Day: February 14, 2022

2 quality ASX tech shares for investors after the selloff

women with a microphone is happy whilst using a computer

women with a microphone is happy whilst using a computerwomen with a microphone is happy whilst using a computer

If you’re looking to take advantage of recent weakness in the tech sector, then it could be worth taking a look at the two shares listed below.

Here’s what you need to know about these tech shares:

Altium Limited (ASX: ALU)

The first ASX tech share to look at is Altium. It is the printed circuit board (PCB) design software provider behind the popular Altium Designer and cloud-based Altium 365 platforms.

PCBs are found inside almost all electronic devices. So, with the Internet of Things and artificial intelligence markets underpinning an explosion in electronic devices globally (an estimated 127 devices hook up to the internet for the first time every second), demand for Altium’s best in class platform looks set to increase strongly in the future.

Management appears confident this will be the case. In fact, it is aiming to more than double its revenue to US$500 million by 2025.

The team at Bell Potter is positive on Altium’s outlook. This led to the broker upgrading the company’s shares to a buy rating with a $40.00 price target last week.

Its analysts “forecast continued strong revenue growth in the high teen percentages in FY23 and FY24 and >20% EBITDA growth in each of these periods on the back of anticipated further margin expansion.”

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another tech option to consider is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors access to a portfolio of the largest companies involved in video game development, eSports, and related hardware and software globally.

The fund manager highlights that these companies are in a position to benefit from the increasing popularity of video games and eSports. And when it says popular, it means popular. VanEck estimates that there are 2.7 billion active gamers in the world. This is more than Netflix subscriptions and active Apple devices.

Among the ETF’s major holdings are graphics processing units (GPU) giant Nvidia and games developers Take-Two Interactive (GTA, Red Dead), Electronic Arts (FIFA, Sims, Apex Legends), and Roblox.

The post 2 quality ASX tech shares for investors after the selloff appeared first on The Motley Fool Australia.

Wondering where you should 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 over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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

*Returns as of January 12th 2022

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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 and has recommended Altium. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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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Why are ASX 200 bank shares getting so much love today?

a female bank teller smiles warmly as she hands over a piece of paper to a female customer while a large vase of tulips rests on the bank counter.a female bank teller smiles warmly as she hands over a piece of paper to a female customer while a large vase of tulips rests on the bank counter.a female bank teller smiles warmly as she hands over a piece of paper to a female customer while a large vase of tulips rests on the bank counter.

ASX 200 bank shares forged ahead today. The National Australia Bank Ltd (ASX: NAB) share price hiked 1.98% while Macquarie Group Ltd (ASX: MQG) climbed 0.49%.

Meanwhile, Bank of Queensland Ltd (ASX: BOQ) shares gained 1.95% and Australia and New Zealand Banking Group Ltd (ASX: ANZ) closed up 1.37%.

Let’s take a look at why ASX 200 bank shares had such a good Valentines Day?

ASX 200 bank shares rise

While all ASX 200 bank shares finished ahead today, there were two standout performers.

The Westpac Banking Corp (ASX: WBC) share price jumped 4.83% and Bendigo and Adelaide Bank Ltd (ASX: BEN) leapt 4.43%.

Westpac’s share price stormed ahead on news it had bought back 167.5 million of its shares, worth $3.5 billion. A share buyback can improve shareholder returns because the company’s profits are spread across fewer shares.

Meanwhile, the Bendigo and Adelaide Bank share price lifted after it reported a nearly 32% jump in statutory net profit in its half-year results.

For perspective, the S&P/ASX 200 Financials Index (ASX: XFJ) also finished higher today, up 1.54% at market close.

What’s behind the bank share surge today?

Helping ASX 200 bank shares could be news of the major banks raising their home loan rates. ANZ, NAB, and Westpac all upped their fixed home loan rates in the past week, personal finance website savings.com.au reported. Meanwhile, Bank of Queensland has reportedly bumped up its variable rates.

Continuing speculation about measures to curtail rising inflation also could be helping ASX 200 bank shares. As my Foolish colleague Bernd reported last week, central banks, including the US Federal Reserve, are looking to raise rates to keep inflation in check. Analysts also expect the Reserve Bank of Australia could lift its official cash rate.

Rising interest rates tend to help the ASX 200 banks due to larger lending margins. However, on the flip side, higher rates can also depress new lending in mortgage markets.

Investors may also be turning to value shares such as banks, energy, and the utilities sector amid the tech sell-off. As Motley Fool Australia reported last week, ASX value shares have been outperforming growth shares, including technology shares, this year amid potential interest rate hikes.

The post Why are ASX 200 bank shares getting so much love today? appeared first on The Motley Fool Australia.

Should you invest $1,000 in bank shares right now?

