Author: therawinformant

The S&P/ASX 200 Index (ASX: XJO) went up 2.6% today to 5,924 points, undoing some of the declines from earlier in September 2020.

Movers and shakers

There were plenty of big movements today, mostly positive ones.

The biggest gain in the ASX 200 belonged to the Service Stream Limited (ASX: SSM) share price which went up 14% today.

Investors seem to be thinking that the news that the federal government could spend $4.5 billion to upgrade the NBN could help Service Stream quite substantially.

Service Stream has an ongoing relationship with NBN Co and it could be a beneficiary from this announcement.

Other big movers today include: AP Eagers Ltd (ASX: APE) share price went up 7.3%, the Vocus Group Ltd (ASX: VOC) share price rose 6.3%, the Flight Centre Travel Group Ltd (ASX: FLT) share price rose 6% and the Carsales.com Ltd (ASX: CAR) share price drove higher by 5.8%.

On a very positive day for the ASX 200 share market, it may unsurprising to know that gold miners were at the bottom of the ASX 200. The Ramelius Resources Limited (ASX: RMS) share price fell 7.7%, the Northern Star Resources Ltd (ASX: NST) share price fell 2% and the Resolute Mining Limited (ASX: RSG) share price dropped 1.9%.

Nufarm Limited (ASX: NUF)

Nufarm reported its FY20 result today.

It said that its net profit plunged to a $456 million loss after difficulties in some of its markets during the year, as well as impairments.

Continuing revenue increased by 6.5% to $2.85 billion. Excluding material items, continuing earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 21% to $236 million, continuing earnings before interest and tax (EBIT) fell 75% to $34 million and continuing net profit reversed to a net loss of $81 million.

No dividend was declared by the board of the ASX 200 share.

Nufarm managing director and CEO Greg Hunt said: “2020 has been an extraordinary year. The agricultural markets in which we operate across the globe have endured mixed seasonal conditions, industry-related supply issues and of course the tragedy and disruption of COVID-19.

“We have taken decisive steps to strengthen our business to deliver improved returns. We have refocused our portfolio, strengthened our balance sheet and progressed key priorities to drive better performance from our continuing businesses.

“Our earnings performance in 2020 was disappointing. While good momentum was generated in most regions in the second half of the year, weaker earnings from the North American business in the first half and a decline in European and Seed Technologies earnings resulted in underlying EBITDA from continuing operations declining by 21%.”

Sezzle Inc (ASX: SZL)

The buy now, pay later business soared today. The Sezzle share price rose 5.6% after announcing a partnership.

Sezzle is going to partner with Ally Lending, which is owned by Ally Financial – a listed business on the New York Stock Exchange.

Ally Lending enables monthly fixed-rate instalment-loan products that extend up to 60 months in length and US$40,000 per instalment plan.

Sezzle CEO and executive chairman Charlie Youakim said: “Our collaboration with Ally Lending enhances our customer financing offerings, making it possible for consumers to better manage their finances. Ally’s dedication to its customers and commitment to innovation aligns with our vision and culture – making this partnership a good fit for us.”

Sezzle said that the partnership will give merchants and shoppers access to long term financing options, complimenting Sezzle’s existing short-term, interest-free offering without adding any balance sheet impact to Sezzle.

The buy now, pay later business said Ally Lending is backed by the number one digital bank in the USA, Ally Bank. Its commitment to “do right” and “obsess over the customer” has led to a customer NPS score of 68, which is a high rating by customers for Ally Bank.

More reading

• Here’s why the Elders (ASX:ELD) share price is at a new high today
• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Plenti (ASX:PLT) share price crashes lower after its IPO
• Why have ASX tech founders been unloading shares?
• Why the Service Stream (ASX:SSM) share price is surging 14% higher today

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended carsales.com Limited, Flight Centre Travel Group Limited, Service Stream Limited, and Sezzle Inc. 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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I think the best ASX shares to own in your portfolio are ones that have good revenue growth potential, have a good path to profit growth and are scalable.

