Day: 22 May 2020

Card payment options and a surge in e-commerce has created a new era in how we complete transactions. The coronavirus pandemic has accelerated the death of cash with many conducting their business and discretionary transactions via alternative methods. With the World Health Organization also advising people to use contactless payment to reduce the risk of transmission, it’s heightened people’s consciousness of cash handling.  

Here are 2 ASX stocks that could benefit from the death of cash.

EML Payments Ltd (ASX:EML)

EML Payments is an Australian fintech company providing technology solutions for payouts, gifts, rewards and supplier payments. The company has a large presence in Australia, North America and Europe, issuing mobile, virtual and physical card solutions.

The coronavirus pandemic has seen EML’s retail segment struggle, however, its salary packaging and online gaming businesses have outperformed. In a recent trading update, EML reported a 55% increase in Gross Debit Volume of $9.83 billion and a 20% increase in revenue of $87.1 million for the 9 months ending 31 March. Despite being sold-off earlier this year, the EML share price has bounced more than 173% from its March low and is poised to head higher.

Pushpay Holdings Ltd (ASX: PPH)

Believe it or not, the Pushpay share price has surged more than 181% from its March low and is now trading at all-time highs. Pushpay provides donor management services and finance tools targeted towards non-profit, religious and education providers. The company predominately operates in the US and has digitised the way people make donations.

With many churches and religious gatherings banned during the coronavirus pandemic, Pushpay has emerged at the right place, at the right time. The company’s platform has enabled people to make donations whilst also abiding by social distancing measures.

Earlier this month Pushpay released its annual report, posting a 32% surge in revenue for the full-year. The company also noted the successful acquisition of US software company Church Community Builder, allowing Pushpay to provide more innovative solutions for customers.

Pushpay expects further revenue growth in the future as more customers adopt mobile technology, post-pandemic. As a result, the company is targeting 50% of the medium and large church segments in the US and expects EBITDAF in the range of US$48 million and US$52 million for FY21.

Foolish takeaway

The coronavirus pandemic has brought with it many permanent changes in consumer behaviour, such as online shopping and greater attention to infection control. Although cash may, realistically, never be replaced, EML and Pushpay reflect the exciting opportunities and innovations available to investors on the ASX.

More reading

• Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market
• 3 leading ASX 200 tech shares to buy now
• Where growth, income, and value investors can invest right now
• These ASX payments shares could be long term market beaters
• Where to invest $20,000 into shares right now

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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We’re almost 2 months on from the fastest bear market on record, which saw the S&P/ASX 200 Index (ASX: XJO) fall 36.53% from 7,162.50 points on 20 February to a low of just 4,546 on 23 March.

In the time since, however, the market has rallied on the back of unprecedented fiscal support, a flattening COVID-19 curve, and perhaps a whole lot of optimism. So much so that a number of ASX 200 shares heavily sold-off in the downturn have bounced back with a vengeance.

With this in mind, here are all the ASX 200 shares that have doubled or more in price from 23 March through to yesterday’s close:

Afterpay Ltd (ASX: APT) — 394.38%

It’s been an eventful couple of months for the Afterpay share price. The buy now, pay later provider’s recent rollercoaster ride on the ASX has certainly been a hot topic, falling to a low of $8.01 in March due to COVID-19 concerns. The thinking was that with the economy in hibernation and unemployment becoming a real issue, Afterpay’s bad debts were at risk of blowing out, all the while customers would have less of an appetite to spend. 

But 2 months, a flattening curve, and a JobKeeper package later, the Afterpay share price is reaching new heights. Just yesterday, Afterpay shares hit an all-time high of $45.17, buoyed by the company’s announcement of reaching 5 million active US customers.

Since the bottom of the bear market in March, the Afterpay share price has also been boosted by a positive trading update and news of Chinese tech giant Tencent becoming a substantial shareholder.

EML Payments Ltd (ASX: EML) — 171.16%

The EML share price experienced a significant fall from grace in the recent bear market, plunging from its February high of $5.70 to close on 23 March at just $1.34. 

Whilst the broader market has been on an upward trend ever since, it’s EML’s renegotiated acquisition terms that have gotten investors particularly enthused. In late March, the company announced more favourable contract terms for its acquisition of Prepaid Financial Services, a leading provider of white-label payments and banking-as-a-service technology across the UK and Europe.

