Day: 24 July 2021

The Australian share market is home to a number of quality companies with solid growth prospects.

Two that have been tipped to grow very strongly over the long term are listed below. Here’s why analysts think investors should be buying their shares:

Life360 Inc (ASX: 360)

The first ASX growth share to look at is this San Francisco-based technology company. It is the app maker behind the hugely popular family-focused Life360 mobile app, which is used by 28 million monthly active users globally.

It has been a very strong performer in recent years and has continued its explosive growth in 2021. For example, Life360 recently revealed that it expects its annualised monthly revenue to be at the high end of its guidance of US$110 million to US$120 million this year. The high end represents a 34% year on year increase.

This could be boosted further in the second half by a highly successful marketing campaign on TikTok and a recent bolt-on acquisition. The latter has expanded its offering and opened up cross-selling opportunities.

One broker that remains very positive on the company and is forecasting very strong growth in the coming years is Bell Potter. Earlier this month its analysts retained their buy rating and lifted their price target on the company’s shares by 19% to $9.25.

The broker lifted its price target after a similar business, Nextdoor, was acquired by a special purpose acquisition company (SPAC) on significantly higher multiples. Bell Potter notes that Life360 is a year or two behind Nextdoor in scale, but is a better quality business. Particularly given that its subscription revenue is stickier and more recurring than Nextdoor’s advertising revenue.

Zip Co Ltd (ASX: Z1P)

Another ASX share that is growing at a rapid rate is Zip. It is a leading buy now pay later (BNPL) provider with operations across several continents.

Last week it released its fourth quarter update and revealed further strong growth across key metrics. Zip reported a 116% year on year increase in quarterly total transaction volume (TTV) to $1.8 billion and a 104% increase in quarterly revenue to $129.9 million.

Key drivers of Zip’s growth were further increases in transactions, customer numbers, and merchants on its platform. Zip revealed a 230% year on year increase in transaction numbers to 14.2 million for the three months, an 87% lift in customer numbers to 7.3 million, and an 84% rise in merchants to 51,300.

The good news is that the company still has a very long runway for growth over the next decade. This is due to the growing BNPL market in the massive United States market and its continued international expansion. The latter looks set to be boosted by a global rebrand which will see the company operate under the Zip name in all its markets.

Citi is very positive on Zip. Last week the broker responded to its update by retaining its buy rating and $10.25 price target.

The post Why Zip (ASX:Z1P) and this explosive ASX growth share could be buys appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Brokers name 3 ASX shares to buy today
• Zip (ASX:Z1P) share price gaining on Friday
• Here’s what brokers think about the Zip (ASX:Z1P) share price
• The Afterpay (ASX:APT) share price is gaining 3% today

Motley Fool contributor 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 and has recommended Life360, Inc. and ZIPCOLTD FPO. 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.

from The Motley Fool Australia https://ift.tt/3iERJQq

The fund manager in charge of Spheria Emerging Companies Ltd (ASX: SEC) has revealed some of the ASX shares that it thinks look like good ideas at the moment.

Spheria’s investment philosophy is to buy companies with cash generative business models, with a demonstrated track record of solid returns at a sensible valuation given their industry dynamics and positioning.

Whilst Spheria believes that the world can overcome COVID-19, the threat of inflation and emerging signs of reluctance by central banks to “pump prime” to the same extent as they have since the emergence of COVID-19 means the fund manager is focusing its efforts on finding business models with pricing power and trying to avoid those that are likely to see unexpected compression in profit margins, such as mining contractors.

In this era of high levels of corporate activity with lots of liquidity, “procyclical” boards and record levels of private equity funding, Spheria thinks it’s well placed to benefit. That’s because of its focus on undervalued, cash-generating businesses with decent balance sheets.

Spheria is avoiding ASX shares that are overvalued and it’s trying to maximise the risk-reward equation for investors with a disciplined investment approach that is predominately guided by valuation fundamentals.

Ainsworth Game Technology Limited (ASX: AGI)

Ainsworth is a gaming machine manufacturer and supplier. It offers the types of machines that you may find in casinos.

Spheria noted that whilst the company has been heavily impacted by COVID-19, it has never been in danger of insolvency because of property holdings in the US that at one point exceeded its market capitalisation.