There’s not much point going for a business that doesn’t have much revenue growth potential in my opinion unless you’re focused on dividends. Owning mediocre businesses would probably lead to mediocre returns. Going for income may be a poisoned chalice if the share price declines over time.

I believe profit growth is important. The share price of a business is linked to its earnings. If the earnings aren’t going anywhere then the share price may not go anywhere either.

Scalable businesses are really attractive to me because it means they make more profit from revenue growth than they did before. It’s the profit growth that ultimately helps increase the share price and dividends. Finding a business that can generate very strong profit growth is good for potential shareholder returns.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of my top ASX share ideas right now. It’s probably my highest-conviction idea. It helps not-for-profits like US churches receive electronic donations. It also provides livestreaming options for clients to connect with their congregations. It’s very useful in this new COVID-19 world. 

When you can find a great business at a really good price I think you just have to jump on that opportunity.

At the current Pushpay share price it’s priced at 36x FY21’s estimated earnings. I don’t think that’s unreasonable at all considering its growth and how low official interest rates have gone in Australia and New Zealand.

FY20 was an incredible year for Pushpay. It acquired Church Community Builder which really increased the capabilities of Pushpay with the personnel, the access to new clients for both businesses and the ability to offer a combined service. The combined business will hopefully be able to generate more revenue per client.

Pushpay revealed strong revenue growth in FY20 with an increase of 32% to US$129.8 million. In FY21 the ASX tech share is expecting to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF).

The ASX share impressed me most in FY20 with how much its profit margins increased. In FY21 its gross profit margin increased from 60% to 65% and its EBITDAF margin improved from 17% to 22%. The company is aiming for US$1 billion revenue in the coming years, so its margins could go much higher. 

WCM Global Growth Ltd (ASX: WQG)

This ASX share is a listed investment company (LIC) that likes to find businesses with rising competitive advantages and a corporate culture that supports that goal.

A positive moat trajectory for businesses suggests that the companies are getting even stronger, which should lead to good shareholder returns. WCM measures this with a rising return on invested capital (ROIC) as opposed to those with a large but static or declining moat.

In the past it owned shares like Facebook, Apple, Amazon, Netflix and Alphabet, but it has moved on to other opportunities which are seeing regular improvement.

At the end of August 2020, the ASX share’s biggest 10 positions were: Shopify, West Pharmaceuticals, MercadoLibre, Visa, Stryker, Taiwan Semiconductor, Tencent, Lululemon Athletica, Thermo Fisher Scientific and Ansys.

As you can see, there’s a large allocation to IT and healthcare businesses. This offers secular growth for investors. It’s also invested in plenty of businesses that aren’t focused on just the US.

I believe that WCM offers attractive diversification that you can’t really get with ASX shares nor from the most popular exchange-traded funds (ETFs).

It has done very well. Over the past three years its portfolio return (after management fees but before expenses) has been 22% per annum. There’s no guarantee of future performance, but it shows how good WCM is at picking businesses. 

At the current WCM share price it’s trading at a discount of 10% to the net tangible assets (NTA) at 18 September 2020.

Foolish takeaway

I really like both of these ASX shares and I think they could strongly outperform many other ASX shares over the next three to five years. I believe Pushpay could be the best one to buy for growth, but I like the international diversified growth offered by WCM.

More reading

• Top brokers name 3 ASX shares to buy today
• Forget BrainChip (ASX:BRN) and buy and hold these outstanding ASX shares
• 4 unstoppable ASX shares to buy with $4,000
• 5 stellar ASX growth shares that could smash the market in the 2020s
• Where I’d invest $20,000 into ASX shares right now

Tristan Harrison owns shares of WCM Global Growth Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. 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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The Elders Ltd (ASX: ELD) share price has reached a new 52-week high today. At the time of writing, Elders shares are trading at $10.93, up 3.5% for the day. Earlier today, the Elders share price reached as high as $11.16 – the new 52-week high watermark and the highest share price the company has commanded since 2010.