What’s more, earlier this week, EML released a trading update, quantifying the effects of COVID-19 on March and April performance and remaining upbeat about achieving a solid full-year result in FY20.

Perenti Global Ltd (ASX: PRN) — 147.92%

The mining services group has been on a tear recently, notching up a number of impressive one-day gains at times when there was seemingly no news out of the company. 

Perenti first delivered a trading update on 24 March, disclosing that COVID-19 hadn’t yet had an impact on its financial performance. Nonetheless, it decided to withdraw FY20 earnings guidance for safe measure. The following day, the company deferred its interim dividend and outlined a range of capital management initiatives to ensure financial strength throughout the crisis.

On 15 April, Perenti confirmed it still hadn’t experienced any material financial impact from the pandemic. On the whole, it appears investors deemed this mining services share heavily oversold, flooding back to the company in droves.

Credit Corp Group Limited (ASX: CCP) — 143.36%

Being Australia’s largest debt buyer and collector, Credit Corp shares naturally took a beating as soon as the market started taking a turn for the worse. In fact, the Credit Corp share price spiralled from an all-time high of $37.99 in February to just $6.25 on 23 March – an 84% drop.

In the period since, Credit Corp made the move to withdraw its FY20 earnings guidance and completed a $120 million institutional placement to strengthen its balance sheet and pursue debt purchasing opportunities. In any case, as one of the hardest-hit companies in the bear market, investors saw value in the Credit Corp share price after the government announced a series of financial support measures. However, most of Credit Corp’s recent gains have come in late March and early April, with shares actually down 15.64% since 14 April. 

Nearmap Ltd (ASX: NEA) — 110.80%

Those following along with Nearmap’s journey might remember a fateful day in late January this year when the company downgraded FY20 guidance, causing shares to plummet 30%. Well, despite COVID-19 concerns, the Nearmap share price is actually now trading higher than these January lows after more than doubling since the bottom of the bear market.

Along with overall market sentiment, shares in the aerial imagery and location data company have been spurred on by a business update released in April. At the time, Nearmap revealed trading conditions had not been materially impacted by COVID-19, brushed off concerns over the need to raise additional capital, and announced its intention of reaching cash flow breakeven by the end of FY20.

PolyNovo Ltd (ASX: PNV) — 106.82%

Last but not least we have PolyNovo, the up-and-coming healthcare star that announced its arrival on the ASX 200 stage last year by posting a 231% annual gain.

After succumbing to a near 60% fall in the recent bear market, investors have been clamouring to get their hands on PolyNovo shares following a positive trading update released in early April. The company announced a record monthly sales result for the US in March and didn’t believe the coronavirus would have a material impact on its business.

Foolish takeaway

The seemingly never-ending sea of red we saw in the markets earlier this year was, understandably, a difficult pill to swallow for many investors. However, these gains just go to show the kinds of opportunities that can arise in a bear market.

Learning to master your emotions and capitalise on depressed valuations in times like this can go a long way in fast-tracking your journey to long-term wealth creation.

More reading

• 2 ASX stocks that could replace cash
• Is Afterpay an ASX blue chip of tomorrow?
• 3 leading ASX 200 tech shares to buy now
• Brokers name 3 ASX 200 shares to buy right now
• Is Telstra about to be caught in a new mobile phone war?

Cathryn Goh owns shares of AFTERPAY T FPO and Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market appeared first on Motley Fool Australia.

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Smartpay Holdings Ltd (ASX: SMP) shares have stormed out of a trading halt this morning to be up by as much as 14.29% in early trade. The trading halt was put in place on Wednesday, pending the announcement of a capital raising.

Dual-listed on the NZX, Smartpay is a small-cap payments share that has been trading on the ASX since 2013. With a share price of 46 cents at the time of writing, the company’s market capitalisation sits at around $80 million.

Smartpay is an independent full-service EFTPOS provider, directly servicing more than 25,000 merchants with around 35,000 EFTPOS terminals across Australia and New Zealand.

What did Smartpay announce?

Before the market opened this morning, Smartpay revealed it has raised $13 million via a placement to institutional, sophisticated, and professional investors.

Unlike many other ASX shares raising capital at meaningful discounts to their last closing price, Smartpay offered no discount to investors. It completed the raising at an issue price of 42 cents, which was in line with its last closing price on Tuesday.

Smartpay also intends to undertake a share purchase plan for retail investors at the same price of 42 cents, with more details to be announced next week.

