Category: Stock Market

The Iress Ltd (ASX: IRE) share price is on the move on Tuesday morning.

In early trade, the financial technology company’s shares are up 1.5% to $11.78.

Why is the Iress share price pushing higher?

Investors have been bidding the Iress share price higher today following an update on a planned divestment.

According to the release, the company has decided against divesting its UK Mortgages business.

Last year, as part of a Board-led strategy review, Iress decided that it would explore potential opportunities to divest its Mortgages business. This decision reflected the potential to achieve higher returns under new ownership, as well as providing the company with an opportunity to redeploy the anticipated sale proceeds to enhance returns to shareholders.

However, after a thorough and well considered process, the company has had a change of heart and now believes the best outcome for shareholders and clients is to retain the business. Particularly given declining technology valuations.

Iress’ Chief Executive, Andrew Walsh, commented: “The Mortgages business continues to perform strongly, contributing £16.1m of revenue and £6.4m of NPAT in 2021. In recent months, Mortgages has increased its pipeline of opportunities as lenders demand greater scale, efficiency and automation in mortgage processing.”

“During the sale process, global market volatility increased and technology company valuations declined. It became evident that purchasers’ valuations were likely to be below levels that represent a reasonable return to Iress’ shareholders. As a result, the Board has decided to cease the divestment process and retain the business,” Walsh added.

Guidance update

Iress also took this opportunity to advise that its guidance for FY 2022 remains unchanged.

It continues to expect:

• Segment profit growth of 7% to 10%
• Underlying net profit after tax growth of 25% to 37%
• Underlying earnings per share of 40 cents per share to 44 cents per share in constant currency

Management also revealed that it has upgraded its FY 2025 growth target (including Mortgages) to net profit after tax of $120 million to $135 million. This will be a big increase on the net profit of $73.8 million recorded in FY 2021.

The post Why is the Iress share price pushing higher today? appeared first on The Motley Fool Australia.

More reading

• 2 defensive ASX dividend shares for long-term income
• Why Tesla stock keeps falling
• All that glitters isn’t gold: Here are the worst performing ASX mining shares of the quarter
• Lithium watch: Broker tips Lake Resources share price to rocket 42% higher
• Here’s a look at the laggards from ASX tech shares last quarter

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In this period of uncertainty and volatility, it would be understandable for some investors to be looking for defensive ASX dividend shares.

These are companies that have been providing shareholders with consistently growing dividends for a number of years.

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

Soul Pattinson is one of the oldest businesses on the ASX, having been listed in 1903.

It operates as an investment house, meaning it has a portfolio of various assets in different sectors. Soul Pattinson says its investment approach is “focused on investing in resilient businesses with good long-term prospects and excellent management”.

The ASX dividend share has a portfolio of large caps and a portfolio of small caps, as well as large positions and private equity investments. In terms of key sectors, it’s invested in telecommunications, building products, property, agriculture, resources, and financial services.

Three of its largest investments include Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), and New Hope Corporation Limited (ASX: NHC).

Some of its other sizeable investments include Tuas Ltd (ASX: TUA), Pengana Capital Group Ltd (ASX: PCG), Apex Healthcare, Round Oak Metals, Ampcontrol, Ironbark, and Aquatic Achievers.

One of Soul Pattinson’s main aims for shareholders is to grow the dividend. It has increased its annual dividend every year since 2000.

When the company released its FY22 half-year result, Soul Pattinson Chair Robert Millner said:

The outlook for cash generation looks strong and has enabled the board to increase the interim dividend consistent with its policy objective of steadily growing dividends.

WHSP is the only company in the All Ordinaries Index (ASX: XAO) to have increased its dividend every year for more than 20 years.

The company lifted its interim dividend by 11% to 29 cents a share in its latest report. It currently has a grossed-up dividend yield of 3.25%.

Sonic Healthcare Limited (ASX: SHL)

Sonic Healthcare is a large pathology business with operations in countries including Australia, Germany, the US, and New Zealand. Additionally, Sonic Imaging Australia is the second-largest radiology provider in Australia.

This ASX dividend share has a stated progressive dividend policy. It has grown its dividend every year for the past decade with steady organic growth and acquisitions.

Profit has been boosted over the last two years with COVID-19 testing. It has processed millions of tests. Sonic has used some of this money to make earnings-accretive acquisitions such as Canberra Imaging.

The company expects a sustainable level of COVID-19 testing into the future, including routine testing, screening programs, variant testing, whole genome sequencing, and antibody tests.