Today’s new high continues the stellar run Elders shares have enjoyed in 2020 so far. This is a stock that barely felt the coronavirus-induced market crash we saw back in March. While the S&P/ASX 200 Index (ASX: XJO) fell 36.5% between 20 February and 23 March, Elders shares were down just 11.5% in contrast.

Since then, the Elders share price has exploded, rising from $7.31 on 23 March to the new high of $11.16 today. That’s a rise of more than 50%. Year to date, the shares are up 70.5%, including 7.3% in the past month alone.

What does Elders do?

Elders is a company that’s been around the block a few times – initially beginning life way back in 1839. Today, it continues from these roots as an agricultural company that sells goods and services to farmers and primary producers. These mostly consist of insurance, banking and other financial products.

Why is the Elders share price soaring today?

With no major news or ASX announcements since 27 July for this company, its performance over the past month to a new 52-week high is a little perplexing and not entirely obvious.

But digging a little deeper, I think the answer is still there.

According to reporting from The Guardian, the country has just seen its wettest winter since 2016, with NSW set to record a year-on-year increase in winter crop production of 300%, which would be 49% above the 10-year average.

What has this got to do with Elders?

Well, Elders sells insurance, including for crop yields. If crop yields indeed come in at these kinds of levels, it’s likely Elders will have significantly lower payouts on its hands in 2020, and possibly in 2021. With farmers’ looking to have a prosperous year in 2020, it’s possible that they will look to take out even more insurance, or at least bump up their existing policies with Elders.

All of these factors bode extremely well for the company and is why (in my view) the Elders share price is at a new high today.

This sentiment was echoed by my Fool colleague Bernd Struben, who (shoutout) predicted this kind of move a fortnight ago.

More reading

• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Plenti (ASX:PLT) share price crashes lower after its IPO
• Why have ASX tech founders been unloading shares?
• The biggest mistakes investors are making in today’s share markets
• Why the Nufarm (ASX:NUF) share price has rocketed today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Tuesday I looked at a few small cap shares which I think could be top options for investors.

But if small caps are a little too high risk for your liking, you might want to take a look at the mid cap shares listed below.

I believe these shares have the potential to generate strong returns for investors over the long term:

Accent Group Ltd (ASX: AX1)

Accent is the footwear-focused retailer behind store brands such as HYPE DC, Platypus, and The Athlete’s Foot. It was a positive performer in FY 2020 despite the pandemic, delivering a 1.5% increase in sales to $948.9 million and a 7.5% lift in net profit after tax to $58 million. This was driven largely by a 69% increase in digital sales during the 12 months. They now account for 17% of total sales. While FY 2021 will certainly not be easy, Accent started the year in fantastic form. It reported a 16.6% increase in like for like sales during the first 8 weeks of the financial year. Looking beyond FY 2021, I believe the company is well-placed for growth thanks to the popularity of its brands, its strong market position, growing online business, and store expansion plans.

Bravura Solutions Ltd (ASX: BVS)

Another top mid cap share to consider buying is Bravura Solutions. It is a provider of software products and services to the wealth management and funds administration industries. Its shares have come under pressure recently after management warned that its earnings could be flat in FY 2021 because of the pandemic. While this is disappointing, I believe the pullback in the Bravura share price has created a buying opportunity. Especially given how well-positioned the company looks to accelerate its growth once the crisis passes. Bravura has a portfolio of high quality software solutions that have large addressable markets and blue chip customers.

Megaport Ltd (ASX: MP1)

Megaport is a provider of elastic interconnection services across data centres globally. This service allows its customers to increase and decrease their available bandwidth in response to their own demand requirements. This is an increasingly popular alternative to being tied to fixed service levels on long-term and expensive contracts. Megaport has been a very strong performer in recent years thanks to the expansion of its footprint and increasing demand for its offering. This led to its monthly recurring revenue (MRR) reaching $5.7 million at the end of FY 2020. This represents an increase of 57% year on year and equates to $68.4 million on an annualised basis. Pleasingly, it is still only a fraction of its sizeable market opportunity. And thanks to its leadership position, I expect it to capture a growing slice of it over the next decade.

