Author: therawinformant

The S&P/ASX 200 Index (ASX: XJO) may have closed lower today, however three ASX shares have made new, all-time highs.

An all-time high (ATH) is when the share price hits a value higher than it has ever traded at before. Why is this significant? Many companies struggle to break previous highs for a number of reasons. Whether it’s valuations, ratios, broker ratings or even just basic seller psychology, a company approaching its ATH can be a nervous time for investors.

Companies that break past this barrier and make new ATHs are a little bit special. They have broken the glass ceiling and are off and running. When this occurs, the feeling of huge potential is often renewed for investors. Today, three ASX shares have done just this. 

ASX shares making new all time highs

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is an e-commerce platform providing a premium shopping experience. The company specialises in furniture and homewares products and is considered to be Australia’s largest online homewares store. Large is right. Temple & Webster has over 130,000 products listed. 

The company actually operates two different brands – Temple & Webster and Milan Direct. Milan Direct specialises in furniture sourcing with many of its products listed on the Temple & Webster marketplace.

Temple & Webster has an excellent reputation in Australia and has even won several awards to prove it. These include the Deloitte Fast50, BRW Fast Starters and Power Retail awards, to name a few.

The Temple & Webster share price hit a high of $4.37 in February this year, before coronavirus caused a landslide and sent it down to a low of $1.52. Since then, the company has not only recovered, but thrived. Its share price has risen a staggering 690% since those March lows to hit an all time high today of $12.10. 

The company has been in prime position to take advantage of the wave of online shopping occurring during the pandemic, recording a 74% increase in revenue in FY2020. These strong results have helped to push the Temple & Webster share price to lofty new heights.

Sealink Travel Group Ltd (ASX: SLK)

Sealink is Australia’s largest integrated land and marine, tourism and public transport provider. It has established operations across Australia, London and Singapore.

The company boasts amazing numbers, including moving more than 280 million customers each year. That’s right, million. It’s impressive. Sealink achieves this using its fleet of over 3,500 buses and 80 ferries. Chances are, if you’ve travelled at all, you’ve travelled with Sealink!

You would think a company in this sector might have reported a bad year in 2020, all things considered. However, Sealink reported strong numbers in the form of a total revenue increase of 152.8% on the previous year. These are really incredible numbers in the face of the coronavirus pandemic.

For quite some time, the Sealink share price has traded at a maximum price of $5.23. In March, the company was also hit hard by the market crash, with its share price falling from $4.50 down to $2.50. Since then, it has well and truly recovered, climbing nearly 125% to close at $5.59 today. Not only has the rally been great for investors, but Sealink can now boast a new all-time high share price of $5.79 reached in intraday trade too.

Data#3 Limited (ASX: DTL)

Data#3 is a leading provider of IT services and solutions in Australia. Its product suite is extensive, ranging from cloud computing, security and analytics to procurement and project management services. 

The company has actually been listed on the ASX since 1997 and has over 40 years’ experience in business. Revenue is substantial for this IT player, with it reporting a whopping $1.6 billion revenue in FY2020. Revenue alone doesn’t mean much, but in the case of Data#3, this year it reported a 14.9% lift in revenue on the previous year and even more importantly, a lift of 30.5% in net profit. Great results all round.

Since the March crash, which took the Data#3 share price as low as $2.50, it stormed as high as $6.78 today before closing the session at $6.75. Again, like the other ASX shares on the list, this is a new all-time high for the company. One thing to note about Data#3, it actually made a new all-time high recently on 3 September and it has taken the company less than 30 days to do it again!

Foolish takeaway

Watching ASX shares making all-time highs is exciting because they are breaking through a barrier that has never before been broken. 

Often this can trigger a new bullish run for a company as investors develop a new wave of confidence surrounding just how far the share price could ultimately go.

More reading

• Why these ASX tech shares just hit record highs
• Why the Data#3 (ASX:DTL) share price just stormed to a record high
• 4 unstoppable ASX shares to buy with $4,000
• Why Mineral Resources, Redbubble, Saracen, & Temple & Webster shares are pushing higher
• Is the Redbubble (ASX:RBL) share price on a path to $10.75?

glennleese has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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If you’re busy constructing a retirement portfolio and looking for some quality options to add to it, I would recommend you take a closer look at the ASX shares listed below.

