A recent article in the Australian Financial Review has highlighted that the market capitalisaion of Kogan.com Ltd (ASX: KGN) is 5 times that of Myer Holdings Ltd (ASX:MYR). Here’s what has led to the boom in the Kogan share price and what the future looks like for the online retailer.

Coronavirus sees sales boom

Late last week, Kogan released a market update that provided a glimpse of how the coronavirus pandemic has positively impacted the company. As at 31 May, Kogan saw its active customer base grow to over 2 million, with 126,000 additional customers joining the company in May.

Kogan also reported a 100% increase in gross sales across the April and May period in comparison with the same period last year and also reported a 130% surge in gross profit for the period. As a result, the company’s financial year-to-date EBITDA grew by more than 50% to the end of May.

Dominating the future of retail

Kogan’s stellar performance comes as sales in the broader retail sector fell a record 17.7% for April. The coronavirus lockdowns saw online sales boom as consumers flocked to set up home offices, whilst also fulfilling their discretionary needs from home isolation.

The company’s outstanding sales results have been reflected in the Kogan share price, which is currently trading near all-time highs. This comes after the Aussie etailer’s shares surged an amazing 255% from their late-March lows. As a result, the company has a current share market capitalisation of approximately $1.16 billion. This market value is more than 5 times that of department store giant Myer, which tips in at a market cap of a little over $220 million.

Kogan has looked to expand its market share by acquiring furniture and homewares retailer Matt Blatt last month. By relaunching the business online, Kogan is looking to solidify its dominance of the retail sector by competing with other homewares giants such as Adairs Ltd (ASX:ADH).

Is the current Kogan share price a buy?

In my opinion, the coronavirus pandemic could have fast-tracked the changing of the guard in the retail sector. As consumers opt for the convenience of online shopping over traditional brick and mortar shops, online retailers like Kogan.com could be poised to boom in 2020 and beyond.

Having said that, the Kogan share price has had a remarkable ascent from its lows in mid-March. As a result, I won’t be rushing in to buy at the current price. Given the potential for growth in the online retail sector overall, however, I think it would be wise for investors to compile a watchlist of ASX online retailers with the potential to thrive over the next 20 years.

More reading

• These are the 10 most shorted ASX shares
• Why I’d buy Appen and these ASX growth shares for the 2020s
• How I would invest $50,000 into ASX shares right now
• Could these ASX shares be the future dividend stars that make you rich?
• What ASX shares should you invest in during a bull market?

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. 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.

The post The Kogan share price makes it 5 times bigger than Myer appeared first on Motley Fool Australia.

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What a way to start a (shortened) week for the ASX.

The S&P 500 is now showing a positive return so far in 2020, and the ASX may well close the day above 6,000 points for the first time since March.

What pandemic, right?

I wrote about it last week, but it bears repeating: these are strange and unusual times.

I think you should keep investing. I will be.

(Those who are saying not to might well be the same people who told you not to invest in March and April, too, so be careful who you listen to.)

But that doesn’t mean I expect it to be smooth sailing.

Make no mistake, the economy is on the proverbial mat.

Unemployment, here and in the US, has spiked. Whether it keeps climbing may well depend on what ‘echo’ effects we feel — which businesses can’t make it by themselves when government support runs out, and which employees end up getting laid off once JobKeeper winds down.

No, I’m not being a pessimist. I remain resolutely optimistic for the long term.

Instead — and as usual — I’m encouraging you to remain realistic.

Volatility is not over. Bad news is not all in the rear vision mirror (unfortunately).

We will overcome. We will, in time, thrive.

But it might take time and there might be stumbles.

For years, I’ve been telling people “these are good times, but be mentally prepared for when the tough times come”.

I hope you’ve been with us long enough to have heard and internalised the message.

For the last few months, I’ve been saying the reverse: “These are tough times, but make sure you keep investing, so you’ll benefit when the good times return”.

In the event, they returned far more quickly than even I expected: the ASX is up by almost one-third since mid-March.

I hope you held on.

I hope you kept investing.

I hope you kept your eyes on the horizon.

And now?

Now it’s a mix of both. 

Australian shares are still the best part of 17% off their highs.

They’re up about 32% from their lows.

The long term future is still, in my view, very bright.

But the ground between here and there is uncertain. Or, perhaps, it’s more certain, but that certainty includes hills and valleys, meadows and thick forest.

Be prepared for anything and everything in the short term, Fools.

But keep your eyes on the (long term) prize.

—–

2020 has had everything — and we’re not even half-way done, yet!

It’s had droughts, fires and floods. A pandemic and an ongoing trade war. And yes, a market that has soared, crashed and is seemingly rising, phoenix-like, from the ashes.

It has also had injustice and protest.

I tend not to use this space to talk much about things outside business and investing (and associated government policy, from time to time), but I did want to share something from our company that made me incredibly proud last week.

It’s a message that stands on its own as a moral view.

Last week, The Motley Fool chose to stand and be counted.

In part, the statement read:

“At The Motley Fool, we believe that diverse voices, insights, and expertise fuel innovation and human progress in the marketplace of business, and the world at large.

and:

“We reject racism, inequality of opportunity, hatred, and cruelty.

“We will expand our commitment in helping ensure that our employees, our members, our future members, and our fellow humans are safer, treated fairly, and given every opportunity to live out their true potential.”

The company is also distributing US$100,000 to employees to “support equality, justice, and peace in a way that’s meaningful to them.”

You can read our full statement, here.

All that’s required for evil to flourish, Simon Wiesenthal said, is that good people do nothing.

