Author: therawinformant

The S&P/ASX 200 Index (ASX: XJO) finished down 0.2% today, ending at 5,952 points.

Here the main highlights from the ASX today:

A2 Milk Company Ltd (ASX: A2M) share price suffers after FY21 update

The A2 Milk share price fell around 10% today after giving an outlook update for FY21.

In the update A2 Milk reminded investors that it gave an outlook statement for FY21 when it delivered its FY20 result.

COVID-19 is causing a lot of uncertainty and last month A2 Milk warned there could be the potential for a softening of economic activity and there could be other impacts on participants within the supply chain.

In-particular, A2 Milk warned that there was a risk a flow-on effect of pantry destocking continuing into FY21 following the strong sales uplift in the third quarter of FY20 and lower than anticipated sales to retail daigous in Australia, due to reduced tourism from China and international student numbers.

Well, now those issues appear to be hurting revenue expectations for the upcoming result. A2 Milk said there has been additional disruption to the corporate daigou (reseller channel), particularly because of the stage 4 lockdown in Victoria.

Ultimately, A2 Milk said that there has been a contraction in the daigou channel beyond its previous expectations and there hasn’t been the replenishment orders that would typically be expected by this point.

The disruption is expected for the rest of the first half of FY21. That’s not good news for the near-term A2 Milk share price. Daigou channel sales represent a large proportion of infant formula sales across both Australia and New Zealand.

However, A2 Milk also said that based on the continuing strong growth of its China business and the performance of the rest of the business, the company thinks it’s a single channel logistics issue with continuing strong underlying consumer demand in China.

A2 Milk also confirmed that all other areas of the business is strong, including the liquid milk businesses in Australia and the USA, with the China business also performing strongly.

The company boasted of strong market share and brand awareness in China. Management thinks this confirms the effectiveness of its marketing.

Once the daigou disruption is reduced, A2 Milk thinks the second half will be strong and deliver overall growth over FY21.

A2 Milk gave some numbers expectations for the upcoming results.

Group revenue for the first half of FY21 is expected to be between NZ$725 million to NZ$775 million. That means A2 Milk is expecting revenue to fall by 4% to 10%, down from last year’s NZ$806.7 million.

However, for the full 2021 financial year it’s expecting revenue to be between NZ$1.8 billion to NZ$1.9 billion. That would represent growth of between 4% to 10%, up from NZ$1.73 billion in FY20.

In FY21 the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be “in the order” of 31%.

Synlait Milk Ltd (ASX: SM1)

The Synlait share price fell around 7% after giving its FY20 result to the market.

The dairy business reported that revenue rose 27% to $1.3 billion, with consumer-packaged infant formula sales up 15% and lactoferrin sales up 46%.

Synlait’s EBITDA increased by 13% to $171.4 million and net profit after tax (NPAT) declined by 9% to $75.2 million.

Graeme Milne, Chair of Synlait, said: “Synlait’s financial performance was resilient when viewed against the backdrop of COVID-19. The company remains solid and highly profitable with EBITDA growing strongly demonstrating the strength of our core infant and lactoferrin businesses.

“Our NPAT performance did reduce reflecting investments made in new facilities and acquisitions over the past two years to achieve our growth ambitions. We are however well positioned to grow earnings off our current asset base.”

In FY21 the company is expecting a similar, or slight improvement, on the FY20 net profit result with management expecting lower demand in the first half of FY21 because of higher stock levels in the supply chain.

Piedmont Lithium Ltd (ASX: PLL) share price soars

The lithium business announced a binding sales agreement with Tesla. It’s a five-year fixed-price binding agreement with an optional five-year extension.

The agreement represents around a third of Piedmont’s planned production of 160,000 tonnes per annum for the five-year term.

The Piedmont Lithium share price shot up 77% today. Since 11 September 2020 it has risen 189%.

