Author: therawinformant

There are some high-performing ASX tech shares out there that have been identified as buys.

Motley Fool Pro still believe each of these ASX tech shares could be worth buying:

Xero Limited (ASX: XRO)

Xero is a cloud accounting software business with headquarters in New Zealand. It is now a multinational company with market-leading positions in Australia and New Zealand. Its market share in the UK is also rapidly growing as it adds more subscribers which pay a monthly fee to Xero.

The Xero share price has gone up 48% in 2020 so far.

The ASX tech share revealed continuing growth in its FY20 result. Total subscribers increased 26% to 2.285 million. Operating revenue went up 30% to NZ$718 million and earnings before interest, tax, depreciation and amortisation (EBITDA) – excluding impairments – rose 52% to NZ$139.2 million. In the UK, subscribers grew by 32% to 613,000 with revenue growing by 54%. Xero increased its free cash flow generation by 320% to NZ$27.1 million.

One of the main things that the Pro team was pleased about the FY20 result was that North American subscribers grew by 24% to 241,000.

It’s still rated as a buy by the Motley Fool Pro service. The Pro team said the FY20 result demonstrated the runway Xero still has and they like how it’s moving to become a platform service, though Xero’s SME customer base may be impacted because of COVID-19 effects. However, this may be offset by potential customers realising the benefits of cloud products.

Altium Limited (ASX: ALU)

Altium is an electronic PCB design software business. It has various software offerings, such as Altium Designer, some of which is targeted at small engineer outfits and other software is designed for large multinational teams.

On Altium’s ‘about’ page, it tells investors a number of things. Altium says it has a strong track record in engineering development and engineering excellence, it has global diversified earnings (comprised of 48% Americas, 32% Europe, 14% Emerging Markets and 7% Asia Pacific), it’s committed to being the market leader and it’s well positioned for future growth because at the heart of intelligent systems are electronics and PCBs.

In terms of the balance sheet, Altium says it’s committed to growing the dividend each year and it’s debt free.

The ASX tech share is focused on growing its cloud offering to subscribers called Altium 365. Indeed, the company recently made an announcement saying that it was pivoting its organisational structure towards the cloud.

Altium’s growth has been stunted by COVID-19 impacts, however Pro still rate the business as a buy for long-term growth-focused investors and believes it still has a good growth runway ahead.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX tech share that facilitates digital donations, particularly for the US large and medium church sector.

It has a long-term goal of reaching US$1 billion revenue from the US faith sector. The current COVID-19 conditions have seen an acceleration in the adoption of Pushpay’s technology. Pushpay management believe that its new offering called ChurchStaq – which is the combined offering of Pushpay and Church Community Builder – is proving very popular with users.

In the recent FY21 half-year result, Pushpay revealed that its total processing volume went up by 48% to US$3.2 billion. This helped Pushpay’s operating revenue grow by 53% to US$85.6 million and it pushed the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) higher by 177% to US$26.7 million.  

Pushpay management were keen to point out the scalability of the business with its improving profit margins. The gross margin expanded from 65% to 68% whilst the EBITDAF margin surged from 17% at 30 September 2019 to 31% at 30 September 2020.

The Pro team still rates Pushpay a buy. The Pushpay share price has gone up 105% in 2020.

More reading

• 3 ASX shares targeting huge growth in the 2020s
• Why ASX 200 technology shares are again racing higher
• Top brokers name 3 ASX shares to buy today
• Why the Pushpay (ASX:PPH) share price could be a growth opportunity
• ASX 200 ends mixed on Wednesday

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and Xero. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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Last week the Reserve Bank of Australia met to discuss the cash rate and opted to cut it down to a record low of 0.1%.

This was another blow for income investors, who will have to contend with even lower rates in 2021.

But never fear, the Australian share market is home to countless dividend shares that offer better yields than term deposits and savings accounts.

Two that do exactly this are listed below:

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a leading provider of software products and services to the wealth management and funds administration industries. The key product in its portfolio is the Sonata wealth management platform. It allows users to connect and engage with their clients anytime, anywhere, through computers, tablets or smartphones. Demand for Sonata has been growing in recent years and has been underpinning the company’s growth. But Bravura certainly isn’t a one-trick pony and has a number of other products supporting its growth. This includes the Rufus transfer agency solution, the Midwinter financial planning solution, and the recently acquired Delta Financial Systems.

