Author: therawinformant

The Vocus Group Ltd (ASX: VOC) share price has been an impressive performer over the last two and a half months.

Since the specialist fibre and network solutions provider’s shares fell to a 52-week low of $1.80 in late March, they have rallied a massive 73% to trade at $3.13 today.

Is it too late to buy Vocus shares?

The Vocus share price can still go a lot higher from here according to one leading broker.

A note out of Goldman Sachs this morning reveals that its analysts have reiterated their buy rating and $3.85 price target on the company’s shares.

This price target implies potential upside of 23% for its shares over the next 12 months.

Why is Goldman Sachs bullish?

According to the note, the broker was pleased to see Vocus reiterate its FY 2020 guidance and announce the refinancing of its debt on Thursday.

Vocus revealed that it expects its FY 2020 earnings before interest, tax, depreciation, and amortisation (EBITDA) to be in the range of $359 million to $369 million.

This compares to the EBITDA of $356 million that Goldman was expecting. It believes this is reflective of the resilience of telecom earnings.

Overall, the broker remains positive on its outlook and also on its valuation in comparison to rival TPG Telecom Ltd (ASX: TPM).

Goldman commented: “We stay Buy on Vocus with this update removing two key investor issues (i.e. refinancing & lack of guidance commentary) and helping to de-risk our positive investment view.”

“This is based on: (1) improving Enterprise earnings outlook, with a meaningful opportunity to partner with NBN Co.; (2) favorable valuation (vs. TPM and history); (3) significant infrastructure asset base, which we see as attractive in a low-rate environment,” it concluded.

Should you buy Vocus shares?

While my preference in the telco space remains Telstra Corporation Ltd (ASX: TLS), I think Vocus is a great option as well.

Times have been hard for the company over the last few years, but it finally appears to be on track now to deliver solid growth over the coming years. This could lead to the Vocus share price outperforming over the medium term.

More reading

• 5 things to watch on the ASX 200 on Friday
• The 10 shares that significantly move the ASX 200 index
• Telstra shares and 2 other ASX companies to buy in a low-interest rate world
• Why I would buy these outstanding ASX 50 shares right now
• ASX 200 hits 6,000 points: Westpac provide AUSTRAC update, Vocus reaffirms guidance

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 Atomo Diagnostics Ltd (ASX: AT1) share price is charging higher this morning after expanding its COVID-19 testing partnership with a French biotech company.

Atomo Diagnostics is a medical device company that supplies rapid diagnostic test (RDT) devices to the global diagnostic market. Its RDT platforms simplify testing procedures and enhance usability for both professional users and untrained self-testers. The company has supply agreements in place for tests targeting infectious diseases such as HIV and COVID-19.

Atomo Diagnostics shares are fresh on the ASX scene after listing on 16 April 2020 at an issue price of 20 cents per share. At the time of writing, Atomo Diagnostics shares are changing hands at 34.5 cents per share – 9.52% higher for the day and 72.5% higher than the IPO price. The company’s market capitalisation is currently sitting just below $200 million.

What did Atomo Diagnostics announce?

After the market closed yesterday, Atomo revealed it has expanded its COVID-19 rapid test partnership with NG Biotech.

Under the existing agreement, Atomo has been supplying NG Biotech with its Galileo rapid test device for use in NG Biotech’s COVID-19 antibody tests. The initial order under the agreement was for 397,200 devices, with NG Biotech having the right to purchase up to 2.465 million devices.

To date, NG Biotech has ordered more than 1.5 million Galileo devices for testing in France. NG Biotech’s test has been CE Marked for professional use in Europe and results are obtained from a drop of blood in 15 minutes.

Under the expansion of the partnership, Atomo now has exclusive rights to market and distribute the COVID-19 antibody test in Australia, New Zealand, and a number of countries in South East Asia – subject to obtaining regulatory approvals in each jurisdiction. The test will be marketed and distributed under the brand ‘AtomoRapid COVID-19 (IgG/IgM)’ and Atomo will be the listed manufacturer.

The pricing arrangements with NG Biotech are limited to a price payable per unit only and do not include any license fees or royalties.

Atomo noted that the period of exclusivity is not currently limited and it is in the process of negotiating a definitive long-term supply agreement with NG Biotech.

What now?

Atomo will now progress regulatory applications within the relevant jurisdictions in the coming months. Based on an assessment of regulatory pathways, the company’s initial focus will be Australia, the Philippines, Hong Kong and Taiwan.