The fund manager pointed out that in the US (and Australia), the end market of casinos, pubs and clubs have/had recovered strongly and in many case are now/were in a position to recommence expenditure on new machines. The company returned to profitability in the second half of FY21.

Spheria believes that the ASX share has the potential to leverage its portfolio and intellectual property and regulatory approval to improve earnings and surpass what it was making before COVID-19 came along.

City Chic Collective Ltd (ASX: CCX)

This ASX share is a retailer of plus-size clothes, footwear and accessories. It has a number of different brands including City Chic, CCX, Avenue and Evans. City Chic is now making a majority of its sales online.

Spheria said this business appears to be well positioned to benefit from the re-opening across the countries that it has major operations in (mainly the UK, the US and Australia). It can also benefit from the significant bounce back in apparel expenditure, which has been hurt by lockdowns in the UK and US in-particular, that is accompanying this trend.

According to Commsec, the City Chic share price is valued at 31x FY23’s estimated earnings.

The post Leading fund manager likes these 2 ASX shares appeared first on The Motley Fool Australia.

More reading

• Here’s why the City Chic (ASX:CCX) share price is up 25% in 2021
• Are these 2 high-flying ASX shares buys?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

from The Motley Fool Australia https://ift.tt/2UOA9kW

Are you looking for some top ASX dividend shares to add to your income portfolio next week?

If you are, you might want to look at the ones listed below. Here’s what you need to know about these highly rated dividend shares:

Bapcor Ltd (ASX: BAP)

The first ASX dividend share to look at is Bapcor. It is the Asia Pacific region’s leading provider of vehicle parts, accessories, equipment, service and solutions.

Bapcor has been performing very strongly once again in FY 2021. This is thanks partly to strong demand for used cars, which has resulted in elevated sales across its brands.

The good news is that the company looks well-placed to continue its growth in the years to come. This is due to its strong market position and its expansion plans. The latter is being driven both domestically and in the massive Asia market.

One broker that is a big fan of Bapcor is Citi. It currently has a buy rating and $9.55 price target on the company’s shares.

Its analysts are expecting Bapcor to grow its fully franked dividend to 19 cents per share in FY 2021 and then 23 cents per share in FY 2022. Based on the current Bapcor share price of $8.21, this will mean yields of 2.3% and 2.8%, respectively, over the next two financial years.

National Australia Bank Ltd (ASX: NAB)

Another ASX dividend share to look at is this banking giant. It could be a top option for investors that don’t have exposure to the banking sector yet.

This is due to the positive trading conditions it has been experiencing thanks to the Australian economy’s strong recovery from the pandemic, the thriving housing market, cost reductions, and its improving outlook.

Macquarie is very positive on NAB and recently upgraded its shares to an outperform rating with a $28.00 price target. The broker likes NAB due to its attractive valuation and strong capital position. It feels the latter should allow the bank to absorb any negative impacts of the AUSTRAC investigation and a potential COVID-induced economic slowdown.

Macquarie is forecasting fully franked dividends of $1.20 per share in FY 2021 and then $1.25 per share in FY 2022. Based on the latest NAB share price of $26.04, this represents attractive yields of 4.6% and 4.8%, respectively, over the next two years.

The post Here are 2 ASX dividend shares analysts rate as buys appeared first on The Motley Fool Australia.

More reading

• These ASX dividend shares keep giving investors a payrise
• It hasn’t been a great month so far for the NAB share price
• ANZ’s (ASX:ANZ) $1.5bn buyback puts other ASX 200 banks under capital return spotlight
• Do ASX 200 banks share same BNPL ambitions as Westpac (ASX: WBC)?
• Leading brokers name 3 ASX shares to buy today

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

from The Motley Fool Australia https://ift.tt/3fbE0jl

Last week saw a number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Reliance Worldwide Corporation Ltd (ASX: RWC)

According to a note out of Ord Minnett, its analysts have retained their buy rating and lifted their price target on this plumbing parts company’s shares to $6.20. The broker believes trading conditions are favourable in its key markets and has upgraded its earnings estimates to reflect this. It also believes it has the balance sheet strength to undertake acquisitions or capital management. The Reliance share price ended the week at $5.35.

