Day: January 26, 2021

Rex (ASX:REX) share price takes flight as domestic launch nears

yellow paper plane flying high above other paper planes representing asx travel shares

The Regional Express Holdings Ltd (“Rex”) (ASX: REX) share price is rising today. The Rex share price is currently trading at $1.76 a share — that’s a 2.92% gain for the day and a gain of more than 50% over the past year.

As the smallest of Australia’s three airlines sets its sights on the major cities, let’s take a look at its recent moves and the latest news out of the industry.

Rex celebrates Australia Day in Sydney with no sign of Qantas or Virgin

During yesterday’s Australia Day celebrations, some Sydneysiders would have been surprised to see a Rex airplane soaring over the Sydney Harbour.

According to today’s Australian, this annual tradition is usually carried out by Qantas Airways Limited (ASX: QAN), which zooms through in an A380 and hands Tim Tams out at the luggage carousels.  

In the past, Virgin Australia has also joined the Australia Day celebrations, serving up classic Aussie treats in its lounges.

With neither bigger sibling making an appearance this year, Rex seized the opportunity to promote its latest fleet addition, a Boeing 737.

Rex gears up to compete with Qantas and Virgin Australia

Starting 1 March, borders permitting, Rex will operate its first Sydney–Melbourne flight. Following the Easter holiday, Rex intends to add Brisbane flights as well.

Earlier this month, the Australian Financial Review (AFR) published a commentary questioning whether Rex is strong enough to compete in this space. It argues that  between the aggressive business strategy of Qantas combined with the new set of private equity hands steering the Virgin Australia ship, Rex might be out of its depth.

A second commentary at the AFR published 18 January takes the opposite position. It states that with a company history that dates back 70 years, there’s no better contender to face up to the bigger players. The article points out that Rex has made operational profits every year since the 2004 financial year and “is probably one of only three listed airlines in the world that has been able to do so”.

Navigating an industry in flux

As Rex positions itself in Sydney, Qantas and Virgin Australia prepare for new competition. Both companies are also currently dealing with border closure problems caused by international flight restrictions, an issue Rex doesn’t have.

As reported by the AFR, Virgin Australia recently proposed an ‘AviationKeeper’ pitch to the government. Via a joint letter written with the Transport Workers’ Union and Australian Services Union, the letter proposed that if international borders remain closed for the next year, an ‘AviationKeeper’ scheme must be enacted to support the industry.

Qantas was asked if it wanted to sign the letter and the company declined.

The Qantas share price has taken a roughly 28% beating over the past 12 months. At time of writing, the Qantas share price is $4.67, down just over 2%.

In comparison, the Rex share price is up nearly 3% today and has climbed more than 57% over the past year.

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Motley Fool contributor Gretchen Kennedy owns shares of Qantas Airways Limited. 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.

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The Novonix (ASX:NVX) share price is on a rollercoaster ride today

ASX tech share price rollercoaster

The Novonix Ltd (ASX: NVX) share price has been on a rollercoaster ride in Wednesday’s trade. 

Shares in the Aussie lithium-ion battery group jumped to a new record high of $4.23 per share in early trading, before crashing to a low of $2.95. That’s a drop of almost 15%.

At the time of writing, the Novonix share price has recovered slightly and is currently trading at $3.34, down 7.5%.

Why is the Novonix share price wobbling today?

Novonix is an integrated developer and supplier of high-performance materials, equipment, and services for the lithium-ion battery industry.

In the absence of any fresh announcements to the ASX, could the volatile Novonix share price movement be down to the latest company announcement on 21 January?

In that release, Novonix advised its wholly owned US-based subsidiary, PUREgraphite, has been selected to receive a ~US$5.6 million grant by the US Department of Energy (DOE) for new technology development.

The grant funding will support the development of high efficiency furnace technology for lithium-ion battery synthetic graphite material.

Novonix chief executive, Dr Chris Burns, was positive about the grant. Dr Burns said the new furnace technology will be “industry leading” and “state of the art” in energy efficiency, environmental impact and capital cost.

Investors snapped up the company’s shares following that announcement, and the surge continued this morning before this afternoon’s dramatic plummet.

Foolish takeaway

Despite today’s rollercoaster ride today, the Novonix share price remains up 150 per cent this month.

Novonix has recorded steady revenue growth in recent years, with total income climbing from $0.10 million in June 2017 to $5.04 million in June 2020. The strong momentum throughout January has also seen above average trading volumes.

Novonix’s 5-day average trading volume is sitting at 9.3 million through to 27 January compared to an average of 3.2 million according to ASX data.

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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.*

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Motley Fool contributor Ken Hall 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.

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Better buy: NVIDIA vs. Qualcomm

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

chip and tech stocks represented by two computer chips side by side

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

If you’re in the market for an investment in the chip industry, you’ve likely considered powerhouse players Qualcomm Inc (NASDAQ: QCOM) and NVIDIA Corporation (NASDAQ: NVDA). The former has a long history dominating the cellular chip space, and the latter is currently a leader in the graphics processing unit (GPU) market. 

Both tech companies are positioning themselves to benefit from long-term chip trends, but which is a better buy right now? Let’s take a closer look at what each is doing to grow its business to find out. 

The case for Qualcomm 

Qualcomm’s bread and butter for many years has been the company’s long list of 3G and 4G patents that it collected royalties on from device makers. Qualcomm was involved in several years-long battles with other tech companies over how much it receives for its patent royalties, but much of that has been settled now. 

