Author: therawinformant

In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. At the time of writing the benchmark index is up 2.15% to 6,052.7 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Catapult Group International Ltd (ASX: CAT) share price is down 1% to $1.89. This appears to be down to profit taking after a very strong gain on Monday. Investors were buying the sports analytics and wearables company’s shares after it was awarded a contract to provide video exchange services to the top 130 United States college football teams.

The Perseus Mining Limited (ASX: PRU) share price has fallen 2% to $1.51. A number of gold miners have come under pressure today after investor sentiment improved greatly and led to demand for safe haven assets to soften. The S&P/ASX All Ordinaries Gold index is down by 0.5% at the time of writing.

The Prospa Group Ltd (ASX: PGL) share price has tumbled 3.5% lower to 80 cents. This online lender’s shares have come under pressure since the release of its unaudited results for FY 2020 late last week. Prospa expects to report a loss of up to $22 million due to additional provisions and write offs. It has also guided to expected credit losses of 11.7%, which was notably higher than what analysts at UBS were expecting. This morning they reiterated their neutral rating on Prospa’s shares.

The Spark Infrastructure Group (ASX: SKI) share price is down 1% to $2.25. This appears to have been driven by softening demand for safe haven assets. As with gold, investors will put money into utilities when they go into risk off mode. But with the market flying higher today, investors appear to be switching back into risk assets.

More reading

• ASX stock of the day: Catapult share price leaps 15% on US college football contract
• Here’s how to start investing with $5k
• Prospa share price sinks 15% as online lender announces COVID provisions
• Is this why the Catapult share price sank lower today?
• 3 exciting ASX growth shares to buy and hold

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 Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International 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.

The post Why Catapult, Perseus Mining, Prospa, & Spark shares are dropping lower appeared first on Motley Fool Australia.

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Like all financial markets, ASX shares produce winners and losers.

Some companies soar to spectacular market capitalisations as their product or service takes off. Others see share prices deteriorate as markets and demand shift.

When investing in shares, downside risk is capped – you cannot lose more than what you put in. But upside potential is unlimited – there is no ceiling to how high share prices can go.

We take a look at 5 top ASX growth shares where, had you invested $10k in each of these shares 3 years ago, you would be sitting on more than $1.3 million today. 

 

Avita Therapeutics Inc (ASX: AVH) 

The ASX share price in Avita Therapeutics has gained a whopping 8944% over the past 3 years, which means a $10k investment made in August 2017 would now be worth $894,400.

Avita is a regenerative medicine company with a technology that allows the production of spray-on skin from the patient’s own skin cells. This RECELL System is used to treat burns and other wounds, improving healing and scar appearance. RECELL System sales grew 213% in FY20, but sales growth ground to a halt in the fourth quarter as a result of the impacts of the coronavirus pandemic. 

Although April sales were the lowest in 2020, procedural volumes resumed in May and June. Physicians have embraced the benefits of the RECELL System, which include reduced hospital stays and fewer surgeries. The system is also being assessed for use in treating vitiligo, scar reconstruction, and for aesthetic applications. This could substantially increase the company’s addressable market. 

Afterpay Ltd (ASX: APT)

The Afterpay share price has gained 2066.12% over the past 3 years, making a $10,000 investment now worth $206,600. Afterpay has seen massive growth in customer numbers and transaction volumes during this period. In FY17, Afterpay had 6,000 merchants and 1 million customers in Australia and New Zealand. Underlying sales were around $560 million.

Now Afterpay has 5 million customers in the United States, and close to 5 million across Australia, New Zealand, and the UK. The company had 48.44k active merchants in March 2020. Underlying sales in the nine months to March 2020 grew 105% on the prior corresponding period to $7.3 billion.

Afterpay is now available through Apple Pay and Google Pay in select US stores, with roll out to Australia scheduled for coming months. The buy now, pay later provider has benefitted from the shift to e-commerce prompted by coronavirus, with sales accelerating in Q4, up 127% on the prior corresponding period. 