And while management has warned that its earnings could be flat this year because of the pandemic, it remains positive on its long term prospects due to its portfolio. It commented that Bravura is positioned for “long-term growth driven by market demands for microservices ecosystems, digital solutions and automation.”

In FY 2020, the company paid investors an 11 cents per share unfranked dividend. Based on the current Bravura share price, this equates to a 3.75% dividend yield.

Dicker Data Ltd (ASX: DDR)

Dicker Data is a leading distributor of computer hardware and software across the ANZ region. It has been growing both its earnings and dividend at a quick rate over the last few years thanks to growing vendor agreements and increasing demand. Pleasingly, this has continued in 2020 despite the pandemic. For example, last month Dicker Data released its third quarter update and revealed year to date profit before tax growth of 28.3% to $60.8 million.

With its update, management spoke positively about its outlook. It notes that demand is strong, quoting activity is high, and 5G and artificial intelligence are huge opportunities for the company in the medium term.

In the meantime, Dicker Data is planning to pay a 35.5 cents per share fully franked dividend this year. Based on the latest Dicker Data share price, this equates to a 3.4% dividend yield.

More reading

• 2 ASX dividend shares with better yields than term deposits
• These were the 3 best-performing ASX 200 tech shares in October
• Buying these ASX dividend shares could solve your income needs
• 3 of the best mid cap ASX shares to buy right now
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd and Dicker Data 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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On Friday the S&P/ASX 200 Index (ASX: XJO) was on form and finished a stunning week with a solid gain. The benchmark index rose 0.8% to 6,190.2 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to rise.

The Australian share market looks set to start the week on a positive note. According to the latest SPI futures, the ASX 200 is expected to open the day 15 points or 0.25% higher this morning. This is despite a mixed end to the week on Wall Street, which saw the Dow Jones fall 0.25%, the S&P 500 trade flat, and the Nasdaq edge ever so slightly higher. Despite the soft finish, the S&P 500 had its best week since April.

Biden wins the U.S. election.

Although Donald Trump has refused to concede the election and legal challenges are likely, Joe Biden has taken an unassailable lead in the race to the White House. In light of this, most major media outlets have declared Biden the winner and the new President-elect. Investors may now begin to construct their portfolios around his policies.

Oil prices sink lower.

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could have a tough start to the week after oil prices sank lower. According to Bloomberg, the WTI crude oil price fell 4.3% to US$37.14 a barrel and the Brent crude oil price dropped 3.6% to US$39.45 a barrel. Rising COVID-19 cases sparked demand fears.

Gold price pushes higher.

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch on Monday after the gold price pushed higher on Friday night. According to CNBC, the spot gold price climbed 0.25% to US$1,951.70 an ounce. This means the precious metal had its best week since July. This was driven by US dollar weakness and hopes for a larger coronavirus relief bill thanks to Joe Biden’s victory.

ANZ goes ex-dividend.

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price could trade lower today when it goes ex-dividend for its final dividend. The banking giant will then be paying its fully franked 35 cents per share dividend to eligible shareholders in around five weeks on 16 December.

More reading

• Here’s what a Joe Biden victory would mean for ASX shares
• The ASX 200 shares rocketing on takeovers, upgrades and low interest rates
• Here’s how much NAB (ASX:NAB)’s new dividend is worth
• Big 4 banks’ own customers don’t trust them
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro 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.

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It may not be the biggest tech sector in the world, but the ANZ region’s tech sector is home to a good number of companies with significant potential.

Three small cap ASX tech shares that have been growing strongly this year are listed below.

Here’s what you need to know about them:

Damstra Holdings Ltd (ASX: DTC)

Damstra is a growing integrated workplace management solutions provider. The company’s cloud-based workplace management platform is used by businesses globally to track, manage, and protect their workers and assets. Demand for its offering has been growing strongly in recent years and this has continued in FY 2021. For example, in the first quarter, Damstra revealed record first quarter revenue, cash receipts, and operating cash flow. This impressed analysts at Morgan Stanley, who put an overweight and $2.00 price target on the company’s shares.