Commenting on the partnership expansion, Atomo’s co-founder and managing director John Kelly said:

“Atomo is delighted to have secured exclusive rights to market, as the listed manufacturer, the COVID19 test which NG Biotech has successfully launched in Europe with initial sales to the French Ministry of the Armies (Defence) and a number of public hospitals, following strong results in independent French clinical studies.”

More reading

• Is the Westpac share price too high?
• The Xero share price just hit a record high: Is it too late to invest?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares
• Qantas share price soars on plans to increase domestic flights

Motley Fool contributor Cathryn Goh 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 Westpac Banking Corp (ASX: WBC) share price had another strong day yesterday, surging 1.28% to $18.18 per share.

While the S&P/ASX 200 Index (ASX: XJO) edged 0.84% higher, Westpac was one of the ASX 200 shares leading the way.

At the time of writing, shares in the Aussie bank were up 5.57% this week, but are they overvalued today?

Is the Westpac share price overvalued?

The ASX bank shares have been on a rollercoaster ride in 2020. The Westpac share price slumped as low as $13.47 in mid-March amid the bear market.

There’s been a strong rebound since, despite weak economic data and Australia heading towards a recession. But Westpac may no longer be the bargain buy it once was. 

Many, including Westpac, announced billions of dollars of impairments in April and May due to COVID-19. However, loan quality may not deteriorate if the economy bounces back quicker than expected.

But all of this seems to ignore the impending recession and its impact on the Aussie economy. The share market is inherently forward-looking but I don’t think all economic impacts are fully priced in.

There’s a lot of cash flying around in markets right now. With interest rates sitting as little as 0.25%, not many people like the idea of savings accounts or bonds for a strong return.

That means you could look towards ASX shares. The Westpac share price is still a long way down from its $30.05 52-week high. It’s been a big 12 months for the Aussie bank highlighted by its AUSTRAC scandal and the subsequent fallout.

Foolish takeaway

I still think the Westpac share price could climb higher and surpass $20 per share in 2020. There could be more volatility ahead, but that’s not necessarily a bad thing if you’re a long-term investor who is willing to buy and hold.

More reading

• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.8%, travel shares fly higher
• This ASX 200 stock is well placed to beat earnings expectations

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

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The Xero Limited (ASX: XRO) share price has been a strong performer in 2020 despite the market volatility.

In fact, on Thursday the cloud-based business and accounting platform provider’s shares raced to a record high of $91.49.

When Xero’s shares hit that level, it stretched their year to date gain to just under 15%. This compares very favourably to a 10.5% decline by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the Xero share price at a record high?

Investors have been driving the Xero share price higher this year after it continued to deliver strong growth across key metrics.

In FY 2020 Xero delivered a 30% increase in operating revenue to NZ$718.2 million and a 29% jump in annualised monthly recurring revenue to NZ$820.6 million.

This was driven by increases in both its average revenue per user and total subscribers. The latter rose 26% to 2.285 million subscribers thanks to the addition of 467,000 net subscribers during the 12 months.

And due to the benefits of scale, Xero’s earnings grew even quicker. The company reported a 52% increase in earnings before interest, tax, depreciation, and amortisation to NZ$139.17 million.

It also recorded its first net profit. Xero’s profit after tax came in at NZ$3.34 million for the year, compared to a loss of NZ$27.14 million a year earlier.

Is it too late to invest?

While Xero’s shares certainly aren’t cheap, I would still be a buyer of them if you planned to invest with a long term view.

At the end of the year Xero had 2.285 million subscribers. Although this is a large number, it is still on a fraction of its addressable market. Management estimates that less than 20% of the English-speaking addressable cloud accounting market has adopted cloud platforms.

This means there is still a material market opportunity for the company over the next decade. And given the quality of its product, I expect it to capture a growing slice of this market over the long term and drive strong earnings growth.

More reading

• 3 stellar ASX growth shares I would buy right now
• Are Megaport shares the ones to buy and hold beyond 2030?
• 3 large cap shares beating the ASX 200 this year
• Should the Xero share price have a P/E ratio of 4,000?
• 2 cheap ASX 200 shares to buy right now

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia 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’s been an interesting time for investors this year. The coronavirus pandemic caused the BHP Group Ltd (ASX: BHP), National Australia Bank Ltd. (ASX: NAB) and Afterpay Ltd (ASX: APT) share prices to plummet in March. Furthermore, the S&P/ASX 200 Index (INDEXASX: XJO) has fallen 16.47% from its February high. Whilst both BHP and National Australia Bank have gone on to rebound considerably, the Afterpay share price has not only also done this, but actually reached new, all-time highs. 

