Author: therawinformant

The Megaport Ltd (ASX: MP1) share price is pushing higher on Wednesday after the release of its FY 2020 results.

At the time of writing the network as a service provider’s shares are up 1.5% to $14.82.

How did Megaport perform in FY 2020?

For the 12 months ended 30 June 2020, Megaport’s strong growth continued with a 66% increase in revenue to $58 million.

On a recurring basis, at the end of the period the company’s monthly recurring revenue (MRR) had reached $5.7 million. This was an increase of 57% year on year and equates to $68.4 million on an annualised basis.

Given that Megaport is investing heavily in its future growth, it continues to operate at a loss. It recorded a net loss of $47.7 million for FY 2020. Despite this, it has a very strong balance sheet with a cash position of $166.9 million.

What were the drivers of Megaport’s growth?

Megaport drove consistent increases in all metrics across all regions in FY 2020.

This includes its footprint in data centres globally, which grew 22% to 366 installed locations and 27% to 669 enabled locations.

Strong demand thanks to the shift to the cloud and its expanding footprint led to Megaport’s customer base increasing by 352 or 24% to 1,842. Management advised that customers grew across many verticals, but Financial Services, Manufacturing, Healthcare, and Digital Media continue to perform exceptionally well. This is a result of increased demand for cloud connectivity and data requirements within vertical-specific digital supply chains.

Also growing strongly were its Ports and Megaport Cloud Routers (MCRs), which were up 42% and 75%, respectively. This led to Total Services increasing by 5,151 or 45% to 16,712. This includes a 53% increase in Virtual Cross Connections to 9,248.

Management commentary.

Megaport’s Chief Executive Officer, Vincent English, said, “The Company has reached $5.7 million in monthly recurring revenue, a 57% increase from last year. This growth is underpinned by our North American business contributing $26.3 million this fiscal year, an increase of 94% from FY19.”

“Our continued global expansion to key locations in Europe, Asia Pacific, and North America has enabled Megaport to reach 23 countries, and 669 enabled locations including 366 installed data centres in 128 cities globally. Our expansion into Japan with the enablement of Tokyo and Osaka has unlocked new opportunities as Megaport is the first global neutral interconnection fabric in the market,” he added.

Outlook.

Mr English believes that its performance in FY 2020 has put the company on a path to become EBITDA breakeven in the near future.

He commented: “Megaport’s performance in Fiscal Year 2020 has positioned the company on a path to profitability. We are driving our business to achieve EBITDA breakeven on an exit run rate basis in Fiscal Year 2021. With the investments we’ve made in our people, technology, and network footprint, Megaport is well positioned to achieve our revenue and profitability objectives.”

A key driver of this looks like to be in recently announced Megaport Virtual Edge offering.

“The development of Megaport Virtual Edge and our collaboration with Cisco to enable SD-WAN capabilities will unlock a new level of value for our customers and enable more businesses to take advantage of Megaport’s industry-first elastic interconnection platform,” he explained.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia has recommended 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 Corporate Travel Management Ltd (ASX: CTD) share price is on watch this morning after the company revealed an $8.2 million loss.

The travel agent saw revenues collapse as global travel markets shut down earlier this year thanks to the coronavirus pandemic. Nonetheless, Corporate Travel says it is positioned for recovery and can be profitable on a domestic-only model. 

What does the company do? 

Corporate Travel is a travel solutions provider with a focus on the corporate market. It recorded EBITDA of $150.1 million in FY19 which generated a statutory profit of $86.2 million. But the sudden shutdown in travel markets this year saw volumes dry up in March.

Corporate Travel responded rapidly with redundancies and other cost reductions to stem losses. One of the few not to raise capital during the COVID-19 downturn, the travel company did, however, delay its interim dividend in March. 

How did Corporate Travel perform in FY20? 

Corporate Travel  reported underlying EBITDA of $65 million for FY20. This gave underlying net profit after taxes of $32 million but a statutory loss of $8.2 million.