MyDeal.com.au Limited (ASX: MYD)

MyDeal.com.au is a recently listed online retail marketplace provider with a focus on furniture, homewares, appliances, technology, baby products, and hardware. It has been a positive performer in FY 2021, delivering first quarter gross sales growth of 317% to $56.67 million. Management advised that this was underpinned by the shift to online shopping and a 268% increase in active customers to 669,897. Looking ahead, the company intends to use the $40 million raised from its IPO to drive future growth. This includes growing its private label business, investing in its proprietary technology, and investing in advertising to grow its customer base and brand.

Whispir Ltd (ASX: WSP)

Finally, Whispir is a software-as-a-service communications workflow platform provider which allows businesses and governments to deliver two-way interactions at scale using automated multi-channel communication workflows. Its platform was used to great effect during the height of the pandemic when 22 government departments used it for COVID-19 communications. Management estimates that the Workflow Communications platform as a Service market could reach US$8 billion per year by 2024. This compares to the revenue of $39.1 million it recorded in FY 2020, which was up 25.5% year on year.

More reading

• 3 growing small cap ASX shares
• MyDeal.com.au (ASX:MYD) share price up 7% on trading update
• These 3 ASX shares to IPO recently are struggling
• Are these small cap ASX shares the next Kogan (ASX:KGN) and Nearmap (ASX:NEA)?
• 3 of the best mid cap ASX shares to buy right now

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 and recommends Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool Australia has recommended Whispir 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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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Corporate Travel Management Ltd (ASX: CTD)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $21.50 price target on this travel booking company’s shares. The broker notes that one of its rivals is forecasting a quicker than expected recovery in the corporate travel market. This bodes well for Corporate Travel Management and the broker believes its pathway to profitability is much clearer than other ASX travel booking shares. The Corporate Travel Management share price ended the week at $16.74, which implies potential upside of over 24%.

Nanosonics Ltd (ASX: NAN)

Analysts at UBS have retained their buy rating and $7.20 price target on this infection control company’s shares following the release of its trading update. The broker notes that Nanosonics’ has had a better start to FY 2021 than it was expecting, with strong quarter on quarter growth in consumables. And while the broker expects its first half result to be soft, it remains positive on its long term prospects. The broker believes Nanosonics is an example of a high-quality structural growth story, particularly in a post-COVID world which is likely to have a greater focus on infection prevention. This price target implies potential upside of almost 26%.

National Australia Bank Ltd (ASX: NAB)

A note out of Citi reveals that its analysts have retained their buy rating and $23.50 price target on this banking giant’s shares following its full year results. Although NAB fell short of its estimates in FY 2020, it notes that this was due to an increase in its loan loss provisions. It feels these have been brought forward from the new financial year and has thus reduced its loan loss forecasts for FY 2021. In addition to this, it likes the bank above the rest of the big four due to its revenue growth prospects and strong cost control. The NAB share price was changing hands for $19.57 on Friday afternoon. This means there’s potential upside of 20% (excluding dividends) based on this price target.

More reading

• Is the NAB (ASX:NAB) share price a buy for dividends?
• Here’s how much NAB (ASX:NAB)’s new dividend is worth
• Big 4 banks’ own customers don’t trust them
• ASX 200 shoots 1.3% higher on Thursday
• When ‘cutting rates’ doesn’t mean what you think it means

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 Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Nanosonics 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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While most companies on the Australian share market have resisted giving guidance in FY 2021 because of the uncertainty caused by the pandemic, a number have reaffirmed their longer term aspirational targets.

Three ASX shares which have bold growth plans over the next five years or so are listed below. Here’s what they are trying to achieve in the 2020s:

Altium Limited (ASX: ALU)

Altium is a leading electronic design software company best-known for its eponymous Altium Designer product. Demand for its software has been increasing over the last few years thanks to the rapidly growing Internet of Things and artificial intelligence markets. Pleasingly, management appears confident in its growth trajectory and is aiming to grow its revenue to US$500 million by 2025-2026. This will be an increase of over 150% from the revenue of US$189 million it achieved in FY 2020.

