Author: therawinformant

The Healius Ltd (ASX: HLS) share price has edged 0.95% higher today, after the healthcare provider gave a trading update. According to Healius, a strong pathology recovery and cost management initiatives have underpinned an estimated $54 – $56 million profit for FY20. Healius also recently sold its medical and dental clinics. The sale will bring in approximately $470 million in 1H21, providing significant balance sheet flexibility. 

What does Healius do?

Healius delivers pathology and diagnostic imaging services across Australia and operates day hospitals in Victoria, New South Wales, Queensland, and Western Australia. Healius sold its 70 or so medical centres to BGH Capital in June. The centres are occupied by some 1,300 general practitioners, dentists, and specialists. 

What did Healius report? 

Healius reported FY20 underlying EBIT of $102 – 104 million with underlying NPAT of $54 – $56 million. Net debt was approximately $670 million at 30 June 2020 giving a bank gearing ratio of 2.7. The proceeds from the sale of the medical centres will be received in 1H21, adding $470 million to the company’s coffers. Healius is looking to ‘right-size’ overheads in FY21 and FY22 in order to expand margins. 

The pathology division contributed the bulk of earnings in FY20, with unaudited underlying earnings of $114 – $116 million. Imaging contributed $17 million and Montserrat Day Hospitals $3 million. In June, Healius noted good growth in activity post the impact of the March lockdown. Today’s strong result was driven by the pathology division trading plus rapid efforts to reduce costs when the extent of volume declines due to COVID-19 was unknown. 

The pathology division has been involved in the fight against COVID-19, undertaking up to 16,000 tests per day. Testing has rapidly escalated due to state-based testing initiatives and COVID-19 outbreaks. Healius undertakes nearly 50% of private testing in Victoria. Non-COVID pathology testing has also grown with the reopening of the economy nationally and is currently in the order of 5% – 10% behind the prior comparable period.

What is the outlook for the Healius share price? 

The sale of the medical centres is due to complete in the first half of FY21, with the proceeds delivering significant balance sheet flexibility. As part of the FY20 results, Healius expects to report an after-tax loss on discontinued operations in the order of $110 – $120 million relating to the medical centres. With the sale of the centres, Healius will have a good level of available liquidity together with significantly reduced requirements for ‘business as usual’ capital expenditure. At the time of writing, the Healius share price is sitting at $3.20.

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• Afterpay and these shares were the best performers on the ASX 200 in June

Motley Fool contributor Kate O’Brien 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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It has been a busy day of quarterly update releases on the Australian share market.

And while the likes of Bubs Australia Ltd (ASX: BUB) and Sezzle Inc (ASX: SZL) may have stolen the headlines, they weren’t the only companies releasing updates.

Three updates you may have missed are listed below. Here’s a summary of how they performed:

Alcidion Group Ltd (ASX: ALC)

The Alcidion share price is dropping lower on Monday after the release of its fourth quarter update. The healthcare technology company reported quarterly contracted revenues of $3.7 million despite operating in a challenging market. This was more than double what it achieved during the prior corresponding period. As a result, Alcidion’s full year revenue is anticipated to be in the range of $18.4 million and $18.7 million. In addition to this, the company advised that it has $12.8 million in revenue already contracted to be recognised in FY 2021, with a further $17 million sold out to FY 2025.

Mach7 Technologies Ltd (ASX: M7T)

The Mach7 share price is racing higher today after releasing its fourth quarter update. That update revealed that the medical imaging data management solutions provider generated $3.6 million of positive free cash flow during the quarter. This lifted its full year free cash flow to $4.5 million. A key driver of this was a material purchase order from Hospital Authority Hong Kong. This meant Mach7 finished the quarter with a cash balance of $48.9 million. Though, since then it has completed the acquisition of Canadian company, Client Outlook. This acquisition provides a unique zero-footprint viewing and integration platform distinguished as healthcare’s first Smartviewer, known as eUnity.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price is down slightly this afternoon after the release of its quarterly update. As was expected, the clinical-stage biopharmaceutical company reported a reduction in prostate cancer imaging kit sales during the second quarter. This was because many oncology and radiology services were deferred to manage patient risk. As a result, Telix received $0.95 million in cash from kit sales for the quarter, down 16% on the first quarter. The company held cash reserves at the end of the quarter of $24.38 million. Though, it has since received an R&D tax refund of $11.4 million. As a result, management believes it has sufficient funds for at least five further quarters of operations.

More reading

• 3 exciting small cap ASX shares to watch in August
• Why Alcidion, Bubs, IGO, & Next Science shares are pushing higher
• 3 exciting small cap ASX shares to watch in FY 2021
• Add these ASX small cap shares to your watchlist immediately
• 5 exciting small cap ASX shares to watch

James Mickleboro owns shares of TELIXPHARM DEF SET. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd and MACH7 FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia has recommended Alcidion Group Ltd, MACH7 FPO, and Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX growth shares typically pay a low dividend or no dividend at all. However, unlike dividend shares, the vast majority of profits is typically invested back into the company to support long-term growth. This can lead to very strong share price growth over the longer term for top performing ASX growth shares.

