Author: therawinformant

The Next Science Ltd (ASX: NXS) share price has returned from its trading halt and is dropping lower on Thursday.

In morning trade the medical technology company’s shares are down 3% to $1.28.

Why was the Next Science share price in a trading halt?

The Next Science share price was placed into a trading halt on Wednesday after announcing the launch of a $15 million equity raising.

This morning the company revealed that it has received firm commitments for its fully underwritten placement of $8 million to institutional and sophisticated investors.

In fact, the placement was oversubscribed, with strong support from existing and new eligible investors.

In addition to this, the company has received a firm commitment for an additional placement of $2 million to its existing major shareholder, Mr Lang Walker. Though, the completion of this placement is subject to shareholder approval.

These funds will be raised at $1.20 per share, which represents a 9.1% discount to its last close price.

Next Science will now push ahead with its share purchase plan, which aims to raise a further $5 million from retail investors. This will be undertaken at the lower of the placement price or a 2% discount to its five-day volume weighted average price on the closing date.

Why is Next Science raising funds?

The company is raising funds to provide it with working capital to primarily support the commercial launch of its new XPerience Surgical Rinse in the US market in the first half of 2021. This is subject to clearance by the U.S. Food and Drug Administration.

The XPerience Surgical Rinse is a sterile solution in a 500mL Polypropylene bag. The solution is used to irrigate the surgical site as a last wash replacing some of the saline rinses. It remains active for upwards of five hours and is 10 million times more effective at removing MRSA than current options.

Management believes there is a huge unmet need for the product. It notes that there are 110 million surgeries globally each year, with 48 million in the United States and 2.2 million in Australia.

Next Science’s Managing Director, Judith Mitchell, commented: “We are delighted with the strong level of support for the placement and would like to thank our existing shareholders for their continued support and we welcome new shareholders to our register.”

“We are also pleased to provide eligible shareholders with the opportunity to participate in the capital raising via the SPP. With the proceeds of this raise, we will be well placed to capitalise on the significant market opportunity offered by our XPerience Surgical Rinse and the other applications of our Xbio technology,” she concluded.

More reading

• Why the Next Science (ASX:NXS) share price is on watch

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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The Laybuy Holdings Ltd (ASX: LBY) share price is storming higher on Thursday after the release of an update.

At the time of writing, the buy now pay later provider’s shares are up 5.5% to $1.87.

What did Laybuy announce?

Ahead of its appearance at the Bell Potter Emerging Leaders Conference, Laybuy released an update on its revenue, gross merchant value (GMV), and net transaction margin (NTM) for the months of July and August.

According to the release, the Afterpay Ltd (ASX: APT) rival has continued its strong form over the last couple of months.

Laybuy’s GMV growth in July and August was strong and at the end of the period had reached NZ$520 million on an annualised basis. This was a 161% increase on the prior corresponding period.

This was driven by solid growth in both customer and merchant numbers. At the end of August, Laybuy had 542,000 active customers on its platform. This was up 69,000 or 14.6% since the end of June.

It was a similar story for its merchant numbers, which reached 6,180 by 31 August. This was an increase of 508 or 9% over the two months.

Pleasingly, Laybuy also reported improvements in its bad debts.

The buy now pay later provider’s defaults as a percentage of GMV reduced from 3.4% (for the 3 months to 30 June) down to 3.1% (for the 5 months to 31 August). This led to the company’s NTM continuing its upward trajectory. It recorded a NTM of 1.5% for July and August, up from 0% in FY 2020.

What else did the company reveal?

In addition to its financial metrics, the company provided an update on its merchant pipeline.

It advised: “The pipeline of retailers to be onboarded is significant and continues to develop with a mixture of large “highly recognisable” retail brands and a broad range of SME merchants.”

Shareholders will no doubt be hopeful that this underpins further GMV and customer growth in the coming months.

More reading

• Why AGL Energy (ASX:AGL) and these ASX shares just hit new lows
• Why the Laybuy (ASX:LBY) share price is tanking today
• Laybuy share price soars 47% above IPO on first day of ASX trading
• Another buy now, pay later company is listing on Monday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Expectations were high today going into Snowflake‘s (NYSE: SNOW) initial public offering (IPO). Management had twice increased the price of the offering in the week leading up to its debut.