Share price falls present an opportunity for anyone considering investing in the ASX 200. When taking on board Warren Buffett’s wise words, investors should “be greedy when others are fearful and fearful when others are greedy”.

Even at today’s prices, I believe these 3 ASX 200 shares offer good value and could provide great, long-term returns for investors.

BHP share price

BHP is one of the oldest companies listed on the ASX, known for investing in high-quality resource assets. Currently, BHP is involved with iron ore, coal, copper, nickel, potash and petroleum. It has achieved significant growth over 135 years but recent turmoil has seen its share price trade at a hefty discount. The BHP share price has fallen 11.8% from its January high.

However, I believe BHP’s growth appears set to continue. At the end of March, BHP had 6 projects under development with a combined budget of US$11.4 billion over the life of the projects. These projects mean BHP will continue to maintain and expand its production in the years ahead.

BHP is committed to paying dividends to shareholders. Its current dividend policy states it will payout 50% of underlying profit in a given period. This means shareholders can expect an ongoing income stream from BHP. The policy should also support continued growth of the BHP share price. 

At the time of writing, BHP trades on a trailing dividend yield of 6.02% fully franked. This is a huge yield in the current interest rate environment and shows that BHP offers great value to investors at its share price today.

NAB share price

NAB has been in the news lately through its recent decision to raise capital from investors. When analysing the bank, however, it could be seen to offer great value. In February, the NAB share price reached $27.31, it now sits at $18.92 which represents a fall of just over 30%. This drop shows the capital raising and the damage to the bank’s balance sheet brought on by the coronavirus crisis. However, it also represents a good opportunity to invest in NAB shares at today’s price.

If the NAB share price eventually recovers to its previous high, which is very possible assuming no further significant setbacks, shareholders will make a 44% gain on shares purchased at today’s price. This represents great value and suggests that investors can make significant gains from investing in NAB shares.

NAB has a pro forma CET1 ratio of 11.2% after its capital raising. This suggests that the bank is in good financial health by international standards. If several of NAB’s loans turn bad, it still has a solid capital buffer to remain in business and continue lending.

NAB trades on a trailing dividend yield of 6.04% fully franked. Following its capital raising, NAB has promised to continue paying dividends to shareholders.

Afterpay share price

Investors usually invest either for growth or income. While Afterpay does not currently offer income, it does offer growth. At today’s share price, investors could make considerable gains. Especially if Afterpay is successful in its current growth ambitions. Afterpay has over 8.4 million users worldwide and plans to become a major payment service provider. This would see it rival major industry players like Visa or Mastercard.

While it is growing rapidly, Afterpay is already offered by 48,400 retailers worldwide. It’s true that this scale may not be up there with the major payment providers, but it does offer room for considerable expansion. When more retailers and, therefore users, take up Afterpay, it could also become a takeover target as major technology or financial companies attempt to capitalise on the platform’s popularity. The likelihood of this is reinforced by an announcement last month which saw Afterpay welcome an investment by major Chinese technology company, Tencent Holdings Ltd (HKG: 0700). 

Tencent currently has revenue per share of $1.51 which is less than the Afterpay share price. However, it is important to consider the scalability of Afterpay’s platform. If this company becomes a major global player as planned, this figure could grow phenomenally, leaving today’s Afterpay price a distant memory.

Foolish takeaway 

BHP, NAB or Afterpay shares could be a great investment at today’s prices. When contemplating which company to invest in, buyers should consider if they are primarily targeting growth or income. In my opinion, both NAB and BHP offer great income at their current share prices. Today’s Afterpay share price, on the other hand, offers the potential for phenomenal growth and the possibility of a takeover in the future. Whilst investors should consider their individual needs and invest accordingly, I believe all 3 of these companies offer great value at today’s share prices. 

More reading

• Is the Westpac share price too high?
• Why today might be a good day to buy NAB and Westpac shares
• Could the Openpay share price signal a wider boom for BNPL?
• 3 small cap ASX tech shares that could be stars of the future
• 5 things to watch on the ASX 200 on Friday

Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T 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 Index (Index:^AXJO) is poised to open weaker this morning. But the pullback might be an opportune time to buy National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

The broader market weakness is no thanks to weak leads from Wall Street on worries that stocks have run too far ahead of fundamentals.

But there’s value to be found in the NAB share price and Westpac share price, at least that’s according to UBS.

Last few places on the ASX to find value

The broker just upgraded these stocks to “buy” from “neutral” as the sector is one of the last few places you can find value.