Polynovo Ltd (ASX: PNV) 

The Polynovo share price has gained 1023.08% over the past 3 years, meaning your original $10k investment would now be worth $102,308.

Back in FY17, funding from the Biomedical Advanced Research and Development Authority (BARDA) was Polynovo’s main source of revenue. The company reported total revenue of $3.6 million for FY17 with the NovosorbBTM product available in the US, Australia, South Africa, and New Zealand. Now the product is being used globally, and Polynovo is predicting product sales in FY20 will double those of FY19. In FY19 sales increased 435% on the previous year to $9.348 million. 

Polynovo recently received US$15 million in funding from BARDA for a clinical trial evaluating the efficacy of the Novosorb BTM product. This will allow Polynovo to apply for FDA approval of the product. Novosorb BTM is based on a unique polymer technology with potential applications in the hernia and breast reconstruction markets. The company is building a hernia product factory in Port Melbourne and plans to enter the US hernia market in 2021. 

Appen Ltd (ASX: APX) 

The Appen share price is up 790.56% over the past 3 years. This makes a $10k investment made 3 years ago worth $79,056. Appen provides data for the development of machine learning and artificial intelligence products.

In the year ended 31 December 2017, Appen recorded revenues of $166.5 million. Just two years later, in 2019, Appen recorded $536 million in revenue, a 223% increase. Appen’s existing customers have underpinned revenue growth with increased demand for new and existing projects. 

In the current financial year, Appen has made a substantial investment in sales and marketing to lay the foundation for future growth. Government artificial intelligence spend is a target, as is the Chinese market. Appen has reported that the COVID-19 pandemic has had a minimal impact thus far. Earnings have been resilient although the economic downturn may impact smaller customers. Nonetheless, the company is well placed to ride out the downturn with a cash balance of more than $100 million and low capital requirements. 

Megaport Ltd (ASX: MP1) 

The Megaport share price has gained 500.45% since 2017, meaning a $10,000 investment made 3 years ago would be worth $50,045.

Megaport operates in the network-as-a-service space. The company provides bandwidth which allows users to connect to cloud services and data centres.

In FY17, Megaport reported $10.7 million in revenues with total monthly recurring revenues of $1.22 million in June 2017. Now Megaport has monthly recurring revenues of $5.7 million and reported revenue of $17 million in just 4Q FY20.

Megaport has focused on expanding its network footprint to new markets and deepening its reach in existing ones. It established a presence in Denmark and Spain in 4Q FY20, bringing the Megaport platform to 23 countries and 128 cities globally. In June 2020, Megaport reported 1,842 customers, up from 738 at the end of FY17.

The company has continued its strong growth momentum through the pandemic, with the platform enabling customers to flexibly respond to the rapidly changing business environment.

More reading

• Afterpay share price higher despite falling short of share purchase plan target
• Why I would invest $50,000 into these excellent ASX shares
• Should you invest in Commonwealth Bank shares?
• These ASX medical shares fell double figures in July – are they a buy?
• Which shares to watch this ASX earnings season

Kate O’Brien owns shares of Appen Ltd, Avita Medical Limited, and POLYNOVO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited and POLYNOVO FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended Avita Medical Limited 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.

The post If you invested $50k in these ASX shares 3 years ago, you’d be a millionaire today appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) may be storming higher on Tuesday, but the same cannot be said for the JB Hi-Fi Limited (ASX: JBH) share price.

At the time of writing the retailer’s shares are down 1% to $44.20.

This compares unfavourably to a stunning 2.1% gain by the benchmark ASX 200 index in morning trade.

Why is the JB Hi-Fi share price dropping lower today?

Investors have been selling the retailer’s shares this morning after it provided an update on the impact of COVID-19 restrictions on its businesses in Victoria.

According to the release, following the Victorian Government’s announcement of stage 4 restrictions in metropolitan Melbourne, a total of 46 JB HI-FI stores and 21 The Good Guys stores will be temporarily closed to customers from midnight tonight for a minimum period of six weeks.