Whispir Ltd (ASX: WSP)

Another note out of Ord Minnett reveals that its analysts have retained their buy rating and lifted their price target on this cloud communications platform provider’s shares to $4.30. According to the note, the broker was pleased with its performance during the fourth quarter and feels that its new customer additions will be supportive of further solid growth in FY 2022. It has also been pleased with its early success in the United States market, which provides it with a significant growth opportunity. The Whispir share price was fetching at $2.83.

Zip Co Ltd (ASX: Z1P)

Analysts at Citi have retained their buy rating and $10.25 price target on this buy now pay later (BNPL) provider’s shares. This follows the release of Zip’s fourth quarter update last week. According to the note, the broker was pleased with Zip’s performance during the quarter. Citi notes that Zip’s transaction volume and revenue came in ahead of its expectations. The broker suspects that the weakness in the Zip share price post-release was driven by the lack of commentary on potential M&A interest. The Zip share price ended the week at $7.09.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• Zip (ASX:Z1P) share price gaining on Friday
• Here’s what brokers think about the Zip (ASX:Z1P) share price
• The Afterpay (ASX:APT) share price is gaining 3% today
• Zip share price falls, Pilbara Minerals flies. And the BHP share price gets a Tesla bounce. Scott Phillips on Nine’s Late News

Motley Fool contributor 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 and has recommended Reliance Worldwide Corporation Limited, Whispir Ltd, and ZIPCOLTD FPO. The Motley Fool Australia has recommended Reliance Worldwide Corporation Limited and Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3kNtLFo

The Mineral Resources Limited (ASX: MIN) share price has been one of the best performers on the S&P/ASX 200 Index (ASX: XJO) over the last month.

Since this time in June, the mining and mining services company’s shares have risen a sizeable 20%.

This means Mineral Resources shares are now up 60% since the start of the year.

Why is the Mineral Resources share price up 27% in a month?

Investors have been bidding Mineral Resources shares higher over the last month after some positive comments by a leading broker.

According to a note out of Macquarie from last month, the broker reiterated its outperform rating and lifted its price target by 20% to $73.00. It then followed this up with a 4% increase to $76.00 earlier this month.

Based on the latest Mineral Resources share price of $61.79, this implies potential upside of 18% over the next 12 months even after its strong recent gains.

Why is Macquarie bullish?

Macquarie is bullish on the Mineral Resources share price due to the company’s exposure to iron ore and lithium.

In respect to iron ore, the company’s portfolio includes the Iron Valley Iron Ore project and the Koolyanobbing Iron Ore project in Western Australia.

Whereas for lithium, Mineral Resources’ Wodgina operation is one of the largest known hard rock lithium deposits in the world with a production life of over 30 years. It also has the Mt Marion Lithium project in its portfolio. This project is operated by Mineral Resources under a life-of-mine mining services contract and is jointly owned by it and Jiangxi Ganfeng Lithium.

Big dividends

Macquarie is also forecasting some big dividends from Mineral Resources, potentially making it an attractive option for income investors.

Its analysts have pencilled in fully franked dividends of $3.37 per share in FY 2021 and then $3.09 per share in FY 2022. Based on the current Mineral Resources share price, this will mean yields of 5.5% and 5%, respectively, over the next couple of years.

This stretches the total potential return on offer to over 23% for investors.

The post Here’s why the Mineral Resources (ASX:MIN) share price is up 27% in the last month appeared first on The Motley Fool Australia.

More reading

• Why is the Mineral Resources (ASX:MIN) share price struggling this week?
• 2 buy-rated ASX dividend shares for income investors
• Guess which sector this week’s top performing ASX 200 shares all come from
• Why the Mineral Resources (ASX:MIN) share price is up 39% in 3 months
• 2 ASX 200 mining shares that could be buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

from The Motley Fool Australia https://ift.tt/3zLnBdh

The Woolworths Group Ltd (ASX: WOW) share price has gained 5.27% since Endeavour Group Ltd (ASX: EDV) split ranks and listed on the ASX.

Woolworths’ shares finished Friday’s session trading at $39.52, 0.89% higher than its prior closing price. It was also the Woolworths’ highest closing price ever, a record it has broken every day since Wednesday.

