develop or manage, residential, commercial or industrial property.

DEXUS Property Group (ASX: DXS) is one that covers all three, while the Investa Office Fund (ASX: IOF), manages office properties around Australia.

Below are two small cap shares, focused on the Gold Coast and Perth, that I think have the potential for solid growth.

Finbar Group Limited (ASX: FRI) is a residential property developer, mainly developing apartments and some commercial property in Perth.

The company has $68 million in cash and while there is some debt, it is all related to projects. Finbar reported $5.1 million in net profit for Fy2017, which is the 21^st year of consecutive profit.

Sales are starting to ramp up and this year they have sold 154 units, being either pre-sales of future projects or sales of completed projects, which is up from last year.

The company paid a fully franked 6 cent dividend for the year, which is the 15^th consecutive year paying dividends and has a dividend yield of 6.22%.

The share price is down from a high of $1.8 0in 2013, due to a decline in pre-sales, but looks to have bottomed out, so could be good for price appreciation, growth, and yield.

Sunland Group Limited (ASX: SDG) is also a property developer of residential housing and urban development.

The share price has risen 338% since the depths of the GFC and has a dividend yield of 4.65%. The P/E ratio is 7.68.

The company has most of its developments around the Gold Coast, which is benefiting from foreign investment, mainly from China and the Commonwealth games being held in 2018. This has also lead to improvements in infrastructure, notably the airport.

But not all are foreign investors, with many southern buyers coming up from the colder climates.

Property Analysts are predicting the market to be hot for another 2-5 years and it still has not reached the heights of the big centres of Melbourne and Sydney.

The post 2 small cap property shares to buy appeared first on The Motley Fool Australia.

Most retirees and SMSF investors typically require a certain level of income to sustain their required standard of living and for many people this just isn't possible with term deposit rates at around 3%.

This has seen more people invest in equities in the search for yield.

This sounds like a reasonable strategy but investors need to remember that yield is only one part of the equation when investing in shares.

For example, what is the point investing in a company offering an 8% yield if the share price falls by 30%?

Or what if the company pays a trailing dividend yield of 8% but then slashes its dividend due to difficult operating conditions? Does BHP Billiton Limited (ASX: BHP) or Woodside Petroleum Limited (ASX: WPL) sound familiar?

And then there is the other situation where the dividend looks so attractive, but it is the result of the share price being hammered for one reason or another. Sometimes the market can get it wrong – for example Retail Food Group Limited (ASX: RFG) when it was recently trading below $4 per share and yielding more than 6.2% – but it can also be because the market thinks the current dividend is unsustainable.

In these situations, investing for yield alone is clearly a recipe for disaster.

With these points in mind, I recently carried out a quick search looking for companies currently yielding more than 7% and looked at whether those above average yields were too good to be true. Here are a few examples of the companies that came up:

• Prime Media Group Limited (ASX: PRT) – Currently yielding 16.7% – fully franked! The media sector is facing a number of headwinds and Prime Media continues to suffer from declining revenues. The company does expect to post a full year profit of around $24 million, which should allow for the payment of a reasonable dividend for the remainder of the year. With that said, the longer term sustainability of the company's business model and dividend is more uncertain and this is sufficiently reflected in the current valuation.
• Finbar Group Limited (ASX: FRI) – Currently yielding 10.5% – The West Australian property developer has suffered from softening conditions recently thanks to the decline in the resources sector. There could be further pain to come for Finbar and I would not be surprised to see the full year dividend cut when the company reports later in the year.
• Select Harvests Limited (ASX: SHV) – Currently yielding 11.2% – Just like commodity companies, Select Harvests' profits are highly dependant on the price it can receive for its almonds. The price of almonds has been declining recently so investors should expect a fall in profits and a complimentary fall in the dividend when the company next reports.
• Australia and New Zealand Banking Group (ASX: ANZ) – Currently yielding 7.5% – There is a lot of ongoing debate as to whether or not ANZ (and the other major banks) will be cutting dividends this year and this uncertainty is weighing on the share price. There is little doubt that profit growth has stalled for ANZ and the current share price reflects the fact that it is the bank at the highest risk of cutting its dividend in the short term.

Foolish takeaway

Investors should always be sceptical when a company is offering a dividend yield well beyond the market average.

