The share market was positive last week with the S&P/ASX 200 Index (ASX: XJO) up 5.3%. Australian shares continued their post-crash rally in May with the ASX 200 ending the month up 4.2%. The index has now climbed more than 25% since the March crash, but remains around 20% below February highs. 

Share prices over May were impacted by the loosening of coronavirus restrictions, changing commodity prices, and local economic expectations. With lockdowns easing ahead of initial expectations, the economy is reopening earlier than expected. This has improved confidence prompting a rebound for sectors previously sold off heavily. We take a look at last week’s biggest share price gainers. 

Southern Cross Media Group Ltd (ASX: SXL)

Shares in Southern Cross Media surged 62.1% last week to finish the week at 23.5 cents. The share price rallied mid week despite no news out of the broadcaster, resulting in an ASX price query. Challenger Ltd (ASX: CGF), a substantial holder in Southern Cross Media, has been selling down its stake, with its voting power falling from 8.32% to 6.27% in May. 

Southern Cross shares were dramatically sold down as the coronavirus crisis took hold, falling from above 60 cents in February to just 11 cents in April. The broadcaster completed a $169 million capital raising in May (announced in April) with proceeds used to pay down debt. The capital raising was conducted at 9 cents a share in the face of declining advertising revenues. 

The broadcaster has instituted sweeping cost reductions with $40–$45 million in operating expenditure savings to be realised in CY20. Capital expenditure is being reduced by $3–$6 million over FY20 and FY21. The FY20 interim dividend was cancelled and no final dividend will be paid. 

Following the receipt of the full proceeds of the capital raising, Southern Cross Media’s net debt stood at $161.8 million in early May. Southern Cross managed to achieve positive earnings before interest, tax, depreciation and amortisation (EBITDA) in April, with revenue declines partially offset by operating cost reductions. Southern Cross Media has warned however that bad and doubtful debt provisions could reach $5 million in H2 FY20. 

Virgin Money Uk PLC (ASX: VUK)

Virgin Money shares gained 23.2% last week to close the week at $1.805. There was no news out of the lender last week to prompt the price rise, however investors were favouring ASX banking shares with the big four banks also rising. 

In its interim financial results released earlier in May, Virgin revealed a resilient first half performance, with underlying profit before tax of £120 million. During the half business lending increased by 5.7% while personal lending increased by 6.2%. Costs were down 3% year on year. 

Virgin says it has a defensive portfolio consisting of 82% mortgages, 11% business, and 7% unsecured lending. Its credit card portfolio is prime quality and it has low exposure to more impacted small and medium enterprises. Nonetheless, the lender has booked a COVID impairment provision of £164 million. 

Virgin is taking a disciplined approach to risk management. The loan portfolio has been built prudently and customers and credit lines managed proactively. Virgin says its funding and liquidity position would allow it to withstand a 9–12 month shut out of markets and it has no reliance on short-term wholesale funding. 

Boral Limited (ASX: BLD)

Boral shares climbed 21% last week and finished the week at $3.11. There was no news out of Boral last week to prompt the surge in the share price, however Boral shares were heavily sold off in the March crash and even now are trading 38% down from their February highs. 

Boral is currently embroiled in litigation relating to its US windows business, which it acquired in 2017. In the lawsuit Boral alleges the former owner of the windows business breached non-compete covenants. The former owner has made his own $700 million claim against Boral with litigation ongoing. 

The windows business has been a source of pain for Boral with financial irregularities uncovered in December. These included misreporting in relation to inventory levels and costs associated with raw materials and labor. Pre-tax earnings were overstated by US$24.4 million between March 2018 and October 2019. 

Austal Limited (ASX: ASB)

Austal shares gained 20.1% last week closing the week at $3.34. Shares spiked Friday morning after the shipping company increased FY20 earnings guidance. Austal is now forecasting group revenue of around $2 billion and group EBIT of no less than $125 million. 

The improved forecast is attributable to a number of factors. These include COVID-19 having a more limited impact in April and May than anticipated and the sustained strength of the US dollar. Austal was also awarded a new vessel construction contract in May. 

Austal is a shipbuilder producing commercial vessels and defence prime contractor. It has shipyards across the US, Western Australia, Vietnam, and the Philippines. Shares in the shipbuilder were sold off sharply in the March correction, falling 47%. Austal shares remain 20% down from their February high. 

McMillan Shakespeare Limited (ASX: MMS)

Shares in McMillan Shakespeare climbed 18.8% last week to finish the week at $8.64. The McMillan Shakespeare share price has been in decline since late last year. Revenues and profits fell in the first half, following which coronavirus hit. 

McMillan Shakespeare has reported a decline in novated leasing volumes since the onset of coronavirus, however salary packaging activity remains unchanged. The company has a large customer base in the health, public, and emergency service sectors which should provide some protection against a fall in volumes. 

New asset financing in Australia and New Zealand has declined. The focus in this area is on extending maturing lease contracts and working with customers to restructure lease arrangements. In the UK, McMillan Shakespeare’s asset management business responded to the lockdown by furloughing non-essential staff and reducing salary and other costs. 