Endeavour debuted on the ASX on 24 June 2021. At that point, Woolworths shares were going for $37.54 apiece.

Let’s take a look at what Woolworths’ has been up to since it spun off its hotel, liquor, and gambling holdings.

How Woolworths‘ shares have performed since Endeavor

While some were concerned the spin-off could be disastrous, Woolworths has gone from strength to strength since ditching Endeavor.

Despite falling 15% in intraday trade on 24 June, the Woolworths share price finished Endeavor’s first day on the ASX 0.5% higher.

Since then, it appears the Woolworths share price has been boosted by COVID-19 lockdowns in Sydney, news it will open an online-only store, and the creation of a digital wallet.

However, the next boost to Woolworths might come from its latest market campaign.

Today’s Fresh Food People

The Woolworths share price was higher on Friday amid the launch of the company’s new brand campaign.

While the marketing campaign likely had little effect on the Woolworths share price, it might have moved viewers of the Tokyo Olympic Games.

The new campaign was first broadcast on television during the opening ceremony on Friday night.

It’s a reimagining of the now 34-year-old Fresh Food People campaign, titled Today’s Fresh Food People.

According to Woolworths, the campaign celebrates the diversity of the employees of Woolworths’ supermarkets, Metro stores, online marketplace, and the Woolworths Food Company.

Woolworths’ chief marketing officer Andrew Hicks commented on the campaign, saying:

Australia and the world has changed profoundly over the last 18 months, and so have the expectations of our customers. As today’s fresh food people, we need to evolve and grow with them…

[We] will continue our focus on our team bringing a little good to everyone everyday while ensuring our priorities match customers’ expectations on how we can create a better tomorrow for all Australians. Keeping Australians COVID-safe and the care we show for team and customers during these times will also continue and be a key part of what it means to be Today’s Fresh Food People.

Woolworths share price snapshot

It goes without saying that the Woolworths share price has been having a good run lately.

Woolworths shares have gained 16% since the beginning of 2021. They’re also 20% higher than they were this time last year.

The post How the Woolworths (ASX:WOW) share price has performed since Endeavour’s demerger appeared first on The Motley Fool Australia.

More reading

• The other side of lockdown – ASX supermarket shares are flying
• Woolworths (ASX:WOW) store closes after staff contract COVID-19
• What is the outlook for the Woolworths (ASX:WOW) share price?
• Has Dry July hit the Endeavour (ASX:EDV) share price?
• Which ASX 200 shares are winning from latest retail trade figures?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

from The Motley Fool Australia https://ift.tt/3i33mBD

Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Bubs Australia Ltd (ASX: BUB)

According to a note out of Citi, its analysts have retained their sell rating and 35 cents price target on this infant formula company’s shares. The broker has been looking at the Chinese infant formula market and expects the new three-child policy to be a boost to overall industry sales. However, it expects the increase in birth rates to be skewed to lower tier cities. These are areas where domestic infant formula brands have strong positions. As a result, Bubs may not benefit greatly. The Bubs share price ended the week at 50 cents.

Qantas Airways Limited (ASX: QAN)

A note out of Credit Suisse reveals that its analysts have retained their underperform rating and cut their price target to $3.90. According to the note, the broker has reduced its forecasts to reflect its belief that domestic capacity levels will be lower than expected because of lockdowns. The broker is forecasting capacity of just 40% during the first quarter and 70% during the second quarter compared to pre-COVID levels. It fears that if this disruption continues, it could mean Qantas will be to raise funds in the future to strengthen its balance sheet. The Qantas share price was fetching $4.55 on Friday afternoon.

Syrah Resources Ltd (ASX: SYR)

Analysts at Morgan Stanley have retained their underweight rating and 80 cents price target on this graphite producer’s shares. According to the note, Syrah’s production during the June quarter was ahead of its expectations. However, shipping container issues led to weaker sales volumes. Outside this, Morgan Stanley has previously spoken about concerns over potentially high capital expenditure that may need extra funding. The Syrah share price ended the week at $1.30.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

More reading

• ASX 200 travel shares slide as New Zealand closes travel bubble
• Qantas (ASX:QAN) share price falls as capacity drops below 40%
• Why the Syrah (ASX:SYR) share price is surging 12% in 2 days
• Qantas (ASX:QAN) share price on watch as CEO warns lockdowns could cost jobs
• Qantas (ASX:QAN) share price tanks another 2% on Tuesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2WiBf9d

When it comes to dividends, AGL Energy Limited (ASX: AGL) shares have been favourites with income investors for a long time.