There is usually a reason behind this and it is up to the investor to find out why the dividend yield may be too good to be true.

Are you looking for a sustainable and growing dividend yield that offers the possibility of solid capital gains?

The post Are these massive dividend yields too good to be true? appeared first on The Motley Fool Australia.

As Charlie Munger once said, "No matter how wonderful a business is, it's not worth an infinite price. We have to have a price that makes sense and gives a margin of safety considering the normal vicissitudes of life."

In keeping with Charlie's thoughts, one of my favourite stock picking metrics is the 'Price to Book Value'.

The price to book value is the comparison between the current share price and the current book value per share, also called equity per share.

The book value per share or equity per share, is the amount of equity on the balance sheet divided by the number of common shares.

Why is book value so important?

Book value is one way to measure the value of a company. Put simply, you add up the carrying value of the company's assets, and subtract its liabilities, what you're left with is the book value.

Compare that to the value the stock market is giving to the business (the share price), and you may have a great value investing opportunity.

As a value investor, for me it's a great starting point.

Where to find this information?

In terms of finding this information, let's use Telstra Corporation Ltd (ASX: TLS) as an example.

To find the current share price for Telstra, you can go to any number of sites, like Google Finance. Here is Telstra's current share price at $5.66 on Google Finance:

To calculate the book value per share.

Go to Telstra's 2015 Annual Report and you'll see the total number of listed shares is 12,225 million:

Then go to Telstra's Statement of Financial Position or Balance Sheet and find the total equity available to Telstra entity shareholders, which is $14,103 million:

Now, all you have to do is divide the total equity available to Telstra entity shareholders by the total number of shares ($14,103 million/12,225 million) and you get $1.15 of book value or equity per share.

Compare the $1.15 of book value to the share price of $5.66 and you have a price to book value ratio of 4.92. The closer the book value per share is to the share price, the better the value.

Easy!

10 value stocks selling at a discount right now

Here is my list of 10 stocks currently selling very close to their book value. I've also added some additional criteria to provide some protection against high debt companies, and focused on companies that have recently provided good returns on equity, positive earnings per share growth and, paid a dividend:

The post 10 value stocks selling at a discount during the crash appeared first on The Motley Fool Australia.

Mike King looks at the independence of financial advisors in Australia in this enlightening article, or as it turns out, the incredible lack thereof.

Andrew Page lays down a few key psychological factors that make us naturally poor investors in this brief but insightful piece. I wish I had read it earlier as I was guilty of making one of the mistakes he warns against just earlier this week.

Blue-chip healthcare stock CSL Limited (ASX: CSL) announced on Tuesday that the US Food and Drug Administration has accepted for review its recombinant factor VIII single-chain for the treatment of haemophilia A. People with haemophilia A have a shortage of factor VIII and can suffer from random heavy internal bleeding.

Then on Friday, CSL announced that it has secured final approvals to acquire Novartis' influenza vaccines business. The US$275 million deal is likely to complete in the next few days and will result in CSL owning the second largest influenza vaccines business in the world. During the week, Ryan Newman wrote two articles examining the buy case for CSL which can be found here and here.

National Australia Bank Ltd. (ASX: NAB) took the decision to lift rates on interest-only loans by 0.29 of a percent from 10 August. Brendan Lau examines what the change means for the bank's shareholders in this article.

Medical device company ResMed Inc. (CHESS) (ASX: RMD) released its fourth quarter results showing revenue growth of 9% but no growth in net income. The reduced profitability is partly explained by the presence of two non-recurring cost items in the latest quarter.

On Monday, iiNet Limited (ASX: IIN) shareholders voted overwhelmingly to accept the takeover offer by TPG Telecom Ltd (ASX: TPM). The combined entity will be one of the largest home broadband providers in Australia.

Navitas Limited (ASX: NVT) announced its 2015 financial results on Monday including reported earnings per share of $71.8 million, up 39% on last year. Excluding impairment charges, the result represents an 11% improvement. Why were its shares sold off on the news and is it now a buy?

On Wednesday aged care provider Regis Healthcare Ltd (ASX: REG) revealed that the Supreme Court of Victoria upheld its appeal against the State Revenue Office Victoria, relating to a stamp duty assessment from a merger transaction in 2007. As Regis had already paid the original assessment, it will recognise a profit uplift of $19.5 million this year.