The less-than-stellar results are expected given the turmoil in global travel markets. Border closures have dramatically reduced travel spend during the second half, with client activity reaching its lowest point in April 2020.

Positively, Corporate Travel reported a better than expected Q4 performance. Revenue averaged $11.5 million a month compared to $2–$5 million a month in May. This was due to its high level of exposure to clients in essential services industries who have been permitted to travel despite restrictions.

The company has established a solid platform for growth with client retention above 97% and new business wins in all regions. 

With a strong liquidity position and no debt, Corporate Travel is positioning itself for recovery. It has $60 million cash net of client cash and creditors and no further significant one-off costs expected in FY21. The deferred interim dividend has been cancelled in order to preserve funds. 

What’s next for Corporate Travel? 

Corporate Travel is seeing a significant contribution from essential services travel, which provides recurring revenues.

With a focus predominantly on domestic travel, managing director Jamie Pherous says the business model “positions the business for a rapid return to profitability with only a marginal increase in domestic travel activity from current levels”.

Given ongoing uncertainty around travel restrictions, the company has declined to provide FY21 guidance, but says an extended period with no international travel is likely to create opportunities for industry consolidation.

Corporate Travel will consider potential acquisitions that align with its strategy and says it is well-positioned to pursue these opportunities. The Corporate Travel share price was trading at $12.14 at yesterday’s close.

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

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The stars are aligning for the OZ Minerals Limited (ASX: OZL) share price. The miner posted a big rise in earnings this morning and the outlook for its key commodities is shining bright for 2021.

The news sent the OZL share price jumping 2.1% to a nine-year high of $14.39 in early trade as the S&P/ASX 200 Index (Index:^AXJO) gained 0.1%.

The copper and gold miner posted an 82% surge in first half net profit to $79.8 million on the back of a 37% uplift in revenue to $575.7 million.

The good result allowed OZ Minerals to keep its interim dividend steady at 8 cents a share. Some may find somewhat miserly given the big rise in profit and operating cash flow to $150.7 million ($49.5 million higher than 1H 2019).

OZ Minerals rockin’ profit results

Good thing OZ Minerals has never been regarded as an income stock with its yield consistently coming in at or below CPI.

The reason to buy OZ Minerals is because its very well placed to benefit from copper and gold. The precious metal in particular is a big reason why the miner delivered a big uplift in profits.

There are reasons to be a copper bull too, especially as Rio Tinto Limited (ASX: RIO) downgraded its copper production output by 15%, according to the Australian Financial Review.

What’s more, the world’s largest copper mine, Escondida in Chile that’s owned by BHP Group Ltd (ASX: BHP) and Rio Tinto, is also likely to produce less than expected over the next two years.

Multiple tailwinds for OZ Minerals share price

In contrast, OZ Minerals isn’t experiencing any production difficulties. If anything, its key mines are humming along very nicely and management plans to expand production.

“The ramp-up at Carrapateena during the half year has exceeded expectations with a strong performance from the underground materials handling system, production system and plant allowing an increase to production guidance,” said its chief executive Andrew Cole.

“The Prominent Hill underground is performing well, and we have seen annualised ore mining rates of ~4.5Mtpa achieved through July.”

Advancing while rivals retreat

It’s a case of making hay while commodity prices are rising. Management is recommitting $45 million in growth capex funding for Carrapateena, which is on track to achieve 4.25Mtpa run rates by year-end.

It’s also putting in up to $9 million in new growth funding for Prominent Hill to accelerate underground decline development to begin mining the western side of the Malu orebody.

A better value buy to OZL share price?

Experts believe OZ Minerals is the ASX miner with the best leverage to copper, and the underperformance of the Sandfire Resources Ltd (ASX: SFR) share price says it all.

However, one wonders if the pricing gap between the two will start to close given the big rally in the OZL share price. The stock surged by 54% over the past year when the SFR share price tumbled 12%.

Bargain hunters may find the ugly duckling more enticing if the copper price lives up to bullish expectations.