After initially pricing the stock in a range of $75 to $85 early last week, it was increased to $100 to $110 on Monday in the face of overwhelming demand. Late Tuesday, the price was boosted again to $120, and even that wasn’t enough.

The stock began trading at 12.38 pm EDT today, opening at $245, immediately soaring 104%. It traded as high as $319 in the minutes after opening, before the overwhelming demand and massive volatility caused trading to be temporarily halted. At the close, the shares were up 112.9% to $255.

With 28 million shares being offered, and the underwriters’ option to purchase an additional 4.2 million shares in the event of significant demand, the company raised as much as $3.864 billion, making it the largest software IPO ever.

That’s not all. With more than 277 million shares outstanding, Snowflake is now valued at about $70 billion.

In an unexpected move, Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) agreed to make a $250 million investment in the company using a concurrent private placement in conjunction with its IPO. The move was surprising considering the legendary investor’s long track record of avoiding IPOs.

Additionally, Berkshire agreed to purchase another 4,042,043 shares from former Snowflake CEO Bob Muglia in a private, secondary transaction. In all, Buffett spent more than $735 million to acquire 6,125,376 shares of Snowflake today. Not a bad day for the Oracle of Omaha, however, considering the shares are now worth more than $1.5 billion.

salesforce.com (NYSE: CRM) also invested $250 million in Snowflake at its IPO price, more than doubling its money by the end of the day.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Warren Buffett is investing in this hot tech IPO. Should you?
• Warren Buffett just invested billions in Japan – here’s why it matters
• Why Alphabet should split its stock
• 2 Warren Buffett quotes you need to read this week
• Why Warren Buffett regrets buying Berkshire Hathaway

Danny Vena 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 Berkshire Hathaway (B shares) and Salesforce.com and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN) have been streaming video before digital shows and movies were cool. There’s now a plethora of online platforms available for content-hungry consumers, but a few years ago it was Amazon’s Prime Video turning heads by winning more trophies than Netflix at the 2015 Emmy Awards presentation.

Amazon is no longer a major threat to Netflix. Amazon does crank out a cult favorite series from time to time, but it’s not the hit factory Netflix has become over the years. However, pitting Netflix against Amazon as investments based solely on where each one stands in the streaming video food chain isn’t fair to the world’s largest online retailer. Amazon is naturally a much larger enterprise – one in which streaming video barely moves the needle. Let’s size up to the middle children of the FAANG stocks family to see which one is the better buy.

Center of attention

Netflix is the top dog in premium streaming video. It isn’t even a close competition, as it was commanding the couches of nearly 193 million paid streaming accounts worldwide by the end of June. When your friends are buzzing about a new show there’s a good chance it’s on Netflix.

Amazon is the much larger overall company. It has delivered $322 billion in revenue over the past four quarters, towering well above Netflix with its nearly $23 billion in trailing top-line results. Amazon is the country’s second-most valuable public company by market cap. We mostly know the company Jeff Bezos built for its online storefront, but between its AWS cloud computing platform and its Whole Foods Market grocery store chain, Amazon is also a force in new tech and old trades. 

Neither stock is cheap by conventional valuation measuring sticks, but they are undisputed growth darlings that have earned their market premiums. I usually wait until the end of these columns to crown the winner, but I’m going to tap Amazon as the better buy here early – and wrap up by explaining my thought process. 

Let’s start with growth. The assumption may be that the more nimble Netflix is growing faster than Amazon, but that’s not the case these days. Revenue climbed 21% higher in Netflix’s latest quarter, but net sales at Amazon during the same three-month period clocked in 40% higher. A popular narrative is that Netflix is the stock to own in the new normal, but it’s actually Amazon that has been able to accelerate its business in the wake of the pandemic. 

