This month I’ve been looking at how investments in the IPOs of a number of popular ASX shares have fared.

This includes the likes of Afterpay Ltd (ASX: APT) and CSL Limited (ASX: CSL). You can read about those IPOs here and here.

Today I thought I would turn my attention to New Zealand-based infant formula and fresh milk company A2 Milk Company Ltd (ASX: A2M).

How has a2 Milk Company performed since its ASX listing?

Technically speaking, a2 Milk Company didn’t list on the Australian share market through an IPO.

It first listed on the New Zealand stock exchange all the way back in 2004. The company then sought a dual listing on the Australian share market in March 2015.

The ASX listing didn’t impact its New Zealand listing, nor did it involve the raising of any new capital.

Once its shares were listed on the ASX, you could have picked them up for 56 cents apiece. This means that a $10,000 investment in its shares would have given you a total of 17,857 shares.

Since then a lot has changed. For a long time the company was playing catch up with rival Bellamy’s and seen as just a small time player in the industry. It’s also interesting to note that its operations were loss-making, much like those of Bubs Australia Ltd (ASX: BUB) today.

Today it is the largest ANZ infant formula brand and has a growing fresh milk footprint both here and in the United States.

It has also transformed from being a loss-making entity into one of the most profitable companies on the Australian share market.

The upper end of the company’s guidance for FY 2020 implies revenue of NZ$1,750 million and earnings before interest tax, depreciation, and amortisation of NZ$560 million. This represents a sizeable 34.1% and 35.4% increase, respectively, on the prior year.

Unsurprisingly, given this explosive growth in its earnings since 2015, its shares have been exceptionally strong performers.

Today’s the a2 Milk Company share price is changing hands for $17.64. Which means that the 17,857 shares you picked up in 2015 would now be worth a total of $315,000.

I think that is a pretty incredible return over a period of just over five years. But perhaps what is even better is that a2 Milk Company’s growth is far from over.

Given the modest market share its infant formula has in the China market and its expanding fresh milk footprint, I believe it is well-positioned to continue its strong earnings growth for a long time to come.

More reading

• Brokers name 3 ASX 200 shares to buy right now
• 10 quality ASX shares to buy in June
• 1 key trait to look for with most top ASX growth shares
• Is the A2 Milk Company share price in the buy zone?
• 3 outstanding ASX growth shares to invest $3,000 into today

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 and CSL Ltd. The Motley Fool Australia owns shares of A2 Milk and AFTERPAY T FPO. 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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Coles Group Ltd (ASX: COL) shares haven’t been having a good time of late.

Since 19 March 2020, the S&P/ASX 200 Index (ASX: JXO) has risen an extraordinary 21%. Over the same period, the Coles share price has fallen more than 12% from above $17 to where they sit today (at the time of writing) at $15.02.

Of course, from a year-to-date perspective, it’s a bit of a different story. Since the dawn of 2020 (which feels like a lifetime ago), the ASX 200 is still down 13.4%, whilst Coles shares have essentially been flat.

So what’s going on here? And more importantly, for investors, is the Coles share price a buy today?

Hot Coles or not?

The first thing to note is that Coles’ former parent company has been selling Coles shares like there’s no tomorrow. At the start of 2020, Wesfarmers Ltd (ASX: WES) owned a 15% stake in Coles – leftover from the demerger that occurred back in November 2018 (at around $12.80 a share).

Fast forward to today, and Wesfarmers has trimmed back its remaining stake in Coles to around 5%. Yes, Wesfarmers sold a ~5% chunk of its Coles stake in February this year, followed by another ~5% tranche in late March.

With Wesfarmers seeing no value in Coles, should investors take the hint?

These transactions don’t merit too much thought, in my view. Yes, Wesfarmers probably doesn’t see too much meaningful growth in Coles’ future. But that’s understandable, seeing as Coles is a very mature business with almost complete market saturation.