However, based on current state government directions, the company’s online and commercial operations will continue to trade and be available to meet the needs of customers with fulfilment by home delivery and contactless click and collect.

The company’s warehouses and metropolitan Melbourne store network will be operational, with strict safety measures in place, to fulfil online and commercial orders.

Which other retailers have provided updates?

Two other retailers that have released similar updates today are Baby Bunting Group Ltd (ASX: BBN) and Wesfarmers Ltd (ASX: WES).

In respect to Baby Bunting, its stores in metropolitan Melbourne will remain open during the lockdown period. COVID safe work practices will continue to be applied, including encouraging customers to shop online or use its contactless click and collect service.

Baby Bunting’s distribution centre and online operations, based at Dandenong South in Melbourne, will continue to operate. Though, some minor adjustments will be made to ensure that these operations are in line with the stage 4 requirements for warehouses and distribution centres.

For Wesfarmers, both its Bunnings and Officeworks businesses will remain open to commercial and business customers. Regular consumers will be restricted to online and click and collect options.

Whereas its Kmart and Target stores in the Melbourne metropolitan region will be unable to service customers in-store.

More reading

• Wesfarmers share price higher on Victorian COVID-19 update
• The ASX stocks hit by Victoria’s stage 4 forced shutdowns
• My top retail ASX 200 share to gift right now
• 2 ASX shares that have benefitted from measures to reboot the economy
• Analysis: Is the Woolworths share price good value in August?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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.

The post Why the JB Hi-Fi share price is dropping lower today appeared first on Motley Fool Australia.

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The Wesfarmers Ltd (ASX: WES) share price is pushing higher on Tuesday after an update on its Victorian operations.

At the time of writing the conglomerate’s shares are up over 1% to $46.44.

What did Wesfarmers announce?

This morning Wesfarmers provided the market with an update on the impact of the business restrictions announced by the Victorian Government.

According to the release, Wesfarmers generated approximately 17% of its retail sales from stores in metropolitan Melbourne in FY 2020.

The good news is that all of the company’s retail businesses in the region will be able to continue operating in some form during the lockdown period. The bare minimum will be via their online operations, through home delivery and contactless click and collect options.

Due to the vital nature of its products, the company’s key Bunnings stores in the region can remain open for trade customers. And while Bunnings will be closed for in-store retail customers, click and collect options will be available.

The same applies to its Officeworks stores, which can continue to service business customers. Whereas Wesfarmers’ Kmart and Target stores in the Melbourne metropolitan region will be unable to service customers in-store.

Although government restrictions allow for the COVID safe operation of distribution centres and other supply chain operations, the company is working closely with suppliers and the government to assess supply chain impacts.

The company’s industrial businesses, including Blackwoods, Workwear Group, Coregas, Australian Vinyls, and Modwood, have operations in Victoria which are expected to continue to operate in accordance with COVID safe guidelines.

“Well equipped to adapt.”

Wesfarmers’ Managing Director, Rob Scott, advised that the company is committed to supporting government and community efforts to limit the spread of COVID-19.

He also appears confident that Wesfarmers is well-positioned to navigate through the disruption.

Mr Scott commented: “Our businesses are well equipped to further adapt their operations to continue to safely support customers and suppliers through these restrictions, with a focus on supporting business, trades and home delivery as well as contactless click and collect in many of our Melbourne metropolitan stores.”

More reading

• My top retail ASX 200 share to gift right now
• 2 ASX shares that have benefitted from measures to reboot the economy
• Analysis: Is the Woolworths share price good value in August?
• 7 ASX shares to watch this reporting season
• Coles and Wesfarmers share prices reach for new highs. Should you invest?

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

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If the digital age wasn’t already here before the COVID-19 pandemic, it certainly is now. More than ever, people around the world are finding new ways to get on with their lives. Working from home, socialising through video communications and shopping online, people are getting creative and using digital means to achieve their goals.