In this article, I’ll take you through two quality ASX growth shares that I think are worth buying and holding for the long term

2 ASX growth shares to buy and hold

Bubs Australia Ltd (ASX: BUB)

Bubs is an Australia-based producer of goat milk products. It has established a portfolio of premium, high-margin brands, concentrating on infant formula products. The company is now extending its product range across other categories. These include organic baby food and adult goat dairy products.

The Bubs share price trended downward from late 2019 until mid-March this year. It then trended upwards until early May, after which it has trended largely sideways.

The third quarter of FY 2020 was a stand-out quarter for Bubs. It recorded a very strong 67% increase in revenue to $19.7 million for the three months to March. This was driven by strong growth during the coronavirus pandemic. Fourth quarter results just released saw a 5% decline in gross sales on the prior corresponding period to $13 million for Bubs. However, sales grew strongly by 14% compared to quarter sales in the corresponding period last year.

I believe that Bubs is an ASX growth share that’s well positioned for long-term success, driven by its expanding presence in Asia.

REA Group Limited (ASX: REA)

The REA Group share price was significantly impacted during the the early phase of the coronavirus pandemic up to late March. However, since then, it has recovered most of those share price losses.

REA Group achieved a 1% increase in overall revenues for Q3 FY2020 to $199.8 million. I believe this was a solid result considering all the challenges it is facing during the pandemic.

REA Group is likely to face continued COVID-19 headwinds in the months ahead. However, I believe this ASX growth share is well positioned to perform strongly over the long term, once the pandemic finally subsides. I prefer REA Group over its rival Domain Holdings Australia Ltd (ASX: DHG) due to its expanding overseas division and larger local presence.

Foolish takeaway

Bubs and REA Group are both quality ASX growth shares that I believe are well positioned to outperform the S&P/ASX 200 Index (ASX: XJO) over the next five years. Both companies continue to perform strongly in their domestic market, while also focusing on successful international expansion strategies.

More reading

• Is it time to dollar-cost average into ASX shares?
• All Technology Index celebrates 6 months with stunning outperformance
• Why I would buy Pushpay and these ASX growth shares in August
• ASX 200 up 0.25%: Lynas rockets on U.S. deal, gold miners surge, bank shares tumble
• Why Lynas, Northern Star, REA Group, & Sezzle shares are storming higher

Motley Fool contributor Phil Harpur owns shares of REA Group Limited. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australian furniture industry was facing challenges even prior to COVID-19. Declining discretionary income and negative consumer sentiment meant Ibisworld predicted the market would fall to $6.6 billion this year. And only a weak recovery is predicted as the economy gradually emerges from lockdown. The industry is a competitive one, with nearly 6,000 businesses operating in the space. This includes ASX listed furniture retailers Temple & Webster Group Ltd (ASX: TPW), Nick Scali Limited (ASX: NCK), and Adairs Ltd (ASX: ADH). Let’s take a look at which of these ASX furniture shares has the edge. 

Nick Scali 

Nick Scali closed stores during the first lockdown but sales climbed nonetheless as consumers stuck at home looked to upgrade their home environments. Sales orders grew 7% over the second half to mid June, with sales accelerating post store re-openings. Sales in the fourth quarter to mid June were up 20.4%. The retailer has forecast strong profit growth in the second half, with net profit after tax expected to increase 15% to 20% on 2H FY19. Full year revenue is expected to be in the range of $260 million to $263 million with full year NPAT of $39 – $40 million. 

Temple & Webster 

Temple & Webster is an online-only furniture and homewares retailer which has benefitted from the shift to eCommerce caused by the pandemic. The business traded strongly in 2H FY20 with revenue growing 90% compared to the prior corresponding period. Over the financial year to 31 May, revenue increased 68% to $151.7 million. Active customer numbers also increased 68% to 440,257. The company is bullish about the longer term shift to online in the furniture retailing space driven by shifting demographics. It remains enviably placed to take advantage of this change, which has been accelerated by COVID-19. 

Adairs

Adairs is an omni-channel homewares retailer which also dabbles in the furniture sector, selling bedroom and children’s furniture. Adairs also shut stores during the first lockdown, but strong online growth made up for this. Online sales increased 92.6% in the second half to 14 June 2020. This led to total sales growth across stores and online of 27.4%. Consumers bunkered down at home sought to upgrade their furnishings, leading to higher demand. FY20 guidance is for sales of $385 – $390 million. 

Who has the edge?