Bubs Australia Ltd (ASX: BUB)

Another company targeting huge growth over the next five years is Bubs. It is a growing infant formula, baby food, and vitamins company. In FY 2020, the company’s revenue grew by 32% to $62 million. This was driven largely by a 58% increase in Bubs infant formula sales to $30 million. Management is now aiming to grow its revenue to $400 million by 2025, with a gross margin floor of 40%. FY 2021 has started slowly because of the pandemic, though. This means Bubs has a uphill struggle to achieve its goals.

SEEK Limited (ASX: SEK)

Finally, another company intent on growing its sales materially in the 2020s is SEEK. In FY 2020, the job listings giant reported revenue of $1,577.4 million. It is now aiming to increase this to $5 billion later this decade. This growth is expected to be driven by its dominant position in the ANZ market, its growing China-based Zhaopin business, and its investments in growth opportunities.

More reading

• Rising jobs and house loans place these ASX shares in focus
• Why the SEEK (ASX:SEK) share price rebounded after being 8% down
• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• Why 5G Networks, Cedar Woods, SEEK, & Tyro shares tumbled lower today
• SEEK (ASX:SEK) share price drops 5% after responding to Blue Orca short seller attack

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia has recommended SEEK 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating but lifted their price target on this payments company’s shares to $30.00. While it has lifted its sales forecasts to reflect Afterpay’s strong start to FY 2021 and its high customer growth and transaction frequency, it still believes its shares are vastly overvalued and has held firm with its sell rating. The Afterpay share price ended the week at $100.50.

Ansell Limited (ASX: ANN)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating but increased the price target on this safety products company’s shares to $33.35. The broker has been impressed with Ansell’s strong start to FY 2021 and believes it is well-placed to benefit from increased demand for personal protective equipment because of COVID-19. However, over the medium term it isn’t as positive on its prospects and thus feels its shares are reasonably expensive because of this. The Ansell share price last traded at $41.70.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Analysts at Credit Suisse have retained their underperform rating and reduced the price target on this pizza chain operator’s shares to $58.71. The broker notes that its same store sales growth slowed towards the end of the last three months. However, positively, its new store openings are running ahead of expectations. Whether or not this can be maintained, though, is the big question according to the broker. It fears it could be harder to open stores in the European market in the current environment. In light of this, it doesn’t believe its shares offer good value at the current level. The Domino’s share price ended the week at $84.48.

More reading

• Why ASX 200 technology shares are again racing higher
• Ansell (ASX:ANN) share price climbs after upbeat AGM update
• Why share markets are shrugging off this uncertainty, and what to expect next
• Why Domino’s, Estia Health, Pendal, & Treasury Wine shares are dropping lower
• Domino’s Pizza (ASX:DMP) share price falls after brokers respond to trading update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Ansell Ltd. and 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.

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The three ASX shares I’m going to mention in this article are rated as ‘buys’ by several brokers.

Broker recommendations give an indication where market analysts think there are buying opportunities for investors. Share prices change all the time, so sometimes a broker could think an ASX share is a buy at one price and perhaps a sell if it were significantly higher.

Investment site MarketIndex regularly collates the ratings of brokers together to assess what the broker community collectively think are opportunities. Just because several brokers think something is a buy doesn’t mean it’s guaranteed to do well, but it may reveal some insights.

With that in mind, here are three ASX shares that brokers like:

Cleanaway Waste Management Ltd (ASX: CWY)

As the name suggests, it’s a business involved with waste management. It’s actually one of the biggest in the country – your weekly bin collection may be done by Cleanaway.

Cleanaway is rated as a buy by at least five analysts. Since 3 September 2020 the Cleanaway share price has fallen by 13.5%. That peak of the share price was just after the release of its FY20 result.

In that result, the ASX share reported underlying net profit growth of 8.7% to $152.9 million with free cashflow of $230.1 million, up 11.5%. Cleanaway said that its defensive characteristics were once again demonstrated during COVID-19.

