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ASX lithium shares have been something of a perennial disappointment. Many of the top companies have had a lot of potential without delivering the returns investors are after.
Here’s why that could be about to change in 2021.
With the benefit of hindsight, lithium pricing around 2015 was pretty crazy. There was something of a bubble as everyone expected it to be the next big thing, largely through electric vehicles and battery storage.
However, lithium prices have fallen significantly and appear to be finally stabilising. That’s good news for producers who can more reliably predict future revenues with less volatility in commodity prices.
The Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) share prices have fallen in recent years almost in step with lithium prices.
Any rebound in pricing would be good news, but I think stability is the key as investors can rebase their expectations for the ASX lithium shares.
According to a report by the International Energy Agency, electric vehicles accounted for ~1% of global car stock in 2019, up 40% from 2018.
I think demand is slowly starting to pick up and a rejuvenated Tesla Inc. (NASDAQ: TSLA) is a key cog. Tesla is finally making waves after years of production promises and ramp-up.
That’s not to say that Tesla is out of the woods yet, but I’m cautiously positive about its sales and production pipeline.
If demand for electric vehicles (EVs) continues to grow, I think ASX lithium shares can benefit from stronger pricing and more absorption of volume.
There’s also the potential for the coronavirus pandemic to actually have a positive effect on pricing. As governments worldwide look to stimulate their economies with more EV investment, that could drive up demand even further.
There have been a number of key initiatives announced which are good for ASX lithium shares and their potential earnings.
Atlassian co-founder Mike Cannon-Brookes is in talks with Elon Musk for a second major battery storage project. This comes after the 2017 Hornsdale Power Reserve which is the largest lithium-ion battery in the world.
Overseas, Britain is looking at banning the sale of new petrol, diesel or hybrid cars by 2035. That would boost demand for EVs and drive up demand for the commodity which is good news for ASX lithium shares.
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The Woolworths Group Ltd (ASX: WOW) share price has been a strong performer this year. But thanks to Tuesday’s Federal Budget, I think it could be set to soar in the next 12 to 18 months.
Shares in the ASX conglomerate have edged 2.3% higher this year after rocketing in the March bear market. It may not sound like much, but that means Woolworths has outperformed the S&P/ASX 200 Index (ASX: XJO) by 12.1% in 2020.
Strong sales from its supermarkets division have been key to offsetting weak performance in its pubs business caused by the coronavirus pandemic.
A 2.3% gain is good news for shareholders but I think it could be just the start of a strong run for the Woolworths share price.
Tuesday’s Federal Budget contained some great news for businesses like Woolworths and competitor Coles Group Ltd (ASX: COL).
The government unveiled its $74 billion JobMaker hiring scheme designed to reduce unemployment. A cornerstone of that scheme is incentives and subsidies to hire unemployed young workers which would slash wage costs for participating companies.
For businesses like Woolworths and Coles that have a significant young workforce, that is great news for the bottom line. Reduced expenses means higher net profits and therefore strong earnings available for shareholders.
That could be all that’s needed for the Woolworths share price to outperform in the next year or so. Add to that the continued strong supermarket sales and easing restrictions across the country and, to me, Woolworths looks like a solid buy right now.
The Woolworths share price has had a strong run in 2020. However, I think strong government support and a potential pickup in its pubs business could see Woolies’ earnings surge in FY21.
With diversified operations across the group and a renewed focus on automation and efficiency, Woolworths could be back in the buy zone.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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 SEEK Limited (ASX: SEK) share price rocketed 4.2% higher on Wednesday and I think the ASX employment group could be set to surge further.
Seek was one of many companies in the S&P/ASX 200 Index (ASX: XJO) to climb after Tuesday’s Federal Budget announcement.
There is plenty to unpack from the latest budget but there are a couple of major impacts for Seek’s profitability.
Listings have dropped and advertising revenue restricted as the job market has dried up. But that could be about to change as the federal government unveiled a new employment incentive scheme.
The $74 billion JobMaker scheme provides wage subsidies to companies that hire previously unemployed Australians. The goal is to boost employment and get people off JobSeeker.
Here’s why that could spark the start of a bull run for the Seek share price in 2021.
Seek operates a number of sites that aim to match jobseekers with employment opportunities. It is essentially an online classifieds site which makes money from employer listings and advertising.
That means a strong job market is good for Seek. As you can imagine, the coronavirus pandemic has not been good for business.