Now, let’s talk about moats. Netflix has a stronger moat than naysayers think. It should have nearly 200 million paying customers by the end of this year, and that’s the kind of scale that makes content cheaper to acquire on a per-subscriber basis. It’s also where content creators want to pitch their shows and movies. There are a lot of streaming video services these days, but Netflix continues to dominate.

Amazon also has a great moat. With more than 150 million Amazon Prime members worldwide, it’s the first place people go when they need to buy something online. Brick-and-mortar chains may be beefing up their e-commerce initiatives, but Amazon’s only widening the gap with every passing quarter. 

Both companies are built to thrive in the current climate, and I expect both to beat the market. However, despite owning Netflix personally I have to give the nod to Amazon here. It’s the least likely of the two companies to be disrupted. Amazon also has the more compelling valuation despite offering similar long-term growth potential. Revenue is expected to slow to the high teens in 2021 for both dot-com darlings. They should both be winners, but Amazon is the better buy right now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Apple, Amazon, Microsoft are bigger than EVERY unicorn combined
• Tesla (NASDAQ:TSLA) and Nikola (NASDAQ:NKLA) among most traded US shares last week
• 3 exotic ASX tech ETFs you might want to add to your portfolio today

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rick Munarriz owns shares of Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Netflix and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon and Netflix. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Netwealth Group Ltd (ASX: NWL) share price will be on watch this morning after the investment platform provider announced a strategic investment.

What did Netwealth announce?

Netwealth announced a strategic investment and partnership with specialist fintech data solutions provider, Xeppo.

The company has purchased an initial 25% equity stake in Xeppo, with the option to increase its stake to 50% in the future. While no details have been provided in respect to how much Netwealth is paying for the stake, it advised that it is not material.

According to the release, Xeppo specialises in connecting, matching, and reconciling data from a wide range of sources to support the wealth management, accounting, and mortgage industries. Its technology allows users to better manage client relationships, monitor compliance, and drive new business and revenue opportunities.

Why is Netwealth investing in Xeppo?

Netwealth’s joint managing director, Matt Heine, explained the reasons behind the company’s investment in Xeppo.

He said: “A key element of Netwealth’s strategy is to expand an enrich the data which underpins our current and future technology and which sits at the core of our ‘whole of wealth’ and client portal offering.”

“From our recent research, we found that advice firms on average use between 12 and 15 technology systems in their business, all of which have different data models, significant data discrepancies and often overlap from a features perspective. For example, the Netwealth platform captures customer details as does an advice firm’s CRM, planning software, fact find and client portal.”

The managing director believes that its investment in Xeppo can help solve this problem.

He concluded: “Working closely with Xeppo can solve this challenge and enable systems to better connect and integrate with each other driving business efficiency and great client experiences.”

Finally, in conjunction with this investment, the company advised that it will be expanding its current integrations to support two-way data feeds between accounting and financial planning systems. This includes those offered by Bravura Solutions Ltd (ASX: BVS) and Xero Limited (ASX: XRO).

More reading

• ASX 200 rises 0.8%, Treasury Wine Estate shares turn sour
• Netwealth share price on watch as net profit surges 22%

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 Xero. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia owns shares of Netwealth. 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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Are you looking to buy some blue chip ASX shares for your portfolio this week?

If you are, then I think you should look at the ones listed below. I believe all three have the potential to generate solid returns for investors over the next decade.

Here’s why I would buy these ASX blue chip shares today:

Cochlear Limited (ASX: COH)

The first blue chip ASX share to consider buying is Cochlear. It is the global leader in implantable hearing devices. I believe it has very strong growth potential over the 2020s thanks to its exposure to the ageing populations tailwind. I expect this tailwind to lead to solid demand for its hearing products over the next decade and underpin strong earnings growth. This could make the Cochlear share price a long term market beater.

CSL Limited (ASX: CSL)

Another quality blue chip ASX share to consider buying is CSL. It is the biotherapeutics giant behind the world class CSL Behring and Seqirus businesses. Over the last decade CSL has grown its earnings at a consistently solid rate thanks to the strong demand for its therapies. The good news is that I expect more of the same over the next 10 years. Especially given the expected surge in demand for influenza vaccines in the coming years because of the pandemic and the increasing demand for immunoglobulins. Supporting its growth will be its research and development pipeline. This has a number of therapies under development that have the potential to generate billions of dollars in sales.