In the latest result, which was for the six months to 31 December 2021, the ASX dividend share grew its interim dividend by 11% to 40 cents per share.

At a franking rate of 100%, Sonic Healthcare has a grossed-up dividend yield of 3.9%.

The post 2 defensive ASX dividend shares for long-term income appeared first on The Motley Fool Australia.

More reading

• Top ASX dividend shares to buy in April 2022
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• 3 reasons why the Sonic Healthcare (ASX:SHL) share price could be an opportunity
• Top ASX shares to buy in April 2022

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Sonic Healthcare Limited and TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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

What happened

For the second trading day in a row, Tesla (NASDAQ: TSLA) stock drove lower on Monday, down 3.7% as of 10:50 a.m. ET.

You can blame China for that. 

So what

Tesla’s problems in China began about a month ago, when a resurgent coronavirus forced the local government to declare a quarantine in Shanghai, where Tesla’s Chinese gigafactory is located. In cooperation with the quarantine, Tesla shut down production at its Shanghai plant, then reopened, then shut down again at the end of the month.

That second shutdown has now continued for more than two straight weeks, as Reuters confirms today. As a result of the shutdown, Tesla ended up with basically flat production numbers between February and March, and March’s tally of 55,462 electric cars assembled was down 18.5% from January’s 68,117. 

Now what

Now here’s why this is important to Tesla investors — and why it may provide a glimpse of what may happen next.

According to Reuters, “Chinese buyers have rushed to place orders, worried that Tesla may raise prices further after announcing price hikes in November and March due to the higher costs of raw materials.” So if and when the Shanghai plant opens back up, you can expect backlogged orders to quickly be filled, producing a boom in Tesla production and deliveries — perhaps as early as this later this month.

However, if buyers are largely buying in order to front-run anticipated price hikes, then those orders, that production, and those deliveries will most likely pull forward sales of electric cars that would otherwise have happened in May or later.

Result: You can expect to see Tesla’s Chinese numbers improve once the Shanghai lockdowns go away — but then probably fall again shortly afterward. This is going to make it hard for longer-term investors to discern any particular trend in Tesla’s China sales.

As always, caveat investor. 

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

The post Why Tesla stock keeps falling appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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ASX mining shares were the star performers last quarter, with the basket coming clearly out on top.

The S&P/ASX 300 Metal & Mining Index (ASX: XMM) gained 14.7% between December 31 and March 31. The S&P/ASX 200 Materials Index (ASX: XMJ) also rose by 11.9% during the period. In contrast, the broader S&P/ASX 200 Index (ASX: XJO) edged just 0.74% higher.

While some names flourished and kept the sector easily afloat, it wasn’t bonanza shareholder returns for everyone involved.

Here are the laggards of the mining sector for the three months of trade to 31 March 2022.

Underperforming ASX mining shares last quarter

We’ll talk in terms of percentage change for the quarter, as the list differs when talking in terms of points and dollars.

Taking out the top spot for ASX mining laggards is Australian Strategic Materials (ASX: ASM), which slid 28.8% for the three months. This was followed closely by Chalice Mining Ltd (ASX: CHN) with a 26.3% loss.

Perenti Global Ltd claimed third spot, falling 19.35%.

Perhaps surprisingly, nickel player Nickel Mines Ltd (ASX: NIC) saw an 11.9% down-step too. Even as nickel prices surged to record heights in the quarter, the company’s relationship with a large nickel supplier and trader had the market nervous about the stock.

Not all the laggards were in the red, however. Further down the list are shares such as Alumina Limited (ASX: AWC) with a 7.5% gain. That’s not bad, but not great compared to the other winners.

One of the larger ASX mining shares, Pilbara Minerals Ltd (ASX: PLS), finished flat for the quarter.

Below are the top 10 underperforming ASX mining shares for the March quarter in table form.

Ticker	Company Name	Quarterly return (%)
ASM	Australian Strategic Materials	-28.8
CHN	Chalice Mining Ltd	-26.35
PRN	Perenti Global Ltd	-19.35
RSG	Resolute Mining Limited	-15.38
INR	Ioneer Ltd	-13.75
SFR	Sandfire Resources Ltd	-13.68
NIC	Nickel Mines Ltd	-11.89
RMS	Ramelius Resources Limited	-8.28
IMD	Imdex Limited	-8.14

The post All that glitters isn’t gold: Here are the worst performing ASX mining shares of the quarter appeared first on The Motley Fool Australia.