At the current Cleanaway share price, it’s trading at 20x FY23’s estimated earnings according to Commsec.

Challenger Ltd (ASX: CGF)

Challenger is the market leader (by market share) of annuities in Australia. An annuity is when a person gives their capital to a business like Challenger in return for a guaranteed source of income – either for a fixed term or for the rest of their life.

It’s rated as a buy by at least six analysts. The Challenger share price is down 52% since the pre-COVID-19 crash price of $10.38.

Challenger recently told investors about its performance in the first quarter of FY21. The annuity business said that its group assets under management (AUM) went up 4% for the quarter to $89 billion. ‘Life’ investment assets also went up for the quarter, benefiting from annuity sales growth of 46% compared to the prior corresponding period, total book growth of 0.8% for the quarter and positive investment returns.

The ASX share’s funds under management (FUM) went up 5% for the quarter, which included $3.6 billion of net inflows. Challenger also said that significant progress has been made deploying the life cash balance into higher yielding investments.

At the current Challenger share price it’s priced at under 11x FY22’s estimated earnings according to Commsec.

Metcash Limited (ASX: MTS)

Metcash is a diversified retail business operating through a variety of brands.

Its food pillar supports over 1,600 independently owned stores including IGA and Foodland brands. In liquor it supplies independent retailers under brands like Cellarbrations, The Bottle-O, IGA Liquor, Duncan’s, Thirsty Camel and Porters Liquor.

In hardware the ASX share has operations including Mitre 10 and Home Timber & Hardware. It is also acquiring franchisor Total Tools.

It’s rated as a buy by nine analysts. Since 2 October 2020, it has risen by 13.6%.

Metcash recently held its AGM and gave a trading update as part of that. It said that food sales continue to benefit from COVID-19 effects. Total food sales in the first quarter were up 11.4% on the prior corresponding period. Excluding the loss of Drakes, total food sales excluding tobacco went up 18.4%.

In liquor, Metcash said its trading continues to perform well as restrictions lift. Sales in the first quarter of FY21 increased by 11.4%. Excluding regions impacted by trading restrictions, sales went up 23.2%.

At the current Metcash share price it’s valued at 15x FY21’s estimated earnings, according to Commsec.

More reading

• These are the 10 most shorted shares on the ASX
• These were the best performing shares on the ASX 200 in October
• Are Coles (ASX:COL) or Woolworths (ASX:WOW) shares a better ASX dividend buy today?
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: ASX snaps winning streak… just

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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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With term deposits and savings accounts offering just paltry interest rates, a growing number of people are turning to the share market for a source of income.

And given the high quality options on offer, I don’t find this surprising at all.

For example, listed below are two popular blue chips that are sharing their profits with shareholders. Here’s what you need to know about their dividend prospects:

Telstra Corporation Ltd (ASX: TLS)

Times have been hard for Telstra over the last few years due to the arrival of the NBN. This rollout saw the company’s lucrative telephone lines ripped out, leading to a significant gap in its earnings. The good news for its long-suffering shareholders is that the telco giant is hoping that its T22 strategy is the catalyst to a resurgence in its fortunes over the 2020s. This strategy is stripping out costs, simplifying its business, and aiming to extend its network superiority and 5G leadership.

However, FY 2021 still looks set to be another difficult year for Telstra because of the pandemic and the NBN rollout. Management expects the latter to result in an in-year underlying EBITDA headwind of approximately $700 million. In light of this, it is forecasting underlying EBITDA in the range of $6.5 billion to $7 billion this year, down from $7.4 billion last year.

Nevertheless, the Telstra board has recently advised that it is doing what it can to maintain its dividend in FY 2021. This would mean a fully franked dividend of 16 cents per share, which is the equivalent of a 5.7% dividend yield.

Wesfarmers Ltd (ASX: WES)

Another blue chip that shares a large portion of its profits with shareholders is Wesfarmers. This is the conglomerate behind popular brands such as Kmart, Target, Officeworks, Catch, and Bunnings. The latter is now the biggest contributor of earnings following the divestment of Coles Group Ltd (ASX: COL) in 2019.

