Author: therawinformant

The Respiri Ltd (ASX: RSH) share price has today reached 52-weeks highs, following news that the eHealth company signed a merchant services agreement with major payments share Zip Co Ltd (ASX: Z1P). The Respiri share price is currently trading over 17% higher at 17 cents per share.

What does Respiri do?

Respiri is a medical technology company that develops devices and mobile health applications, with the aim of improving patient self-management of chronic, costly respiratory disorders. Respiri’s technology is used in major hospitals in UK, Europe, USA, Japan, Korea and Australia.

The company’s flagship device ‘wheezo’ employs machine learning to provide personalised feedback and education to patients. Its goal is to help improve quality of life for children and adults who suffer from diseases like asthma, diabetes and cardiovascular illness. Furthermore, it aims to dramatically reduce hospital admissions and the economic burden from these diseases.

Respiri’s operations are based in Melbourne, Australia.

Why is the Respiri share price storming higher?

The Respiri share price is climbing on the announcement of a merchant services agreement with well known buy now, pay later (BNPL) service provider, Zip.

Respiri CEO Mr Marjan Mikel noted:”Our Agreement with ZIP provides asthmatic patients seeking access to our platform additional financial flexibility when making these important healthcare decisions relating to improvements in the management of their disease.”

As recently as last Friday, the company also announced that it had signed an exclusive sales agreement with Cipla Australia for wheezo. Cipla Ltd is a globally recognised pharmaceutical company. The deal saw the Respiri share price jump over 30% on Friday alone. 

The agreement with Cipla is for an initial minimum order quantity of 2,000 with delivery in October. It has a 5-year term, with a 3-year renewal option. According to Respiri, Cipla Australia possesses significant sales and marketing infrastructure, covering over 80% of the pharmacy market in Australia.

Foolish takeaway

The Covid-19 crisis has seen a shift toward remote care to try to keep patients out of hospitals, lower costs and improve care. In my view, these factors will encourage greater adoption of Respiri’s remote patient monitors, and the company’s partnerships with Zip and Cipla will also make it easier for consumers to acquire Respiri’s products.

Respiri shares have been storming higher so far this year, as the company sees high demand for its software-as-a-service platform. This demand has seen the Respiri share price rise by more than 70% in 2020.

More reading

• Top brokers name 3 ASX shares to sell next week
• How I’d build a $100,000 ASX portfolio of growth shares
• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower
• How to pick an ASX 200 share market bubble
• Why the Zip Co share price sank 11% lower today

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

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The S&P/ASX 200 (ASX: XJO) is down over 10% compared to this time a year ago. Individual share performances have varied in the wake of the coronavirus pandemic with some surging and others wilting. 

The shift to eCommerce hastened by the onset of the virus is benefiting online operators. Healthcare companies involved in treatment of coronavirus have also been favored by investors. Meanwhile, gold miners have performed well as investors seek safe haven assets. We take a look at why these nine shares have more than doubled in value over the past year. 

9 ASX shares that have doubled in value over the last year

Australian Ethical Investment Limited (ASX: AEF) 

The Australian Ethical Investment share price is up 210% compared to a year ago. The managed funds and superannuation company invests more than $4 billion for over 57,000 customers in accordance with ethical and sustainability principles. Its Emerging Companies Fund returned 13.9% after all fees in FY20 against a benchmark of negative 7.4%. Australian Ethical Investment earned a performance fee of $3.64 million thanks to the Fund’s outperformance. The company is now expecting underlying profit after tax of between $9 and $9.5 million in FY20, an increase of 41% from FY19. 

Kogan.com Limited (ASX: KGN) 

The Kogan share price has risen 228% over the past year with the online retailer’s performance accelerating during lockdown. Kogan sells a wide range of products from consumer electronics to appliances, homewares, hardware, and toys. During lockdown, demand for homewares and electronics surged, facilitating more time spent living and working from home. Kogan saw gross sales rise more than 100% in April and May. Gross profit grew by more than 130% over the same period. Kogan is benefitting from the ongoing shift to eCommerce which has been hastened by the onset of coronavirus. 