According to the company, the funds raised will be used to capitalise the business for growth in both the Australian and New Zealand markets, as well as strengthen its balance sheet through debt reduction.

Commenting on the successful raising, managing director Bradley Gerdis, said:

After having proved up the Australian growth opportunity, as evidenced in our strong revenue growth figures recently released to the market for the year ended 31 March 2020, we are now readying the business to resume and accelerate our Australian growth and to pursue opportunities in the NZ market as we come through the COVID period.

Recent headline results

Earlier this week, Smartpay revealed it had seen a steady recovery in merchant transactions over the past 4 weeks – so much so that aggregate transactional revenue had recovered to 75% of pre-COVID-19 levels.

Prior to this, the company released a trading update in April, informing a 40% decline in aggregate transactional revenues as government restrictions affected the trading conditions of many of Smartpay’s merchants.

With a financial year ending 31 March, Smartpay recently revealed unaudited full-year FY20 revenue of NZ$28.3 million, up 34% from last year’s result of NZ$21.1 million.

The company expects the effects of COVID-19 to further entrench cashless and contactless payments and believes it is well-positioned to benefit from these positive tailwinds.

More reading

• Why this ASX infrastructure company could help protect your portfolio in a downturn
• 2 ASX stocks that could replace cash
• Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market
• Is Afterpay an ASX blue chip of tomorrow?
• 3 leading ASX 200 tech shares to buy now

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

The post Small-cap ASX payments share jumps 14% on successful capital raise appeared first on Motley Fool Australia.

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Will Afterpay Ltd (ASX: APT) join the likes of Commonwealth Bank of Australia (ASX: CBA) and CSL Limited (ASX: CSL) and be an ASX blue chip of tomorrow?

The way the Afterpay share price has been performing in recent weeks would indicate so, at least.

Afterpay shares have been on an absolute tear since reaching a two-year low back in March. Then, Afterpay reached as low as $8.01 a share – a level not seen since June 2018.

Today, it’s a different story, with Afterpay at fresh all-time highs above $44 a share. Anyone who picked up some Afterpay shares in late March would be looking at a gain of over 400% in just two months.

So will this breakneck growth continue for Afterpay long enough to justify that coveted ‘blue chip’ status?

Does Afterpay have what it takes to become an ASX blue chip?

On current prices, Afterpay has a market capitalisation of $11.9 billion. That’s enough to put the company in the S&P/ASX 200 Index (ASX: XJO) to be sure – even into the ASX 50. But (at the time of writing), there is still a lot of space between Afterpay’s market cap, and the market cap of real ASX blue chips like Woolworths Group Ltd (ASX: WOW), Commonwealth Bank and CSL.

But there’s more to being a blue chip than just sheer size.

The term ‘blue chip’ derives from poker, where the highest value gambling tiles are coloured blue. Conventionally, ‘blue chip’ shares represent not just size, but safe cash flows and a robust business model. Afterpay is yet to fulfil those two criteria in my view.

But that doesn’t mean it won’t in the near future.

Afterpay’s opportunity for ‘blue chip’ status

For Afterpay to be a true ASX blue chip, I think it has to cement its position in the crowded field of the payments sector. It will need to prove it can become reliably profitable and prove it can fend off competition from the real blue chips in the payments space – the US giants MasterCard and Visa.

These companies are stupendously profitable and have market caps of $US292.2 billion and US$405.8 billion respectively.

Australia is a fantastic economy, but it’s my belief that it doesn’t offer Afterpay enough scale and ammunition for ‘blue chip’ status on its own, given Afterpay’s small-margin ‘clip the ticket’ business model. For Afterpay to truly succeed and become a blue chip, it needs to operate on a global scale much like MasterCard and Visa.

The good news is that Afterpay is heading in the right direction. Its US growth numbers are very pleasing, as are its numbers from the UK and Europe. Its partnership with Chinese giant, Tencent Holdings is also conducive for growth opportunities in Asia.

We’ll have to see if Afterpay can truly become an ASX blue chip. But I think it’s treading the right path!

More reading

• Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market
• Brokers name 3 ASX 200 shares to buy right now
• Is Telstra about to be caught in a new mobile phone war?
• Why Aristocrat Leisure, Afterpay, Corporate Travel, and Sydney Airport are pushing higher
• ASX 200 down 0.2%: Wesfarmers overhauls Target, Sydney Airport has no plans to raise equity

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

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