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Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, OZ Minerals Limited, Rio Tinto Ltd and Sandfire Resources Ltd. Connect with me on Twitter @brenlau.

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

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The size of pay cheques for ASX 200 chief executive officers is often a contentious debate.

Does anyone deserve millions of dollars per year when the Australian Prime Minister doesn’t even take home seven figures?

Or is it fair enough that people with business acumen and cerebral aptitude rake in as much money each year as celebrities and sporting heroes?

Regardless of your opinion, it can’t be denied that the leaders of our biggest public companies have a huge influence on the wealth of millions of Australians.

The Motley Fool readers likely own some shares directly, but even those who don’t, have some skin in the game through their superannuation accounts.

With one big mistake or one genius move, ASX 200 CEOs can make or break our portfolios, let alone the employment of thousands of Australians.

CEO pay inflation is slowing

The Australian Council of Superannuation Investors (ACSI) this month released its analysis regarding the remuneration of the S&P/ASX 200 (ASX: XJO) CEOs.

ACSI Chief Executive, Louise Davidson, said that scrutiny from her organisation and other investors had slowed the inflation of executive pay packets. She commented, “More boards are using sensible discretion to rein in outcomes for senior executives – demonstrated by the fact that 25 CEOs had their bonuses zeroed out where performance was not adequate, compared with only seven a year earlier.”

The upheaval this year created by the COVID-19 pandemic will challenge management teams right across the ASX 200.

“…people at every level of society have been wrestling with unprecedented changes to their work – for those who have kept their jobs – financial pain, isolation and family dislocations,” said Davidson.

She went on to say, “Against this backdrop, boards of ASX 200 companies will need to be mindful this year of how remuneration outcomes will be perceived externally, given the widespread impact of the pandemic on investors, staff, customers, governments and other key stakeholders.”

The 20 highest paid ASX 200 CEOs

ACSI compiled a league table of the highest paid ASX 200 CEOs by using a ‘realised pay’ metric. That’s the value of cash and equities actually received, rather than the accounting numbers shown in annual reports.

• IDP Education Ltd (ASX: IEL) chief, Andrew Barkla, set a new record for the highest pay in the history of the report, taking home $37.76 million.
• CSL Limited (ASX: CSL) boss, Paul Perreault, pocketed $30.5 million to rank second, with a significant gap to the third highest pay packet.
• Qantas Airways Limited (ASX: QAN) chief, Alan Joyce, who has featured prominently in the public consciousness during the Covid-19 pandemic, came in 8th with a pay packet of $12.2 million.
• Macquarie Group Ltd (ASX: MQG) chief, Shemara Wikramanayake, was not eligible for the table as she took over the position from Nicholas Moore in the middle of the company’s 2019 financial year.

On that note, let’s take a look at the top 20 chief executive ‘realised’ pay packets for their company’s 2019 financial year:

Rank	Chief executive	Company	Realised pay
1	Andrew Barkla	IDP Education Ltd (ASX: IEL)	$37,761,322
2	Paul Perreault	CSL Limited (ASX: CSL)	$30,526,634
3	Philippe Wolgen	Clinuvel Pharmaceuticals Limited (ASX: CUV)	$20,624,450
4	Michael Clarke	Treasury Wine Estates Ltd (ASX: TWE)	$19,853,177
5	John Guscic	Webjet Limited (ASX: WEB)	$16,498,937
6	Greg Goodman	Goodman Group (ASX: GMG)	$14,967,391
7	Robert Kelly	Steadfast Group Ltd (ASX: SDF)	$14,419,677
8	Alan Joyce	Qantas Airways Limited (ASX: QAN)	$12,217,400
9	Colin Goldschmidt	Sonic Healthcare Limited (ASX: SHL)	$11,912,450
10	JS Jacques	Rio Tinto Limited (ASX: RIO)	$10,323,975
11	Peter Coleman	Woodside Petroleum Limited (ASX: WPL)	$9,665,221
12	Mark Vassella	BlueScope Steel Limited (ASX: BSL)	$9.465,692
13	Mark McInnes	Premier Investments Limited (ASX: PMV)	$9,155,382
14	Bill Beament	Northern Star Resources Ltd (ASX: NST)	$8,858,086
15	Julian Pemberton	NRW Holdings Limited (ASX: NWH)	$8,815,450
16	Nigel Garrard	Orora Ltd (ASX: ORA)	$8,595,076
17	Maurice James	Qube Holdings Ltd (ASX: QUB)	$7,735,816
18	Paul Flynn	Whitehaven Coal Ltd (ASX: WHC)	$7,619,735
19	Scott Charlton	Transurban Group (ASX: TCL)	$7,609,185
20	Peter Allen	Scentre Group (ASX: SCG)	$7,452,446

