The Zip Co Ltd (ASX: Z1P) share price has rebounded off its lows but is still trading notably lower on Friday.

At the time of writing the payments company’s shares are down over 7.5% to $6.03. This is despite the release of another positive announcement this morning.

What did Zip announce?

This morning Zip released an update which revealed that its strong performance continued during the month of May.

In May, Zip recorded monthly transaction volume of $189.3 million and revenue of $15.6 million. This was a 63% and 78% increase, respectively, over the same period last year.

And while this growth is a touch slower than in April, when transaction volume lifted 86% and revenue rose 81% growth, it is still a very impressive rate of growth in such a challenging economic environment.

Zip added 65,000 new customers during the month, lifting its total to 2.1 million. This represents a total increase of 63% since this time last year.

Also growing strongly was its merchant numbers. They are up 46% year on year to 23,600.

Net bad debts low but rising.

At the end of May, Zip’s net bad debts stood at 2.16%. This compares to 1.99% at the end of April.

Management notes that this is in-line with expectations and significantly outperforming the market average.

Positively, monthly arrears, which is a forward indicator of future losses, reduced from 1.57% in April to 1.47% in May. In addition to this, there was no material change to the number of hardship assistance requests.

Zip’s Managing Director and CEO, Larry Diamond, commented: “May was another strong month for Zip – the performance of the business, both in terms of the continued strong transaction volume, and in particular the outstanding repayment performance, demonstrates the resilience of the Zip business model.”

The chief executive notes that the company is benefiting from the shift away from cash to digital, contactless payments, and ecommerce. Pleasingly, he expects this trend to continue in the future even after the pandemic ends.

Mr Diamond explained: “We also anticipate ecommerce penetration to remain at elevated levels post COVID-19 as consumers gain familiarity shopping online, and retailers invest significantly in this space.”

The chief executive also revealed that Zip is on course to achieve its guidance in FY 2020. “We remain on track to hit our FY20 target of $2.2b in annualised transaction volume set at the beginning of the year,” he concluded.

More reading

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• ASX growth companies including Zip Co cash in on the rise of e-commerce
• A $10,000 investment in the Zip Co IPO would be worth $350,000 today
• My share investing journey during the pandemic
• 3 ASX shares to buy now with $10,000

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 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.

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The Qantas Airways Limited (ASX: QAN) share price has shot up over 100% from its trough on 23 March. The company has gradually started to recommence regional flights. Meanwhile, both national and international borders remain closed. You have to wonder if investors are taking a very large gamble, or if Qantas really is a good investment right now. 

Not the same old Qantas

It appears likely that Qantas will be a transformed company following the COVID-19 pandemic lockdowns. Reduced demand is likely to force down costs for employees and marketing, in particular. This will presumably drive the company to mould itself into a leaner outfit that is better equipped to face its new ‘normal’. Analyst Anthony Mulder from the investment bank Jeffries has forecast staff costs at Qantas to reduce to $2 billion in the 2021 financial year, down from $4.2 billion in 2019.

Qantas will, however, take a short term hit on fuel. The hedging they would have had in place to control costs will see them paying higher prices following the oil price’s sudden crash. Nonetheless, over the medium term, the company will see fuel costs fall. There is also talk of Qantas winding up or selling off its minority stake in Vietnamese offshoot Jetstar Pacific. 

What happens next?

It is hard to miss the growing crescendo calling for borders to reopen. The moment open borders are announced, I believe the Qantas share price will start to climb again. In addition, the company is well placed to return to a level of profitability.

It has been well supported by the government subsidising essential flights and its balance sheet remains very strong. Furthermore, Qantas retains a 19.9% stake in Alliance Aviation Services Ltd (ASX: AQZ). This provided the Aussie airliner with at least one air flight revenue stream throughout the lockdown period. Qantas’ stake in Alliance, however, is currently under review by the ACCC.

Is there value in today’s Qantas share price?

Notwithstanding all the factors above, I believe Qantas has the financial track record of a well managed company. Moreover, it has a strong balance sheet and high liquidity (cash) levels. As an indication of good management, Qantas has a 10-year average return on equity of 17.5%. This is also known as its return on net assets. I believe that for a capital intensive company, this is a good result.

Lastly, in his upgrade of Qantas, analyst Anthony Mulder gave it a target price of $6.20. Merrill Lynch Bank of America analyst Melinda Baxter also upgraded her recommendation, valuing the Qantas share price at $5.25. It is currently trading at $4.29, at the time of writing.

Foolish takeaway

During the pandemic, Qantas has demonstrated why it is one of Australia’s most widely held shares. It is reshaping itself for the future and has worked hard to be battle ready. With two prominent analysts recommending a higher target price, I believe the Qantas share price will start to climb once there is a hint that borders will reopen. 

More reading

• The smartest ASX shares to invest $10,000 in right now
• Flight Centre share price and other ASX 200 travel shares look set to continue rising
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points
• Top brokers name 3 ASX 200 shares to buy next week
• Will the Qantas share price crash back to Earth?

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. 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 Is the Qantas share price a buy today? appeared first on Motley Fool Australia.

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ASX 200 shares continue to bounce back strongly in June. However, we’ve seen a minor wobble this week as the S&P/ASX 200 Index (ASX: XJO) has fallen lower for 2 consecutive days, and is down almost 3% this morning.

Despite this, things are still looking relatively good in global share markets. Strong money supply and general optimism about 2021 are pushing share prices higher.

It’s easy to get distracted by short-term market movements. It’s important to keep an eye on the prize – building a long-term investment portfolio.

Here are a few ASX 200 shares that I think are worth buying and holding for decades into the future.

3 ASX 200 shares to buy for the long-term

When investing for the future, I like to think of some key themes that will be important. After all, future trends will drive the economy and that will be led by top ASX companies.

I think Commonwealth Bank of Australia (ASX: CBA) is one share to buy for the future. CBA is Australia’s largest bank and has historically been a dividend staple of many Aussie portfolios.

There’s a lot of talk around disruption and the rise of the neobanks. While neobanks may continue to capture market share, I think the big four will be hard to dislodge.

CBA isn’t the only ASX 200 share that is looking tough to dislodge in its industry. I like the look of NextDC Limited (ASX: NXT) as a leader in the data storage and security industry.

NextDC looks to be laying the platform for future growth right now. The Aussie data storage group recently raised $672 million from investors to develop more data centres around Australia.

Another ASX growth share that I think is set for more growth is Polynovo Ltd (ASX: PNV). Polynovo’s proprietary NovoSorb BTM product continues to go from strength to strength. In fact, the Polynovo share price has rocketed 3,050% in the last 5 years and more than doubled in the last 12 months.

Foolish takeaway

These are just a couple of the ASX 200 shares I think will be strong companies in the decades ahead and are well worth considering today as long-term buys.

More reading

• Is ‘sell’ really a dirty word? How to know when to let go of your ASX shares
• Why the AFIC share price could be cheap today
• Woolworths facing fresh threat from Amazon.com
• Is this the start of a second COVID-19 share market crash?
• Is this why the NAB share price could be cheap today?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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 3 ASX 200 shares to buy and hold for decades appeared first on Motley Fool Australia.

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