More reading

• Buy these ASX dividend shares to beat low interest rates
• 2 high yield ASX dividend shares to buy this week
• 3 ASX tech shares that could take off in FY21
• 3 high quality ASX growth shares to invest $3,000 into right now
• 3 ASX dividend shares for income investors to buy today

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 MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia has recommended Accent Group and MEGAPORT 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 Data#3 Limited (ASX: DTL) share price has continued its positive run and charged higher again on Wednesday.

At one stage the information technology services and solutions provider’s shares stormed as much as 6% higher to a record high of $6.63.

When the Data#3 share price reached that level, it meant it was up a remarkable 74.5% since the start of the year.

Why is the Data#3 share price at a record high?

Investors have been fighting to get hold of the company’s shares this year following a very strong performance in FY 2020 despite the pandemic.

For the 12 months ended 30 June 2020, Data#3 reported a 14.9% increase in revenue to $1.6 billion and a 30.5% lift in net profit after tax to $23.6 million.

A key driver of its growth was revenue from its public cloud business. It reported revenue of $581 million, up over 60% year on year. This means that over one-third of its revenue is now coming from this business.

The company’s Chief Executive Officer and Managing Director, Laurence Baynham, commented: “We are delighted with the performance of the consolidated Data#3 business, which delivered another record result in what has been an extraordinary year. The result demonstrates the inherent strength and relevance of our solution offerings in an evolving market, and the growth in public cloud was a particular highlight.”

What about the future?

While the company wasn’t able to provide guidance for the year ahead because of the pandemic, management appears very confident on its future.

Mr Baynham explained: “Our expectation is that technology will play a major role in Australia’s economic recovery from the pandemic, and we remain well positioned to capitalise on those opportunities.”

Judging by its share price performance in 2020, it appears as though investors are equally confident that this will be the case.

More reading

• 2 top ASX shares I’d buy with $2,000 right now
• Here’s why the Elders (ASX:ELD) share price is at a new high today
• 3 mid cap ASX shares to buy for strong potential returns
• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Where to invest $10,000 into ASX shares right now

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.

The post Why the Data#3 (ASX:DTL) share price just stormed to a record high appeared first on Motley Fool Australia.

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The market is running hot and it’s the Flight Centre Travel Group Ltd (ASX: FLT) share price and Webjet Limited (ASX: WEB) share price that’s rebounding strongly.

The S&P/ASX 200 Index (Index:^AXJO) rallied nearly 2% at the time of writing to break a four-day losing streak.

The market was sold off on resurging global COVID-19 worries but bargain hunters couldn’t help themselves today.

Biggest losers have most to gain

This explains why the pandemic-stricken travel sector is seeing some of the best comebacks, especially with some experts voicing hope for a vaccine in 2021.

The ASX stocks most heavily sold-off during COVID will logically be the ones leading any recovery (assuming they survive). It’s clear that value buyers are trying to get on this trade early.

The FLT share price surged over 5% to $13.51 in the last hour of trade while the WEB share price gained 2.5% to $3.67.

FLT share price and WEB share price not alone in rebound

They aren’t alone. The Qantas Airways Limited (ASX: QAN) share price flew 3.6% higher at $3.90 and Sydney Airport Holdings Pty Ltd (ASX: SYD) rose 3.7% to $5.74.

Six months from now, we could be looking back and wishing we bought travel stocks during the September sell-down.

This is despite the fact that international borders are unlikely to reopen fully till late 2021, if not 2022.

Easing border restrictions boosting confidence

But news that South Australia is welcoming News South Wales residents with open arms is giving investors just enough optimism to refuel the rally.

Meanwhile, the 14-day rolling average of new COVID-19 cases in Victoria dropped below 30. There’s talk that Queensland premier Annastacia Palaszczuk will be under intense pressure to allow Victorian holiday makers back in sooner rather than later as her government is facing a huge budget deficit.

The Flight Centre share price and Webjet share price may be more dependent on international travel, but the removal of state border restrictions may be enough to keep them in the air.