More reading

• Cimic (ASX:CIM) share price flat on new market updates
• I think it’s time to jump on the A2 Milk (ASX:A2M) share price
• Is the run over for ASX lithium shares after Tesla’s battery day? 
• 2 ASX shares I think are cheap today
• Piedmont Lithium (ASX:PLL) share price rockets 83% higher on Tesla deal

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 Cimic Group Ltd (ASX: CIM) share price has remained relatively flat despite two positive updates, one announced on Friday and the other today.

At the time of writing, the Cimic share price is 0.78% up at $19.45. This compares to the S&P/ASX 200 Index (ASX: XJO) which is 0.1% higher at 5,968 points.

What does Cimic do?

The Cimic Group provides a range of services to the infrastructure, resources and property markets. These include construction, mining, mineral processing, engineering, concessions, and operation and maintenance services. 

The company operates in more than 20 countries throughout Asia Pacific, the Middle East, North and South America, and Sub-Saharan Africa.

Ventia contract extension

Cimic Group’s 50% owned associate, Ventia, has been awarded a contract extension. The 18-month extension will provide asset maintenance services to the New South Wales Land and Housing Corporation (LAHC).

Ventia will earn $124 million in base contract revenue, with a further $160 million should it provide additional programs. It will deliver maintenance, project and program services in Sydney, Newcastle and the Hunter Valley.

Ventia Group defence and social infrastructure executive Derek Osborn said:

The award of this extension is testament to the exceptional service delivered by our team throughout our 18-year relationship with NSW Land and Housing Corporation, and from the outset of this contract.

I’m pleased that this extension provides the opportunity to continually innovate and improve our service for the benefit of LAHC, its tenants and the wider communities.

The original contract was awarded to Ventia in April 2016, with the new extension taking the term up to December 2022.

Thiess contract extension

The group’s global mining services provider, Thiess, was awarded a contract extension by Glencore on Friday. The 18-month extension will provide mining services at Mount Owen in the Hunter Valley, Australia.

It is projected the commitment will generate A$340 million revenue for Thiess, which will strengthen its balance sheet.

The deal sees Thiess provide mine planning, design and execution, drill and blast, overburden removal and coal mining services.

Thiess managing director Douglas Thompson was pleased with the company’s effort, saying:

For more than 25 years we have delivered industry-leading, specialised mining techniques at Mt Owen, leading to higher resource recovery, increased plant efficiency and reliable material movement for our client.

Our team looks forward to continuing our long association with Glencore and the Hunter Valley community.

Cimic advised that the contract extension would start in July 2021.

Cimic share price summary

The Cimic share price fell to a multi-year low $11.87 in the March bear market. Since then Cimic has pushed higher following the overall rebound of ASX shares. However, as investor confidence wears thin, the Cimic share price is 40% down from the beginning of the calendar year.

More reading

• ASX 200 finishes flat, A2 Milk shares drop 10%
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher
• ASX 200 shares to buy for housing boom
• 3 ASX shares with dividend yields above 10%
• 3 cheap ASX shares in the buy zone today

Motley Fool contributor Aaron Teboneras 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 S&P/ASX 200 Index (ASX: XJO) and All Ordinaries Index (ASX: XAO) are starting to look firmer following recent weakness in ASX tech shares and a broad-based sell off in the Nasdaq. This could be a window of opportunity to explore some leading names in the tech sector. Here are two ASX tech shares I’d consider buying with $10,000. 

2 ASX tech shares I’d buy today

1. Megaport Ltd (ASX: MP1) 

Connectivity and network services provider Megaport is one step closer to earnings before interest, taxes, depreciation and amortisation (EBITDA) breakeven following a strong performance in FY20. The company delivered a 66% increase in revenue to $58 million, a 24% increase in customers to 1,842 and a 45% increase in its number of services (ports, connections, routers and internet exchanges) to 16,712. 

Megaport previously raised $50 million in April to further strengthen its balance sheet and is using the proceeds of the capital raising to further accelerate sales, product development and platform opportunities in the near and medium term. At 30 June 2020, the company had $166.9 million in cash. Megaport is getting closer to delivering the scale and revenue it needs to reach EBITDA breakeven, which it anticipates achieving in FY21.

