The ASX 200 gained 1.90% in August, but the best performing stocks for the month easily outshined the index. Here are the top performing stocks in August 2021:
As for Australia’s biggest companies by market cap, it was a bit of a mixed bag with some companies making respectable gains and while others made losses.
Australian and New Zealand Banking Group Ltd (ASX:ANZ)
In July, the RBA pledged to continue the current government bond buying program of purchasing $4 billion per week in bonds until early November. As COVID-19 numbers continue to grow in NSW and VIC and lockdowns are extended, we agree with ANZ’s current prediction that the RBA is likely to extend the current program to early next year. ANZ’s buy-back appears to have supported the share price in the short term as it has continued to track sideways. ANZ must trade above $30 to reduce the risk of a decline to between $23 and $24 in coming months.
BHP Group Ltd (BHP)
Investors will have the opportunity to vote on the proposal by BHP to unify its corporate structure through the removal of the current UK listing. The announcement has increased volatility in BHP’s share price, however, China’s decision to lower steel production had a larger impact on iron ore miners. In July, prior to the announcement, BHP had risen by approximately 10% but has since fallen in excess of 20% from the all-time high of $54.55 on 30 July 2021. The good news for investors is the record dividend of US$2 per share to be paid on the 21st of September. Also, current analysis indicates that BHP’s share price is likely to continue to rise over the medium to long term.
Commonwealth Bank of Australia (CBA)
Climate-related court action is increasing in Australia and Commonwealth Bank is on the list. An article on Reuter’s website on the 2nd of September stated that a CBA investor has filed action in Australia’s Federal Court, seeking authorisation to inspect bank records on several oil and gas projects funded by the bank. Prior to this, on the 11th of August CBA released information on a share $6 billion buy-back, which should support its share price. That said, the stock price peaked on the same day at $109.03 and has since been trading closer to $100. A fall below approximately $99 means CBA would be at risk of a further sell-off.
Related article: 10 Best ASX Stocks To Buy Right Now
CSL Limited (CSL)
In August 2021, CSL announced a $3.27 billion profit and declared a dividend of $1.61 per share, up 10%. The stock continued to rise to a peak of $315.18 on the 31st of August. Although CSL’s share price typically trends up well over time, the stock is not immune from periods of short-term volatility. For example, the stock fell by around 11.2% from a peak of $307.57 in June 2021 to a short-term low of $273.01 in early July before rising by approximately 6% to the end of July and was up a further 8% in August. Medium to longer term analysis indicates that CSL will continue to rise above the all-time high of $342.75 achieved prior to the pandemic.
Fortescue Metals Group Ltd (FMG)
All major iron ore miners traded to new all-time highs in July 2021 before falling more than 20% in August due to China’s decision to lower steel production. FMG achieved an all-time high of $26.58 on the 29th of July before declining to a low of $19.30 on the 23rd of August. As the analysis predicted, FMG experienced a large fall in August of 15.7%, which wiped out the previous month’s gains. Strong resistance exists at approximately $25 and current analysis indicates that the stock has the potential to trade to this level again before the end of the first quarter of 2022.
Macquarie Group Limited (MQG)
Rental community developments are not new, however, there is a growing trend in property markets in the US, UK and here in Australia to build more of these communities as demand grows. A report in The Australian recently indicated that MQG is entering into this market. The bank announced recently it has lowered the dividend payout ratio from 60 to 80% to between 50 to 70%. Instead of falling, MQG’s share price has continued to rise. The stock rose by approximately 6.3% in August and made further gains in early September. Current analysis indicates a further short rise is likely this month before the stock peaks.
National Australia Bank Limited (NAB)
On 26th August, NAB acknowledged the $18.5 million penalty imposed by the Federal Court in relation to Fee Disclosure Statements in 2019. The bank has also had to pay back $31m to more than 15,000 customers. NAB investors have been more upbeat about the bank, particularly following the hike in the interim dividend which doubled to $0.60 in July, though still well below pre-COVID payments of $0.83 and $0.99 received in 2019 and 2018 respectively. On the plus side, for the month of August 2021 NAB shares rose by around 7 per cent to $27.73 and this month the stock is trading close to $29, well above levels achieved prior to the COVID meltdown in February 2020.
Westpac Banking Corporation (WBC)
At the end of August WBC announced it completed the sale of its lenders mortgage insurance business to Arch Capital Group Ltd. The market saw this as positive and WBC gained around 5.3% in August to close at $25.82 on 30 August 2021. Although the analysis indicates WBC has the potential to continue to rise towards the end of the calendar year, it is also important to consider the current downside risk that exists for the stock. On a more cautionary note, if WBC’s share price were to fall below $25.60 this would increase the probability of a further decline below the low of $24.13 on 20 July 2021.
Wesfarmers Limited (WES)
In July, WES announced a takeover offer for Australian Pharmaceutical Industries (API). API’s Board rejected the offer on the basis that it undervalues the company. WES has since requested price-sensitive information before making a higher offer. Following the announcement, WES’s share price continued to rise and gapped up on the first trading day in August before trending higher to a peak of $76.20 on the 20th of August. Following the high, WES reversed and fell by around 10.8% to $59.95 by month end, which left investors confused as the company reported a strong performance on 27 August for the financial year ending 30 June 2021, with net profit after tax having increased by 16.2 per cent to $2.4 billion. These falls are common and so we believe there is nothing for long term investors to be concerned about, as WES fell by approximately 12.4% this time last year.
Woolworths Group Limited (WOW)
WOW stores in NSW are under pressure as unprecedented demand for online shopping rises. Products are missing from shelves in stores as well as in customer orders. WOW reported that this is due to staff at distribution centres having to self-isolate. Following the close of trade in July, WOW share price gained around 10% to trade to a high of $42.66 on the 20th of August. The stock fell from this level by around 4.5% into the close last week. Although WOW has the potential to trade as high as $46 in early 2022, in the short term the analysis indicates a greater risk exists to the downside. Further constraints in WOW’s distribution chain would increase selling pressure and push the stock price down to between $38 and $40 short term.
Thinking of investing?
The past year has seen a number of stocks boom and reach new heights, which can be quite alluring for some investors. However, it is always best to do your research and bear in mind that past performance is not an indicator of future performance. Check out our article on how to pick stocks.
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