Data Source: Australian Council of Superannuation Investors, Table created by Author

Foolish takeaway

As a shareholder, how you interpret these salaries is up to you.

Do you think these particular chief executives have provided value in return for the level of remuneration received?

More reading

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Tony Yoo owns shares of CSL Ltd. and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Premier Investments Limited, Treasury Wine Estates Limited, and Webjet Ltd. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Scentre Group, Sonic Healthcare Limited, and Steadfast 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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The Vocus Group Ltd (ASX: VOC) share price is on watch this morning after the company released its FY 2020 results. Vocus recorded total recurring revenues of $1752.6 million. This was a slight 1% decline on the prior year .

Sharp drop in retail revenues

Overall revenues in Vocus’ retail division fell significantly by 9% over the prior year to $748 million. However, the fibre and network solutions provider did see an improvement in the decline of its consumer revenues by -3% for the full year. Meanwhile, consumer revenues were stable in the second half of the year.

Vocus continues to suffer from the impact of the migration to legacy fixed line services. This is particularly the case within in its small business division. Revenues within the division declined sharply by 27% during FY 2020.

Overheads within the retail division declined by 14% due to a disciplined cost control strategy. The overall retail business saw a strong fall in underlying EBITDA of 22% to $80.1 million. This was mainly driven a decline in EBITDA in its SMB division as well as the further migration to the NBN.

Strong growth in network services 

Vocus’s  network services division was the standout performer for the Vocus share price during FY 2020.

The division recorded EBITDA growth of 10% for the full year. This was a very strong 10% growth on the previous year. Meanwhile, recurring revenue for the division increased by 6% to $626.3 million.

Revenue from its high-margin data networks division grew 3% during FY 2020. National Broadband Network (NBN) revenue growth was particularly impressive. It was up by a massive 42% during the 12-month period.

Vocus also now has achieved a market leading position in the enterprise ethernet and business satellite product segment. Growth in Vocus’ wholesale and international division also was a strong contributor to network service growth. Further sales momentum with respect to capacity on Australia Singapore Cable was a significant reason for this.

The New Zealand division was another strong performer for the Vocus share price. Recurring revenue grew by 6% to $378.3 million.

Group managing director and CEO Kevin Russell said the FY20 results showed the company was firmly on-track in its three-year turnaround, meeting all aspects of financial guidance that was first provided in July 2019. He said:

“Vocus Network Services (VNS) built momentum in FY20, winning market share in our core markets with growing underlying recurring revenue and an improving customer profile. We also launched our new Vocus brand and saw a demonstrable improvement in brand recognition and consideration.”

Market outlook for the Vocus share price

Vocus anticipates a stronger year in FY 2021, with its network services division expected to grow by 5% during this period. Underlying EBITDA growth is expected to be in the range 8%  to 12%.

For the entire Vocus Group, underlying EBITDA is expected to be between $382 million and $397 million. While the capex range for Vocus Group is expected to be between $160 million and $180 million.

More reading

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Motley Fool contributor Phil Harpur 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 Bapcor Ltd (ASX: BAP) share price could be on the move on Wednesday following the release of its full year results.

What happened in FY 2020?