Overall, COVID-19 has been a tailwind for many ASX tech shares. I believe Megaport is currently experiencing significant growth with a pathway to profitability. With many ASX tech shares looking stronger after the recent tech sell-off, the Megaport share price might be one to watch. 

2. Bigtincan Holdings Ltd (ASX: BTH) 

Bigtincan has truly taken off following its strong FY20 results. The Bigtincan share price jumped more than 10% on the day of its FY20 results to close at a near all time record high of $1.00. One month on, and its share price has soared another 35% to currently trade at $1.35 (at the time of writing).

The company is a provider of software that brings together sales content management, customer facing training, coaching, onboarding and document management to help companies increase sales win rates, reduce expenses and improve customer satisfaction. In FY20 the company delivered a 56% increase in revenue to $31 million with a significant $71.9 million cash at hand. It had previously achieved significant contract wins with big names such as DXC Technology Co (NYSE: DXC), Sephora USA and Nike Inc (NYSE: NKE).

The company is clearly building momentum and forecasts FY21 revenue to be in the range of $41 to $44 million. Its $71.9 million cash position also means the company can pursue and accelerate growth opportunities and explore any potential strategic mergers and acquisitions moving forward. I believe Bigtincan could be a leading ASX tech share to watch closely into the future.

More reading

• Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
• 3 mid cap ASX shares to buy for strong potential returns
• 3 quality small cap ASX shares with very strong growth potential
• 3 ASX tech shares that could take off in FY21
• These exciting small cap ASX shares could be stars of the future

Lina Lim 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, MEGAPORT FPO, and Nike. The Motley Fool Australia has recommended BIGTINCAN FPO, MEGAPORT FPO, and Nike. 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 A2 Milk Company Ltd (ASX: A2M) share price has fallen around 10% in response to a trading update.

What was in the update?

In the update A2 Milk reminded investors that it gave an outlook statement for FY21 when it delivered its FY20 result.

COVID-19 is causing a lot of uncertainty and last month A2 Milk warned there could be the potential for a softening of economic activity and there could be other impacts on participants within the supply chain.

In-particular, A2 Milk warned that there was a risk a flow-on effect of pantry destocking continuing into FY21 following the strong sales uplift in the third quarter of FY20 and lower than anticipated sales to retail daigous in Australia, due to reduced tourism from China and international student numbers.

Well, now those issues appear to be hurting revenue expectations for the upcoming result. A2 Milk said there has been additional disruption to the corporate daigou (reseller channel), particularly because of the stage 4 lockdown in Victoria.

Ultimately, A2 Milk said that there has been a contraction in the daigou channel beyond its previous expectations and there hasn’t been the replenishment orders that would typically be expected by this point.

The disruption is expected for the rest of the first half of FY21. That’s not good news for the near-term A2 Milk share price. Daigou channel sales represent a large proportion of infant formula sales across both Australia and New Zealand.

However, A2 Milk also said that based on the continuing strong growth of its China business and the performance of the rest of the business, the company thinks it’s a single channel logistics issue with continuing strong underlying consumer demand in China.

A2 Milk also confirmed that all other areas of the business is strong, including the liquid milk businesses in Australia and the USA, with the China business also performing strongly.

The company boasted of strong market share and brand awareness in China. Management thinks this confirms the effectiveness of its marketing.

Once the daigou disruption is reduced, A2 Milk thinks the second half will be strong and deliver overall growth over FY21.

Actual guidance

A2 Milk gave some numbers expectations for the upcoming results.

Group revenue for the first half of FY21 is expected to be between NZ$725 million to NZ$775 million. That means A2 Milk is expecting revenue to fall by 4% to 10%, down from last year’s NZ$806.7 million.

However, for the full 2021 financial year it’s expecting revenue to be between NZ$1.8 billion to NZ$1.9 billion. That would represent growth of between 4% to 10%, up from NZ$1.73 billion in FY20.