Afterpay Ltd (ASX: APT)

The biggest of the buy now, pay later (BNPL) providers by market capitalisation, the Afterpay share price is up 186% over the past year. Afterpay is benefitting from the move to digital payments, settling record transaction volumes through 4QFY20. Over the full year, Afterpay delivered underlying sales of $11.1 billion, a 112% increase on the previous year. Fourth quarter underlying sales were the highest ever at $3.8 billion, 127% above 4Q FY19. This reflects the accelerating shift to eCommerce which has occurred since the pandemic broke out. The net transaction margin for FY20 is expected to be approximately 2%, underpinning a pathway to longer term profitability for the business. 

Opthea Ltd (ASX: OPT) 

The Opthea share price is up 173% over the past year and has recovered well from the March market correction. The rise in its share price saw Opthea joining the S&P/ASX 300 (XKO) in the most recent quarterly rebalance. Opthea is developing a novel therapeutic to improve vision and reduce retinal swelling in patients with eye diseases. Its product candidate is currently undergoing Phase 2 clinical trials to determine if it improves visual acuity in patients suffering from Wet Age-related Macular Degeneration and Diabetic Macular Edema. The prevalence of both diseases is on the rise due to the aging population and increasing prevalence of diabetes worldwide. 

West African Resources Ltd (ASX: WAF) 

The West African Resources share price has increased nearly 170% since this time a year ago. The company is a gold miner operating in West Africa that has benefitted from the rise in the gold price over recent months. Gold was trading at around $2200 at the start of 2020 but has risen to around $2600 per ounce currently. In the year to 30 June, West African Resources smelted 37,807 ounces of gold and shipped 35,080 ounces. This ASX share reported it held US$65.6 million in cash and gold at 30 June 2020. 

Ramelius Resources Limited (ASX: RMS) 

The Ramelius Resources share price has gained 134% over the past year. Another gold miner to benefit from rising gold prices, Ramelius Resources operates a number of gold projects in Western Australia. The company produced 86,517 ounces of gold in the June quarter and a record 230,426 ounces in FY20. The balance sheet remained robust with cash and gold of $185.5 million and a reduced debt figure of $24.4 million at the end of June. This gives a net cash position of $161.1 million. 

Mesoblast Limited (ASX: MSB) 

The Mesoblast share price has risen 123% in the last year with its cell therapy remestemcel-L proving beneficial in the treatment of seriously ill COVID-19 patients. In April, Mesoblast reported a significant increase in survival for coronavirus patients with acute respiratory distress syndrome (ARDS) who were given the treatment. Remestemcel-L is currently undergoing phase 3 trials to assess its use in adult ARDS patients. During the nine months to the end of March, Mesoblast’s revenues increased 113% reaching US$31.5 million. Loss after tax reduced to US$45.3 million over the period, with cash in hand of US$60 million plus another US$90 million raised in May. 

Codan Limited (ASX: CDA) 

The Codan share price is up 111% over the past year with the company reporting it will deliver a record profit in FY20 of around $63 million. Codan provides communications technology, metal detectors, defence electronics, and mining automation solutions. Customers are humanitarian organisations, mining companies, security and military groups. Demand for metal detectors has remained strong across both recreational and gold mining markets. The communication business has also been performing strongly delivering a $7 million project which led to a record sales month in May. Codan reports it has net cash of $85 million on the balance sheet. 

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) 

The Fisher & Paykel share price has climbed 115% over the past year with the healthcare company reporting unprecedented demand for its respiratory devices. Production of some hospital hardware products was doubled or tripled earlier this year. Fisher & Paykel announced record results for the year to 31 March 2020 with profit after tax rising 37% to $287.3 million. For the first three months of FY21, hardware sales have continued to accelerate and hospital consumables were tracking at a one third increase. 

More reading

• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• Top brokers name 3 ASX shares to buy next week
• 3 five-star ASX shares to buy
• These were the worst performing ASX 200 shares last week
• How I’d build a $100,000 ASX portfolio of growth shares

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 Australian Ethical Investment Ltd. and Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and 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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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has started the week in a disappointing fashion. The benchmark index is currently down 0.5% to 6,003.3 points.

