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

Looking to invest in quality S&P/ASX 200 Index (ASX: XJO) shares with strong long-term growth potential?

I think the following 3 ASX 200 shares are worthy candidates for above-average share price growth over the next 5 years. Each share also has a strong and proven business model across a range of markets.

Bapcor Ltd (ASX: BAP)

Bapcor is the leading second-hand auto parts distributor in Australia and New Zealand. Additionally, an expansion into Thailand is aimed at providing a launching pad to make headway in the Asian market.

I think its recent capital raising of $236 million from institutional and retail investors positions the company well to navigate through any prolonged downturn caused by the coronavirus pandemic. Bapcor also believes the capital raising puts it in a strong position to execute its 5-year growth strategy.

Weaker trading conditions were experienced in late March and early April. However, coronavirus restrictions are now easing. I believe trading is therefore likely to pick up again quicker than anticipated.

Domino’s Pizza Enterprises Ltd. (ASX: DMP)

Domino’s has an aggressive expansion plan. Assuming it executes well on this, I believe the plan positions Domino’s well for strong sales growth over the next 5 years.

Compared to other fast food outlets and restaurants, the company’s revenue base has proven to be fairly resilient during the coronavirus crisis so far.

In its most recent market update in late April, Domino’s revealed that its chain of stores in France were progressively reopening. Additionally, stores in Japan and Germany have maintained strong sales growth, while there has been minimal impact on trading in Australia.

Domino’s doesn’t typically have a sit-down service and any in-store pick-up by patrons is normally very quick. In addition, Domino’s has an extensive home delivery service which has experienced a surge in demand in response to lockdown restrictions.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) 

I am attracted to ‘Soul Patts’ as a long-term investment. I like its high level of diversification across a broad range of industries, which range from pharmacies and telecommunications to mining and building products.

Soul Patts also keeps plenty of cash on its balance sheet. This places it in a strong position to capitalise on any investment opportunities that crop up. On the flip side, this cash can be used as a buffer in difficult operating times, such as those faced now.

Soul Patts funds its dividends from the cash it receives from its investment portfolio. The company expects this to be in line with the previous year, supporting its ability to maintain its stellar dividend record and pay a growing dividend in FY20.

More reading

• These ASX shares are set to get a big boost from the next big government stimulus
• These 5 ASX 200 shares were last week’s biggest winners
• 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

Motley Fool contributor Phil Harpur owns shares of Bapcor and Domino’s Pizza Enterprises Limited. The Motley Fool Australia owns shares of and has recommended Bapcor and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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 3 leading ASX 200 shares to buy for market-beating returns appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2zMBT3G

Recently, as we start each week afresh, I’ve been drawing inspiration from the great investor, Warren Buffett. As you are no doubt already aware, Buffett is the Chair and CEO of Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B) and arguably the world’s most successful investor. Our Motley Fool colleagues over in the United States have put together a comprehensive list of Buffett’s best quotes, which you should definitely check out when you have time.

But here are 3 quotes that I think have particular wisdom worth absorbing this week!

“For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favourable business developments”

Here Buffett is warning about the dangers of assuming you can pay any price for a top-notch company. I believe investors often fall into this trap. When they see a company that is growing fast, they figure it’s better to buy the overvalued shares than miss out entirely. In my opinion, we have seen this play out recently with WAAAX shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO). While buying into a winning company can feel good for a while, Buffett is warning that paying an overinflated price can lead to a path of wealth destruction in the end.

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage”

This Warren Buffet quote is a great lesson for us all to keep in mind. Some investors often assume that just because a company is a ‘disruptor’, this automatically makes it a good investment. Disrupting an industry can be a winning strategy, but only if the company is able to hold on to its ‘moat’, or competitive advantage.

Just take Nokia, for example. This company pioneered mobile phones back in the day, but today is not really around to keep extracting its share of the spoils. That honour belongs to the likes of Apple, Alphabet and Samsung. These are all companies that could do what Nokia did, only better. No wonder Warren Buffett owns shares of Apple.

“Predicting rain doesn’t count, building the ark does”

I think this Warren Buffett quote is particularly relevant in 2020. This is a year that has already brought unprecedented volatility to our share market. There’s always a conga-line of doomsayers ready to tell you when the next share market crash or recession is about to hit. As Buffett also espouses, however, it doesn’t matter how right they are, but how you prepare for it. Remember, even a broken clock is right twice a day! 

Foolish takeaway

Recessions and market crashes have often resulted in Warren Buffett becoming richer. Now that’s something I think we could all draw inspiration from in the current climate. 

More reading

• Why the Zip Co share price rocketed 57% higher in May
• 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

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Alphabet (A shares) and Berkshire Hathaway (B shares). 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 3 top Warren Buffett quotes to start your week right appeared first on Motley Fool Australia.

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