Here’s why I think these ASX shares would be great options for retirees:

Coles Group Ltd (ASX: COL)

The first ASX share I would add to a retirement portfolio is Coles. In fact, I believe the supermarket giant would be a great core holding for this type of portfolio. This is due to its defensive qualities, strong market position, and positive long term growth outlook. The latter is thanks to a combination of food inflation, its refreshed strategy, defensive earnings, and expansion opportunities.

Another positive is the company’s dividend policy. With Coles intending to pay out upwards of 90% of its earnings back to shareholders, they stand to benefit greatly from increasing dividends over the next decade. In the meantime, based on the current Coles share price, I estimate that it offers an attractive fully franked ~3.2% FY 2021 dividend.

Goodman Group (ASX: GMG)

Another ASX share that I think would be great for a retirement portfolio is Goodman Group. It is an integrated commercial and industrial property group that owns, develops, and manages industrial real estate across 17 countries. The main attraction to the company for me are its warehouses and logistics facilities. I believe these put Goodman in strong position to deliver consistently robust earnings growth over the next decade.

Especially given its exposure to the structural tailwinds of the ecommerce market through relationships with the likes of Amazon, DHL, and Walmart. In respect to the former, in June Goodman strengthened its relationship with Amazon with a 20-year lease for a distribution centre in Western Sydney owned by its joint venture with Brickworks Limited (ASX: BKW).

More reading

• Which ASX REITs are still worth buying in a post-COVID-19 world?
• Where to invest your Coles (ASX:COL) dividends this week
• The ASX shares that fund managers were buying this month
• 5 things to watch on the ASX 200 on Tuesday
• How to make money by investing in ASX 200 shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 TPG Telecom Ltd (ASX: TPG) share price has gone off the ASX radar in the past few months, it seems. Backtrack to late June, and the imminent TPG/Vodafone merger was the talk of the ASX town. The old TPM-tickered TPG was about to join forces with Vodafone to form a newly merged telco. Investors were excited to see the fixed-line strength of TPG combined with the mobile reach of Vodafone’s customer base. The spin-off of the old TPG’s Singapore operations into Tuas Ltd (ASX: TUA) was also an exciting sidenote. In the 2 months leading up to the merger, TPM shares rose by more than 25%.

But since the merger came into effect, TPG shares have fallen off the radar. The TPG share price is down around 15% since 30 June, and the Tuas share price has offloaded more than 22%.

So what’s going on? Is this a case of buyers’ remorse?

What does the TPG share price tell us?

It’s hard to value TPG using traditional metrics like the price-to-earnings (P/E) ratio given the ‘new TPG’ has only been around for a few months now.

But let’s look at some numbers anyway. On current prices, TPG is being valued at a market capitalisation of $14.1 billion.

In its half-year earnings report which TPG released to the market recently, the company told us that if the Vodafone merger had occurred on 1 January, revenues would have come in at $2.71 billion for the 6 months ending 30 June 2020, with earnings at $918 million. If we annualise TPG’s earnings (which is a little bit shonky, I know), TPG comes in with a P/E ratio of 19.74. By comparison, rival Telstra Corporation Ltd (ASX: TLS) is currently being priced at a market capitalisation of $33.84 billion with full-year revenues of $23.71 billion and earnings of $8.9 billion, which gives Telstra a P/E ratio of 18.57.

That tells us that the market is more or less pricing these 2 companies at a similar level compared to their underlying earnings.

TPG or Telstra?

So why would an investor go for TPG over Telstra shares, for example? More growth? I happen to think Telstra’s mobile network (the only division making telcos any money these days) is far superior to the new TPG’s one and is likely to attract more customers when 5G technology comes into the mainstream.

More income? Although TPG shareholders were treated to a whopping special dividend of 51.6 cents per share on the completion of the merger, this was largely funded by debt. It is unclear what kinds of dividends the company will be paying going forward. It has got a high benchmark though — on current prices, Telstra’s reaffirmed 16 cents per share gives the company a trailing yield of 5.65% today.