In FY21 the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be “in the order” of 31%.

Why I think the A2 Milk share price is a buy today

I think A2 Milk is one of the best businesses in the S&P/ASX 200 Index (ASX: XJO). Being able to buy A2 Milk at a price that’s 10% cheaper than last week is an attractive idea to me.

These types of short-term problems can prove to be good long-term opportunities. Is A2 Milk going to be fundamentally challenged forever by this? No, in my opinion.

Indeed, Melbourne is about to leave stage 4 restrictions and Australia’s overall COVID-19 position is steadily improving. Plus, A2 Milk is making up for it with stronger local sales in China.

The company is still expecting revenue growth over FY21 with a pretty stable EBITDA margin.

The A2 Milk share price has been hit hard today, but it still has very strong international growth credentials in Asia and the US. By March 2022 I think A2 Milk shares can bounce back strongly – which is pretty short-term in share market terms.

More reading

• 2 ASX shares I think are cheap today
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher
• Why a2 Milk, Blackmores, Ramelius, & Synlait Milk shares are tumbling lower
• a2 Milk (ASX:A2M) share price on watch after guidance update
• 10 fantastic ASX shares to buy in October

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

The post I think it’s time to jump on the A2 Milk (ASX:A2M) share price appeared first on Motley Fool Australia.

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Exchange-traded funds (ETFs) can be an investor’s best friend. ASX ETFs provide instant diversification and can be used to invest in the broader market or a concentrated sector or geography.

Here are a few of my favourite ETFs on the market right now.

Vanguard Australian Shares Index ETF (ASX: VAS)

I’m a big fan of this ASX ETF for broad market exposure to the S&P/ASX 300 Index (ASX: XKO).

Some investors may be worried about home bias, where you overinvest in your local market. However, I think Aussie investors should have a large holding of Australian shares to reduce currency risk in their investments.

There’s also the boost that franking credits on Australian shares can provide, which is why I like this ASX ETF.

ETFS FANG+ ETF (ASX: FANG)

This ETF Securities fund provides exposure to some of the top tech stocks in the world. The fund comprises large holdings in US and other global tech stocks including the ‘FAANG’ group comprising Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ:NFLX) and Alphabet Inc (NASDAQ: GOOG).

The ETFS FANG+ ETF is up 44.2% since its inception in late February. This ASX ETF offers diversified exposure concentrated in the tech and telecom space with a management cost of 0.35% p.a. 

ETFS Reliance India Nifty 50 ETF (ASX: NDIA)

This ETF Securities ETF provides a exposure to the Indian economy by attempting to track its Nifty50 benchmark index.

The ETFS Reliance India Nifty 50 ETF uses a full-replication strategy to track the index which means very similar holdings and weightings to the benchmark.

I think India’s economy is set to boom in the coming decades. It is forecast to be the world’s third largest by 2030, according to research by Standard Chartered. We could also see Australia diversify trade away from China towards India, which is good for business.

The coronavirus pandemic hit the Nifty50 hard, but now could be a good time to buy this ASX ETF on the cheap.

More reading

• Why you’re better off investing in ASX shares in 2020 than paying off the mortgage faster
• Buy Fortescue and this ASX dividend share for a source of income
• The 3 best ETFs for passive investing
• How to make $1 million from ASX shares
• Is a passive ASX investing strategy for you?

Motley Fool contributor Ken Hall owns shares of Vanguard Australian Shares Index. 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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Cochlear Limited (ASX: COH) shares have not had a good year in 2020 so far. After topping out at a new (and still standing) all-time high of $251.55 back in February, the Cochlear share price is today asking just $200.50 at the time of writing. That’s more than a 20% discount to the February high watermark. Now just because a share has pulled back 20% from its most recent high, this does not mean it’s automatically ‘on sale’ or a ‘good deal’. But it does merit some digging in my view, particularly when the company in question is as high calibre as Cochlear.