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• How did ASX lithium shares perform today?
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• Pilbara Minerals share price higher on lithium conversion facility update

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Imdex Limited. The Motley Fool Australia owns and has recommended Imdex Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Lake Resources (ASX: LKE) share price was a strong performer on Monday.

The lithium developer’s shares ended the day 7% higher at $1.99 thanks to the announcement of an offtake agreement with auto giant Ford. This was the second agreement of its kind in as many weeks.

Following yesterday’s gain, the Lake Resources share price has now risen 82% in 2022.

Where next for the Lake Resources share price?

The good news for investors is that one leading broker believes the Lake Resources share price can still climb a lot higher from here.

According to a note out of Bell Potter this morning, the broker has retained its speculative buy rating and lifted its price target by 55% to $2.83.

Based on the current Lake Resources share price, this implies potential upside of 42% for investors over the next 12 months.

What did the broker say?

Bell Potter was pleased to see the company sign another offtake agreement, noting that it now has exposure to both Japanese and North American electric vehicle markets.

It commented:

“LKE has now announced two non-binding Memorandum of Understandings covering all of the proposed 50ktpa initial lithium product offtake from its Kachi Project (LKE 75%). The Hanwa Co., Ltd non-binding MoU (announced 29 March 2022) for 25ktpa will potentially align LKE with Japanese battery and auto manufacturers. Today’s announced non-binding MoU with Ford Motor Corporation covering 25ktpa adds a further highly credible potential counterparty with a focus on North American markets.

The agreements and the counterparties add support to ongoing financing and predevelopment activities for Kachi. They also highlight auto manufacturers’ increased interest in participating further up the battery minerals supply chain and with an eye to the ESG credentials of raw materials providers.”

As for its valuation, the broker has bumped up its price target on the Lake Resources share price materially to reflect a lowering of its risk profile.

It explained:

“LKE’s key project is the 50ktpa lithium carbonate Kachi Lithium Brine Project in Argentina. This project is expected to employ direction lithium extraction technology which has enormous ESG benefits compared with incumbent brine and hard rock lithium production methods. […] we have upgraded our valuation to $2.83/sh (previously $1.82/sh) through a reduction in risk discount.”

The post Lithium watch: Broker tips Lake Resources share price to rocket 42% higher appeared first on The Motley Fool Australia.

More reading

• How did ASX lithium shares perform today?
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• Why IGO, Lake Resources, Regis Resources, and ResApp shares are charging higher
• Lake Resources share price shoots 16% higher on lithium deal with Ford
• Lake Resources share price on watch following lithium deal with car giant Ford

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Global tech shares have been rocked in 2022 as equity markets test themselves against a morphing investment landscape.

Whilst Australian benchmarks like the S&P/ASX 200 Index (ASX: XJO) have snapped back in the past month of trade, the tech index has failed to enjoy such a luxury.

Instead, the S&P All Technology Index (ASX: XTX) started the year up at 2,984 and slipped down to 2,536 by the quarter’s end, eventually booking a 15% loss.

Now as yields on government bonds – also used as the discount rate in share valuations – surge past 3% for the first time in years, pressure remains on heavily volatile tech shares at present.

The trend’s been in situ since trade restarted back in January, and there have been some seriously underwhelming performances in that time. Here’s a look at the laggards in the tech industry from last quarter.

Last place in from March quarter goes to…

Undoubtedly there was some serious carnage last quarter for ASX tech shares. Taking the bottom 41 names in descending order, as a group, the average loss was 31.84% whilst the median loss (exactly in the middle) was 28.43%.

Leading the way was Cettire Ltd (ASX: CTT) with a stunning 68% loss for the three months, whilst Advanced Human Imaging Ltd (ASX: AHI) also lost 67%.

Sezzle Inc (ASX: SZL) wasn’t far behind printing a 55.5% backstep for the quarter, whilst Marley Spoon AG (ASX: MMM) topped out the number 10 spot, with a 46% slippage.

In fact, checking a list of the top and bottom performing ASX tech names provided by Bloomberg data, the two top performing names were Brainchip Holdings Ltd (ASX: BRN) and Computershare Ltd (ASX: CPU) at 42% and 24.80% respectively.

However, there were only 6 names that finished in the green, with all the other tickers posted in the top and bottom performing stocks each falling deep into the red.