Foolish takeaway

Whilst I think TPG is a great business, I would prefer to invest in Telstra myself if I wanted exposure to an ASX telecom company. There are a few things that aren’t really clear just yet for TPG, including a full-year set of numbers to analyse and any kind of dividend guidance. As such, I would go with the devil you know and stick with Telstra if you want in with this space.

More reading

• Are these high yield ASX dividend shares worth buying?
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• 2 high yield ASX blue chip dividend shares to buy next week
• 2 unloved ASX 200 shares I would buy now
• 2 ASX dividend shares with yields over 8%

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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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If you thought the worst of the COVID-19 dividend cuts were over for the ASX big banks, think again!

There’s one bank in particular that could deliver more dividend pain even as the economy recovers from the impact of the pandemic.

Dividend downgrades were commonplace during the August reporting season with the big four banks slicing or suspending their payouts.

Big banks’ sorry dividend story

These include the Commonwealth Bank of Australia (ASX: CBA) as it chopped its latest payment by 58% to $0.98 a share and National Australia Bank Ltd. (ASX: NAB), which lowered its dividend to $0.33 from $0.83.

Australia and New Zealand Banking Group (ASX: ANZ) deferred its interim dividend from May and only just paid a $0.25 distribution, while Westpac Banking Corp (ASX: WBC) cancelled its half year dividend.

Mind you, the banks aren’t the only ones guilty of being dividend disappointers. Several other S&P/ASX 200 Index (Index:^AXJO) companies followed the same route.

Record $1.3bn fine lifts WBC’s dividend risk

But the market believes the dividend risks is now behind largely us and the next payments can only be better.

That’s largely through, but maybe not so for Westpac as it’s seen by experts as having the weakest balance sheet among the big four.

It’s record $1.3 billion fine for money laundering is a big reason for the dour view. This is the largest fine ever dished out in Australian corporate history and Westpac only provisioned around $900 million for the disgraceful act.

Will Westpac pay a final dividend for FY20?

While the market believes CBA, ANZ Bank and NAB will have little trouble paying the next dividend instalment (and I think it will probably be higher than their last payment), the jury’s out for Westpac.

There is a chance that management will cancel or defer paying a final dividend when it hands down its full year results in November.

The move will almost certainly cement Westpac as the worst performing big bank stock for 2020 as its peers pull out their dividend check books.

Best case dividend scenario still looks gloomy

However, Morgan Stanley believes it won’t come down to that. While it acknowledges the risks, the broker believes Westpac will still pay a final dividend, albeit a tiny one.

It was forecasting a 30 cent-a-share payment, but lowered this to 25 cents given the Australian banking regulator’s guidance for banks to cap their payout ratio to 50% of profits.

“Risk is still skewed to the downside given the potential for larger write-downs and the need for the Board to adopt a conservative approach at this point in the cycle,” said Morgan Stanley.

“A 25c dividend would use ~20bp or ~A$0.9bn of capital and imply an ex dividend CET1 ratio of ~10.7%. This suggests just ~A$1.0bn above APRA’s ‘unquestionably strong’ target of 10.5%.”

Capital raising risk

That’s cutting it a little close and management may need to raise some capital. It doesn’t make sense to me to pay a dividend and do a cap raise, although that’s what NAB did earlier this year.

On the other hand, Morgan Stanley thinks it’s more likely that Westpac will sell assets rather than new equity.

Shareholders would hope so given how depressed the Westpac share price is.

More reading

• ASX 200 ends the day flat, BOQ (ASX:BOQ) shares drop on impairments
• The forgotten ASX gold stock that UBS is urging you to buy today
• One ASX tech share to buy today ahead of government cash splash
• BrainChip (ASX:BRN) and Novonix (NVX) were among the most traded shares on the ASX last week
• 3 ASX dividend shares to buy for income today

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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 S&P/ASX 200 Index (ASX: XJO) was flat today, it finished at 5,952 points.