Like most companies, Bapcor had a difficult 12 months in FY 2020 following the bushfires, drought, and of course the COVID-19 pandemic. These combined to have an adverse impact on its financial performance.

Positively, despite these challenges, Bapcor delivered a solid result in FY 2020 and believes it is in a very solid financial position to optimise on opportunities as they arise.

For the 12 months ended 30 June 2020, Bapcor delivered a 12.8% increase in revenue from operations to $1,462.7 million. This was driven by a combination of organic and growth through acquisitions. Excluding the latter, revenue would have been up 7% year on year.

This growth was driven by its Trade, Specialist Wholesale, and Retail businesses, which more than offset weakness in the Bapcor NZ business.

Trade revenue grew 7.1% to $561.7 million, Specialist Wholesales revenue increased 26% to $520.4 million, and Retail revenue rose 14.7% to $292.7 million. Bapcor NZ’s revenue fell 5.2% to $156.3 million.

It was a similar story for the earnings of these businesses, which ultimately led to its pro forma earnings before interest, tax, depreciation, and amortisation (EBITDA) pre AASB16 falling 4.1% to $157.8 million in FY 2020. Including AASB16, its pro forma EBITDA was up $59.3 million to $217.1 million.

On the bottom line, Bapcor reported a 5.5% decline in pro forma net profit after tax (before AASB16) to $89.1 million.

Despite this decline, the Bapcor board has declared a final dividend of 9.5 cents per share, which is consistent with last year’s final dividend. This brings its full year dividend to a fully franked 17.5 cents per share, which is up 2.9% on the prior corresponding period.

It is worth noting that due to its strong financial position, the company has decided to suspend the operation of its dividend reinvestment plan for the FY 2020 final dividend.

Management commentary.

Bapcor CEO & Managing Director, Darryl Abotomey, was pleased with the company’s performance given the challenging trading conditions.

He said: “… despite the circumstances Bapcor’s talented team members have been able to deliver a commendable result for FY20, with Proforma EBITDA being down 4.1% and Proforma Net Profit After Tax being only 5.5% below the record earnings that were achieved in FY19. Record revenue was achieved by the group, driven by record revenue and earnings in our Burson Trade and Retail businesses and the addition of the Truckline business in December 2019.”

The chief executive remains positive on the company’s long term prospects, but warned of short term challenges. As a result, no guidance for FY 2021 was given with this result.

He commented: “The market fundamentals and opportunities will continue to drive profit growth in the future, however given the current economic uncertainties and unknown future impacts of COVID-19 Bapcor is not in a position to provide a forecast of earnings for the current year. An update on trading conditions will be provided at the Annual General Meeting in October.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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 Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is on watch this morning after the company reported a 90.6% jump in full-year free cash flow. 

Why is the Domino’s share price on watch?

For the year ended 30 June 2020 (FY20), Domino’s increased its Network and Online sales by 12.8% and 21.4%, respectively. Combined, those pre-AASB16 sales totalled $5,624.9 million for the year with same-store sales growth of 5.8%.

Japan proved to be a strong growth market in FY20 with Network sales up 38.0% (18.4% in constant currency terms) with Online sales up 44.1% for the year.

The group’s store count climbed 6.5% to 2,668 with no new franchisees leaving due to the coronavirus pandemic. That included a further 78 stores in Europe, 75 in Japan and 10 across Australia and New Zealand.

Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 7.3% to $303.0 million. EBIT climbed 3.6% to $228.7 million while net profit after tax (NPAT) was up 3.3% to $145.8 million.

The Domino’s share price is worth watching today after increasing both earnings per share (EPS) and its final dividend. EPS came in 2.7% higher at 169.4 cents while dividend per share climbed 3.3% to 119.3 cents.

Free cash flow was the big mover, however, surging 90.6% higher to $161.8 million during the year. That could see the Domino’s share price be an early mover in today’s trade as investors take in the latest result.

COVID-19 impact

There were some impacts felt from the pandemic in the FY20 result, particularly on EBITDA figures. That included $14.1 million of store support provided, which was offset by $2.7 million of royalties, revenues and lower costs as well as $3.2 million of government assistance received.