With this in mind, there is 1 company that is perfectly positioned to grow with the digital trend, in my opinion.

WiseTech Global Ltd (ASX: WTC)

WiseTech Global was founded in 1994 in Sydney. The founders began by writing code for Aussie freight forwarding companies. In 2014, WiseTech developed its widely successful global logistics platform known as ‘CargoWise’.

Key product

CargoWise is the exciting product behind WiseTech’s success. The cloud-based software services the logistics industry worldwide by helping logistics providers operate more efficiently to move and store products. The platform delivers a number of services, including freight forwarding, customs services, container freight, warehousing, geo and tracking services amongst many others.

Only 1 year after launching CargoWise (2014), WiseTech secured $35 million in equity funding to help drive growth. Just 12 months after that, Wisetech listed on the ASX with a $1 billion valuation.

Today, CargoWise is a massive product in the logistics market. According to WiseTech, 25 of the top 25 global freight forwarding companies are its customers. Additionally, 40 of the top 50 third-party logistics providers and over 15,000 logistics organisations across 150 countries utilise CargoWise in their operations. 

Some of the big-name customers in WiseTech’s portfolio include UPS, DHL and Toll.

About the WiseTech share price

The WiseTech share price is currently trading at $21.32, which is down by 9%, year to date. The recent market crash in March this year took its toll on WiseTech, with prices plunging from almost $30 right down to $10.50. The good news for investors is that it only took the WiseTech share price 3 months to rise back to its current pricing.

Past performance 

WiseTech floated on the ASX in 2016 a little over $3 a share and the WiseTech share price reached a height of $38.70 in September 2019.

Even before the COVID-19 crash in March, WiseTech was caught in a series of very public short seller attacks by Beijing-based, J Capital. These attacks caused a lot of damage to the WiseTech share price.

The company, however, continues to thrive. Even with the short seller attacks and the COVID-19 crash, the growth in the WiseTech share price from ASX float to current day stands at a massive 500+%. Over approximately 4 years, this equates to around 118% per year. I have no doubt that has been a very enjoyable run for investors!

Future potential

The current situation presents a buying opportunity in my opinion, with WiseTech shares trading at 40%+ below their previous highs. With an encouraging rapid recovery following the March market crash, I feel that WiseTech has great future potential.

Dividends

In addition to share price growth, WiseTech also pays a dividend to its investors. The company’s official policy is to pay up to 20% of its net profit after tax. WiseTech has paid 2 dividends per year since 2017. Whilst many other companies suspended or delayed their dividends earlier this year, WiseTech paid an interim dividend to investors in April. This dividend was paid at 1.7 cents per share and was fully franked. An announcement on WiseTech’s final dividend is set for August this year.

Foolish takeaway

WiseTech has global reach in a world that’s becoming more digital by the day. People still need physical products, meaning increased work for all kinds of logistics and freight providers. As online shopping increases, so does shipping. WiseTech is in prime position to help its clients expand their own operations. By ensuring the success of the logistics industry, WiseTech also ensures its own success. WiseTech shares are certainly worth of portfolio consideration, in my view.

At the time of writing, the WiseTech share price is sitting at $21.32 per share, with a market capitalisation of $6.9 billion.

More reading

• ASX 200 jumps 0.7%: Fortescue impresses, Macquarie’s tough Q1, big four banks rise
• WAAAX shares see mixed recovery from COVID-19
• All Technology Index celebrates 6 months with stunning outperformance
• ASX 200 drops 1.1%: Big four banks fall, Resolute rockets, Afterpay tumbles
• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade

Motley Fool contributor Glenn Leese has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. 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 Volpara Health Technologies Ltd (ASX: VHT) share price is on watch this morning after the company announced changes to its business strategy. Volpara says it is clear that many of the ways it has operated in the past (trade shows, site visits etc.) must change to facilitate continued growth. 

What does Volpara Health Technologies do?