Here’s what has been happening on the market today:

South32 update.

The South32 Ltd (ASX: S32) share price has taken a tumble after the release of its fourth quarter update. South32’s update revealed record production at its Brazil Alumina, Hillside Aluminium, and Australia Manganese mines in FY 2020. However, the mining giant’s Illawarra metallurgical coal production was below guidance. This was attributed to challenging strata conditions during the final quarter.

Sydney Airport traffic update.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is dropping lower on Monday after the release of its traffic update for June. According to the release, a total of 172,000 passengers passed through its gates during the month. This was down 94.9% on the prior corresponding period’s ~3.4 million passengers. This comprised 32,000 international passengers (down 97.6%) and 140,000 domestic passengers (down 93.3%).

HUB24 record quarter.

The HUB24 Ltd (ASX: HUB) share price is pushing higher on Monday after revealing a record performance in the fourth quarter. The investment platform provider recorded a net inflow of $1.1 billion for the quarter, which together with favourable market movements, lifted its funds under administration by 14% or $2.1 billion to $17.2 billion. This means that its average monthly net inflows during FY 2020 was $412 million, up 26% from $326 million per month in FY 2019.

Best and worst ASX 200 shares.

The BlueScope Steel Limited (ASX: BSL) share price is the best performer on the ASX 200 with a 3.5% gain. This morning analysts at Macquarie retained their outperform rating and lifted their price target on the steel maker’s shares to $12.55. The worst performer on the ASX 200 has been the Super Retail Group Ltd (ASX: SUL) share price with a 5% decline. This is despite there being no news out of the retailer today.

More reading

• Why CSR, South32, Sydney Airport, & Webjet shares are tumbling lower
• Why the South32 share price is falling today
• HUB24 share price pushes higher on record Q4 performance
• Is the Xero share price in the buy zone right now?
• Coles and 2 more ASX 200 shares to watch this week

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 Hub24 Ltd. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Hub24 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 South32 Ltd (ASX: S32) share price is down by 2.03% at time of writing, after the ASX miner released its quarterly report for the period ending June 2020 earlier this morning. 

South32 is a diversified miner producing bauxite, alumina, aluminium, energy and metallurgical coal, manganese, nickel, silver and lead in Australia, South Africa and South America. It was originally a part of BHP Group Ltd (ASX: BHP) before a demerger took place in 2015. 

What did South32 announce today? 

In its Q4 FY20 report, South32 revealed it achieved record production at its Brazil Alumina, Hillside Aluminium and Australia Manganese mines in FY20. 

Production of materials was mostly above guidance. However, the miner’s Illawarra metallurgical coal production was below guidance, which was attributed to challenging strata conditions in Q4 FY20. 

To strengthen its balance sheet, South32 decided to suspend its on-market share buy-back program on 27 March. As a result, the group confirmed its capital management program remains 92% complete.

In the report, South32 also confirmed it has access to a further US$1.4 billion in liquidity as a result of extending the expiry date of its undrawn revolving credit facility by one year to the end of February 2023. 

Commenting on the quarter, CEO Graham Kerr said:

With uncertainty remaining in global markets we continue to manage our financial position to ensure we retain the right balance of flexibility, efficiency and prudence… Our strong balance sheet and simple capital management framework are designed to reward shareholders as our financial performance improves.

Impairment charge

In the report, South32 confirmed it expects to recognise an impairment as a result of its Metalloys and TEMCO smelters. The hit to its FY20 results is expected to be a pre-tax, non-cash impairment charge of US$109 million. Additionally, one-off pre-tax restructuring costs, which includes redundancies at Metalloys, is estimated to be US$7 million. 

The charges will impact its equity accounted investments and will be excluded from its underlying earnings in FY20. 

About the South32 share price

South32 is currently trading at $2.18. In the past year, the share price has fallen 27.74%. In contrast, the S&P/ASX 200 Index (ASX: XJO) has fallen 10.38%.

According to an ASX release on 27 March 2020, South32 has returned US$2.9 billion to shareholders by way of dividends and a capital management program. 

Additionally, the group is focused on reducing costs to help absorb the potential impact of lower commodity prices over an extended period of time.