However, more incentives to employ workers should mean more job listings. That is likely to increase revenue and boost earnings (and potentially dividends) in FY21.
The Seek share price has now edged 1.0% higher in 2020 but 2021 could be a good year. The Aussie group has an $8.0 billion market capitalisation and a 1.5% dividend yield right now.
Combined with strong potential share price growth, I think it could appeal to both income and growth investors.
To me, the Seek share price looks to be turning a corner. With strong momentum and appeal across the investor spectrum, I think it could be set to outperform in 2021.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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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The Bigtincan Holdings Ltd (ASX: BTH) share price could be on the move on Thursday after the announcement of a new acquisition.
This morning the sales enablement platform provider announced that it has entered into an agreement to acquire Denmark-based Agnitio for 15 million Danish kroner (A$3.3million).
The agreement includes a conditional deferred cash consideration of up to 7.5 million Danish kroner (A$1.65 million) payable based on target revenue and subscription revenue earned in the 6-month period commencing 1 October 2020.
This acquisition will be fully funded from Bigtincan’s existing cash reserves, which were boosted by an institutional placement and share purchase plan in May.
Agnitio was founded in 2001 and is a pioneer in sales enablement for the life sciences sector.
Management notes that its Rainmaker solution enables pharma and medtech companies to respond to the needs of their customers in the age of COVID-19. It enables and supports health care professionals, payers, and other healthcare stakeholders.
At the last count, Agnito had in excess of 3,000 users across 45 countries and was generating sustainable annualised recurring revenue (ARR) of A$1.6 million.
Bigtincan’s Co-Founder and CEO, David Keane, commented: “Life sciences organisations are seeking new ways to engage their customers remotely while remaining compliant with local and international laws.”
“Agnitio has pioneered the market’s most advanced virtual engagement solution specifically designed to support life sciences companies, and when added to Bigtincan’s existing market leading Sales Enablement Automation platform, will help life sciences companies interact with their customers in a virtual ‘Digital Sales Room’ environment,” he added.
Digital sales rooms are a growing trend in business to business (B2B) sales. Research firm Gartner is forecasting 50% of all enterprise B2B sales technology implementations will include digital sales rooms by 2025.
Management notes that Agnitio meets Bigtincan’s defined acquisition criteria. It provides a positive financial impact, complementary technology, excellent people, and a focussed go-to-market strategy with an active customer base.
In addition to this, it explained that Agnitio is a leader in the provision of mobile sales tools for life sciences. This means it brings new technology to Bigtincan, including its Rainmaker remote selling technology which has a proven track record of helping remote sellers engage with their customers in ways not possible before.
And given their highly complementary businesses, management believes it represents an opportunity to deliver significantly increased value to customers of both companies when combined.
Commenting on the deal, Agnitio’s CEO, Lars Meincke, said: “Agnitio’s core mission has been to empower sales teams, market access and medical affairs teams in today’s digital world, and we believe that together with the global Bigtincan team, we can accelerate progression towards that vision.”
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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 BIGTINCAN FPO. The Motley Fool Australia has recommended BIGTINCAN 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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The Lendlease Group (ASX: LLC) share price was on fire yesterday as it surged 3.1% higher.
That’s good news for shareholders, but I think there could be further share price growth ahead for the Aussie construction group.
2020 has not been a great year for Lendlease as its shares have underperformed the S&P/ASX 200 Index (ASX: XJO).
However, strong support for the construction and infrastructure sectors is good news for major players like Lendlease.
The federal government is expanding its existing $100 billion infrastructure plans with a further $10 billion allocated to spend in the sector.
Construction and major infrastructure projects including road and rail are key components of that plan. That to me says the Lendlease share price could be headed higher if it can secure some more major contracts.
The Lendlease share price has slumped 34.0% to $11.84 per share this year as the coronavirus pandemic has hit profits.
However, Tuesday’s Federal Budget announcement contained some great news for companies like Lendlease. That could mean that a 3.1% share price surge is just the start of a bigger run for the ASX share.
Lendlease has an $8.2 billion market capitalisation with a 2.8% dividend yield right now. I think it could be a chance to snap up a high-quality ASX infrastructure share for a good price.
Lendlease has had its fair share of troubles including a $350 million writedown of its engineering arm in November 2018.
However, I think the significant support in the Federal Budget could prove to be a turning point for the Lendlease share price.
The Lendlease share price has had a tough time in 2020 but it could be turning a corner.