Here are the main highlights from the ASX 200:

Bank of Queensland Limited (ASX: BOQ)

The challenger bank announced FY20 impairments to the market today, sending the BOQ share price down by 7%.

BOQ revealed that it has completed its FY20 collective provision modelling. The bank announced that the FY20 loan impairment expense will be $175 million (pre-tax), which includes a COVID-19 provision expense of $133 million (pre-tax). These provisions are based on the latest data that BOQ has access to.

The $175 million impairment expense amounts to approximately 37 basis points of gross loans. The $133 million COVID-19 provision consists of $10 million in the first half of FY20 and $123 million in the second half. This is expected to reduce the CET1 ratio by 39 basis points. However, the CET1 ratio will still be above its target range of 9% to 9.5% because of strong organic capital generation in the second half of FY20.

BOQ is now expecting higher unemployment, downgrades to property prices and an increased duration of the economic downturn.

The ASX 200 bank said that it’s committed to support customers during this difficult period through a range of relief measures and by ensuring a flow of new credit into the economy to help small and medium businesses get back on their feet. BOQ continues to see reductions in customers accessing financial assistance through the banking relief package.

At 31 August 2020, BOQ had 12% of housing customers on the banking relief package and 16% of SME customers (based on gross loans and advances). Of those customers accessing relief packages, a quarter are still making full or partial repayments.

The company has also been reviewing its remuneration and superannuation. It has found errors amounting to $11 million. It’s completing a broader external wage analysis and review for enterprise agreement employees.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel announced today it’s buying Travel & Transport. This is a North American corporate travel business which had US$2.8 billion of total transaction value (TTV) in the 2019 calendar year.

The enterprise value of this acquisition is US$200.4 million on a cash-free, debt-free basis.

The leadership of the ASX 200 share believe there are compelling strategic reasons for the acquisition, with scope for good combination benefits.

The enterprise value implies a multiple of seven times the 2019 calendar year pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA), which was before the impacts of COVID-19. The implied multiple reduces to 4.3 times including the estimated full run-rate synergies of US$18 million.

It’s expected to be approximately 10% earnings per share (EPS) accretive on a pro-forma 2019 calendar year basis excluding synergies, and 30% EPS accretive including synergies.

To fund it, Corporate Travel is carrying out a fully underwritten entitlement offer to raise $375 million. Additional capital is being raised to fund acquisition costs, integration costs, provide additional liquidity to fund potential Travel & Transport losses for a prolonged period, balance sheet flexibility and capacity for other acquisitions.

The capital raising is being done by the ASX 200 share at $13.85 per share, a 14.3% discount to the last traded price last week.

After the raising, Corporate Travel will have net cash of $126.8 million. The acquisition is expected to complete in late October 2020.

In terms of current trading, both CTM and Travel & Transport are being impacted – they are currently operating at 25% and 13% of last year’s transaction volumes respectively.

Over July 2020 and August 2020, the pro-forma group generated average revenue of $14 million per month and an average underlying EBITDA loss of $5.7 million per month and average pro-forma group cash burn of $7.5 million per month.    

Other movers

The Whitehaven Coal Ltd (ASX: WHC) share price was one of the best performers in the ASX 200, it rose by around 4% today.

At the red end of the ASX, the Mesoblast Limited (ASX: MSB) share price dropped almost 5% and the A2 Milk Company Ltd (ASX: A2M) share price fell around 4%.

More reading

• The forgotten ASX gold stock that UBS is urging you to buy today
• ASX bank share price hammered after missing pay revealed
• Leading brokers name 3 ASX shares to sell today
• One ASX tech share to buy today ahead of government cash splash
• The latest 3 ASX stocks that brokers just upgraded to “buy”

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia owns shares of A2 Milk. 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 MyFiziq Ltd (ASX: MYQ) share price was a very strong performer on Tuesday before abruptly being placed into a trading halt this afternoon.

Prior to the trading halt, the healthcare technology company’s shares were up 15% to a record high of $1.33.

When the MyFiziq share price hit that level, it meant it was up a whopping 400% over the last six weeks.

Why is the MyFiziq share price in a trading halt?