In light of this, with so much going on right now at the energy company, investors may be wondering if that remains the case.

Should you buy AGL shares for the dividend yield?

Over the last 12 months AGL shares have yields dividends per share of 92 cents. This comprises FY 2020’s final dividend of 51 cents per share and FY 2021’s interim dividend of 41 cents.

Based on the current AGL share price of $7.99, this represents a massive partially franked 11.4% yield.

Unfortunately, the prospect of a similarly generous yield over the next 12 months is not good. In fact, investors may want to prepare for a significant cut. Particularly given management’s decision to cancel its special dividend plans due to its demerger.

What are analysts expecting?

Goldman Sachs recently put a neutral rating and $8.40 price target on AGL shares.

The broker said: “While AGL looks cheap vs historical valuation metrics, we’d highlight that the broader ASX energy sector remains heavily discounted as well. So while macro tailwinds post-Covid support the fundamental recovery for the business, near-term shareholder returns have been reduced with the removal of the special dividend and introduction of an underwritten DRP.”

Goldman Sachs is forecasting dividends per share of 66 cents in FY 2021 (41 cents has already been paid), 45 cents per share in FY 2022, and then 47 cents per share in FY 2023.

With AGL shares currently fetching $7.99, this will mean yields of 8.2%, 5.6%, and 5.9%, respectively.

One broker that isn’t as positive is Credit Suisse. Its analysts currently have a sell rating and $6.70 price target on AGL shares.

Credit Suisse is also forecasting a big dividend cut in FY 2022. It has pencilled in a 35 cents per share dividend, which implies a 4.4% yield.

The post Should you buy AGL (ASX:AGL) shares in July 2021 for the dividend yield? appeared first on The Motley Fool Australia.

More reading

• AGL Energy (ASX:AGL) share price one to watch during transition – expert
• AGL (ASX:AGL) share price checks in at new 52-week low
• The AGL share price is now trading on a 10% dividend yield
• Top brokers name 3 ASX shares to sell today
• Why the AGL Energy (ASX:AGL) share price has fallen 15% in 3 months

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

from The Motley Fool Australia https://ift.tt/3y2xy5y

There are a group of ASX dividend shares that are well liked by brokers.

Businesses that are rated as buys by analysts whilst also having good yields may be opportunities for people looking for income. However, there’s always a risk that the broker(s) are wrong about a business.

Here are two ASX dividend shares that some brokers are a fan of:

Super Retail Group Ltd (ASX: SUL)

Super Retail is a retailer that’s liked by a number of different brokers. It has retail brands including Supercheap Auto, Rebel, BCF and Macpac.

It’s currently rated as a buy by at least four different brokers including Credit Suisse. The price target is $14.45, which suggests an increase of the Super Retail share price of around 10% over the next 12 months, if Credit Suisse is right.

The company has seen a large amount of growth since the onset of COVID-19. Its store numbers and active club members have also been increasing over the last few years.

Online sales are playing an important part of the picture, with a large amount of growth. In the first half of FY21, it saw growth of online sales of 87%. This also came with “strong” operating leverage. Online sales were $237 million in the first half of FY21, up from $127 million in the first half of FY20.

The ASX dividend share saw its margins maintained in the second half of FY21, like it was in the first half, thanks to strong customer demand. This meant there was limited promotional activities.

In the first 44 weeks of FY21, Super Retail saw 28% growth of like for like sales.

Credit Suisse believes that at the current Super Retail share price, it will pay a grossed-up dividend yield of 5.4%.

Metcash Limited (ASX: MTS)

Metcash is a diversified retailer. It supplies national networks of IGA and Foodland. It supplies liquor businesses like Cellarbrations, The Bottle-O, IGA Liquor, Duncans and Thirsty Camel.