Should you buy Flight Centre and Webjet?

Both stocks have lost around 70% of their value since the start of calendar 2020. This compares to the 47% dive by the QAN share price and a 13.5% decline by the ASX 200.

Lucky for these stocks, recent emergency capital raisings means they should have enough of a cash runway to ride out the COVID mayhem.

I would even hazard a guess and say there could be merger and acquisition upside for both. Nothing like a crisis to force mergers, and there have been stranger bedfellows.

But be forewarned, buying these ASX COVID casualties aren’t for the faint hearted. These stocks are likely to face more turbulence than many other parts of the market for a while yet!

More reading

• Plenti (ASX:PLT) share price crashes lower after its IPO
• Why have ASX tech founders been unloading shares?
• The biggest mistakes investors are making in today’s share markets
• Why the Nufarm (ASX:NUF) share price has rocketed today
• ASX 200 up 1.9%: Afterpay storms higher, Nufarm jumps, big four banks rise

Motley Fool contributor Brendon Lau owns shares of Webjet Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group 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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Considering the interest rates on offer with many savings accounts are just 0.05% per annum at present, I would sooner invest in the share market than keep it in one of these accounts.

After all, with a rate as low as that, if you had $10,000 in one of these savings accounts, you would earn interest of just $50 a year.

I believe significant better returns can be found on the share market if you invest wisely.

But which ASX shares should you invest $10,000 into? Here are three that I would buy today:

a2 Milk Company Ltd (ASX: A2M)

The first option to consider investing $10,000 into is a2 Milk Company. It is a New Zealand-based infant formula and fresh milk company with a focus on a2-only products. The a2 protein is believed to be easier to digest than the a1 protein, giving the company’s products a unique selling point. And while other companies have tried to copy its products, this has only reinforced its strong brand. This is particularly the case with Chinese consumers, who are buying its products in increasing numbers. Pleasingly, despite its strong sales growth in the country, a2 Milk Company still only has a modest market share. This gives it a long runway for growth over the next decade.

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

Another option for investors to consider buying is the BetaShares Asia Technology Tigers ETF. I think this exchange traded fund could provide strong returns for investors in the future due to its exposure to a large number of the fastest growing tech companies in the Asia market. These companies are revolutionising the lives of billions of people in the region and look very well-positioned for growth. Among the companies in the fund you will find the likes of ecommerce giant Alibaba, search engine company Baidu, and WeChat owner, Tencent.

NEXTDC Ltd (ASX: NXT)

A final option to consider investing $10,000 into is NEXTDC. It is the region’s most innovative Data Centre-as-a-Service provider and busy building the infrastructure platform for the digital economy. This puts NEXTDC in a strong position to benefit from the cloud computing boom which continues to accelerate. It was because of this boom that NEXTDC was able to deliver a 23% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $104.6 million in FY 2020. More of the same is expected in FY 2021, with management guiding to EBITDA of $125 million to $130 million.

More reading

• 3 great ASX blue chip shares I’d buy
• Could these microcap ASX shares be the next A2 Milk (ASX:A2M)? 
• Why I would buy CBA (ASX:CBA) and this beaten down ASX share
• Got $3,000? Buy these exciting ASX growth shares
• Up 79% this year, is the NextDC (ASX:NXT) share price the next Afterpay (ASX:APT)?

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. 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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It’s no secret that interest rates are already at rock-bottom levels. Ever since the Reserve Bank of Australia (RBA) started cutting rates from the last peak of 4.75% we saw back in 2011, savers and retirees have been punished with an avalanche of interest rate cuts to ever lower ‘record lows’. Those were only exacerbated in 2020. The RBA quickly lowered the cash rate in response to the coronavirus pandemic. We had 1.5% back in February (which was the then-record low). But today, we sit at 0.25%, our new record low.

We as Australians have never before seen or invested in this kind of brave new world. An interest rate of 0.25% has translated into term deposits and savings accounts yielding interest rates not much better than inflation.

But according to reporting in the Australian Financial Review (AFR), things could be about to get a whole lot worse for savers.