This afternoon MyFiziq requested a trading halt pending the release of an announcement regarding a material commercial transaction with a sales channel partner.

No other details have been provided by the company, so investors will need to wait until Thursday to learn just what this deal is.

Why Is the MyFiziq share price up 400% in six weeks?

Investors have been fighting to get hold of shares over the last six weeks following the release of a series of announcements.

The one which appears to have got investors most excited relates to an agreement with Asia Pacific corporate wellness platform WellteQ.

That agreement will see the company integrate its newly developed CompleteScan platform into the US$10 trillion insurance, telehealth, corporate wellness and wearables market via WellteQ’s personalised digital wellness and analytics platform from January 2021.

The company describes CompleteScan as a convergence of technologies that unlock a multitude of biometric markers and risks such as CVD, obesity, heart attack, stroke, and metabolic syndrome. It uses a combination of face scans and body scans via smartphones to generate its results.

According to the release, the integrated offering will be first offered to existing corporate customers. This includes Willis Towers Watson APAC, NIB Holdings Limited (ASX: NHF), Bupa Australia, Toll Logistics, Credit Suisse, and DBS Bank.

Management notes that digital health platforms such as WellteQ are becoming a highly sought-after engagement, triage, and monitoring tool for the public healthcare, corporate, and insurance sectors during the pandemic.

Vlado Bosanac, Chief Executive Officer of MyFiziq, commented: “This will be a world first as multiple organisations worldwide are positioning themselves with offerings to the telehealth, insurance industry and the corporate wellness space. Combining our new CompleteScan technology with WellteQ will be a paradigm shift in both tracking and analytic capabilities across multiple market segments.”

More reading

• MyFiziq (ASX:MYQ) share price soars 30% on expansion news

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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If I had $3,000 to invest in three small cap ASX shares I’d be happy to buy the three ideas in this article.

Many of my previous top small cap ideas have grown so much they’re no longer small caps. Citadel Group Ltd (ASX: CGL) is being taken over whilst Redbubble Ltd (ASX: RBL) is now worth over $1 billion. There’s no official definition of a small cap, but I think a $1 billion market capitalisation is a good milestone. So I need to choose other ideas that still count as small caps. 

These three small caps look compelling to me:

City Chic Collective Ltd (ASX: CCX)

This business is a retailer of plus-size women’s clothing, accessories and footwear. The City Chic share price has fallen around 10% over the past month after it was announced that the ASX share wasn’t successful with its bid for Catherines, a US retailer.

It’s disappointing that City Chic didn’t win the auction. However, I think it’s a good sign that City Chic didn’t bid too much because it shows respect for shareholder capital and management are focused on long-term returns.

Besides, City Chic is seeing opportunities to buy other brands in this current difficult retailing environment and it can also try to take make share. Its balance sheet is currently in a very strong position to be able to do this.

I’m quite bullish about the long-term prospects for the City Chic share price. It’s growing nicely in Australia and it’s expanding strongly in the northern hemisphere. It sells a high proportion of its goods online, which makes it well suited to the current COVID-19 era.

At the current City Chic share price it’s trading at 23x FY22’s estimated earnings.

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This ASX share is a listed investment company (LIC) that hunts for companies with market caps between $100 million and $1 billion.

It’s a high-conviction manager, it usually holds approximately 10 positions that it wants to be invested in for the long-term (generally for five years or longer). It has an industrial focus with no resources exposure or very early stage business exposure. It’s ESG aware when it makes investment picks.

Some of its existing investment picks are small caps like MNF Group Ltd (ASX: MNF), Enero Group Ltd (ASX: EGG) and Over The Wire Holdings Ltd (ASX: OTW).

Aside from liking the existing investments, there are two other attractive elements about NAOS Small Cap Opportunities Company.

The NAOS Small Cap Opportunities Company share price is currently trading at a 17% discount to the pre-tax net tangible assets (NTA) of $0.71 at 31 August 2020. It also offers a grossed-up dividend yield of 9.7%.

Bubs Australia Ltd (ASX: BUB)

Bubs is a high-risk, high-reward ASX share small cap.

