Day: January 2, 2021

These ASX shares are growing rapidly in FY 2021

A man drawing an arrow on a growth chart, indicating a surging share price

While the pandemic has stifled the growth of a number of companies such as A2 Milk Company Ltd (ASX: A2M) and Appen Ltd (ASX: APX) this year, not all companies have been impacted.

In fact, the two companies listed below continue to go from strength to strength and are on course to deliver very strong results in FY 2021. Here’s what you need to know:

Kogan.com Ltd (ASX: KGN)

This ecommerce company has been a very strong performer in FY 2021 thanks to the shift to online shopping.

At its annual general meeting in November, Kogan revealed that its gross sales for the first four months of FY 2021 are up 99.8% on the prior corresponding period. Pleasingly, its margins have been expanding, leading to gross profit growth of 131.7% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 268.8%.

Also growing in FY 2021 has been its customer numbers. At the end of October, Kogan had 2,682,000 active customers. This is up 9% since the end of August.

Temple & Webster Group Ltd (ASX: TPW)

Fellow ecommerce company Temple & Webster has also been growing strongly.

The online homewares and furniture retailer delivered a very strong result in FY 2020 and has followed this up with stellar growth so far in the new financial year.

As of 19 October, Temple & Webster’s revenue was up 138% on the prior corresponding period.  Furthermore, this strong top line growth led to its EBITDA coming in at $8.6 million for the first quarter. This is more than the entire EBITDA it generated in FY 2020.

All in all, this appears to have positioned the company to deliver another impressive result in FY 2021. In light of this, it won’t come as a surprise to learn that the Temple & Webster share price is up over 300% since this time last year.

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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd, Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Kogan.com ltd 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.

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2 surprisingly strong performing ASX shares in 2020

asx share price rising higher represented by red paper plane flying above other white paper planes

While we all know that the shares of Afterpay Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN) were extremely strong performers in 2020, a few lesser-known companies impressed.

Two surprisingly strong performing ASX shares in 2020 are listed below. Here’s why they smashed the market:

Codan Limited (ASX: CDA)

The Codan share price jumped 50% higher over the 12 months. Investors were buying the electronic products company’s shares thanks to an impressive full year result in FY 2020 and further strong growth in the new financial year.

In respect to FY 2020, Codan delivered record sales of $348 million thanks largely to strong metal detector demand. And on the bottom line, the company reported a record statutory net profit after tax of $64 million. This was an increase of 40% year on year. The strong gold price has been supporting demand for its metal detectors.

Pleasingly, in the middle of December the company released a trading update which revealed that management expects a record half year profit after metal detector sales continued to grow in both the recreational and commercial markets.

It has provided guidance for a net profit after tax of $40 million for the half. This is up by 33% from $30 million a year earlier.

Dicker Data Ltd (ASX: DDR)

The Dicker Data share price also surged 50% higher during 2020. The catalyst for this was the leading computer hardware and software distributor’s strong performance during the pandemic.

During the first half of FY 2020, Dicker Data achieved a total revenue of $1,006.1 million, up 18.1% compared to the prior corresponding period. This was driven partly by the working from home initiative, which led to a surge in demand for remote work and cloud-based solutions.

And thanks to widening margins, the company’s profits (and dividends) grew even quicker. Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $47.1 million for the half, up 27.6% from the same period last year.

Pleasingly, this strong form continued in the third quarter, with Dicker Data reporting a net profit before tax for the nine months to 30 September of $60.8 million. This represents an increase of 28.3% over the prior corresponding period.

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Returns as of 6th October 2020

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Fundie names 5 ASX shares with good growth prospects

Chalk drawing of a risk bag and a reward bag on set of scales

Clime Capital Ltd (ASX: CAM) is a listed investment company (LIC) that runs a portfolio that targets both large ASX shares and small ASX shares.

Some of the largest positions in Clime’s portfolio at the end of November 2020 were: APN Property Group Ltd. (ASX: APD), Austal Limited (ASX: ASB), City Chic Collective Ltd (ASX: CCX), Macquarie Telecom Group Ltd. (ASX: MAQ) and Nick Scali Limited (ASX: NCK).

Clime explained what happened with its portfolio about some of its November movements, and the current thinking behind each idea:

National Australia Bank Ltd (ASX: NAB)

The fund manager said that the approximately 25% return of NAB shares in November reflected both the earnings result and positive developments on the economic front.

The increasing certainty of effective vaccines in 2021 has improved the economic prospects according to the fund manager. This may mean that businesses and consumers are likely to be better placed to meet their debt obligations and consequently impairment charges for the major banks will be lower than earlier feared. This was confirmed in the earnings result, with a lower charge in the second half and commentary that portfolios are performing better than expected. The banks also did better than expected with capital adequacy, which is partly tied to loan performance.