I believe strong government backing for the sector combined with existing robust relationships on major infrastructure projects at a state and federal level is good news for Lendlease.
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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.
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The ELMO Software Ltd (ASX: ELO) share price will be on watch today after the announcement of a major acquisition after the market close on Wednesday.
The cloud-based human resources and payroll software provider announced the acquisition of UK-based Breathe for an initial payment of 18 million pounds (A$32.4 million) using a combination of cash and scrip.
In addition to this, an earnout consideration of 4 million pounds (A$7.2 million) is payable in cash subject to the achievement of certain financial targets.
Founded in 2012, Breathe is a fast-growing, scalable human resources platform for small businesses. Management notes that the acquisition provides ELMO with entry to a new market segment, the small business market, while at the same time expanding its footprint in the UK.
Breathe’s self-service business model is highly scalable and makes it fast, easy, and cost-effective for small businesses to digitise critical HR processes.
Its annualised recurring revenue (ARR) as of 31 August 2020 stood at 3.6 million pounds (A$6.5 million) and has been growing at over 30% annually. Its revenue is 100% subscription-based and recurring in nature.
Management advised that Breathe has a large and growing customer base in the UK with over 6,700 customers and customer retention at over 85%. It is earnings before interest, tax, depreciation and amortisation (EBITDA) neutral at present following investments in its growth.
ELMO’s CEO and Co-founder, Danny Lessem, commented: “The acquisition of Breathe is an important step in ELMO’s evolution as a provider of cloud-based HR solutions. Strategically, Breathe is a very compelling, fast growing business. It provides ELMO with access to a new and attractive customer segment, complementary technology, and a significant UK footprint. The strategic crossovers and revenue opportunities are very meaningful, and our market opportunity has significantly expanded.”
“We are now able to transform the way people are managed, either in office or remotely across all market segments, improving productivity, performance and overall wellbeing of millions of workers across Australia, New Zealand and also the United Kingdom,” he added.
Founder Jonathan Richards will continue on as CEO of Breathe UK.
As a result of this acquisition, the company has upgraded its guidance for FY 2021.
ELMO’s ARR is now expected to be in the range of $72.5 million to $78.5 million, up from $65 million to $70 million.
Similarly, revenue in FY 2021 is now expected to be in the range of $61 million to $66 million. This compares to $57 million to $61 million previously.
Finally, EBITDA is forecast to be -$3.5 million to -$7.5 million. Previously ELMO was forecasting -$4 million to -$7 million.
One little-known Australian IPO has doubled in value since January, and renowned Australian Moonshot stock picker Anirban Mahanti sees a potential millionaire-maker in waiting…
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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 Elmo Software. The Motley Fool Australia has recommended Elmo Software. 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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Is the Altium Limited (ASX: ALU) share price a strong buy? I’d say Altium has been a mixed big since the onset of the COVID-19 pandemic.
Looking at the share price movement, Altium shares dropped 42% during the COVID-19 crash at the lowest point. It’s still down by 16.4% from the all-time high price in February 2020.
I think the electronic PCB software business is one to consider because of its high quality.
It wasn’t too long ago that Altium announced its FY20 result.
Revenue increased by 10% to US$189.1 million, the subscription base rose by 17% to 51,0006 and the number of Altium Designer seats increased by 15% to 9,251. Earnings before interest, tax, depreciation and amortisation (EBITDA) went up 13% to US$75.6 million and the EBITDA margin improved to 40%, up from 38.9%.
FY20 profit before income tax went up 12% to US$64.6 million, though profit after income tax fell 42% to US$30.9 million. There was a one-off taxation change that will allow Altium to decrease its effective tax rate beginning in FY21 to a run rate of between 22% to 25%.
Excluding that taxation change, normalised earnings per share (EPS) grew by 5% to US 42.45 cents and the dividend grew by 15% to AU$0.39 per share. That fall in the earnings growth rate probably justifies the volatility and decline of the Altium share price.
It was a pretty disrupted second half of the year. It decided to launch ‘attractive pricing’ to continue winning new customers over the last few months. Winning long-term market share is probably more important for the business than short-term profitability. However, it’s important not to degrade the value of the software company’s brand too much.
The most interesting development was the launch of Altium 365, which is the company’s effort at providing its services through the cloud.
The current conditions and the accelerated roll out of Altium 365 is evolving Altium’s revenue away from perpetual licensing and maintenance subscriptions towards term-based licensing and software as a service (SaaS) subscriptions.