The Bubs share price has drifted 24% lower since 24 August, but the company’s revenue and distribution continues to grow. I think this is an opportunistic time to buy part of a fast-growing business.

In FY20 alone it saw total revenue increase 32% to $62 million and infant formula sales jumped 58% to $30 million. Direct sales to China grew 32% and export markets outside of China saw a five fold increase of revenue.

COVID-19 has caused lumpy demand for the infant formula business’ products, whilst restrictions are hampering the daigou channel. But I believe this is just a short-term issue for the small cap ASX share.

Over the longer-term I think Bubs is headed for cashflow positive status, positive earnings before interest, tax, depreciation and amortisation (EBITDA) as well as growing profit margins.

Bubs may not shoot the lights out every single quarter, but I believe the next two or three years will show continued progress on its international growth strategy. Vietnam and other non-China countries could become particularly pleasing markets for Bubs.

More reading

• $3,000 invested in these 3 ASX shares could make you a fortune over the next 10 years
• The Bubs (ASX:BUB) share price is down 42% in 12 months: Is it a buy?
• I waited 10 years before pouncing on this stock
• 3 ASX shares now trading at crazy cheap prices
• ASX 200 falls 0.7%, UK and travel shares drop

Tristan Harrison owns shares of NAO SMLCAP FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO and MNF Group Limited. The Motley Fool Australia has recommended Over The Wire Holdings 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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The tech sector has been in fine form on Tuesday and is charging notably higher.

So much so, the S&P/ASX All Technology Index (ASX: XTX) is storming 1.8% higher in afternoon trade.

This is despite the benchmark S&P/ASX 200 Index (ASX: XJO) trading roughly flat.

Two tech shares that have really caught the eye on Tuesday are listed below. Here’s why they have just hit record high:

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price surged higher and hit a record high of $1.44 earlier today. When the AI-powered sales enablement automation platform provider’s shares hit that level, it meant they were up exactly 100% since the start of the year. Investors have been fighting to get hold of Bigtincan’s shares this year due to its very strong performance in FY 2020 despite the pandemic. 

For the 12 months ended 30 June 2020, Bigtincan reported revenue growth of 56% to $31 million and annualised recurring revenue (ARR) growth of 53% to $35.8 million. Pleasingly, management is confident there will be more of the same in FY 2021. It provided ARR growth guidance of 36.9% to 48% year on year. I’m a very big fan of Bigtincan (but not its name!) and believe it would be a great long term option for investors.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has continued its incredible run and reached a new all-time high of $12.06 today. This online furniture and homewares retailer’s shares have now risen a staggering 355% since the start of the year.

As with Bigtincan, the catalyst for this has been its very strong performance this year despite the pandemic. The acceleration in the shift to online shopping this year led to Temple & Webster recording a 74% increase in revenue to $176.3 million in FY 2020. Things were even better for its operating earnings, which increased year on year from $1.5 million to $8.5 million. Pleasingly, its strong growth has continued early in FY 2021, putting the company in a position to deliver another impressive result next year.

More reading

• 2 ASX tech shares I’d buy with $10,000 
• Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
• 3 quality small cap ASX shares with very strong growth potential
• 4 unstoppable ASX shares to buy with $4,000
• 3 ASX tech shares that could take off in FY21

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’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO and Temple & Webster Group 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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If you’re on the lookout for blue chip ASX shares that you can buy and hold then I would suggest you check out the ones listed below.

I believe these quality companies have the potential to grow very strongly over the next decade. This could lead to their shares generating market-beating returns for investors during the 2020s.

Here’s why I rate them highly:

REA Group Limited (ASX: REA)

The first ASX blue chip share that I think would be a great buy and hold option is property listings company REA Group. The last few years have not been easy for the company. It has had to contend with a mini housing market crash and then of course the pandemic. But despite this, REA Group has managed to come out on top and deliver solid profit growth. I believe this demonstrates the strength of its business model.

The good news is that house prices are being tipped to rise next year once the pandemic passes. This is likely to lead to higher listing volumes and could result in an acceleration in its profit growth in the near future. Especially given its new revenue streams, costing cutting, and potential price increases.