Goodman Group (ASX: GMG)

A final blue chip ASX share I would buy for the long term is Goodman Group. I think the integrated commercial and industrial property company is well placed for growth thanks to its high quality portfolio of assets. This portfolio comprises strategically located modern, high quality properties in key gateway cities around the world. Management notes that these properties have shortened the distance between businesses and consumers and put its customers ahead of the market. A testament to the quality of these assets are its tenants. Goodman counts the likes of Amazon, DHL, and Walmart among its tenants.

More reading

• 3 retirement myths you can’t afford to believe
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• 4 of the best ASX 200 shares to buy in September

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 Cochlear Ltd. and CSL 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Investors interested in gaining access to the stock and bond markets currently enjoy a wide variety of possibilities as the universe of exchange-traded funds (ETFs) has grown. For the most part, this growth in low-cost, easy-to-access ETFs has been a boon for investors. However, while gaining access to niche sectors of the market through these products has never been easier, the risk to investors getting burned in some of these funds has increased.

As the popularity of exchange-traded funds has grown, providers have begun to create more intricate securities. In general, ordinary investors should avoid these less-understood funds. Some of these newer, more complex products come with higher risks and are not appropriate for the average investment portfolio.

Understanding the difference between standard and complex funds

Most investors have a strong grasp on how exchange-traded funds operate. In a standard ETF, the value of the security will correlate exactly with the value of an underlying basket of stocks or bonds. The SPDR S&P 500 is a good example of a standard fund.

This is not necessarily the case with more intricate securities. These more complex products go beyond simply imitating an underlying basket of stocks and bonds. An example is the Proshares UltraPro Short S&P 500, which utilizes debt, also known as leverage, in their investments to augment their profits (or losses). The added complexity is what makes an investment like this potentially dangerous.

Another example of this exotic ETF product is the United States Oil Fund (NYSEMKT: USO), which attempts to track the performance of a global oil price index. In this case, the security utilizes futures contracts in order to achieve the performance of the underlying market. However, the value of futures contracts can be affected by many factors that have no correlation to the oil market, such as interest rate levels and time until expiration. It is quite possible that the security’s value could be negatively affected by factors that have nothing to do with movements in the oil market.

In fact, many investors lost money in the USO back in April as front month futures contracts went to zero during upheaval in the oil markets. This was a situation that the oil market (and its investors) had never experienced before.

How investing in these complex securities can go wrong

It is difficult, if not impossible, for ordinary investors to fully understand the underlying risks and how these instruments are going to perform under different market conditions. This is particularly the case in extremely volatile markets like the COVID-19 financial crisis.

An example of this involves long/short funds, such as the ProShares Long Online/Short Stores (NYSEMKT: CLIX). Long/short funds are patterned after an institutional hedge fund strategy that aims to buy stocks that they believe have a strong chance of increasing in value and sell stocks short that they believe should lose in value.

In theory, investors can expect this strategy to do well during periods of volatility, like we just experienced in the COVID-19 crisis. Todd Rosenbluth, head of ETF and mutual-fund research at CFRA said, “This seemed like it was a great environment for long-short strategies as we saw U.S. equities fall into a bear market and subsequently recover much of the losses.” However, that did not happen. As Mr. Rosenbluth points out, “The majority of funds in the category lost money, some substantially.”

Understanding the underlying risks is challenging

Many of these products have been created to track the performance of markets which historically have been the domain of expert institutional investment professionals. These professionals have extensive research staffs and fully understand the risks that they are undertaking. Unfortunately, this is not the case for most ordinary investors.

Global oil markets and long/short strategies are just two examples of this. Case in point, many professional oil traders warned investors to avoid trading oil funds during the market upheaval in April. Those that did not heed this warning lost money.