Performance vs guidance

Domino’s had previously provided guidance and a 3-5 year outlook on 21 August 2019. Forecast same-store sales growth was 3-6%, compared to 5.8% in today’s result.

New organic store additions climbed 6.5% for the year, just shy of the 7-9% forecast last August. Net capital expenditure totalled $97.4 million within the $60-100 million guidance figure provided.

FY21 trading update

The Domino’s share price will be one to watch this morning after the company also provided an early FY21 trading update.

Network sales growth is up 18.5% in the year to date (YTD) while same-store sales growth has climbed 11.0%. Both of these are well up on FY20 numbers of 12.8% and 5.8%, respectively. Domino’s has also added 24 new organic store additions to its network in FY21. The Domino’s share price has risen nearly 43% in year-to-date trading and is up almost 72% from its March low.  

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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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.

For some investors, especially those with limited funds, looking for stocks with the lowest share price may be tempting. After all, if a stock has a low price per share, you can buy more of it. But just because a stock appears to be cheap doesn’t mean it’s a good buy. In fact, some of the most expensive stocks in terms of price-per-share can be way better investments than almost any penny stocks, which have very low share prices but come with outsize risk.

And while it may have made sense in the past for investors to limit their purchases to companies with low share prices if they didn’t have much money to put into the market, that’s no longer the case. In fact, rather than looking for cheap stocks, you should look for companies you believe will perform well over time regardless of the price. You can do that thanks to fractional shares.

The first thing to remember when looking for stocks is that the share price shouldn’t matter to you; what matter are the risk and the potential for growth. A stock that costs $1 per share is cheap to purchase, but it’s not a very good buy if the company is on the verge of insolvency and has no plans to fix its financial problems. On the other hand, a stock that costs $5,000 a share is “cheap” in terms of presenting a great value if there’s solid reason to believe shares may be worth $10,000 next year. 

Many investors used to be limited by the size of their bankrolls to buying companies with low-priced shares simply because brokerages required you to buy at least one full share. That’s not the case anymore because a growing number of brokers allow you to buy fractional shares.

These are just what they sound like: fractions of full shares (in some cases as low as 0.001 of a share). Many big-name brokers have opened the door to buying these partial shares through a process called “dollar-based investing.” You specify how much to invest in a company and you’ll get whatever part of a share your cash can buy. So if you want to buy Tesla even though it’s trading at $1,650 a share and you only have $20, you can become the proud owner of 0.0121 of a share. 

It doesn’t matter that you’re purchasing such a small stake; if the stock price rises, your percentage gains will be the same as any other investors’ are. But, thanks to fractional shares, you won’t have to be restricted to looking for companies with low share prices, such as the untested NIO, if you want to invest in an electric vehicle maker. You’ll have the chance to buy the industry leader with the higher per-share price if you think it presents a better balance between potential risk and possible gains. 

How to pick companies to invest in

Since you’re no longer limited by your pocketbook, you have a vast pool of potential investments. To find the right ones, you’ll want to consider factors including:

• The company’s track record and potential for growth.
• Its competitive advantage.
• Its leadership team.
• Whether the stock is being sold at a fair price.

It can take time to research which stocks to buy, especially when you don’t have to restrict yourself to stocks you can afford to buy one or more shares of. But if you put in the work, learn how to make informed choices, and invest for the long term, your efforts can often pay off in the end. 

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

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Christy Bieber 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 Tesla. 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 Sorry, cheap stocks aren’t the best stocks. Here’s why appeared first on Motley Fool Australia.

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

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The Kogan.com Ltd (ASX: KGN) share price will be on watch on Wednesday.

On Tuesday the ecommerce company’s shares surged a massive 12% higher to end the day at a record high of $22.99.

However, within minutes of the company’s shares closing at this record high, its CEO and CFO were selling down their stakes in the company.

What is happening?

According to the AFR, the company’s founders Ruslan Kogan and David Shafer are selling down their stakes by a sizeable $163 million.