SEEK Limited (ASX: SEK)

Another top blue chip ASX share to buy and hold is SEEK. It is the owner and operator of online employment sites in Australia and a number of international markets. I’m a big fan of the company due to its dominant position in the ANZ market and its rapidly growing Zhaopin business in China.

It is the latter that I’m most excited about. With Zhaopin quickly becoming one of the leaders in the massive China market, SEEK looks well-positioned for growth over the long term. Management certainly agrees. It is is aiming to grow SEEK’s revenue to $5 billion later this decade. This will be more than triple the $1,577.4 million it recorded in FY 2020.

More reading

• 3 outstanding blue chip ASX shares to buy in October
• Is it time to buy Telstra and these high quality ASX 200 shares?
• Where to invest $10,000 into ASX shares immediately
• 3 ASX tech shares that are still in the buy zone
• ASX 200 rises 1%, SEEK (ASX:SEK) jumps 9%

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended REA Group Limited and 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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ASX (REITs) real estate investment trusts have had a pretty interesting year, to say the least. Due to their unique structure, REITs have always been a popular investment, particularly for dividend income investors. Since REITs are not subject to corporate tax laws in the same way as other ASX companies, they are usually entitled to pass on their dividend distribution payments without paying tax (of course, this also means the distributions don’t usually come with franking credits).

But, like with many sectors, the coronavirus pandemic has upended the playing field for REITs. So are any worth buying in 2020 and beyond for a decent income investment?

What’s wrong with ASX REITs in 2020?

REITs work on a very simple premise – they are designed to return rental income to shareholders from the land that the company owns.

Most REITs fall into one (or more) of three buckets: residential, commercial and industrial. Residential REITs typically own apartments, retirement villages and other land that people live on or in. Commercial REITs tend to own office buildings, business parks or shopping centres. Industrial REITs fall more into a ‘warehouse’ categorisation and own distribution centres and the like.

So what’s the problem here? Well, think about the effects that the coronavirus pandemic has brought to the world. Two of the biggest trends to emerge this year have been a shift to working from home, and online shopping and e-commerce. Starting to see the problem now?

Yes, neither of these trends are good news for commercial REITs. If a company that was previously hiring out an entire office block now finds itself with half of its workforce working from home, is it really going to keep paying full price for a building it now only uses half of? Not for long, I’d wager.

It’s a similar story with shopping centres. Retail and shopping were already moving online before the pandemic, but the accelerator is now pushed to the floor. I’m not sure REITs like Scentre Group (ASX: SCG), which owns the Westfield branded malls in Australia and New Zealand, has an especially bright future ahead of it. And with residential evictions now on ice as well, I’m not sure the business case for residential REITs is too crash hot either (not that I don’t support the policy).

The only REITs I’m banking on…

That leaves industrial REITs, which is the group I would isolate from the others as the only REIT worth investing in in 2020. Industrial REITs are rare growth area. E-commerce is fuelled by warehousing and distribution centres. For example, industrial REIT Goodman Group (ASX: GMG) has recently inked a deal with online titan Amazon.com Inc (NASDAQ: AMZN) to house a fulfilment centre for 20 years. It already has a similar arrangement with Coles Group Ltd (ASX: COL). There’s something I’d be willing to invest in. BWP Trust (ASX: BWP) is another industrial REIT I would consider. It leases its warehouses to Wesfarmers Ltd (ASX: WES) for Wesfarmers’ Bunnings Warehouse chains.

When it comes to REITs, I think you need to ask yourself ‘what’s the future of this company’s assets’ before you commit to any of them. The game has changed for REITs in 2020, so you’d better make sure you know the new rules.

More reading

• 2 reliable and quality ASX dividend shares to buy
• Here are the 10 most popular ETFs on the ASX
• Will the Reserve Bank cut the cash rate again in October?
• Why retirees should buy these safe and strong ASX dividend shares
• Is Lendlease (ASX:LLC) the new Goodman Group (ASX:GMG)?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen 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 Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Amazon. 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 Which ASX REITs are still worth buying in a post-COVID-19 world? appeared first on Motley Fool Australia.

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