Adairs has the highest sales of the trio, benefitting from its physical stores as well as strong online presence. Temple & Webster is seeing the strongest growth, however, and benefits from cost savings due to its lack of a physical footprint. But there will always be customers who want to see furniture in person to purchase, or require customisation – this is where Nick Scali shines.

More reading

• All Technology Index celebrates 6 months with stunning outperformance
• 2 ASX shares leveraged to the eCommerce shift
• Extended jobkeeper: Which ASX shares to buy?
• 4 trends to invest in before August earnings season
• Top brokers list the latest ASX small cap stocks to buy today

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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended 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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ASX share market falls can be scary, but could dollar-cost averaging (DCA) be the answer?

To the inexperienced investor, the March bear market made for scary viewing. In fact, even experienced investors were spooked amid unprecedented market volatility.

While it’s good to buy undervalued ASX shares, you don’t want to fall into the trap of market timing. After all, ‘time in the market is better than timing the market’, as the saying goes. 

That’s where a DCA strategy can come into your investment plans and help you think long-term.

What is dollar-cost averaging?

According to Vanguard Australia, DCA is “investing the same amount of money at set intervals over a long period – whether market prices are up or down”.

Essentially, dollar-cost averaging is the opposite of market timing. Obviously, ASX share prices will fluctuate over time. The good news is that if you’re using DCA to your advantage, you can buy more shares at cheap prices.

For instance, let’s say you invested $1,000 per month in Afterpay Ltd (ASX: APT) shares. When the Afterpay share price was trading at $40.50 per share in February that would net you 24 shares.

However, when the ASX tech share fell to its 52-week low of $9.99 in March, that same $1,000 would buy you 100 shares.

Is now a good time to dollar-cost average into ASX shares?

The simple answer is yes, it’s always a good time to DCA into ASX shares.

The whole point of dollar-cost averaging is to ignore market timing. By definition, if you pick and choose when to DCA, you are going against that whole philosophy.

Of course, what you invest in is a whole separate issue. You could continue to buy beaten-down ASX shares like Star Entertainment Group Ltd (ASX: SGR).

However, DCA is more common with passive investors looking to track an index like the S&P/ASX 200 Index (ASX: XJO). Where active investors like to buy undervalued companies, passive investors trust that the market will win in the long run.

A couple of classic broad market ETFs that you could deploy a DCA strategy into are BetaShares Australia 200 ETF (ASX: A200) or Vanguard Australian Shares Index ETF (ASX: VAS).

ETFs don’t just have to track the whole market. For instance, the ETFS Morningstar Global Technology ETF (ASX: TECH) provides exposure to global technology companies and could be a good option for a DCA strategy in a tech-focused portfolio.

Foolish takeaway

Using DCA can be a powerful strategy for both your own thinking and your investments. Rather than panicking in a bear market, you can think of it as a fire sale on your favourite ASX shares.

That means you can sit back, relax and enjoy the long-term investment journey.

More reading

• All Technology Index celebrates 6 months with stunning outperformance
• ASX 200 up 0.25%: Lynas rockets on U.S. deal, gold miners surge, bank shares tumble
• 3 unloved ASX growth shares that could make you rich
• HUB24 and 2 more ASX 200 shares to watch this week
• These shares were the ASX 200’s biggest losers last week

Ken Hall owns shares of Vanguard Australian Shares Index. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ETFS Morningstar Global Technology ETF. 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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It’s been 6 months since the launch of the S&P/ASX All Technology Index (ASX: XTX), or the ‘All Tech’. Launched at the end of February, the new index was just in time for the March market meltdown, which saw its value tumble. The All Tech fell 42% from 2,018 at inception to 1,171 at its March low. 

But the All Tech has staged a strong comeback, with tech shares leading the post-March market rally. The index is now up 92.9% from its March low and nearly 12% since inception. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 32.7% since its March low, and down 13.6% since 24 February, when the All Technology Index commenced. 

New index representative of tech sector  

The All Technology Index was designed to be representative of Australia’s tech sector. This will enhance the profile and understanding of ASX tech companies and improve opportunities for investors. It provides a benchmark of ASX technology companies and facilitates investment in the sector.

The index provides broad exposure to a portfolio of technology shares, with a scope that goes beyond the GICS Information Technology sector. Technologically focused companies from a number of industries are included, such as those operating online marketplaces or providing healthcare technology. 

The case for the index is compelling. Over the 5 years prior to its launch, the IT sector has had more IPOs than any other sector on the ASX. Over the 3 years prior to the launch of the All Technology Index, the ASX 200’s annualised total return was around 10%. Over the same period, the technology companies that would have been in the index (had it existed) would have returned more than 20%. 