Another aged care provider, Estia Health Ltd (ASX: EHE), disclosed that it has acquired a further four aged care facilities in Victoria for $181.1 million, taking the total in the group to 53 facilities. What do the latest acquisitions mean for investors and is the stock a buy?

Stories from the smaller end of the market

Consumer products company, GUD Holdings Limited (ASX: GUD), reported a 19% improvement in underlying profit after tax to $36.9 million in its 2015 financial reports released on Thursday.

Ten Network Holdings Limited (ASX: TEN) has replaced its chief executive and chairman, Hamish McLennan, with David Gordon as chairman and Paul Anderson as chief executive. Will the changes make any difference?

IT consultancy, UXC Limited (ASX: UXC), announced a number of significant contract wins during the week. The contracts are service based and so will provide valuable recurring revenues for the company and include a three-year $15 million deal with Ausgrid and Endeavour Energy.

Payday lender Cash Converters International Ltd (ASX: CCV) went into a trading halt on Thursday after media reports said it was facing a class action. Should shareholders be concerned?

On Monday, diagnostic imaging company Capital Health Ltd (ASX: CAJ) advised that its underlying net profit before tax (NPBT) would be up by 58% to $16.1 million. However, reported NPBT is just $7.8 million with one-off costs related to acquisitions making up the difference.

On Tuesday, eye surgery company Vision Eye Institute Ltd (ASX: VEI) said that it expects earnings before interest, tax, depreciation and amortisation to be $27 million for this year, an improvement on its previous guidance of between $25 million and $26 million. Then, on Friday it was announced that major shareholder Primary Health Care Limited (ASX: PRY) has sold its 19.9% stake in the company for 94 cents per share. This is a higher price than what is being proposed by Pulse Health Limited (ASX: PHG), who have already made an approach to buy Vision Eye.

Junior biotechnology company, Admedus Ltd (ASX: AHZ) reported revenue of $2.9 million for the June quarter, up 36% from the previous quarter and 16% from the corresponding period. However, operating cash outflows were $5.8 million for the quarter and $21.5 million for the year. Are things still moving in the right direction?

Perth-based property developer Finbar Group Limited (ASX: FRI) gave profit guidance of $25.5 million for 2015 on Monday and then announced on Friday that it has been granted approval for a $72 million project in Dianella. Is the company a good option for income investors?

The post Did you miss the major news from the ASX this week? appeared first on The Motley Fool Australia.

The profit guidance is down on last year's result of $36.5 million, although total dividends are equal to 2014 at 10 cents. Property developers undertake projects that last multiple years and so timing can affect any individual year's profit result. The company has suggested that this explains the fall in profit from last year saying.

"This result represents a solid year of profitability in a year where the timing of the construction and completion cycle provided less assistance to the reported net profit."

Indeed, such timing impacts are more pronounced with larger projects and Finbar has now reached a size where it is undertaking multi-year developments worth hundreds of millions of dollars. For example, the company is about to begin selling units in the largest single stage project it has done, the 38 level Civic Heart project with a value of more than $400 million.

Encouragingly, Finbar took the opportunity to inform the market that it holds pre-sale contracts of $402 million, up from $239 million last year and the highest level in the company's history. These pre-sales will be converted into revenues and earnings over the coming months and years.

Just following the news, Finbar was trading at $1.27 giving it a market capitalisation of $292 million. At 31 December 2014, the company had debt less cash of $54.8 million and so based on the $25.5 million profit guidance, Finbar trades on an enterprise value to net profit multiple of 13.6x. Meanwhile, the stock has a large fully franked dividend yield of 7.8% and currently trades at a 26.1% premium to its net asset value as at 31 December 2014.

For income-seeking investors, Finbar looks like an attractive option with few other ASX listed stocks able to offer such a high yield. However, investors should consider the sustainability of current dividends and often such a high yield indicates that the market expects dividends to fall in the future.

My view is that the reason for the market discount in this case is twofold.