As a basket, tech shares have been weighed down by a number of non-specific macroeconomic catalysts. Most easy to see is the rotation out of growth and tech shares back into defensible such as mining and financials.

But there’s more at play, as we’ve now got the first conflict in Europe in decades, and let’s not forget that crazy little virus called COVID-19.

With the current commodity inflation, backed by the prospects of rising interest rates, this only adds fuel to the fire in these two industries, which appear to have stolen the gains tech shares posted last year.

Not only that, but the tech industry’s earnings per share (EPS) are also the lowest in the last 7 years for the segment, according to Bloomberg data.

It remains to be seen where the direction of earnings will go from here.

The post Here’s a look at the laggards from ASX tech shares last quarter appeared first on The Motley Fool Australia.

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• March was a lousy month for ASX BNPL shares. Here’s why

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Cettire Limited and Marley Spoon AG. The Motley Fool Australia has recommended Cettire Limited and Marley Spoon AG. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The CSL Limited (ASX: CSL) share price has wobbled since the beginning of the year.

This has been caused by a challenging environment brought about by the ongoing impacts of the global COVID pandemic.

At Monday’s market close, the global biotech’s shares finished 0.09% lower to $265.47.

Below, we take a look at the company’s most recent performance, and comparison against its sector in 2022.

What’s happened to CSL recently?

On February 16, CSL provided investors with its half-year results for the 2022 financial year. The CSL share price rose 8.5% on the back of the details.

The company noted that its immunoglobulin portfolio faced headwinds caused by industrywide constraints on collecting plasma in FY21. This was due to the global pandemic, with government-mandated restrictions causing foot traffic numbers to fall.

Under the CSL Behring banner, sales of its leading subcutaneous immunoglobulin product, Hizentra, fell 9%. Nonetheless, this contributed to overall revenue of US$4.4 billion for the CSL Behring portfolio, down 2% on H1 FY21.

Meanwhile, its Seqirus business experienced a strong surge in seasonal influenza vaccines, up 20%. A record volume of around 110 million doses was distributed around the world. As a whole, Seqirus revenue jumped to US$1.7 billion, up 17% from the prior corresponding period.

In addition, CSL responded by implementing multiple initiatives in its plasma collections network. Programs included using social media influencers, speeding up the donation sign-up and check-in process, and paying donors more for blood.

Investors were also updated on the company’s plasma collection numbers, with volume up 18% over H1 FY21.

CSL opened 18 new facilities in the first half of FY22 to attract lapsed and new donors through its doors. For the remainder of the financial year, the company plans to open another 35 centres, expanding its presence, mostly across the United States.

Also in February, CSL announced the completion of a share purchase plan. The SPP – first announced in December – raised $750 million for CSL’s acquisition of Vifor Pharma.

How does the CSL share price compare to the health sector?

Over the last 12 months, the CSL share price is more or less flat, but is down almost 8.7% this year to date. The company’s shares hit a 52-week high of $319.78 in November 2021, before moving in circles.

In contrast, the S&P/ASX 200 Health Care Index (ASX: XHJ) has lost 2.6% from this time last year, and is down 11.3% in 2022. The sector also registered a record high of 48,213 points in late-August.

Both the CSL share price and broader health index are down around 3.5% over the past month.

As you can see, CSL shares are slightly tracking ahead of the Health Care Index. The latter has failed to take off this year amid the expected rise in interest rates which weakens investor sentiment.

Based on today’s price, CSL commands a market capitalisation of roughly $127.88 billion, with approximately 481.71 million shares on issue.

The post How is the CSL share price performing against its sector in 2022? appeared first on The Motley Fool Australia.

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• Here’s what $10,000 invested in CSL shares 5 years ago looks like now

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Mineral Resources Limited (ASX: MIN) share price has been on form in recent weeks.

Since this time last month, the mining and mining services company’s shares have risen a sizeable 27%.

This has been driven by rising iron ore and lithium prices, which Mineral Resources has exposure to through its world class portfolio of mining operations.

Can the Mineral Resources share price keep rising?

Despite its recent gains, one leading broker still sees plenty of value in the Mineral Resources share price.

According to a note out of Goldman Sachs, its analysts have upgraded the company’s shares to a buy rating and lifted their price target by a sizeable 42% to $70.80.

Based on the current Mineral Resources share price of $59.29, this implies potential upside of 19.4% for investors over the next 12 months.

Why did Goldman upgrade the company’s shares?

Goldman made the move in response to rising iron ore and lithium prices and changes to its volume and growth assumptions.