It isn’t only the COVID-19 pandemic that’s been weighing on bank shares. Competition from fintechs, pressure from the banking regulator to increase their cash buffers, the fallout from the Haynes Royal Commission and tumbling interest rates are just some of the other punishing headwinds.

Shares in the big banks, excluding Commonwealth Bank of Australia (ASX: CBA), are trading at their lowest multiples in 27 years, noted UBS.

Light at the end of the tunnel

“However, with the economic outlook less bleak than anticipated even a few weeks ago,” said the broker.

“The likelihood of a further deterioration in asset quality and RWA [risk weighted asset] inflation driving additional highly dilutive capital raisings has reduced materially.

“The lower reliance on JobKeeper (wage subsidies) than government expectations also provides some flexibility for further targeted stimulus as current packages, loan deferrals and rental relief expires in October.”

Banks will recover ahead of the economy

While we the coronavirus will continue to have an impact on the economy until a vaccine is found, the broker pointed out that the market factor in the recovery before then, barring a sharp deterioration in the economy.

It’s also worth noting that the damage from the COVID-19 crisis hasn’t been as bad as what many experts (and the government) were expecting. Despite this, the government is adding to its record stimulus to get our economy back on its feet.

ASX banks could re-rate

What this means is that the threat of ballooning bad debt shouldn’t be as bad as forecast, and that will be a trigger for a re-rating in the sector.

“Although sustained low rates will weigh on NIM [net interest margin] and credit growth will be anaemic, a sector ROE of ~9% looks possible,” said UBS.

“At these levels, the banks could re-rate to around book value, and with an 80% payout ratio offer ~7.2% dividend yield.”

More reading

• Is the Westpac share price too high?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.8%, travel shares fly higher
• This ASX 200 stock is well placed to beat earnings expectations

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

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The Qantas Airways Limited (ASX: QAN) share price was a strong performer on Thursday.

The airline operator’s shares jumped 7% to $4.49 after announcing plans to increase the number of domestic flights in June and July.

What did Qantas announce?

With travel restrictions starting to ease across the country, both Qantas and Jetstar will increase their domestic and regional flying for June and July.

According to the release, the additional services will see capacity increase from 5% of pre-pandemic levels, to 15% by the end of June. This represents an increase of more than 300 return flights per week.

The company is prepared to further increase the number of flights it operates in July. This will depend on travel demand and the further relaxation of state borders. Qantas revealed that it has the ability to increase the number of flights to upwards of 40% of its pre-crisis domestic capacity by the end of July.

Where will Qantas be flying to?

The company advised that the additional flights include more services on capital city routes. This is particularly the case with Melbourne-Sydney and a number of routes to-and-from Canberra.

As travel restrictions start to ease domestically, Qantas and Jetstar will increase domestic and regional flying for June and July, with more than 300 additional return flights per week by the end of June. Read more: https://t.co/iW5sNBpPtZ pic.twitter.com/DNO3HM2p57

— Qantas (@Qantas) June 4, 2020

https://platform.twitter.com/widgets.js

As you can see above, it will also increase intra-state flights for Western Australia, Queensland, New South Wales, and South Australia. Weekly flights to Broome, Cairns, and Rockhampton will see also receive significant boost.

In addition to this, flights will resume on eight routes that are not currently being operated. This includes flights from Sydney to Byron Bay, which previously saw its route launch postponed because of the pandemic.

Will there be enough demand?

Also supporting the Qantas share price on Thursday were positive comments by Qantas CEO, Alan Joyce.

Mr Joyce believes Australians are eager to take to the skies again. He commented: “We know there is a lot of pent up demand for air travel and we are already seeing a big increase in customers booking and planning flights in the weeks and months ahead.”

“We are gradually adding flights in June as demand levels increase, which will go from 5 per cent of pre-crisis levels currently to 15 per cent by late June. We can quickly ramp up flying in time for the July school holidays if border restrictions have eased more by then,” Joyce added.

Mr Joyce also revealed that Qantas is taking precautions to make the flying experience safe for travellers.

He explained: “Customers will notice a number of differences when they fly, such as masks and sanitising wipes, and we’ll be sending out information before their flight so they know exactly what to expect and have some extra peace of mind. Importantly, the Australian Government’s medical experts have said the risk of contracting Coronavirus on an aircraft is low.”

Overall, this looks like a big positive for Qantas and should help limit the cash burn it is currently experiencing.

More reading

• ASX 200 rises 0.8%, travel shares fly higher
• This ASX 200 stock is well placed to beat earnings expectations
• Why the Alliance Airlines’ share price is surging higher
• Is the Qantas share price a buy?
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging higher

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

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