Lend me your ears…

Cochlear is one of the most successful ASX shares in the healthcare space. It famously pioneered the ‘Cochlear implant’ – a hearing aid device now universally recognisable. The company has continued to remain in the vanguard of hearing aid technology and is still a market leader in the space. It now has a truly global presence, with 20% of its sales now coming from emerging markets. It holds a 60% share of its global product market.

However, like many ASX companies, both Cochlear and its shares have been under pressure this year due to the coronavirus pandemic. In its FY2020 earnings report released last month, Cochlear reported a loss of $238.3 million for the year on revenues of $1.35 billion, mostly due to surgery deferrals as a result of the pandemic. As such, the company will not be paying a final dividend in 2020.

Why is the Cochlear share price a buy today then?

I think Cochlear is worth a good look today, even after its disappointing earnings report. Yes, Cochlear has taken a massive hit this year. But the market that it serves (people with a hearing impairment) hasn’t gone anywhere. Cochlear serves a large customer base with inelastic demand for its products. Many of the company’s patients are born with a hearing impairment, which means they have a fair chance of being Cochlear customers for life. The company already has a dominant position in advanced economies around the world and as incomes rise in emerging markets, more and more potential customers are finding Cochlear as well.

As such, I think the pullback we’ve seen in the Cochlear share price this year presents a solid buying opportunity. Quality companies like Cochlear don’t go on sale often, and so I think this is a rare chance to open a position or double-down if you already have one.

More reading

• How to be the next Warren Buffett with ASX shares
• Why Atlas Arteria, Cochlear, Telix, & Treasury Wine shares are dropping lower
• The Aussie dollar at a critical juncture and could turn fortunes for these ASX stocks
• Top brokers name 3 ASX shares to sell today
• Forget BrainChip (ASX:BRN) and buy and hold these outstanding ASX shares

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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 rebound in ASX lithium shares came to a grinding halt after Tesla’s battery day. Could Elon Musk’s comments about lithium continue to strain the lithium market or is this a buying opportunity for ASX lithium shares?

ASX Lithium shares stumble 

The Galaxy Resources Limited (ASX: GXY), Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) share prices have fallen into negative territory this year following Tesla’s battery day announcements. Musk highlighted that lithium is a “widely available resource, one of the most common resources on the planet” and that “Nevada alone has enough to power all vehicles in the US”. Tesla announced its intentions to simplify the process to extract lithium and acquired rights to mine some of its supply from 10,000 acres in an unspecified part of Nevada. 

While the mass production of electric vehicles by Tesla and other manufacturers will require a lot more lithium, Musk’s comments about localising supply casts doubt as to the relevancy of ASX lithium producers. This has seen the Galaxy Resources share price fall 30%, Pilbara Minerals share price fall 18% and Orocobre share price fall 10% last week.

One of the few lithium players that emerged from Battery Day unscathed was Piedmont Lithium Ltd (ASX: PLL). Piedmont is a lithium player focused on its pre-production business of spodumene concentrate and lithium hydroxide in North Caroline, US. The Piedmont Lithium share price soared more than 70% today following its sales agreement with Tesla. This agreement covers a fixed commitment of 160,000 tonnes per annum for an initial five-year term as well as additional quantity to be delivered at Tesla’s option. While this agreement does paint the narrative that more lithium will be required for the ‘electric vehicle revolution’, it does appear that Tesla has a geographic preference of where the lithium is sourced. America. 

How are lithium prices?

The catalyst that saw ASX lithium miners spiral from billion dollar valuations to just millions was the oversupply of lithium in the market. This is no different than the supply and demand factors that affect the likes of iron ore miners Fortescue Metals Group Limited (ASX: FMG) and BHP Group Ltd (ASX: BHP).

The challenge is that there has not been any improvement in the lithium spot price for many years. Fastmarkets highlights lithium prices sitting at multi-year lows with brief periods of stability. Even before Tesla’s battery day and an improvement in ASX lithium share prices, there was not any material improvement in market conditions. 