The ASX dividend share also has a number of hardware brands including Mitre 10, Home Timber & Hardware and a majority ownership of Total Tools.

It’s currently rated as a buy by at least three brokers. One of the brokers that rates Metcash as a buy is Citi.

The broker points to market share gains in supermarkets and a strong performance in hardware as reasons to like the business.

FY21 saw hardware sales revenue go up by 24.7% to almost $2.6 billion and hardware underlying earnings before interest and tax (EBIT) grew 61.5% to $136 million.

The business has committed to return a significant amount of capital to shareholders while continuing to invest in future growth. The target dividend payout ratio has been increased from 60% to 70%. The FY21 annual dividend was increased by 40% to 17.5 cents. It also announced a $175 million share buy back.

At the time of the FY21 result release, it announced that it increased its ownership of Total Tools from 70% to 85% for a cost of $59.4 million.

At the current Metcash share price, Citi believes it’s going to pay a grossed-up dividend yield of 6% in FY22.

The post 2 ASX dividend shares rated as top buys by brokers appeared first on The Motley Fool Australia.

More reading

• The other side of lockdown – ASX supermarket shares are flying
• 2 buy-rated ASX dividend shares for income investors
• Why the Wesfarmers (ASX:WES) share price just hit a new all-time high
• These are the 10 most shorted ASX shares
• 2 top ASX dividend shares with BIG yields

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3eQcTK8

The CSL Limited (ASX: CSL) share price might be one to think about with the biotech giant expecting a recovery.

What is CSL?

According to the ASX, CSL has a market capitalisation of almost $132 billion.

It’s based in Melbourne and CSL describes itself as a leading global biotech company that develops and delivers innovative biotherapies and influenza vaccines that save lives, and help people with life-threatening medical conditions live full lives. The company has more than 27,000 employees around the world, with operations in more than 35 countries.

Here are some of the reasons why the CSL share price might be one to think about:

Research and development

One of the key ways that CSL aims to stay ahead of its competitors is by investing an enormous amount of money into research and development. It has more than 1,700 employees dedicated to research and development.

Indeed, CSL looks to spend around 10% of its annual revenue on R&D each year. Due to the effects of COVID-19, it re-prioritised spending and may spend up to 11% of revenue on R&D.

Multiple large, late stage R&D programs are underway providing potential new growth opportunities.

COVID-19 recovery for CSL products

CSL has been affected by COVID-19 impacts.

One of the impacts has been that plasma collections continue to be challenging, but it has multiple initiatives to drive an improvement.

Initiatives include enhanced targeted marketing initiatives to increase collections, adoption of new technology and the plasma hold period has been reduced from 60 to 45 days. The roll-out of COVID-19 vaccines is increasing mobility.

As the COVID-19 pandemic recedes, growth in doctor visits, elective and emergency procedures are expected, leading to growth in product demand.

A recovery of plasma collections is one of the things that UBS is looking for and why it rates it as a buy with a price target of $330.

Seqirus

CSL’s vaccine business has seen a surge in activity.

The COVID-19 pandemic is driving demand for influenza vaccines. In the FY21 half-year result, Seqirus revenue increased by 38% to US$1.34 billion. Growth here was particularly driven by North America (revenue was up 38%) and the EU (where revenue grew 64%).

This helped the overall CSL earnings before interest and tax (EBIT) grow 42% to US$2.36 billion, net profit grow 44% to US$1.8 billion and cashflow jump 87% to US$2.3 billion.

CSL share price

According to UBS, the CSL share price is valued at 44x FY21’s estimated earnings and 46x FY22’s estimated earnings.

The broker also believes that the healthcare giant is going to grow its annual dividend to $2.61 per share in FY22.

The post 3 reasons why the CSL (ASX:CSL) share price could be one to look at appeared first on The Motley Fool Australia.

More reading

• 3 ASX 50 shares named as buys
• TGA approves Pfizer vaccine for kids aged 12-15 years old
• 2 blue chip ASX 200 shares rated as buys
• What is the outlook for the CSL (ASX:CSL) share price?
• I’m investing for my kids. Any advice?

Motley Fool contributor 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 has recommended CSL Ltd. 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.

from The Motley Fool Australia https://ift.tt/2UAjNN1