More reading

• Why CSR, South32, Sydney Airport, & Webjet shares are tumbling lower
• ASX 200 down 0.5%: Sydney Airport and South32 updates, HUB24 delivers record Q4
• 3 ASX shares to leverage the booming iron ore price
• Is the Xero share price in the buy zone right now?
• Coles and 2 more ASX 200 shares to watch this week

Motley Fool contributor Matthew Donald 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 ASX tech sector continues to be one of the top performing sectors on the ASX,  particularly during the coronavirus pandemic.

In this article I will take you through 2 of my top ASX tech share picks right now: Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).

Altium

The Altium Limited (ASX: ALU) share price was significantly hit during the first month of the coronavirus pandemic. During that time, the share price of the electronic design software company lost around 40% of its value. Since that period, however, it has regained around half of those losses.

Altium recently delivered a very solid set of financial numbers for FY 2020, despite the challenges of the pandemic. The ASX tech share was able to record a 10% increase in revenue to US$189 million. This means that Altium has now recorded 8 consecutive years of double-digit revenue growth. Customer growth also continued strongly. Altium’s Designer platform saw a 14% increase in new seats sold, while its overall subscriber base grew by 17% to over 50,000.

I believe that the Altium growth story is set to continue over the next 5 years, driven by the growing global demand for smart connected devices. With its share price still below pre-COVID 19 levels, Altium is in my buy zone right now.

Appen

Appen is a global leader in providing data for use in machine learning and artificial intelligence (AI). Appen’s business models spans across a range of industries, including technology, automotive, and government sectors.

Despite a drop during the early phase of the pandemic, the Appen share price has performed very strongly during 2020. Since the beginning of the year, it has risen from $22.46 to be trading at $35.68 at the time of writing. That’s a whopping increase of nearly 60%.

Appen recently indicated that the pandemic has not had a significant impact so far on its business operations.

Despite its strong recent rise, the Appen share price remains in my buy zone right now. I believe that Appen is positioned to grow strongly over the next 5 years, driven by the rising global demand for AI products and machine learning markets.

Foolish takeway

Both Appen and Altium are 2 ASX tech shares that I would be happy to add to my ASX share portfolio right now. Both companies have entrenched market positions in far reaching global markets that continue to expand.

In addition, I believe that both companies are well positioned to tap into the rising demand for IoT devices, driven by the growing trend of cloud computing.

More reading

• 4 ASX 200 shares to buy with $4,000
• Want to beat the market? Try these 3 ASX growth shares
• Top brokers name 3 ASX shares to buy next week
• Is Altium a millionaire maker share at this price?
• How I’d build a $100,000 ASX portfolio of growth shares

Phil Harpur owns shares of Altium and Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium. The Motley Fool Australia owns shares of Appen 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 iron ore price is on the rise, reaching nearly $110 per tonne this month. This is the highest price seen since August last year. The increase in coronavirus infections in Brazil has caused supply concerns while demand is rising in China. The Chinese Government has vowed to increase spending on infrastructure construction to combat the economic impacts of coronavirus. Here, we take a look at 3 ASX iron ore shares heavily leveraged to this trend. 

3 ASX iron ore shares to leverage the rising price of iron 

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue Metals share price climbed 10.4% last week on the strength of the iron ore price. One of the world’s largest iron ore producers, Fortescue operates in the Pilbara in Western Australia. The company reported record third quarter shipments of 42.3 million tonnes in the third quarter, 10% higher than 3Q FY19. Year to date shipments were a record 130.9 million tonnes. Fortescue had net cash of US$0.1 billion at the end of the March quarter compared to net debt of US$2.9 billion at the end of March 2019. 

Mt Gibson Iron Limited (ASX: MGX) 

The Mt Gibson Iron share price has climbed 12.7% this month as the iron ore price gains strength. Mt Gibson Iron has assets in the Kimberley and Mid West regions of Western Australia and reported iron ore sales of 1 million wet metric tonnes in the March quarter. Sales revenue totalled $82 million for the quarter. The company had cash and liquid investments of $402 million at the end of the quarter, and no borrowings. In FY19 Mt Gibson delivered a net profit after tax of $44.6 million in total iron ore sales of $230 million. 