Exchange traded funds are an amazing innovation that help investors gain quick and inexpensive access to broad market diversification. However, it can be extremely difficult for ordinary investors to fully understand the risks of the more complex securities. If investors do not fully understand the risks and rewards of a particular strategy, it is best not to invest at all.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Better buy: Amazon vs Netflix
• Netwealth share price on watch after strategic investment in Xeppo
• Bolster your portfolio with these outstanding ASX blue chip shares
• 3 ASX tech shares that are still in the buy zone
• Redbubble (ASX:RBL) and this ASX share have more than doubled in 2020

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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The technology sector has gone gangbusters this year, so many fear most of those success stories are now overvalued.

But there are still some bargain ASX tech shares to be snapped up, according to one fund manager.

Prime Value portfolio manager Richard Ivers told The Motley Fool that he’s currently high on 3 particular stocks.

His Prime Value Emerging Opportunities Fund already owns all 3, and he’s excited to see how they will fare.

City Chic Collective Ltd (ASX: CCX)

City Chic is a retailer that sells plus-size women’s clothing.

The chain used to be part of Specialty Fashion Group, which also had brands like Millers and Katies that were bleeding cash.

SFG sold off the loss-makers to Noni B two years ago, and kept City Chic for itself.

And now the company is flying with 70% of sales coming online, Ivers said.

“It’s got a really great management team. A guy called Phil Ryan is the CEO, and he’s been there for years,” he told The Motley Fool.

“Now he’s got the chains off him and he can just run this business properly.”

Last year, City Chic acquired a US competitor called Avenue. This year, it’s in the process of buying out another US rival, Catherines.

And Ivers reckons more deals will be coming.

“They’ve got a balance sheet with about $100 million in cash. And there’s other opportunities to acquire online bits of other distressed assets,” he said.

“Online is growing faster than bricks-and-mortar [sales]… and it’s also higher margin for them.”

News Corporation (ASX: NWS)

While most people would not think of Rupert Murdoch’s media business as a tech company, Ivers disagrees.

“A lot of the focus is on ‘old world’ assets – the Foxtels and the newspaper, which are low quality assets… No one would debate that.

“But where the real value is in their holding of REA Group Limited (ASX: REA) and cash.”

Ivers calculates that News’ stake in the real estate classifieds website plus its cash represents about $19.30 of value per share.

And News Corp is currently trading at $20.69.

According to Ivers, the other “exciting” part of News’ business is the publishing company Dow Jones. 

That subsidiary includes The Wall Street Journal, a publication that has a paywall for a wealthy readership receptive to paying for financial news.

“Historically [Dow Jones] has been reported as part of newspapers. So analysts have struggled to understand what sort of [price-to-earnings] multiples you should put that on,” said Ivers.

“But for the first time, in their results just gone, they’ve actually split out Dow Jones.”

And those numbers showed a healthy subsidiary with earnings increasing 13% in the COVID-affected fourth quarter. 

Taking its rival New York Times Co (NYSE: NYT)’s 25-times multiple, Ivers said Dow Jones alone could be worth US$6 billion ($8.2 billion).

Redbubble Ltd (ASX: RBL)

Redbubble is an online marketplace for artists to sell printed forms of their work. 

The site acts as a middle man between artists and printers, who put the art on coffee mugs, clothing, manchester and the like.

Despite its shares rising more than 9-fold since March, Ivers still sees tremendous upside.

“They did $350 million of revenue last year… Of that $350 million, about 30% of any dollar of growth falls through to EBITDA.”

That means if Redbubble experiences 50% growth, that’s about $50 million of earnings. Ivers said that would take the company to about a 15-times price-to-earnings multiple.

This compares favourably to other businesses like Temple & Webster Group Ltd (ASX: TPW) and Kogan.com Ltd (ASX: KGN), which are selling at far higher multiples.

“What’s interesting about Redbubble is that it’s a global business. Only 5% of its revenues are in Australia. So the opportunity set is much bigger.”

More reading

• Redbubble (ASX:RBL) and this ASX share have more than doubled in 2020
• 2 of the best ASX tech shares to buy and hold until 2025
• 5 quality ASX shares to buy in September
• 5 things to watch on the ASX 200 on Tuesday
• Where I’d invest $20,000 into ASX shares right now

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd, REA Group Limited, 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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Although the All Ordinaries Index (ASX: XAO) is down 10% since the start of the year, not all shares on the index have performed as poorly.