More reading

• These ASX shares are set to get a big boost from the next big government stimulus
• 3 leading ASX 200 shares to buy for market-beating returns
• Top brokers are urging you to buy these ASX shares today
• Leading brokers name 3 ASX 200 shares to buy right now
• The latest ASX 200 stocks to be upgraded by top brokers

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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 These 5 ASX 200 shares were last week’s biggest winners appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gG2hNs

I think that the two S&P/ASX 200 Index (ASX: XJO) shares I’m going to name in this article will be able to beat the market this year and over the long-term. Of course, that’s just my opinion and there’s no guarantee at all.

The ASX is home to some quality growth shares. But it’s also home to plenty of mature businesses with little growth prospects. You just need to find quality growth businesses at the right price.

Here are my two ASX 200 picks:

Brickworks Limited (ASX: BKW) 

Brickworks has been one of the most reliable businesses on the ASX over the past few decades. It hasn’t cut its dividend over the past 40 years and it’s steadily expanding its Australian building products offering with organic growth and acquisitions.

It also recently went into the US with three targeted acquisitions which have quickly made it the market leader in the north east of the US.

The defensive nature of Brickworks’ industrial property trust and holding of ASX 200 investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares are very attractive assets.

We’re now learning that cash grants of between $20,000 to $40,000 may be given to buyers of newly-constructed homes. The government is also apparently considering giving people cash for home renovations to help local tradies according to reporting by the Australian Financial Review. This would likely indirectly benefit Brickworks.

The diversified ASX 200 property business currently offers a grossed-up dividend yield of 5.3%.

A2 Milk Company Ltd (ASX: A2M)

There are few ASX 200 companies that can say they are growing strongly in both the US and China. Those two markets alone could support a much larger A2 Milk business.

A2 Milk has expertly created a brand known for quality and trustworthiness. It’s an offering that resonates with consumers who want a safe (and good-tasting) product.

The current coronavirus pandemic is causing consumers to load up on product, which is helping A2 Milk’s profit margins.

A2 Milk has pretty high profit margins so a healthy amount of the revenue goes straight to the bottom line. The ASX 200 business will soon be generating earnings from Canada with a licensing agreement. There are plenty of other countries for A2 Milk to expand into over time.

I believe there’s plenty more growth to come because A2 Milk is only just getting started in North America. Its huge cash balance could soon start to be used for shareholder returns or even fund an acquisition.

Foolish takeaway

I really like both Brickworks and A2 Milk as ASX 200 share picks. At the current prices I believe Brickworks is cheaper, but A2 Milk is likely to produce stronger returns over the next decade as the global expansion continues.

More reading

• Why a2 Milk, Freedom Foods, Scentre, & TPG Telecom are dropping lower
• Will the A2 Milk share price hit $20 in 2020?
• Got $50,000 to invest for income? Pick these 5 ASX dividend shares
• How you can get very rich with ASX 200 shares
• 10 top ASX growth shares to buy in June for strong returns

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of A2 Milk. 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 I think these 2 ASX 200 shares will beat the market appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3cnIhLY

It wasn’t just Afterpay Ltd (ASX: APT) that was rocketing higher last month in the buy now pay later industry. One of its key rivals also surged higher.

In fact, the Zip Co Ltd (ASX: Z1P) share price was an even stronger performer. It finished the month with an impressive 57% gain.

Why did the Zip Co share price rocket higher in May?

Investors were buying Zip Co’s shares last month after it released a trading update for the month of April. That update revealed that the buy now pay later provider’s strong growth has continued during the pandemic.

For the month ending 30 April, Zip Co delivered an 81% increase in monthly revenue to $15.1 million. This was driven by an 86% lift in monthly transaction volume to $181.6 million and a 70,000 increase in customer number to 2 million.

The latter means the company’s customer numbers have grown 66% since the same period a year earlier. This was supported by a 50% year on year increase in merchant numbers to 23,100.

Another positive was its net bad debts, which came in at 1.99%. Management revealed that this is significantly outperforming the market. In a similar vein, Zip Co’s monthly arrears remained flat at 1.57%. This appears to have convinced the market that there will not be a spike in bad debts during the current crisis.

The company’s Managing Director and CEO, Larry Diamond, was rightfully pleased with its performance.

He said: “April was another very strong month for Zip, and in particular when considering the shutdown of a large portion of the economy. Our product differentiation and penetration into purchases for online, the home, and everyday spend categories, delivered robust transaction volume. Our revenue model has continued to deliver a strong result in the face of a challenging economic environment for retail more generally.”

Will there be more of the same for Zip Co shares in June?

It looks set to be an eventful month for the company in June.

This morning Zip Co requested a trading halt while it undertakes a capital raising to fund a proposed acquisition.

No details have been released regarding the acquisition, but if the market sees value in it then I wouldn’t be surprised to see its shares charge higher in June. But we’ll have to wait and see tomorrow or Wednesday when the company reveals all.

More reading

• 3 top Warren Buffett quotes to start your week right
• This ASX fintech share is up 489% since March
• Why Nearmap’s share price surged by 50% in May
• Openpay share price surges 29% higher after BNPL provider reports record month
• Real wealth from 3 roaring mid caps in May

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T 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.

The post Why the Zip Co share price rocketed 57% higher in May appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2XOYODr