Down, down for interest rates and the RBA

According to the AFR, Westpac Banking Corp (ASX: WBC) chief economist Bill Evans is now predicting that the RBA will cut the cash rate to yet another record low of 0.1% when it meets on the first Tuesday of next month. Westpac is also predicting that the RBA will continue to target government bond yields at the new 0.1% rate.

Mr Evans explained Westpac’s prediction with the following:

It is the medium term projection that the unemployment rate is still likely to be around 7 per cent by the end of 2022 – the [RBA] Deputy Governor refers to a “slow grind” – and that the shortfall in demand will be a significant break on the recovery… That outlook is unlikely to change in the November forecast revisions, hence no real case can be made to ‘wait’.

So basically Mr Evans is saying that the economy is unlikely to recover to ‘full-employment levels’ by the end of 2022 (using the RBa’s own projections). As such, there’s no reason for the RBA to wait in cutting rates.

What would 0.1% mean for savers and investors?

A cash rate of just 0.1% would mean real (inflation-adjusted) interest rate returns you could expect from cash investments like bonds and savings accounts would likely be negative. Even today, Westpac itself is offering an interest rate of 0.8% per annum on a 2-year term deposit. If inflation managed just 1% over the next 2 years, your money will actually be going backwards, even today.

So if rates do head to 0.1%, these kinds of yields will get even worse. It’s not good news for savers, retirees, or anyone else who likes the certainties that a cash investment can bring.

In contrast, ASX share investors will likely be cheering a move to 0.1%. Lower interest rates tend to support share markets, partly because it reduces the appeal of other asset classes (like cash). This phenomenon has come to be decribed as TINA – There Is No Alternative.

Whatever happens, this discussion is just another reminder that we are living in strange times indeed.

More reading

• CBA, Macquarie face new $167m dirty cash allegations
• Macquarie says ASX value shares will outperform growth stocks from here
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Negative rates may be coming to a big four ASX bank near you
• 3 retirement myths you can’t afford to believe

Motley Fool contributor Sebastian Bowen 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 100 (INDEXASX: XTO) has a number of quality ASX blue chip shares within its ranks.

The largest businesses in the ASX 100 are generally powerhouses of their industries and very hard to dislodge by competitors. Blue chips are seen as strong and worth investing in for the long-term.

However, I don’t think some blue chips are worth investing in like banks when you can just go for an exchange-traded fund (ETF) with more diversification and growth on offer. 

There are some ASX blue chips worth buying for the long-term in my opinion, including these three:

A2 Milk Company Ltd (ASX: A2M)

A2 Milk could be the best ASX blue chip share to buy right now in my opinion. There are few ASX 100 shares that have as much growth potential as A2 Milk. The ones that do have a lot of growth potential are priced very highly.

At the current A2 Milk share price it’s priced at 28x FY22’s estimated earnings.

The company is increasing its reach in the US and Asia with its rising distribution network of stores across those two large markets. Revenue grew by around a third in FY20 and management are expecting another year of strong growth in FY21.

I like that the ASX blue chip share is looking to maintain an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of around 30%. This balances the need to invest for growth whilst ensuring good ongoing profitability.

It still has a long growth runway in China and the US alone. Expanding in Canada, the rest of Asia and Europe could turn A2 Milk into a much bigger business.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

I really like Soul Patts as an ASX share. The fact it has been listed since 1903 shows that the investment house isn’t just another business. It’s built to last and is defensively positioned. It’s invested in many ‘essentials’ of the Australian way of life like telecommunications, swimming schools, agriculture and building products.

Soul Patts invests with a contrarian style and that has helped it outperform the ASX 100 over the long-term.

I think the current investments of TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and Clover Corporation Limited (ASX: CLV) are well positioned to outperform. New investments like regional data centres could be a very good move with its long-term style.

The investment conglomerate is about to report its FY20 result which is likely to show some COVID-19 disruption. But I think the ASX blue chip share could be a solid long-term idea no matter what happens next.  