BHP Group Ltd (ASX: BHP)

The BHP share price is up 7.6% this month. BHP has an integrated system of five iron ore mines and four processing hubs in the Pilbara region of Western Australia. The miner produced 60 million tonnes (Mt) of iron ore in the March quarter and 181Mt in the nine months to the end of March. Full year guidance is for production of 242 to 253Mt of iron ore. As at 31 December 2019, net debt was US$12.8 billion, at the lower end of the company’s target range. Cash and cash equivalents were US$14.3 billion. This position, along with BHP’s low cost operations, means the company is resilient and expected to generate solid cash flow through the cycle. 

More reading

• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• These were the best performing ASX 200 shares last week
• Why I would buy a2 Milk and these fantastic ASX 50 shares
• Top ASX dividend shares to buy in July 2020
• Should you buy Fortescue shares at an all-time high?

Motley Fool contributor Kate O’Brien owns shares of BHP Billiton Limited and Mount Gibson Iron Limited. 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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Could global biotech company CSL Limited (ASX: CSL) be interested in acquiring a new billion-dollar antivenom business?

According to Bloomberg, US pharmaceutical company Boston Scientific is considering the sale of antivenom business CroFab, which has been estimated to be worth up to US$1 billion. Boston Scientific acquired CroFab along with a jumble of other healthcare products when it acquired British company BTG in 2019. In my view, it could be a perfect addition to CSL’s antivenom portfolio.

CroFab’s antivenom works to treat snake bites. Specifically, North American pit viper snakes, which include rattlesnakes, copperheads, water moccasins. According to CroFab, 98% of venomous snakebites in the United States come from North American pit vipers.

Now, look, I don’t know a lot about snake bites. The only animal I’ve been bitten by was a wombat at Australia Zoo (yes, really). But the way antivenom is produced is tightly aligned with CSL’s expertise. You can watch a fascinating video of how CSL produces its antivenom on YouTube here.

In essence the process involves putting small amounts of the venom’s toxin into horses or sheep which make antibodies without falling ill. The protective molecules are then extracted from their blood and processed to make antivenom.

Why would CSL buy CroFab?

There would be a lot of synergy between CSL and CroFab. CSL has a deep niche in antivenom products which form part of the company’s Seqirus group. CSL even developed the first aid techniques used for dealing with venoms that are now standard in Australia.

CSL also has a history of growing through acquisitions. In fact, I see acquisitions as a key part of the company’s flywheel of success. As well as reinvesting profits into research and development, CSL invests in businesses with market leading positions which match its strong core competencies. Until recently, CroFab was the only antivenom approved by the US Food and Drug Administration for use in North America.

Foolish takeaway

The estimated price tag of US$1 billion for CroFab would be easily digestible for CSL. At the time of writing CSL commands a market capitalisation of more than $128 billion. CSL also has plenty of cash to put towards a possible acquisition. At 31 December 2019 the company held US$669 million cash. Although I’m only speculating that CSL would be interested in buying CroFab, it feels like it would be a great fit for the CSL portfolio.

More reading

• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• 4 ASX 200 shares to buy with $4,000
• How to rebalance your average ASX share portfolio
• 2 easy ASX shares for beginners
• Where to invest $1,000 into ASX shares immediately

Regan Pearson has no position in any of the stocks mentioned.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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 HUB24 Ltd (ASX: HUB) share price is edging higher on Monday after the release of its fourth quarter update.

At the time of writing the investment platform provider’s shares are up almost 1% to $12.88.

How did HUB24 perform in the fourth quarter?

HUB24 continued to experience strong net inflows during the June quarter. It recorded a net inflow of $1.1 billion, which together with favourable market movements, lifted its funds under administration (FUA) by 14% or $2.1 billion to $17.2 billion.

This means that its average monthly net inflows during FY 2020 was $412 million, up 26% from $326 million per month in FY 2019.

Management notes that net inflows were at record levels for a June quarter despite a soft start to the period.

It advised that momentum built following a softer month in April as advisers adjusted to the COVID-19 environment. Once again, this was driven by client transitions from incumbent platforms, including strong inflows from both key accounts and broker clients.