Volpara Health Technologies is a med tech software-as-a-service (SaaS) company founded in 2009. The company provides breast cancer screening software that assists with the delivery of personalised patient care. Volpara’s clinical functions include providing feedback on breast density, compression, dose and quality. Its practice management software helps with productivity, compliance, reimbursement, and patient tracking. 

What did Volpara Health Technologies announce? 

Volpara announced that it was shifting its business strategy, accelerating a move towards digital marketing over conventional medical marketing. This is expected to drive increased demand from clinical sites as well as increase the number of women that take advantage of Volpara’s products. The shift has resulted in a reorganisation of the executive ranks, with the Chief Commercial Officer leaving the company and a new CEO of Volpara’s United States subsidiary brought on board. 

How has Volpara been performing? 

Volpara recently posted its quarterly cash flow report, which showed cash receipts from customers increased 112% to NZ$5 million for the quarter. This was the fourth straight quarter with receipts greater than NZ$4.5 million, and the highest cash receipts in any quarter since listing in 2016. Nonetheless, Volpara continues to monitor the pandemic closely, noting its resurgence across large parts of the US, its primary market. 

Annual recurring revenue at the end of Q1 FY21 was NZ$19.1 million, an increase of $1.1 million. This was achieved through a combination of new customers and upsells, as well as foreign exchange movements. Churn remained negligible but new sales gains were offset by some maintenance contracts for legacy capital sale systems which were not renewed. CEO Ralph Highnam said in a July update, “…we’re very heartened by the strong cash receipts, negligible churn, and the fact that we got a significant number of new deals over the line.” 

What’s next for the Volpara share price? 

The Volpara share price is up 65% from its March low but remains 26% down from its February high. The company is carefully plotting strategies to ensure it can emerge from the pandemic stronger. Volpara remains cognisant of the challenges posed by COVID-19, but believes while the pandemic will eventually subside, cancer will not. At the time of writing, the Volpara share price is trading at $1.34 which is a 3.1% increase so far today. 

More reading

• 3 exciting small cap ASX shares to put on your watchlist immediately
• ASX 200 down 0.4%, Credit Corp and Temple & Webster impress
• 4 top small cap ASX shares to watch in FY 2021
• Why these ASX tech shares should be on your radar
• Why you should watch these exciting small cap ASX healthcare shares closely

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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 Afterpay Ltd (ASX: APT) share price is pushing higher on Tuesday following the release of an update on its share purchase plan.

At the time of writing the payments company’s shares are up almost 4% to $69.00.

What did Afterpay announce?

This morning Afterpay provided the market with an update on the share purchase plan it announced with its capital raising on 7 July.

Afterpay was aiming to raise approximately $800 million via a fully underwritten $650 million institutional placement and a non-underwritten share purchase plan that aimed to raise approximately $150 million.

The company’s $650 million institutional placement was strongly supported by new and existing shareholders and completed successfully last month at $66.00 per new share.

However, Afterpay’s share purchase plan wasn’t quite as successful as the company might have hoped.

According to today’s update, just 10,110 valid applications were received, out of 53,465 eligible shareholders. This represents a participation rate of 19% based on registered holdings.

And although shareholders had the opportunity to apply for up to $20,000 worth of new shares, the average application fell well short of that at $13,300.

This ultimately means that Afterpay raised approximately $136 million from its share purchase plan, which was $14 million short of its target.

Why did Afterpay fall short of its target?

Given that the shares from the share purchase plan were issued at $66.00 per share, I suspect that the discount was not enough for most investors.

For example, on Monday the Afterpay share price was changing hands at $66.50. This means those that did take part in the share purchase plan have ended up buying shares at just a 0.75% discount to the last close price.

And while the discount was a little more generous at ~3% on the closing date of the share purchase plan, it clearly didn’t prove to be enough for most eligible shareholders to part with their hard-earned money on this occasion.