The standard we walk past is the standard we accept, according to Lieutenant General David Morrison.

Both men are, of course, right. 

I’m proud of our company for doing the right thing.

This is not a political act. It’s not a partisan act. It’s not virtue-signalling.

It’s adding our collective voice to improving our society. To simply standing for what is right.

For what it’s worth, there are also all-but irrefutable arguments for exactly the same view being taken purely out of economic self-interest. I might write about them another day.

Today, though, it’ll just be the moral argument. Which, really, isn’t an argument at all, but something we should all embrace, because it’s right.

—–

Lastly, a Buy idea.

The market has bounced, hard, as I mentioned above.

Many of the companies that seemed cheap a little more than 2 months ago, have gone on to new highs, or have gained back much of what they lost.

Which, for the bargain hunter, can be frustrating.

“Why, oh why, didn’t I buy when those stocks were so cheap”.

Maybe it was a lack of spare cash. Maybe it was just the emotionally challenging task of buying while the market seemed to be in (virtual) flames.

I hear that! I invested quite a bit of my spare cash a little early — before the bottom. And while I did buy more during the down days, I wish I’d have had more cash to do more buying.

In that spirit, I want to highlight a company whose shares I own (for the record) and that’s an active Buy recommendation of Motley Fool Share Advisor.

Yes, shares are up 28% from their lows.

But they are still down 37% from its pre-crisis 2020 high.

The company is Treasury Wine Estates (ASX: TWE).

And here’s the thing: on the most recent pre-pandemic numbers I saw, wine sales from Australia to China were up a full 40% year-on-year: 20% more volume (more bottles) plus 20% higher prices (essentially, but not completely, more profit per bottle).

If (and I think when) that export growth recommences — and looking out a few years past that — if more Asian customers in general, and more Chinese customers in particular,  enjoy more high-priced, premium Australian wines, then Treasury is in the box seat.

And at today’s price — higher than it was, but much lower than it was before that! — I think the shares are a great buy (the wine is pretty good, too!).

Fool on!

More reading

• Not keen on Westpac? Then buy these top ASX dividend shares instead
• Why didn’t Warren Buffett buy more shares in the recent bear market?
• Top brokers name 3 ASX 200 shares to sell today
• 2 ASX shares in the firing line of trade tensions with China
• Are these China-exposed ASX shares in danger in 2020?

Motley Fool contributor Scott Phillips owns shares of Treasury Wine Estates Limited. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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.

The post Two perspectives and a Buy recommendation appeared first on Motley Fool Australia.

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The market jumped to a three-month high on a quicker than expected recovery from the COVID-19 pandemic.

The S&P/ASX 200 Index (Index:^AXJO) jumped 2.4% to 6,145 points as we head into the close as a sense of FOMO gripped the market.

I don’t subscribe to using the fear of missing out as an investment strategy and I think investors will need to be more discerning about stocks to buy.

While some stocks look like they have run ahead of fundamentals, there are a handful that’s only just been upgraded by brokers to “buy”.

This stock’s a steel

One ASX stock that just got bumped up to “buy” by Goldman Sachs is BlueScope Steel Limited (ASX: BSL).

This probably explains the 3.8% jump in the BlueScope share price to $12.84 at the time of writing.

“Steel spreads in both Asia and North America have bounced off floor levels, and we expect improvement over the coming months and a return to levels more consistent with more balanced supply/demand environments,” said the broker.

“This is to be supported by positive reversion of volumes across the core markets, in particular in Australia where our channel checks suggest that demand has been a lot more supportive than previously expected.

What’s more, Goldman thinks the good times will roll on for the next 12-months thanks to additional government stimulus.

The broker lifted its price target on BlueScope to $14.95 from $10.25 a share.

Right kind of exposure

Another ASX stock that is outperforming today is the Worley Ltd (ASX: WOR) share price.

Shares in the oil and gas engineering group surged 14.3% to $10.63 to become the second top performer on the ASX 200 in late afternoon trade.

The stock was underperforming due to the slump in the oil price but Credit Suisse believes its oversold and upgraded it to “outperform” from “neutral”.

The broker also pointed out that Worley is more exposed to operational projects than the more volatile capital projects.

However, Worley’s big price gain today may limit further upside as Credit Suisse’s 12-month price target on the stock is $10.50 a share.

Good medicine

Defensive stocks like healthcare may have fallen out of favour in the rebounding bull market, but the Healius Ltd (ASX: HLS) share price is bucking the trend.

Shares in the medical facilities group rallied 3.2% to $2.62 after Macquarie Group Ltd (ASX: MQG) lifted its rating on the stock to “outpeform” from “neutral”.

While the coronavirus shutdown led to a drop in face-to-face appointments at Healius’ general practitioners (GP) offices, the broker said this is more than offset by telehealth services.

Further, comments from diagnostic services group Capitol Health Ltd (ASX: CAJ) about increase demand for its services from GP referrals support this upbeat prognosis.

Macquarie’s 12-month price target on the stock is $3 a share.

More reading

• What 2020 has taught us about investing
• Chief analyst expects Australian share market to continue rising, says ASX 200 could approach 6,600 in the weeks ahead
• Leading brokers name 3 ASX 200 shares to buy today
• Flight Centre share price and other ASX 200 travel shares look set to continue rising
• Will ASX 200 shares hit a record high in June?

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited, Macquarie Group Limited, and WorleyParsons Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group 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.

The post Top brokers just upgraded these 3 ASX stocks to “buy” appeared first on Motley Fool Australia.

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