Before you consider bank shares, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and bank shares wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

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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 and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. 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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What to expect when Cochlear (ASX:COH) releases its half year results

Two male ASX 200 analysts stand in an office looking at various computer screens showing share prices

Two male ASX 200 analysts stand in an office looking at various computer screens showing share pricesTwo male ASX 200 analysts stand in an office looking at various computer screens showing share prices

The Cochlear Limited (ASX: COH) share price will be one to watch next week.

On 22 February, the hearing solutions company is scheduled to release its half year results.

Ahead of the release, let’s take a look to see what the market is expecting from Cochlear.

What should you expect from Cochlear?

The market is expecting a mildly positive half year result from Cochlear next week. According to a note out of Citi, the market consensus estimate is for a net profit of $127.6 million.

This is up marginally on the prior corresponding period when the company reported a net profit of $125.3 million.

However, Citi is expecting Cochlear to outperform the market’s expectations. It is forecasting a first half net profit of $140.9 million, representing growth of 12.5% over the prior corresponding period.

If Cochlear were to achieve Citi’s estimate, it would mean it is on course to deliver on its guidance in FY 2022. At its annual general meeting, management reaffirmed its FY 2022 guidance for underlying net profit growth of between 12% and 20%.

Management advised that this is expected to be underpinned by market growth, with a continuing recovery in surgery rates across many countries more affected by COVID.

What are others saying?

While it hasn’t provided a first half estimate, the team at Goldman Sachs expects a full year result in August ahead of guidance.

It commented: “We forecast $288m NPAT (17.7% margin) in FY22, which remains above COH guidance of $265-285m.”

Though, the broker has warned that while COVID headwinds are easing, “it is possible there is some persistent hesitancy amongst a proportion of its target market in DMs (aged 70+).” Therefore, investors may want to listen out for any commentary on that front.

All in all, the result could be one of the more interesting ones this season.

The post What to expect when Cochlear (ASX:COH) releases its half year results appeared first on The Motley Fool Australia.

Should you invest $1,000 in Cochlear right now?

Before you consider Cochlear, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Cochlear wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

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 and has recommended Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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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The A2 Milk (ASX:A2M) share price has 40% upside – broker

a man in a business shirt, tie and suit holds a mobile phone to his ear while he drinks a large glass of milk.

a man in a business shirt, tie and suit holds a mobile phone to his ear while he drinks a large glass of milk.a man in a business shirt, tie and suit holds a mobile phone to his ear while he drinks a large glass of milk.

The A2 Milk Company Ltd (ASX: A2M) share price has plenty of potential upside. That’s according to one of the leading brokers in Australia.

Citi has put a price target on the business that implies that A2 Milk shares could rise by around 40% over the next year.

Whilst the company has gone through a lot of volatility over the last couple of years, management and the broker feel that things are now looking more promising.

The latest from A2 Milk

At the company’s annual general meeting (AGM), it acknowledged that FY21 was a disappointing result, with net profit after tax plunging 79.1% to $80.7 million. COVID-19 caused significant disruption and also led to excess inventory. This was partly caused by a reduction of the Chinese birth rate.

The A2 Milk share price has fallen 47% over the last year alone.

However, the company has taken a number of key actions to try to start a recovery.

It ‘recognised’ stock write-downs and deliberately slowed down sales in the fourth quarter of FY21, together with other planned initiatives, to reduce inventory levels and rebalance English label IMF pricing across channels

Another thing that A2 Milk did was swap older distributor inventory with more recent stock to improve on-shelf product freshness.

The infant formula company has increased its marketing to drive customer demand.

A2 Milk has also done some restructuring and hiring, with new talent and a re-focusing on the key business opportunities.

Citi likes the initiatives that the business has worked hard on improving its inventory position and notes the tactics it’s employing to turn things around.

Long-term ambitions

A2 Milk said that it has an ambition to grow sales to over NZ$2 billion and improve margins. This could be quite helpful for the A2 Milk share price.

It wants to regain half of the English label revenue from FY20 to FY21, through a channel recovery after COVID-19 impacts fade and also the execution of its English label strategy to gain market share.

A2 Milk also wants to double its Chinese label market share from 2.5% to 5%.

The ASX share also has plans to grow in other dairy and nutritional products to China through innovation and distribution growth. Other plans include growing in existing markets and two to three new markets as well as growth in milk and adjacent categories.

In terms of the earnings before interest, tax, depreciation and amortisation (EBITDA) margin, it’s targeting a margin “probably in the ‘teens’ in the medium-term due to expected market conditions, investment and innovation.”

Then, in the longer-term, the EBITDA margin is going to possibly be in the “low-to-mid-20s” subject to a higher-than-expected market recovery, English label channel growth and share gains.

A2 Milk share price target

Citi has a price target of $7.30. As already mentioned, that suggests the shares could rise by around 40% over the next year, if the broker ends up being right.

The post The A2 Milk (ASX:A2M) share price has 40% upside – broker appeared first on The Motley Fool Australia.

Should you invest $1,000 in A2 Milk right now?

Before you consider A2 Milk, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and A2 Milk wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

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 recommended A2 Milk. 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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