Nevertheless, with the Afterpay share price zooming higher today following strong gains on Wall Street overnight, it has ended up being a reasonably positive result for those that took part.

More reading

• Should you invest in Commonwealth Bank shares?
• Which shares to watch this ASX earnings season
• Is the Afterpay share price a boom or bust?
• How these ASX investors made 60% in three months
• Is the Afterpay share price a buy?

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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In the past month, Orbital Corporation Ltd. (ASX: OEC) has seen its share price rise by an amazing 38.4%.

This is part of an evolution in military technology towards drones and unmanned defence systems. Moreover, since the government announcement of $270 billion in defence spending, investors have become aware of the advanced technologies of ASX shares underpinning this transformation.

I think a range of companies in this sector are likely to grow significantly over the next 3–5 years. Many now have mature technologies, ongoing sales and significant growth opportunities ahead of them. Orbital is one of 4 leading ASX shares in this sector.

More drone propulsion systems

Orbital is a global leader in propulsion systems for tactical unmanned aerial vehicles (UAVs). The company recently announced an unaudited FY20 result of $33.8 million. This was within its guidance of $25–$35 million despite the interruptions of coronavirus in Australia and client countries. I am very bullish on this company. Partly because their current client base includes subsidiaries of Boeing, Northrop Grumman, and an unnamed large Singaporean Defence Company. 

FY21 is going to be about consolidating Orbital’s current situation and expanding client base. FY21 revenue guidance for this ASX share is for $40–$50 million. In particular, 3 of the company’s existing clients have been selected as providers for the Australian Defence Force (ADF) Land 129 program. 

More unmanned aerial systems

Xtek Ltd (ASX: XTE) makes small unmanned aerial systems (SUAS) among many other products. In particular, it supplies the AeroEnvironment WASP AE SUAS, produced in the United States.

At present, the ADF has more than 50 of these aircraft and Xtek recently announced an additional order for $2.8 million for this model, boosting the company’s existing SUAS supply contract.

In FY20, the supply of SUAS parts and maintenance to the ADF was worth $8 million. In addition, Xtek manufactures lightweight body armour, and is the primary provider to the Department of Defence for portable X-ray equipment and demolition remote firing systems.

FY20 guidance is for revenue of $42 million, an increase on $37.9 million in FY19. This ASX share has increased its production capability and can produce its patented lightweight composite materials to support $40 million per year revenue. This is planned to double during FY21.

ASX shares for drone protection

Two ASX shares are active in this area. The first is DroneShield Ltd (ASX: DRO), a company that provides protection against drones. Droneshield sells multiple sophisticated devices that are just starting to gain traction. For example, it has the Drone Gun MKIII for soldiers in the field. At the more extreme end, the Drone Node disables drones within a 1km radius.

In the past month, the DroneShield share price has risen by 15.38%. Moreover, the company has made 3 positive announcements in the past 2 weeks. First, a $100,000 order from the European Ministry of Defence. Second, a US$200.000 contract with the US Air Force. And third, the successful completion of a trial in a mid-tier European airport. The company expects the implementation tender in Q4 CY20.

The other ASX share in this space is Electro Optic Systems Hldg Ltd (ASX: EOS), which focuses on sophisticated sensor technology. This came from the privatisation of the  Commonwealth of Australia space activity, and the technology has been at the forefront of satellite tracking for more than 35 years.

Electro Optic Systems has also used this technology to build vehicle-mounted, remote-operated weapons that are battle-tested against drones. It is currently in negotiations with the Australian Government for the acquisition of 251 of these weapons. 

Foolish Takeaway

These four companies are just part of our very capable defence contracting industry. Out of all of these ASX shares, I am most interested in Orbital Corporation because I think the time has arrived for this technology, in particular. However, it is clear that we have multiple mature drone technologies capable of servicing the ADF and countries throughout the world.