The good news is that further inflows look very likely. HUB24 revealed that its new business pipeline is growing with 34 new licensee agreements signed during the quarter. This includes a new large national licensee, a large national broker, boutique licensees, and self-licensed advisers.

Flows have already commenced from some of these new licensees and it is also gaining momentum from opportunities secured earlier in the year.

As a result, data by Strategic Insights shows that HUB24 has maintained second place ranking for both quarterly and annual net inflows in the Australian platform market behind only Netwealth Group Ltd (ASX: NWL).

HUB24’s market share has increased from 1.3% to 1.94% since March 2019.

Happy customers.

As well as ranking second in both quarterly and annual net inflows, HUB24 ranked second in the Trends Planner Technology report for adviser satisfaction and adviser advocacy.

This means HUB24 has now ranked in the top two platforms for the past five years.

In addition to this, the company notes that its focus on supporting advisers during the COVID-19 pandemic has been well-received. HUB24 was rated the top platform in terms of primary users perceiving they received good support.

It was ranked first place in five categories including the range of investments, client portal, integration with planning software, client reporting, and tax optimisation tools. Overall HUB24 was ranked in the top 2 in 17 out of 25 categories.

Andrew Alcock, Managing Director, commented: ‘’We remain committed to delivering the highest levels of service to support advisers and their clients as they seek to meet their objectives. We would like to thank our customers and our staff for their continued support during this challenging environment.’’

No commentary on its margins.

One thing missing from the update was any commentary regarding its margins.

There have been concerns that the cash rate cuts could weigh heavily on its revenue margins and ultimately its profits. However, investors will have to wait until the release of its full year results in August to see what the damage is (if there is any).

More reading

• The latest ASX stocks to be downgraded by top brokers today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Hub24 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 Xero Limited (ASX: XRO) share price has recovered strongly from its fall during the early phase of the coronavirus pandemic. The Aussie fintech’s share price is now trading at levels similar to and above those seen in mid-February prior to when the pandemic hit.

Xero has had spectacular growth on the ASX over the past three and a half years. The Xero share price has increased from under $18.00 at the beginning of 2017, to now be trading at $91.70. Xero continues to grow strongly in its core home markets of Australia and New Zealand, while focusing on a strong growth trajectory overseas.

Is the Xero share price a buy right now?

Compelling business model

Xero is an online accounting software provider for small businesses. One of Xero’s key competitive differentiators is that its software packages are affordable and user-friendly. This makes them ideal for small businesses. In comparison, some of its competitors’ products can be expensive and more complex to use.

Xero continues to evolve its business model beyond just being a cloud accounting platform. Small business owners are now increasingly relying on Xero to manage not only their finances, but their entire businesses. Xero now offers comprehensive tools and services that cater to a diverse range of business management requirements. For example, the Xero platform can connect with an impressive number of financial institutions. This includes global fintech companies as well as a wide variety of third-party apps. This provides users with a central hub that allows them to easily access the relevant data and tools they require in the running of their businesses.

Strong recent financial performance

Xero’s strong track record of robust financial growth has continued into FY 2020. For the 12 months ending 31 March 2020, revenue increased very strongly by 30% to NZ$718 million. This growth was driven by a 2% increase in average revenue per user. Overall subscribers also continued on their upward trajectory, increasing by 26% to reach 2.29 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) growth was even more impressive. It increased by a massive 52% to reach NZ$139 million. Xero also pleasingly achieved a positive net profit for the first time in its history.

Foolish takeaway

With a strong recent rise, the Xero share price may appear expensive compared to many of the shares on the S&P/ASX 200 Index (ASX: XJO). However, due to its very strong, long-term growth potential, it remains in my buy zone. I believe there is a long runway for growth ahead of Xero over the next decade, especially driven by expansion in the United Kingdom, North American and other global markets.

More reading

• Coles and 2 more ASX 200 shares to watch this week
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• 4 ASX 200 shares to buy with $4,000
• 5 things to watch on the ASX 200 on Monday
• 3 things that will impact on ASX shares this reporting season

Phil Harpur owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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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