ASX lithium shares have rebounded on the positive medium to long term outlook in the market. Galaxy Resources for example, believes that the significant stimulus packages in both the EU and China are expected to drive electric vehicle led lithium demand. Furthermore, automakers remain committed to ‘electrifying’ their fleets and many major manufacturers have recently reinforced their relationships with tier 1 battery manufacturers. 

Foolish takeaway

Tesla’s intentions to localise lithium supply has weighed down an already vulnerable lithium market. While the medium-long term outlook could still be intact, the weak lithium spot price today means that producers are likely to continue to burn through cash for the near future. I believe the run is likely to be over for ASX lithium shares but investors should continue to watch the space for any signs of improvements. 

More reading

• Piedmont Lithium (ASX:PLL) share price rockets 83% higher on Tesla deal
• 3 ASX shares with dividend yields above 10%
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• Are these blue chip ASX 200 shares worth buying?
• 2 high yield ASX blue chip dividend shares to buy next week

Motley Fool contributor Lina Lim 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 you’re a fan of investing in small cap shares, then you’re in luck.

Right now, there are a number of companies at the small side of the market which I believe have a lot of potential.

Here’s why I think they should be on your watchlist:

Carbon Revolution Ltd (ASX: CBR)

Carbon Revolution is a $370 million advanced manufacturing company that designs, manufactures, and markets single piece carbon fibre wheels for motor vehicles. By being able to manufacture wheels in this way, the company is able to reduce the weight of them significantly. This is a big positive as management estimates that these weight savings can result in up to 40% reductions in inertia. This is really significant for car companies, which are always looking to make their vehicles more efficient. Carbon Revolution counts the likes of Ford and Ferrari as customers. I believe this is a testament to the quality of its products.

Mach7 Technologies Ltd (ASX: M7T)

Another small cap ASX share to watch closely is Mach7. It is a $247 million developer of innovative enterprise imaging and informatics solutions for image viewing, storage, and workflow management. These solutions are able to be implemented individually, or as a comprehensive end-to-end image management and diagnostic viewing platform. The company has designed them to assist healthcare organisations with removing technology limitations to ensure patient information flows easily and can be accessed instantly. This helps to inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes. Management estimates that Mach7’s total addressable market is worth US$2.75 billion per year.

Whispir (ASX: WSP)

A final small cap ASX share I would recommend you put on your watchlist is Whispir. It is a $379 million software-as-a-service communications workflow platform provider. This increasingly popular platform automates communications between organisations and people. This enables organisations to improve their communications through automated workflows to ensure stakeholders receive accurate, timely, useful, and actionable insights. Management estimates that the Workflow Communications platform as a Service market could reach US$8 billion per year by 2024.

More reading

• Why have ASX tech founders been unloading shares?
• 3 ASX tech shares that could take off in FY21
• These 4 ASX shares have grown more than 100% this year
• 3 exciting small cap ASX tech shares that could be the next big thing
• Forget Afterpay (ASX:APT) shares, buy these 3 growth shares

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 MACH7 FPO and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Carbon Revolution Limited. The Motley Fool Australia has recommended Carbon Revolution Limited, MACH7 FPO, and 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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When it comes to buying ‘cheap’ ASX shares, valuation is often in the eye of the beholder. It was pretty easy to call CSL Limited (ASX: CSL) overvalued at most points over the past decade. Yet buying it at any time before 2020 turned out to be a pretty good idea. It’s a story often repeated, most famously with the US technology titan Amazon.com Inc. (NASDAQ: AMZN), which even today trades at a price-to-earnings (P/E) ratio of 118.

But that problem isn’t one afflicting the ASX shares named below. Here are two ASX shares that I think are cheap and undervalued today. Now, as with most ‘cheap’ shares, the two companies named below are trading at relatively low valuations for a reason. However, I think both are still worthy of consideration today.