Magellan Financial Group Ltd (ASX: MFG)

I’ve been impressed with how Magellan has developed the business over the years since the GFC.

Magellan has managed to grow its funds under management (FUM) back to above $100 billion. I think that’s a really good effort by the fund manager considering all of the disruption recently with COVID-19.

I think the news of the investment into Barrenjoey could turn out to be a really smart move if it turns out well. The investment bank seems to have a great initial team and could attract quality clients. Barrenjoey could be a very profitable investment for Magellan.

I’m also looking forward to seeing what the retirement product is. The ASX blue chip has been working on the product for quite a while.

The Magellan share price is currently trading at 20x FY22’s estimated earnings. It also offers a partially franked dividend yield of 3.8%.

Foolish takeaway

I think each of these ASX 100 blue chip shares have the ability to beat the returns of the index over the long-term. I think A2 Milk could be the best performer of the three over the next five years with its international aspirations, though Soul Patts is a nice idea for an ultra-long-term buy.

More reading

• Where to invest $10,000 into ASX shares right now
• Top brokers name 3 ASX shares to buy today
• 4 ASX shares rated as strong buys by brokers
• Could these microcap ASX shares be the next A2 Milk (ASX:A2M)? 
• Why I would buy CBA (ASX:CBA) and this beaten down ASX share

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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 Atomo Diagnostics Ltd (ASX: AT1) share price is up after a deal was announced to distribute its COVID-19 test kit in India. The news has sent the Atomo share price rocketing 10% higher to 38 cents at the time of writing.

What does Atomo do?

Atomo Diagnostics is an Australian medical device company that supplies rapid diagnostics tests (RDTs) and devices to the global diagnostics market. Atomo’s devices are intended to simplify testing procedures and usability for professional and untrained users.

The company has supply agreements in place for tests targeting a range of infectious diseases. These include HIV, COVID-19, and viral vs bacterial differentiation.

New sales agreement

Atomo announced a deal with DIVOC Laboratories, an Indian specialist diagnostic company, to launch its AtomoRapid COVID-19 antibody test in India.

Under the agreement, Atomo will provide 77,000 antibody test kits upon DIVOC obtaining product registration approval for professional use. DIVOC is expected to receive approval in Q2 FY21.

DIVOC will distribute the test kits on a non-exclusive basis to government, corporate, and India’s established home-visit network.

The agreement will be terminated should DIVOC fail to order one million units in the 12 months following regulatory approval. In return, Atomo will receive a fixed transfer price per unit and a percentage of revenues on final product sales.

The non-exclusive sale of its COVID-19 rapid test in India is a further expansion of its agreement with NG Biotech.

Atomo co-founder and managing director John Kelly was pleased with Atomo’s global reach. He said:

We are delighted to be able to offer our antibody rapid test in another large international market. Rapid testing forms a significant pillar of India’s response to managing the COVID-19 pandemic with the numbers of daily rapid tests increasing significantly in recent months.

Our Indian partner is a high-quality provider of diagnostic services, being one of the few laboratories in India that has been able to secure NABL accreditation. We are confident of their ability to roll out the AtomoRapid COVID-19 antibody testing across a number of high value channels in India in the coming months.

Is the Atomo share price good value?

I think Atomo has seized an opportunity that could expand its revenue significantly in the coming months. India has a high ranking for daily COVID-19 infections, hitting more than 90,000 cases in a day this month, and 5.65 million cases in total.

The new agreement is another milestone for the company which listed on the ASX in April this year. At a market capitalisation of $213 million, the Atomo share price has moved little since its Q4 update in June. But that could change in future depending on the success of its agreements.

I would encourgae investors to add Atomo to their watchlist and monitor its ongoing developments.

More reading

• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Where to invest $10,000 into ASX shares right now
• More pain ahead for savers and retirees as Westpac forecasts an October interest rate slash to just 0.1%
• 3 great ASX blue chip shares I’d buy
• ASX investors were buying Tesla (NASDAQ:TSLA) and Snowflake (NYSE:SNOW) shares last week

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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