The S&P/ASX 200 Index (ASX: XJO) went up by 0.3% today as the ASX continued its steady climb upwards. The ASX 200 finished at 5,835 points.

The protests in the US are grabbing the attention with the coronavirus currently not at the forefront of people’s minds. This year has been very eventful so far.

Zip Co Ltd’s (ASX: Z1P) big acquisition

The Zip share price flew higher today by 38.7%. The company announced that it’s going to buy the rest of US-based QuadPay by issuing up to 119 million shares to QuadPay shareholders. The deal implies an enterprise value of US$269 million for Quadpay.

Zip described Quadpay as one of the leading BNPL providers in the US. Based on the first quarter in 2020, QuadPay has annualised revenue of $70 million and annualised total transaction value (TTV) of $900 million. It also has a net transaction margin of more than 2%.

The combined ASX 200 business will have $3 billion of annualised TTV and annualised revenue of $250 million.

Zip has also entered into an agreement with CVI Investments to raise up to $200 million with convertible notes and warrants.

Brickworks Limited (ASX: BKW) trading update

The ASX 200 building products business gave a trading update today. Over the past few months it has managed to make a profit from its Australian building products business, but the US division saw negative earnings.

Australian building product revenue was only down by 10% in the four months to 31 May 2020 compared to the prior corresponding period. Development approval has been received for the new $125 million brick plant at Horsley Park in NSW.

Progress continues at the Oakdale site.

Australia and New Zealand Banking Group (ASX: ANZ) sale

ANZ has finally managed to sell its UDC Finance business for NZ$762 million to Shinsei Bank, a large Japanese business.

The sale will provide around $439 million of level 2 group CET1 capital once settled for the ASX 200 bank. It’ll also released more than NZ$2 billion of funding provided by ANZ New Zealand.

Shinsei intends to preserve UDC’s operations, retain employees and grow the business.

More reading

• This embattled ASX 200 company could be the next M&A target
• Why Coles and Woolworths shares were flat in May
• 3 long-term impacts of near-zero interest rates
• 3 things ASX investors need to know about the RBA’s rate decision today
• These ASX shares were among the best performers in May, surpassing the ASX 200

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Brickworks. 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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Overall, May was an extraordinary month for ASX shares. The S&P/ASX 200 Index (ASX: XJO) managed to bank an increase of 4.2% for the month, helped in large part by the ASX banks like Commonwealth Bank of Australia (ASX: CBA).

But other some ASX shares weren’t really joining in the party.

Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are 2 examples.

The Coles share price started May at $15.51 per share but ended the month at $15.36, meaning the company actually went backwards by 0.97% over the month.

Meanwhile, Woolworths shares began the month at $35.75 per share and concluded May at $35.34, again, down 1.15%.

So why have Woolies’ and Coles’ share prices lagged so dramatically over May? And perhaps more importantly, does this mean there might be some buying opportunities right now?

Why Coles and Woolies have been lagging lately

It’s worth remembering that both the Woolworths and Coles share prices were holding up remarkably well during the market crash we saw in March. Between 20 February and 23 March, the ASX 200 lost more than 36% of its value. Over the same period, the Coles share price ‘only’ lost 3.53% and Woolworths was down 16.4%.

It’s this defensiveness that is leading Coles and Woolworths to lag the broader market’s recovery in my view.

If a stock isn’t volatile relative to the ASX 200 during bad times, it typically displays similar inertia during good times.

Are Woolworths or Coles shares a buy today?

It’s worth noting that I think Woolworths shares were getting a little overpriced prior to the March crash, which explains why they performed poorly compared to the Coles share price during the crash.

Thus, I would class both Coles and Woolworths shares as ‘fairly valued’ today, despite their recent market performance.

But ‘fairly valued’ is still a long way from being a ‘bargain buy’.

On current prices, Coles is trading on a price-to-earnings (P/E) ratio of 17.44 and Woolworths on 17.7. Given that the broader ASX 200 P/E is sitting at 18.98 on average, I’m not really too compelled to add these shares to my portfolio today.

But there might be some merit in these 2 ASX giants if you’re a dividend income investor. Unlike many other ASX blue chips, I think both Coles and Woolworths will easily be able to fund their dividend payments in 2020. The grocery business is very defensive and should hold up no matter what happens with the economy for the remainder of the year.

So long story short, I would class both Coles and Woolworths as reasonable ‘buys’ today for dividend income, but not for much else.

More reading

• This embattled ASX 200 company could be the next M&A target
• ASX 200 rises 0.3%, Zip rockets higher
• Smash low interest rates with these ASX dividend shares
• 3 long-term impacts of near-zero interest rates
• 3 things ASX investors need to know about the RBA’s rate decision today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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The Bubs Australia Ltd (ASX: BUB) share price has been a strong performer over the last few weeks.

Since this time in May, the infant formula and baby food products company’s shares have risen a massive 23%.

And if we go back a further month, then its performance is even more impressive.

The Bubs share price has stormed a remarkable 65% since this time in April.

Why has the Bubs share price surged higher?

There have been a couple of catalysts for this strong share price performance over the last couple of months.

The first was an impressive third quarter update in April, which revealed record quarterly revenue of $19.7 million. This was a 67% jump on the prior corresponding period and a 36% lift on the second quarter.

But perhaps what was most promising with its quarterly update, was news that Bubs is now generating positive operating cashflow. For the quarter, Bubs recorded positive operating cashflow of $2.3 million.

This appears to demonstrate that it has finally reached a scale which means its operations are profitable. Which is a big positive as it has burned through a significant amount of cash in recent years while essentially selling its products at a loss.

Interestingly, this is similar to what A2 Milk Company Ltd (ASX: A2M) experienced back in 2015. Since then it has gone on to become an extremely profitable business.

What else has got investors excited?

Another announcement that got investors excited was a supply agreement with supermarket giant Coles Group Ltd (ASX: COL).

Last month Bubs revealed that its Bubs Organic Grass Fed Infant Formula will be distributed to 482 Coles supermarkets. Initial orders were to be processed in the middle of May, with its products expected on-shelf early this month.

This is in addition to its existing agreement for Bubs Goat Milk Infant Formula (which is ranged in 561 stores) and Bubs Organic Toddler Snacks (which is ranged in up to 804 stores).

Furthermore, within the same announcement the company revealed that fellow supermarket operator Woolworths Group Ltd (ASX: WOW) has increased its supply agreements. This will see Bubs Organic Grass Fed Infant Formula ranged in 800 Woolworths stores and Bubs Goat Milk Infant Formula in 654 Woolworths stores.

Is it too late to invest?

I don’t believe it is too late to invest with a long term view.

Given the progress that Bubs is making with its margins, its increasing footprint, and strong demand in China, it looks well-positioned to deliver strong earnings growth over the next decade.

More reading

• Is the a2 Milk share price too high to buy?
• Top ASX Stock Picks for June 2020
• 10 top ASX growth shares to buy in June for strong returns
• How to make $1,000 a month in dividends
• Where to invest $10,000 into ASX shares immediately

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 BUBS AUST FPO. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST 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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