Banks could emerge from COVID-19 with excess capital, though lack of credit growth and net interest margin pressure could be key challenges.

Mach7 Technologies Ltd (ASX: M7T)

This ASX share develops data management solutions for healthcare providers to own, access and share patient data.

Clime pointed out that Mach7 won a $5.3 million, 7-year contract with Trinity Health to provide its eUnity Enterprise Viewer software at multiple facilities within Trinity’s 92 hospitals across the US.

The fund manager believes Mach7 is well positioned to provide the full suite of software to Trinity. In the event the ASX share wins the remaining tenders, Clime believes it will be of significant financial and strategic value. Trinity is the fifth largest hospital system in the US and would represent Mach7’s first major reference site for its end-to-end medical imaging software solution.

Jumbo Interactive Ltd (ASX: JIN)

The lottery reseller was a strong performer in November after the announcement of a 10-year agreement signed with Lotterywest in WA to provide a white label version of its lottery management software as a service solution. Clime said that this deal, whilst important, will help Jumbo win other government contracts, particularly in the $22 billion US state government lottery market.

Jumbo also announced recently that the UK gambling commission had issued a remote gambling software license to enable Jumbo to help UK operators. Its SaaS offering could be a potential future growth driver.

RPMGlobal Holdings Ltd (ASX: RUL)

RPMGlobal describes itself as a leader in mining industry software, consulting and training. The ASX share’s mining software integrates the planning, design and scheduling, with maintenance and execution, and simulation and costings.

Clime said that its pipeline is growing due to its mining operations software. The near-term outlook has vastly improved on the positive vaccine news. RPMGlobal’s managing director Richard Matthews recently said his views are more upbeat than when the company released its annual report in late August.

Electro Optic Systems Hldg Ltd (ASX: EOS)

This ASX share offers remotely controlled weapon systems and ancillary products comprised of gimbal mounts, fire control systems and sensor units. It also has high capacity, secure and reliable terrestrial and space communications combining high availability microwave and free space optics technologies.

It was a strong performer in November giving further details about its new space communications division. But the 2020 year was a year of delays to offshore customers, delaying cash receipts.

EOS is aiming to launch its SpaceLink constellation by mid-2024 which is initially targeting defence and government customers. SpaceLink will initially provide an increase of 10 times of bandwidth compared to prevailing microwave-based technology. The increase will rise to 100 times after including EOS optical laser technology in later constellations.

However, the company recently withdrew its earnings before interest and tax guidance of $20 million to $30 million for 2020 financial year to 30 December 2020 because of delays to December deliveries due to air freight bottlenecks.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MACH7 FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited, Electro Optic Systems Holdings Limited, and RPMGlobal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited, MACH7 FPO, and RPMGlobal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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2 outstanding ASX shares to buy and hold

Ideas and innovation

One investment strategy that is very popular with investors is buy and hold investing.

Given the enormous success that legendary investor Warren Buffett has had with this strategy over several decades, it isn’t hard to see why it is so popular.

The good news is that it isn’t hard to replicate on the Australian share market. 

With that in mind, listed below are two shares which could be top buy and hold options:

Appen Ltd (ASX: APX)

Appen is a company that many believe could be a great buy and hold option. This is because artificial intelligence (AI) is revolutionising our lives. But in order for AI models to work successfully, they need to be trained. This is where Appen comes in.

Through its team of over one million skilled contractors across the globe, the company provides or prepares the training data for AI models. A testament to the quality of its service is its customer base. This includes Amazon, Facebook, Google, and Microsoft.

While COVID-19 headwinds have slowed its growth this year, management expects the company to bounce back strongly in FY 2021. Analysts at UBS expect this to be the case too. Last month they retained their buy rating and $44.00 price target on its shares following its trading update.

Pushpay Holdings Ltd (ASX: PPH)

Another buy and hold option to look at is Pushpay. It is a donor management and community engagement provider to the church market.

It has been a very strong performer over the last 12 months and released a stellar half year result in November. Pushpay delivered a 53% increase in operating revenue to US$85.6 million and a 177% jump in EBITDAF to US$26.7 million. This was driven by the quality of its platform, its leadership position in the market, and the shift to a cashless society.

The good news is that management appears confident this strong growth can continue and has set itself bold long term targets. This includes winning a 50% share of the U.S. medium to large church market, which is estimated to be worth US$1 billion a year.

It is hoping the recent launch of ChurchStaq will help it achieve these goals. Churchstaq is the combination of its Pushpay and Church Community Builder software. It brings together digital giving, donor development, church apps, and church management software (ChMS) to deliver a fully integrated engagement platform.

Goldman Sachs is a big fan of Pushpay. The broker has a conviction buy rating and ~$2.59 price target on its shares.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

More reading

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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