Altium recently announced that the whole business is pivoting towards the cloud, with Altium now split between ‘cloud’ and ‘software’, with each having its own leadership and organisational roadmap.
The goal is to make Altium’s cloud business have a SaaS-liked organisational structure. It will also allow Altium to tailor its sales better to target clients.
As a result, Mr Sergey Kostinsky was appointed to the role as president who will be focused on driving high performance in the execution of all operational domains with a particular emphasis on the rapid development and adoption of Altium 365.
Firstly, it’s impossible to know what’s going to happen with shares in the short-term.
The upcoming US election could certainly throw up a lot of volatility and may open up some buying opportunities, so the Altium share price could be one to watch over the next few weeks and months.
I still think Altium is on the right path for reaching its long-term goal of market dominance over the next five years, even if the US$500 million revenue goal takes a bit longer. Its balance sheet and dividend continue to improve.
I believe it makes a lot of sense for Altium to focus on Altium 365. Online services is the direction that the world is headed. Altium needs to be able to offer the best software and access for engineers.
Remember that interest rates are now incredibly low. I think that tech shares that are growing can justify much higher valuations these days. I can’t see interest rates rising for a long time.
The Altium share price is currently trading at 48x FY23’s estimated earnings. That looks fairly expensive, so it’s not a strong buy for me today. But if its revenue and EBITDA margin can keep rising then perhaps it’s actually a pretty good long-term buy. However, I’d prefer to buy Altium shares at least 10% lower than today, so I’m looking at other share opportunities at the moment.
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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 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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If you are looking to invest some funds into growth shares this month, then you might want to consider the ones listed below.
I believe these three ASX growth shares are among the best on offer on the share market right now. Here’s why I would buy them:
The first growth share to look at is A2 Milk Company. It is a New Zealand-based infant formula and fresh milk company with a focus on A2-only products. Over the last few years the company has been growing its earnings at a rapid rate thanks largely to the insatiable demand for its infant formula in China. I expect more of the same in the coming years. This could be supported by new product launches and value accretive acquisitions.
I think this rapidly growing payments company has the potential to be a market-beater over the 2020s. This is thanks to its impressive growth in both the UK and US markets and its expansion into new markets. In addition to this, the ongoing shift to online shopping has been a big boost and looks set to underpin stellar underlying sales and customer growth in FY 2021. Combined with the growing popularity of the payment method and its strong brand, I believe Afterpay is on a path to becoming a giant. This could make it a great buy and hold option.
A final ASX growth share to consider buying is Pushpay. It is a donor management and community engagement platform provider for the faith sector. Pushpay has been growing at a very strong rate over the last few years thanks to its leadership position in a niche but lucrative market. The good news is that its growth is still only in its infancy. Management has set itself a target to win a 50% share of the medium to large church market in the future. This represents a US$1 billion revenue opportunity and is many times greater than FY 2020’s revenue of US$127.5 million.
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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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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At present Commonwealth Bank of Australia (ASX: CBA) is offering interest rates of just 0.9% on five-year term deposits. This is broadly in line with what the rest of the banks are offering.
If you’re an income investor, then I wouldn’t settle for these paltry interest rates.
Instead, I would turn to the share market, where you can easily get a greater return on your investments.
But which ASX dividend shares should you buy? Here are two top options for investors to consider buying:
The first ASX dividend share to look at is self-storage operator National Storage. I think the company is a top option for income investors due its positive long term growth outlook thanks to its organic and inorganic growth opportunities. The latter is through its growth through acquisition strategy which has been very effective over the last few years.
It does look as though FY 2021 could be a reasonably subdued year because of the pandemic, but I expect a swift rebound once the crisis passes. Especially given optimism over the housing market. This could lead to higher housing sales activity and increasing demand for its storage solutions. Based on the current National Storage share price, I estimate that the company’s shares offer investors a forward 4.2% dividend yield.
A second ASX dividend share to consider buying is Vitalharvest. I think it would be a great option for investors that are looking to diversify their portfolio. This is because the company’s shares provide investors with exposure to quality agricultural property assets. Some of these assets, which comprise four berry properties and three citrus properties, are leased to horticulture giant Costa Group Holdings Ltd (ASX: CGC) and are exposed to the nutritious and healthy food trend.
In light of this, I believe the company is well-placed for earnings and distribution growth over the next decade. For now, based on the current Vitalharvest share price, I estimate that it offers investors a forward ~6% distribution yield.
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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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