1. Property developers use debt to fund large projects that take years to complete and Finbar is no exception. If the property market were to collapse today, it could lead to major losses for the company as it would have spent hundreds of millions of dollars on buildings that it could not sell. Fortunately, Finbar appears to have a fairly conservative debt level relative to both its market capitalisation and net assets, but the problem is that under such a scenario, its market capitalisation would plummet and banks might call in their debts. The company would then be forced to raise capital at suppressed prices leading to massive dilution for existing holders.
2. Finbar is based in Perth, a city which has grown on the back of the mining boom. The fear is that the business environment will be much worse in the future for Finbar, now that commodity prices are falling and fewer projects are going ahead. However, the latest Australian Bureau of Statistics data shows the population of Western Australia is still growing, up 1.6% year on year for the December 2014 quarter.

Foolish takeaway

Part of the reason that Finbar has such a high dividend yield is that the market believes the business is facing significant risks. The flip side of this is that if the risks do not eventuate then current prices represent a bargain. However, I also believe that current prices do not fully protect the downside if things turn sour for Finbar and so overall I will not buy the stock.

Having said that, I think Finbar is a well-run operation. It has an exclusive arrangement with its key contractor, Hannsen, which also owns over 2% of Finbar stock. This along with the fact that Finbar undertakes many projects as joint ventures, means that risks are shared with suppliers, and profit margins are strong. Also, the company is growing its property investment portfolio – rental income was $13.6 million in 2014, offering a slightly more robust revenue stream in the event of a downturn.

The post Is Finbar Group Limited a good buy for income seekers? appeared first on The Motley Fool Australia.

They are the hidden faces of declining resource investment. But they aren't alone.

We've already seen a number of iron ore miners including Western Desert Resources (ASX: WDR) and Atlas Iron Limited (ASX: AGO) struggle to stay afloat. Western Desert fell into administration, and there are signs Atlas is headed in the same direction – mainly thanks to too much debt and production costs well above the price it receives for its iron ore.

Then there are the secondary companies that are suffering. Transport company McAleese Ltd (ASX: MCS), which had several contracts to haul Atlas's iron ore to port, has suspended its shares. Mining services companies MACA Ltd (ASX: MLD) and Mineral Resources Limited (ASX: MIN), logistics companies and rail operators like Qube Holdings Ltd (ASX: QUB) and Aurizon Holdings Ltd (ASX: AZJ) are also likely to be affected, albeit somewhat differently.

Mining towns and residents next

But it's also the mining towns, where houses once sold for more than a $1 million dollars, now unable to be sold at a third of the price, that are suffering. The workers are going as mines shut down or close, or as the big miners lay off staff to get their expenses as low as possible.

What's worse are the stories of fly-in, fly-out miners who invested heavily in residential property in mining regions, such as Western Australia's northern coast and Queensland's western and eastern towns. Now they have no job, and their properties are worth far less than they owe the banks.

And as the ABC reports, Western Australian mining towns of Wickham and Karratha are starting to feel the pinch, as many former residents leave to head back to the cities they came from. The business owners in the towns have lost a huge amount of business and are unlikely to see it recover.

Who's after that?

Well, what are the banks going to do with those properties where borrowers can't pay back the loans or the businesses in the once booming mining towns? Will we see the banks' bad debts start to rise?

What about West Australian-based property companies like Finbar Group Limited (ASX: FRI)? Only last week the company announced plans to develop 680 apartments in Port Hedland – the same town where million-dollar properties can't be sold for a third of the price. Shareholders will be hoping Finbar's management know what they are doing.

This is only the start. Mining investment is still falling and has yet to hit the bottom, more companies, workers and shareholders are going to lose plenty before this is over.

The post The hidden face of the mining downturn appeared first on The Motley Fool Australia.

Geographical Split

There's plenty of money to be made in property development, but much of the skill comes from having an insight into where the next boom areas are likely to be. Much like the resources game, property prices are subject to the whims of supply and demand and consequently developers with operations outside of Sydney and Melbourne have been left behind.

An example of this is the outperformance of larger diversified developers Lend Lease Group (ASX: LLC) and Stockland Corporation Ltd (ASX: SGP), versus the smaller and concentrated Cedar Woods Properties Limited (ASX: CWP) and Finbar Group Limited (ASX: FRI).

East vs West

The problem with Cedar Woods and Finbar appears to be the group's exposure to the slowing Western Australian economy. Lend Lease and Stockland meanwhile, have far greater exposure to the eastern coast, including Queensland on top of NSW and Victoria.