The company’s chip business is still alive and well and sales to device makers, including Apple, Samsung, and Xiaomi, account for about three-quarters of the company’s total revenue. The rest of the company’s sales come from its licensing business, which still brings in most of Qualcomm’s profit. 

Qualcomm is banking on the next wave of cellular devices, 5G smartphones, as a potential catalyst for its business. While 5G could take a few years to fully take off, Qualcomm already has 110 5G agreements with smartphone makers and all of the major handset manufacturers for its 5G licensing. 

Qualcomm is optimistic that 5G could boost its business because it estimates that the number of 5G-enabled smartphones will grow 150% this year. 

The case for NVIDIA

NVIDIA’s core business is designing graphics processors for gaming and data centers. The company’s GPUs do a fantastic job of processing images and graphics quickly, which makes them great for gaming and for artificial intelligence processing as well. 

Tech companies are increasingly needing to use GPUs to help assist other processors and, as a result, NVIDIA’s data center sales grew an astonishing 162% in the most recent quarter (reported on Nov. 18). Meanwhile, NVIDIA’s GPU sales in the gaming market continue to grow as well. The company’s gaming segment revenue grew 37% in the most recent quarter and still represents 48% of the company’s total sales.

The long-term opportunities for NVIDIA come from the ways its chips can be used by other tech companies and its current market position over competitors like Advanced Micro Devices. Not only is NVIDIA a GPU leader, but its chips are tapping into long-term growth trends in gaming, AI cloud computing, and 5G data centers. 

The global GPU market was worth an estimated $19.8 billion in 2019 but will balloon to $200 billion by 2027. With NVIDIA already tapping into key markets and leading its rival in the GPU space, the tech giant is well-positioned to continue growing. 

The verdict: Buy NVIDIA 

While Qualcomm certainly has some potential to be a good investment, NVIDIA’s diversification of its GPU business across data centers, gaming, and future tech (think driverless cars) makes the company a better long-term bet. On top of that, NVIDIA’s core businesses are performing well and providing stability for the company as it pursues new revenue opportunities. All of this gives NVIDIA an edge over Qualcomm in this match-up.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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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.

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Chris Neiger 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 Apple, NVIDIA, and Qualcomm. The Motley Fool Australia has recommended Apple and NVIDIA. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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2 compelling ASX payment shares to buy

woman touching digital screen stating fintech

There are some ASX payment shares that are growing rapidly which could be worth a look.

Some businesses are driving the evolution for making payments and transfers in an electronic form rather than cash. 

These are two of them:

EML Payments Ltd (ASX: EML)

EML Payments has a number of different payment services for clients to use. The company has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, the company offers virtual account numbers.

The ASX payment share was one of the companies that was significantly sold off during last year, dropping from $5.66 to $1.33. It has since recovered to around $4 as somewhat normal living and EML’s financial performance returned.

In the first quarter of FY21 EML’s total revenue grew 20%, compared to the fourth quarter of FY20, to $40.6 million. The amount of earnings before interest, tax, depreciation and amortisation (EBITDA) generated by the ASX payment share in the FY21 first quarter was $10 million, which was 69% higher than the fourth quarter of FY20.

Dominic Rose from Montgomery Lucent Investment Management said at the start of December that the company was bouncing back well from COVID-19 impacts. He said: “the recent encouraging vaccine news materially increases confidence in a solid earnings recovery in FY22. Market estimates are for earnings before interest, tax, depreciation and amortisation to rebound 40 per cent in FY22 to $74 million, still well below pre-COVID expectations of $95-100 million.

“Looking back, one positive arising from the pandemic was EML’s ability to reprice and restructure the Prepaid Financial Services (PFS) deal in late March, allowing the company to retain a strong balance sheet ($118 million net cash as at the end of June) which offers optionality for further acquisitions. Valuation remains attractive for the growth potential of the business, in our view, with the stock trading on 12x recovered EBITDA (FY23 EBITDA $93 million).”

According to CommSec, the EML share price is valued at 38x FY23’s estimated earnings.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an electronic donation ASX payment share. It assists large and medium US churches to receive payments from donators.

The company has big goals – it is aiming for a 50% market share of the sector, which could translate into US$1 billion of annual revenue with all of the processing volume that could be done at that time.

Pushpay continues to boast of operating leverage and it’s expecting more to come over the rest of FY21 after revealing that its FY21 EBITDAF (EBITDA and foreign currency) was expected to be higher, in a range of US$56 million to US$60 million.

The technology company recently announced that it had allocated an initial investment of resources into developing and enhancing the customer proposition for the Catholic segment of the US faith sector. Management said that this represented a significant milestone as Pushpay continues to execute on its strategy to become the preferred provider of mission critical software to the US faith sector.

Fund manager Ben Griffiths from Eley Griffiths said: “Over the last 12 months it has become clear Pushpay is at an inflection point for both cashflow and earnings. Under the stewardship of CEO Bruce Gordon, Pushpay has transitioned from a founder-led investment phase into an optimize/monetization phase. What is more surprising is the very conservative nature of the accounts (a rarity in small cap tech, outside Iress Ltd (ASX: IRE)). We believe the next few years for Pushpay will be rewarding and that COVID-19 will accelerate the already entrenched trend to digital giving/engagement from cash.”

According to Commsec, the Pushpay share price is valued at 20x FY23’s estimated earnings.

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. recommends EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments 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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