The report reveals that Citi’s equities desk was in the market with the block trade of 7.3 million shares, which represents approximately 6.9% of Kogan’s total shares.

One positive is that these shares have an underwritten floor price of $21.60 and bids were being taken in 5 cent increments up to $22.25, according to terms sent to funds. This means the discount will only range from 6% to 3.2% compared to Kogan’s last close price.

Once the sale completes, Mr Kogan will have reduced his stake down to 15.3 million shares. This represents a 15% stake in the company, which I believe means his interests remain firmly aligned with shareholders.

It’s a similar story with co-founder and CFO David Shafer. Following the completion of these sales, Mr Shafer will own 6.1 million shares. This represents a 5.8% stake in the growing company.

This morning the company confirmed that this report is accurate.

Chairman, Greg Ridder, commented: “Following the significant increase in shareholder value, Ruslan and David have taken the opportunity to balance a portion of their investments while continuing to remain Kogan.com’s largest shareholders. Ruslan and David continue to love building the Business and are excited about the opportunities ahead. I take this opportunity to welcome some new shareholders to the Company, and also to recognise the ongoing interest of many existing shareholders to increase their ownership levels.”

What now?

Given their past history of selling once trading windows reopen following results releases, this selling may not come as a surprise to many investors.

However, large insider selling rarely goes down well with investors and can often weigh on a share price. In light of this, I wouldn’t be surprised if its shares dropped lower today.

More reading

• Kogan share price rockets 12% to a record high: Is it too late to invest?
• Why Cochlear, Kogan, Megaport, & Northern Star shares are charging higher
• New investors should do this before investing in ASX shares
• Why Kogan and these ASX shares just hit record highs
• ASX 200 drops 0.8%, JB Hi-Fi jumps 4.5%

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com 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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Many consider Warren Buffett to be the most successful share investor of all time.

He is the fourth wealthiest person on the planet, so it’s hard to disagree.

But you may be surprised to learn that Warren Buffett considers buying his investment company Berkshire Hathaway Inc. (NYSE: BRK.A) the biggest mistake of his life.

Where did it all begin?

Buffett started purchasing shares in Berkshire in 1962, eventually taking a controlling stake by 1965. 

At the time, the company was a textile manufacturer, losing money in a sector that was in steep decline in 20th century United States.

“Though I knew its business – textile manufacturing – to be unpromising, I was enticed to buy because the price looked cheap,” Warren Buffett said in a letter to shareholders in 1989.

The idea is that if you buy something at a bargain price, any sort of temporary jolt in the company’s fortunes allows the shareholder to sell at a profit.

However, the problem with that is that unprofitable companies in unprofitable sectors will bleed money before that opportunity comes along.

“Unless you are a liquidator, that kind of approach to buying businesses is foolish,” Buffett said.

“In a difficult business, no sooner is one problem solved then another surfaces. Never is there just one cockroach in the kitchen… Second, any initial advantage you secure will be quickly eroded by the low return that the business earns.”

The gift of diversification

Buffett was forced to pivot Berkshire Hathaway into other sectors, such as insurance. This diversification has taken it to where it is today, where it acts as a holding company for its own investments.

These days, Warren Buffett and his right-hand man Charlie Munger do things differently.

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” he said.

“Charlie understood this early – I was a slow learner. But now, when buying companies or common stocks, we look for first-class businesses accompanied by first-class managements.”

He’s done okay. 

Berkshire Hathaway has gone from a share price of US$7,100 in June 1990 to about US$318,000 this month. That’s a 44-fold increase in 30 years.

More reading

• Warren Buffett is dumping banks and buying gold, should you?
• Buffett’s Berkshire Hathaway reveals some surprise moves
• How Aussies can buy Warren Buffett shares without paying $445,000
• Here’s what a stock split means for investors
• Bank savings rates fall as Buffett racks up record cash pile and analysts tip Qantas share price rebound

Motley Fool contributor Tony Yoo 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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