The difference in 2014 has been stark- a falling iron ore and oil price has seen house price growth slow dramatically in WA and Finbar and Cedar Wood's share price plunge up to 25%.

Time to Buy?

Finbar is expected to grow profit this financial year, while Cedar Woods may see a small reduction. This could result in a reduction in Cedar Woods' 5% dividend yield, however Finbar's 7.7% yield should remain at or above the current level.

Catalysts going forward include the success or otherwise of a $120 million project in South Perth for Finbar, and a massive 980 lot development in Queensland's Upper Kedron for Cedar Woods. The diversification into Queensland should be a good move going forward.

Risk-averse investors may be best off looking elsewhere but those that enjoy a riskier investment, certainly in some way linked to the strength of the Western Australia economy, could consider Cedar Woods and Finbar as an intriguing 2015 proposition.

The post Could these 2 property developers be 2015's top picks? appeared first on The Motley Fool Australia.

1. Specialty Fashion Group

Specialty Fashion Group (ASX: SFH) is trading at its 52-week low despite posting a record gross margin of 63% and 20% top-line growth for FY14. Weak market and consumer sentiment is clearly weighing on the stock, but there are strong internal and macro factors at play that should give the company a lift.

The group has one of the largest women's customer communities in Australasia with over 7 million loyal members who contribute to 80% of sales, allowing the company to fend off competition. It started FY15 generating positive growth in same-store sales. This growth along with strategic initiatives to refresh existing brands and expand overseas should lead to more diversified and stable revenues.

On the macro front, the price of cotton has declined over 30% from its two-year high and could continue to slide as a supply glut from India coincides with a slowdown in demand from China, the world's biggest consumer. Sustained weakness in cotton prices should provide support to the company's record gross margin despite recent easing in the Australian dollar.

At a P/E of 13 the company is cheap relative to its peers, and with minimal debt on the balance sheet (net debt to equity of 18%) it can further improve on its 19% return to shareholders through organic and inorganic growth.

2. Finbar Group Limited

Finbar Group Limited (ASX: FRI) is poised to take advantage of its status as a prominent developer of medium- to high-density residential apartments and commercial property in Western Australia.

Property prices have risen nearly 40% over the past five years across the nation, with foreign investment from China widely regarded as the driver. Given that foreign investment is seen as a means to overseas migration for Chinese citizens, incoming migration to Australia is set to rise after Canada scrapped its immigrant investor program.

Although Sydney and Melbourne have long been the destination of choice for migrants, Perth has the potential to lure them away with its improving tertiary education system and more moderate increases (32%) in property prices.

The group is well positioned to meet this demand with $1.8 billion in its project pipeline, most of it centred on Perth's metropolitan area. In February the group signed a 10-year exclusivity agreement with its long-term primary building contractor Hanssen Pty Ltd, providing it with a significant cost advantage.

Finbar is off to a good start in FY15 having received development approval for the $60 million Northbridge project as well as securing a $150 million project in east Perth, and with a net debt-to-equity ratio of 8%, it has the financial capacity to execute its projects. On the valuation front, it's currently trading at a P/E of 8.6, well below its peers, in addition to a good dividend yield of nearly 7%.

3. Collins Foods Limited

Another company set to benefit from Western Australia is fast food chain operator Collins Foods Limited (ASX: CKF). The impending end to the mining boom may have stripped the state of its AAA credit rating, but housing finances is gearing up to be the next growth engine, with CommSec's State of the States October report commenting that the number of financing commitments is 8.5% above the long-term average.

The twin trends of continued economic growth and population increase from incoming migration bode well for the 38 KFC franchises that the company operates in the state. It is looking to expand its footprint and refresh current store formats, with about $25 million earmarked for store refurbishments over the next four years in Western Australia and Northern Territories alone.

The KFC brand is well supported in Australia, underpinned by strong new product promotions and innovative family dinner offerings. This is evident through its strong first-quarter FY15 performance of 21% prior corresponding period growth in NPAT.

The stock is a good pick within the fast food sector with a P/E of 15 that is below peer average and a good dividend yield of nearly 5% backed up by strong cash flow generation.

The post 3 small caps that should be on your watch list right now appeared first on The Motley Fool Australia.