More reading

• Orbital share price defies a falling market
• Short-sellers are targeting these ASX stocks ahead of the reporting season
• 3 surging ASX defence shares to buy next week
• 2 fast-growing mid cap ASX shares that could be destined for big things.
• DroneShield share price soars 12% on European order

Daryl Mather owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited and Orbital Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Do you have $3,000 to invest into ASX blue chips? I think the three shares I’m going to mention in this article could be good picks.

I’m going to pick from shares from the ASX 100. I think one of the 100 biggest businesses on the ASX count as blue chips.

Here are three ASX blue chips I think that could be good long-term ideas:

A2 Milk Company Ltd (ASX: A2M)

A2 Milk is one of the most promising growth shares within the ASX 100. The infant formula business has been growing impressively over the past five years and it’s doing well even during the COVID-19 pandemic. Families still need nutrition. 

A few months ago the company announced that its revenue for the three months to 31 March 2020 was above expectations as consumers increased buying due to pantry stocking. Revenue for FY20 is expected to be in the range of NZ$1.7 billion to NZ$1.75 billion.

The revenue growth was so strong that it caused the expected earnings before interest, tax, depreciation and amortisation (EBITDA) margin to be higher than previous guidance. It’s now expected to be in the range of 31% to 32%. Management haven’t adjusted either the margin guidance or the margin guidance since it was given.

Even if the final quarter of FY20 isn’t that strong, as was the case with Bubs Australia Ltd (ASX: BUB), I think A2 Milk has a very strong future as an ASX blue chip.

The company continues to steadily build its market position in Asia and the US. I’m pleased that the company will soon be making money from Canada after announcing an exclusive licensing agreement with Agrifoods. Canada is another big potential growth market over the long-term. 

A2 Milk is trading at 30x FY22’s estimated earnings.

Altium Limited (ASX: ALU)

Altium has been one of my long-term preferred ASX growth shares because I think it has such a promising long-term future. It has grown into an ASX blue chip and I think it can continue to grow over the long-term.

The tech business is aiming to become the world’s leading electronic software business – akin to how Microsoft dominated the office software space.

Altium has already built an impressive customer base including Qualcomm, Broadcom, Microsoft, HP, Lenovo, ABB, Siemens, Google, Bosch, Proctor & Gamble, John Deere, Tesla, Space X, Boeing and NASA.

Over the next five years the ASX blue chip is aiming for US$500 million of revenue and 100,000 Altium Designer subscriptions. The company has taken a short-term revenue hit due to COVID-19 by lowering prices to ensure that it could continue to build its customer base. Lower revenue in one year is worth it to gain multiple years of revenue from that client. Altium’s software is sticky, clients are unlikely to move away once they’re using it. 

Altium is trading at 50x FY22’s estimated earnings.

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

Soul Patts may not be the biggest business on the ASX, but I definitely think it fits the description of being an ASX blue chip.

When I think of a ‘blue chip’ I would expect that business to have been around for a while. Soul Patts was listed in 1903. It’s one of the oldest listed businesses in Australia.

It’s an investment house that owns a variety of different businesses. It owns unlisted ones like resources, agriculture and swimming schools.

The ASX blue chip also owns stakes in listed businesses like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT). I really like the diversification on offer by Soul Patts. 

Soul Patts invests in long-term business investments, so it itself can be described as a long-term focused share. It’s defensively positioned, many of its investments are essential for our society.

I think this ASX blue chip will be around for a long time after I check my portfolio for the last time. That’s the type of investment I want to hold in my portfolio.

Foolish takeaway

I think these three ASX blue chips can produce strong returns over the long-term. Soul Patts would be my pick for income investors. A2 Milk may be the better pick for medium-term growth. I’d probably want Altium to be a bit cheaper before buying shares, under the current conditions.

More reading

• Why I would invest $50,000 into these excellent ASX shares
• 3 top ASX tech shares to buy right now
• Top ASX Stock Picks for August 2020
• Smart investors should buy these ASX growth shares
• 3 five-star ASX dividend shares to buy in August

Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of and has recommended Brickworks, BUBS AUST FPO, and 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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