The index originally consisted of 46 companies with a combined market cap of $100 million. Ten of these companies were considered ‘unicorns’ (valued at over $1 billion) when the index debuted. Key components of the index can be found below: 

Company	Market Cap	Business
Afterpay Ltd (ASX: APT)	$19.4 billion	Australia’s best known buy now, pay later provider, headquartered in Melbourne.
REA Group Limited (ASX: REA)	$14.1 billion	A digital advertising company specialising in real estate and home loans and based in Melbourne.
Xero Limited (ASX: XRO)	$13.2 billion	An accounting software provider headquartered in Wellington, New Zealand.
Computershare Limited (ASX: CPU)	$7.3 billion	Provides share registry services and is based in Melbourne.
WiseTech Global Ltd (ASX: WTC)	$6.7 billion	Cloud-based logistics software provider based in Sydney.
NEXTDC Ltd (ASX: NXT)	$5.1 billion	A data storage company based in Brisbane.
Carsales.com Ltd (ASX: CAR)	$4.5 billion	Owns online marketplaces for vehicle sales, headquartered in Melbourne.
Appen Ltd (ASX: APX)	$4.4 billion	Provides training data for machine learning and artificial intelligence headquarter in Chatswood, NSW.
Altium Limited (ASX: ALU)	$4.3 billion	Provides software used to design printed circuit boards and is based in San Diego in the United States.
Link Administration Holdings Ltd (ASX: LNK)	$2.2 billion	Provides data management, analytics, and administration services to the superannuation industry from its headquarters in Sydney.
Kogan.com Ltd (ASX: KGN)	$1.8 billion	Online retailer of diversified products and services.
EML Payments Ltd  (ASX: EML)	$1.1 billion	Payment solutions provider offering prepaid, gift, and incentive cards used in everything from gambling to salary packaging.

Index components outperform 

The outperformance of the All Technology Index is thanks largely to Afterpay, which is up more than 685% from its March low. The buy now, pay later provider has powered through the downturn, reporting a 112% increase in underlying sales in FY20. Performance accelerated in the fourth quarter with sales up 127% to $3.8 billion.

But Afterpay wasn’t the only notable contributor to the index’s outperformance. The Appen share price is up more than 110% from its March low, with the artificial intelligence data provider reporting 10% revenue growth over the full year. 

The Xero share price is up 58% from its March low. Xero’s financial year ends 30 March, so the coronavirus crisis had a very limited impact on its most recent results. The accounting software provider reported 29% growth in annualised monthly recurring revenue as well as 30% growth in operating revenue over the year.

Kogan shares have also outperformed, gaining around 355% from their March lows. Kogan has benefitted from the shift to online shopping prompted by the pandemic, reporting growth of 95% in gross sales in 4Q FY20, and 115% growth in profit. 

New additions to the index 

A rebalance in June added 5 new shares to the index and resulted in one removal. Over The Wire Holdings Ltd (ASX: OTW) was dropped from the index. New additions were Seek Limited (ASX: SEK), Tyro Payments Ltd (ASX:TYR), Temple & Webster Group Ltd (ASX: TPW), Nitro Software (ASX: NTO), and RPMGlobal Holdings Ltd (ASX: RUL).

These new additions add further depth and breadth to the index: 

Company	Market Cap	Business
Seek	$7.7 billion	Online employment advertising.
Tyro Payments	$1.8 billion	Payment system provider enabling debit and credit card payments.
Temple & Webster	$943 million	Online furniture and homewares retailer.
Nitro Software	$377 million	Develops software used to create, edit, sign, and secure PDF files and digital documents.
RPMGlobal Holdings	$219 million	Provides technical consulting, training and software licensing and support products and services to the mining industry.

Since joining the index, the Temple & Webster share price has gained 38% with gross sales in June up 130% over the prior corresponding period. Tyro Payments has also seen its share price rise over 5% since joining the index in June, with transaction volumes recovering in June giving a 15% increase in transaction volumes in FY20. 

Foolish outlook

The All Technology Index had a rocky start but has bounced back from the March meltdown to lead the share market recovery. Many of its constituent shares are benefitting from trends arising from the spread of COVID-19, including the shift to digital commerce and payments. This has seen share prices rise, boosting the overall index. 

More reading

• Which ASX furniture share has the edge?
• Is it time to dollar-cost average into ASX shares?
• ASX 200 up 0.25%: Lynas rockets on U.S. deal, gold miners surge, bank shares tumble
• Why Lynas, Northern Star, REA Group, & Sezzle shares are storming higher
• 3 unloved ASX growth shares that could make you rich

Kate O’Brien owns shares of Altium and Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd, Link Administration Holdings Ltd, RungePincockMinarco Limited, Temple & Webster Group Ltd, Tyro Payments, and Xero. The Motley Fool Australia owns shares of and has recommended Emerchants Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, and WiseTech Global. The Motley Fool Australia has recommended carsales.com Limited, Kogan.com ltd, Link Administration Holdings Ltd, Nitro Software Limited, REA Group Limited, RungePincockMinarco Limited, SEEK 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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