2 ASX shares selling cheap today

Virgin Money UK (ASX: VUK)

Virgin Money UK is my first cheap ASX share today. It’s a United Kingdom-based bank, formerly known as Clydesdale Bank, that was spun-out of National Australia Bank Ltd (ASX: NAB) a few years ago. Since then, the company’s share price hasn’t been a nice thing to watch. It last peaked at $6.21 back in July 2018, but has trended lower ever since. Like most bank shares, the coronavirus outbreak has been devastating for the Virgin Money share price, which is languishing at $1.30 at the time of writing after falling another 2.8% today.

But I think this bank’s share price is so cheap now that it’s worthy of a good hard look. Yes, the UK’s economy is being hit very hard at the moment. A second wave of coronavirus infections is unfortunately sweeping through the country and, as such, UK bank shares like Virgin Money are being put through the wringer. But I think Virgin Money is well-poised for a strong recovery once the country opens back up. Like in Australia, the UK banking sector does enjoy strong support from the government, so I think there is very little risk of this company hitting the wall. It could make a good turnaround play at its current prices.

A2 Milk Company Ltd (ASX: A2M)

a2 Milk is my second cheap share to consider today. The company is being hit hard today, with the a2 Milk share price down almost 11% to $15.37 in Monday’s trade (at the time of writing). The catalyst for this hefty move? This morning a2 Milk told the markets that, due to disruption to daigou reseller channels, the company is now expecting revenues to decline year on year for the first half of FY2021 by between 3.9% and 10.1%.

Whilst this is obviously not good news for a2 Milk, I think it will prove to be a temporary setback. This company has been one of the most phenomenal ASX success stories over the past decade. The a2 Milk share price has rewarded shareholders with more than 2,200% in gains over the past five years. With its powerful brand and successful management team, I think this pullback is a great buying opportunity for a long-term investment in a2 Milk today.

More reading

• I think it’s time to jump on the A2 Milk (ASX:A2M) share price
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher
• Why a2 Milk, Blackmores, Ramelius, & Synlait Milk shares are tumbling lower
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• a2 Milk (ASX:A2M) share price on watch after guidance update

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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd 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 A2 Milk. 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.

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The market may be pushing higher this afternoon but missing out on the action are the shares of Corporate Travel Management Ltd (ASX: CTD) and Starpharma Holdings Limited (ASX: SPL).

Both companies requested trading halts this morning before the market open. Here’s why they are halted:

Corporate Travel Management

The Corporate Travel Management share price was placed into a trading halt this morning until Thursday whilst it undertakes the institutional component of an accelerated entitlement offer. According to the request, unlike many of its peers, the company isn’t raising funds for liquidity. Rather, it is raising these funds to make a potential acquisition.

No details were given with the release, but the AFR has reported that Corporate Travel Management is understood to be raising $400 million to make a company-changing acquisition. It remains unclear which company management has its eyes on. And given that it operates globally, there certainly are a lot of options for it to choose from.

Starpharma

The Starpharma share price has gone into a trading halt on Monday so that the dendrimer products developer can launch an equity raising. This will comprise an institutional placement and an accompanying share purchase plan. Starpharma’s shares are expected to return to trade on Wednesday following the completion of the institutional component of the equity raising.

Once again, no details were given with the trading halt request. However, the company is understood to be looking to raise a total of $45 million from investors at a price of $1.50 per new share. This represents a 6.5% discount to its last close price. Some of the funds are expected to be used to support the commercialisation and launch of its COVID-19 nasal spray. Other funds are likely to be used towards the advancement of its promising DEP drug delivery technology.

More reading

• These are the 10 most shorted ASX shares
• Will the Corporate Travel (ASX:CTD) share price surge in 2021?
• ASX 200 falls 0.7%, UK and travel shares drop
• Rhinomed (ASX:RNO) share price tries following Starpharma’s path to COVID glory
• Starpharma (ASX:SPL) share price jumps on COVID-19 nasal spray update

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 Starpharma Holdings Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Starpharma Holdings 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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