It was also an easy avenue for Wesfarmers to raise cash, seeing as the Coles share price held up extraordinarily well in the market crash we saw in March. And Wesfarmers is the kind of company that’s always looking for new pathways to invest down.

Are Coles shares a buy right now?

So here’s how I see Coles shares today: a defensive, mature company with a reasonably safe dividend. Nothing more, nothing less.

For investors who prioritise ASX dividend income, Coles remains a great option in my view. On current prices, Coles shares are offering a 2.78% dividend yield, which comes with full franking credits (giving it a grossed-up yield of 3.97%). If you identify with these goals, the Coles share price is in the buy zone right now, in my view.

But if you’re looking to substantially grow your wealth over years or even decades, Coles is probably not the best bet to make. There are a plethora of ASX shares out there that offer better growth prospects, so perhaps your cash is better served in something else.

More reading

• Will the Wesfarmers share price climb higher in 2020?
• 3 ASX blue chip shares to put into your retirement portfolio
• 3 ASX shares Warren Buffett couldn’t ignore today
• 1 key trait to look for with most top ASX growth shares
• 3 quality ASX dividend shares for income investors to buy 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 Wesfarmers 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 Over the Wire Holdings Ltd (ASX: OTW) share price is charging higher today on the back of a business update and new strategic partnership.

Over the Wire is a telecommunications, cloud and IT solutions provider that specialises in converged voice and data networks, data centres, and hosted infrastructure solutions for corporate clients.

The company owns a carrier-level network with points of presence in all major Australian capital cities and Auckland, New Zealand.

What did Over the Wire announce?

This morning, the company revealed that the current pandemic and associated restrictions have generated strong demand for its voice offering, resulting in higher volumes. This increase in voice volumes has positively offset the delay in some data services due to customer site access restrictions during lockdown.

What’s more, Over the Wire’s exposure to customers in the hardest-hit industries of retail, hospitality and travel is limited, with those most affected representing less than 3% of its recurring base.

While COVID-19 has affected its non-recurring business, recent orders from customers indicate the company is now likely to deliver more than 70% of its non-recurring revenue forecast.

On the whole, Over the Wire noted that it continues to generate positive operational cash flow, maintains a strong balance sheet, and its recurring business is in line with expectations.

The company remains confident of being within 3% of consensus, which comprises revenue of $90.4 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $17.4 million.

Commenting on business performance, managing director Michael Omeros said:

“Although the COVID-19 pandemic has created uncertainty and challenging market conditions our team has shown focus and resilience which should be commended. We are satisfied with how the business is currently tracking and confident about achieving positive growth into next financial year.”

Partnership with NEXTDC Ltd (ASX: NXT)

On top of the business update, Over the Wire also announced a strategic partnership with S&P/ASX 200 Index (ASX: XJO) share NEXTDC. Over the Wire will migrate core elements of its network and private cloud infrastructure into NEXTDC’s tier 4 facilities.

Over the Wire described this partnership as a “foundational building block” that will bring its network closer to many of the world’s leading cloud providers and cloud on-ramp services. Additionally, the partnership will allow Over the Wire to further develop its multi-cloud strategy in conjunction with its current private cloud offering.

“NEXTDC forms an integral part of our multi-cloud strategy and we are excited to be on the journey with NEXTDC, as they continue to build out next generation data centres that are enabling the growth of the digital economy,” said Mr Omeros.

At the time of writing, the Over the Wire share price is sitting 6.35% higher at $3.18 after soaring as much as 10.7% at around midday. Like most small-cap ASX growth shares, Over the Wire shares took a tumble in the wake of COVID-19 and are currently down 30% year to date.

More reading

• 3 fantastic ASX growth shares I would buy and hold for decades
• New to investing? Put $500 into these top ASX 200 shares
• Where to invest $5,000 in ASX growth shares today
• Where to invest $20,000 into ASX shares right now
• 3 explosive ASX growth shares to buy

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire Holdings 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.

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