The good news for its shareholders is that the Bunnings business has been on fire in 2020 despite the pandemic. In FY 2020, Bunnings reported a 13.9% increase in revenue to $14,999 million and a 13.9% lift in earnings to $1,852 million.

One broker that is confident there will be more of the same in FY 2021, thanks partly to a favourable Federal Budget, is Macquarie. Last month it upgraded Wesfarmers’ shares to an outperform rating with a price target of $51.00. It has also pencilled in a dividend of approximately 141 cents per share. This represents a fully franked ~3% dividend yield.

More reading

• 2 ASX dividend shares with yields over 8% today
• Government declares 2021 as ‘Year of 5G’
• Why the Novatti (ASX:NOV) share price jumped 10% on open today
• ASX 200 Weekly Wrap: ASX 200 has another shocker as US election approaches
• 3 ASX blue chip shares to buy for dividends

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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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There are some exchange-traded funds (ETFs) available to ASX investors which can provide access to global returns.

What’s an exchange-traded fund?

ETFs allow investors to buy a large group of businesses in a single investment, rather needing to go out and buy every single one yourself.

Some ETFs are focused on ASX shares like Vanguard Australian Shares Index ETF (ASX: VAS) and BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC). However, the ASX only makes up 2% of the global share market.

Here are two that have been rated as buys by a Motley Fool service:

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

According to VanEck, this ETF gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.

The businesses in this ETF are rated as having “wide economic moats” and are priced at attractive value compared to Morningstar’s estimate of fair value.

This ETF is invested in a variety of sectors, though the biggest two make up a substantial portion of it. Information technology businesses have a 21.3% weighting in the ETF’s holdings, health care has a 19.6% weighting, financials have a 16.5% position, consumer staples have a 10.5% weighting and consumer discretionary has an 8.2% portfolio weighting.

I’m sure you want to know what some of its holdings are. It has a total of 48 positions. These are the positions that have a weighting of more than 2.5% of the portfolio: Applied Materials Inc, Corteva Inc, Biogen Idec Inc, Salesforce.com Inc, Microchip Technology Inc, Schwab (Charles) Corp, Yum! Brands Inc, Bristol Myers Squibb Co, Compass Minerals Internation, US Bancorp, Aspen Technology Inc, Berkshire Hathaway Inc, Pfizer Inc and Zimmer Biomet Holdings Inc.

Over 90% of its holdings are worth more than $5 billion and none are worth under $1 billion.

ETF investors like to know the annual management fee cost of an ETF as the higher the fee, the more it hurts the net returns. VanEck charges an annual management fee 0.49% per annum.

In terms of performance, this investment has generated net returns of 18.6% per annum since inception, slightly outperforming the S&P 500.

VanEck Vectors Morningstar Wide Moat ETF is still rated as a buy by Motley Fool’s Share Advisor service which liked the exposure to quality businesses, the growth potential and the diversification on offer.

Betashares Global Cybersecurity ETF (ASX: HACK)

BetaShares operates this ETF as a way for investors to get exposure to the leading companies in the global cybersecurity sector. It has an annual management fee of 0.67%.

Some of the biggest holdings in this ETF include Crowdstrike, Okta, Zscaler, Accenture, Cisco Systems, Cloudflare, F5 Networks, Fireeye, Leidos and Booz Allen Hamilton.

Overall, it has around 40 positions which largely come from the US, though there are also holdings in the UK, Israel, Japan and so on.

Since inception in August 2016, the ETF has generated net returns of 16.8% per annum.

Betashares Global Cybersecurity ETF is still rated as a buy by the Pro Motley Fool service.

Pro was attracted to the this investment because larger amounts of important information is being stored online and hackers are becoming more sophisticated, so cyber defence is becoming more critical than ever, which should help the earnings of businesses in the ETF. The team at Pro expects this to be a long-term secular trend. Pro thought it was helpful that the ETF gives diversification away from Australian-based companies and the fact that it’s hard to find access to the cybersecurity growth theme on the ASX. Pro said that of those businesses listed on the ASX, most are small, highly illiquid and burning through cash (and often all three).

More reading

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. 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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