Stock Pick

  • Is the Webjet share price going to crash lower?

    graph of paper plane trending down

    The Webjet Limited (ASX: WEB) share price was on fire on Tuesday and rocketed materially higher.

    The online travel agent’s shares jumped over 11% to finish the day at $4.10.

    Despite this strong gain, the Webjet share price is still down over 57% since the start of the year.

    Does this make Webjet shares a bargain buy?

    Unfortunately, at the current level I think Webjet is far from a bargain buy. In fact, I believe it shares are very expensive despite their significant decline.

    As I mentioned here previously, at the start of the year when nobody had heard of COVID-19, Webjet’s market capitalisation stood at just under $1.3 billion.

    A market capitalisation is essentially the value of the company. It represents the total number of shares on issue multiplied by the share price of the time. At that point Webjet had a total of ~135.6 million shares outstanding and a share price of $9.49.

    How much do you think Webjet’s market capitalisation is today?

    Given that its shares price is down 57% since the start of the year, you might expect that its market capitalisation would be down by the same amount to $559 million. But it isn’t.

    Webjet actually has a market capitalisation of approximately $1.4 billion.

    Yes, you read that correctly. Despite the tourism industry grinding to a halt during the pandemic and the next year or two looking incredibly uncertain, investors are giving Webjet a higher valuation.

    How is this possible? This appears to have been caused by investors not taking into account Webjet’s highly dilutive capital raising.

    This capital raising means there are now a total of ~339 million shares outstanding. Which, when multiplied by the current share price, equates to a market capitalisation ~$100 million higher than its pre-pandemic valuation.

    Short interest building.

    In light of this, I can’t say I’m surprised that short sellers have begun to target Webjet. Short sellers are investors that profit when a share price declines.

    On Monday, Webjet had 9.2% of its shares held short, making it one of the 10 most shorted shares on the ASX.

    In light of the above, although I am a big fan of Webjet and its brands, I think it is a very risky share to own at the current level.

    Instead of Webjet, I would be buying these exciting shares…

    5 ASX stocks under $5

    One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.

    Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!

    Learn More

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet 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 Is the Webjet share price going to crash lower? appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/3e8L1ib

  • Qualcomm’s Rf Business Is Under the Street’s Radar, Says 5-Star Analyst

    Qualcomm’s Rf Business Is Under the Street’s Radar, Says 5-Star AnalystAs the largest mobile chipmaker in the world, Qualcomm (QCOM) is expected to be one of the main beneficiaries of the upcoming 5G cycle.However, there’s a particular segment of Qualcomm’s business that gets less attention, but has gradually become more prominent.Susquehanna analyst Christopher Rolland recently spoke to Qualcomm’s resident RF expert, to discuss an “often-misunderstood piece of Qualcomm’s business model.”Qualcomm’s RF front end business – the components that turn the information into radio signals  – grew by 50% year-over-year in the first quarter. Rolland estimates the segment makes up 10% of Qualcomm’s overall business, amounting to what is now a run-rate of $600 million. Looking further down the line, in the long term, Qualcomm sees RF making up 20% of the company’s business.The company has expanded its RF “revenue base” significantly, with recent technology advances in parts, such as power amplifiers, switches and antenna tuners.Furthermore, some 5G networks will be powered by mmWave – the tech which makes it possible to move massive chunks of data at high speed over unused high-frequency bands. Qualcomm’s “integrated approach” gives it a competitive advantage as it provides the performance required to “meet complexity challenges at high frequencies.”But 5G is not the only opportunity for the RF business, as Qualcomm is making strides in 4G, too. 5G is based on legacy 2G/3G/4G networks and Qualcomm has been able “to inherit legacy bands when winning 5G platforms at some customers.”Summing up, the 5-star analyst said, “Qualcomm has defined the cutting-edge cellular standard by consistently ‘moving the goal posts’ in baseband capabilities for the last two decades. Every time a competitor matches Qualcomm’s technology, they quickly add important new ‘table-stakes’ features… We continue to believe the RF opportunity for Qualcomm is generally underappreciated by the Street.”Rolland keeps a Positive rating (i.e. Buy) on QCOM, and raises the price target from $95 to $105. The implication for investors? Potential upside of 23% from current levels. (To watch Rolland’s track record, click here)So, that’s Suquehanna’s view, how about the rest of Street’s take? The analyst consensus rates the chipmaker a Moderate Buy, based on 10 Buys, 6 Holds and 3 Sells. With an average price target of $91, analysts see a modest upside ahead. (See Qualcomm stock-price forecast on TipRanks)To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. More recent articles from Smarter Analyst: * Billionaire Ken Griffin Pulls the Trigger on These 3 Penny Stocks * Acadia Files Nuplazid Label Expansion; Analyst Sees 'Significant' Potential * Jazz Pharma Scores Surprise Early Approval For Lung Cancer Treatment * Facebook’s WhatsApp Rolls Out Digital Payment Service In Brazil

    from Yahoo Finance https://ift.tt/2zIst9C

  • Will the Afterpay share price hit $100 in 2020?

    the words buy now pay later on digital screen, afterpay share price

    The Afterpay Ltd (ASX: APT) share price has rocketed 93% higher since the start of the year to $56.52.

    That would be impressive growth at the best of times, let alone after a steep bear market. Afterpay shares slumped as low as $8.01 before rocketing more than 600% higher in the last three months.

    It’s been a wild ride for long-term Afterpay shareholders in recent years. In fact, the Afterpay share price was trading at just $2.95 in June 2017.

    But could Afterpay repeat the trick and double again in 2020?

    Why the Afterpay share price could surge higher

    It’s fair to say investors panicked as coronavirus restrictions took hold in February. Shares in the buy now, pay later company plummeted lower before rocketing even higher than where they started.

    Afterpay has a $15.1 billion market capitalisation right now. This means the Aussie payments company could leapfrog into the ASX 50 by the end of the year.

    $100 per share seems like a long way from the current Afterpay share price of $56.52. However, Afterpay has proven time and again that it can deliver strong growth to shareholders.

    The group’s retail merchant networks continue to grow and bad debts are staying low. Successful expansions into the United States and the United Kingdom have also been strong growth factors.

    But there’s no such thing as a sure thing in ASX shares, particularly in this market. I’m expecting there to be more volatility on the way, especially as government stimulus measures are wound back.

    If we see another strong earnings result, then the Afterpay share price could surge towards $100 per share. However, any slight wobble could send the company’s shares into another slump.

    Foolish takeaway

    The Afterpay share price has already delivered strong returns for long-term shareholders. But now it’s always a question of, ‘is it too late to buy?’.

    I think there’s still strong growth potential for Afterpay despite increasing competition at home and abroad.

    I wouldn’t say $56.52 per share is a cheap buy, but if earnings continue to grow then who knows how high it could go.

    If Afterpay is too pricey for you right now, check out these 5 ASX shares under $5 today.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    Learn More

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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 Will the Afterpay share price hit $100 in 2020? appeared first on Motley Fool Australia.

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

The Latest

Sorry, but nothing was found. Please try a search with different keywords.