In fact, a few shares on the All Ords have even managed to double in value this year despite the pandemic.

Two ASX shares that have achieved this are listed below. Here’s why they are on fire in 2020:

Redbubble Ltd (ASX: RBL)

The Redbubble share price is up an incredible 288% since the start of 2020. Investors have been fighting to buy the ecommerce company’s shares after its sales exploded during the second half of FY 2020 thanks to the shift to online shopping during the pandemic.

For the 12 months ended 30 June 2020, Redbubble delivered a 43% increase in full year revenue to $368 million and a 141% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $15.3 million. Interestingly, one of the biggest drivers of its sales growth were fashionable facemasks. Pleasingly, Redbubble’s strong form has continued early in FY 2021, with sales more than doubling during the month of July. In light of this, it looks well-placed to deliver another bumper result for the 12 months ahead.

Zoono Group Ltd (ASX: ZNO)

The Zoono share price is up a massive 217% in 2020. The catalyst for this was the biotech company’s exceptionally strong performance during the pandemic thanks to increased demand for surface and hand sanitisers. Demand was so strong that it reported revenue of NZ$38.3 million in FY 2020, up from just NZ$1.8 million a year earlier.

Things were equally impressive for its earnings, which lifted 944.5% year on year to NZ$20.6 million. The big question will be whether this level of sales is sustainable when the crisis eases or just a one-time sugar hit for Zoono. I would suggest investors keep their powder dry until there is more certainty with its future sales.

More reading

• 3 ASX tech shares that are still in the buy zone
• 2 of the best ASX tech shares to buy and hold until 2025
• 3 ASX shares for beginners to buy
• Is the Redbubble share price about to burst?
• Why the Afterpay share price crashed 9% lower today

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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The Qantas Airways Limited (ASX: QAN) share price has had a tough year. Shares in the Aussie airline are down 43.6% to $4.04 per share as of yesterday’s close.

Clearly, the travel industry is one of the hardest hit by the coronavirus pandemic and subsequent restrictions. I’d consider travel alongside the likes of entertainment, energy and hospitality in terms of those doing it tough.

So, the Qantas share price is clearly under pressure. But despite some short-term challenges, is now the time to pickup Qantas shares for a bargain?

Why the Qantas share price could be cheap

For one thing, I think there is implicit government support for the Aussie airline. I can’t see the Federal Government letting Qantas fold given its proud history and the effective duopoly in the Aussie travel market.

Of course, everyone thought much the same with Ansett. But times have changed and the impacts of COVID-19 won’t last forever. I think there is strong implicit support to get Qantas through to the other side of this.

That all combines to help the Qantas share price and the risk-return characteristics. On top of that, I think the company is proactively managing its balance sheet with careful capital management.

That includes the airline parking much of its fleet in the Mojave Desert and looking to move its headquarters out of Sydney. 

Cost cutting is key right now given the limited cash coming in the door. The group announced a $1.9 billion equity raising in June to help strengthen its balance sheet and accelerate its recovery from the pandemic.

All of this tells me that the Qantas share price could have a lot of upside with carefully managed downside. No one can predict the future, but I think there is a clear strategy to manage the airline out of this crisis over a 3-year span.

Foolish takeway

It’s hard to look at the Qantas share price as a bargain based on short-term returns. However, I think the airline can return to its former glory as a leading carrier and strong ASX dividend share in the medium to long-term.

It’s certainly a punt in the current climate, and perhaps I’d wait until the economic picture is more clear in early 2021, but Qantas could be a bargain for $4.04 per share.

More reading

• Is now the time to be buying ASX travel shares? 
• Qantas (ASX:QAN) considers leaving Sydney
• Why the Qantas (ASX:QAN) share price is sinking lower today
• Half of ASX 200 stocks at risk as China-Australia relations hit new low
• How to build a recession-beating ASX share portfolio

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

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