The broker explained its bullish view, stating:

“MIN has a 20yr track record of delivering high return growth and value creation across mining services, iron ore and lithium in Western Australia. MIN’s strategy has always been to increase earnings from their high margin annuity style long life mining services business which generates c. 30% EBITDA margins.

The company is about to commence another rapid growth phase in WA with the construction of two major greenfield iron ore projects with combined 80-90Mtpa of production capacity (MIN’s share c. 25Mtpa), >1Mtpa increase in lithium spodumene (MIN’s share ~600ktpa) with the ramp-up of the Wodgina mine and expansion of the Mt Marion mine and ~100ktpa of Lithium hydroxide or carbonate (MIN’s total share 40-50kt LCE), ongoing growth in external mining services volumes (10-15% or 20-40Mtpa) from existing large Pilbara customers (RIO, BHP, Hancock) and internal (>50% or >150Mtpa), and potential gas production from the Lockyer Deep onshore discovery in the Perth basin (MIN 80%) in 2024/2025.”

The post Leading broker upgrades Mineral Resources shares to buy rating amid lithium exposure appeared first on The Motley Fool Australia.

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• Lithium boom: Broker tips Mineral Resources share price to jump 23%

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Could the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price be an attractive option to consider for dividend income?

ANZ is one of the big four ASX banks, alongside National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).

The big banks have a reputation as ASX dividend shares.

How big is the ANZ dividend going to be?

Commsec has estimated what the ANZ dividend could be looking ahead, based on numbers provided by external data providers.

In FY22, the ANZ annual dividend is projected to be $1.44 per share. That would translate into a grossed-up dividend yield of 7.4% at the current ANZ share price.

Then, in FY23, that dividend is expected to increase to $1.55 per share. This would mean the FY23 grossed-up dividend yield could be 8%.

In FY24, the annual dividend could rise again to $1.65 per share. If that happened, the ANZ grossed-up dividend yield would be 8.5%.

The latest dividend

The last time investors got a dividend update was the FY21 final dividend paid on 16 December 2021, which was 72 cents per share. That brought the full-year dividend to $1.42 per share, an increase of 82 cents compared to the 60 cents per share dividend in FY20.

The FY21 ANZ grossed-up dividend yield represents a grossed-up dividend yield of 7.3%.

Is the ANZ share price a buy?

Morgan Stanley recently called the ANZ share price a buy, with a price target of $30.30.

The broker thinks that the net interest margin (NIM) of ANZ could benefit as interest rates rise.

ANZ economists predict that the Reserve Bank of Australia (RBA) will start raising the interest rate in June 2022. All the big four banks now believe that the RBA will increase the interest rate.

However, the NIM could be impacted by higher costs for term deposits, which ANZ apparently has a lot of.

Morgan Stanley puts the ANZ share price at 13x FY22’s estimated earnings and under 12x FY23’s estimated earnings.

Latest profit update from ANZ

In February 2022, the ANZ gave a quarterly update for the three months to 31 December 2021. The bank advised the net interest margin fell eight basis points for the quarter, but the impact of rising rates was expected to moderate headwinds such as competition.

The bank added that it had made progress in Australia to improve its systems and processes.

It also said that the credit quality environment remained benign.

The post Is the ANZ share price a smart idea for dividend income? appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 bank shares having such a stellar start to the week?
• Leading brokers name 3 ASX shares to buy today
• Is the NAB share price entering a ‘sweet spot’?
• Why these ASX bank shares could outperform over the next 6 weeks
• Who owns ANZ shares? Take a look. You might be surprised

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Adore Beauty Group Ltd (ASX: ABY) share price has suffered in 2022. But there are a few factors that could make it a compelling proposition.

Adore Beauty is a leading online retailer of a wide range of beauty products. The company says it has evolved into an integrated content, marketing, and e-commerce business that sells more than 11,700 products from more than 270 brands.

The Adore Beauty share price has fallen by around 54% since the start of 2022.

But, for these three reasons, the ASX share could be an attractive idea:

Business growth

Some businesses achieved booming sales during the COVID-19 years of FY20 and FY21 but then lost that momentum.

However, Adore Beauty has grown a lot over the last two years and it continues to grow.

In the first six months of FY22, revenue rose 18% to $113.1 million. This was an 18% increase year on year. Over two years, the compound annual growth rate (CAGR) was 47%.

It’s also seeing growth of active customers that reached 876,000 in HY22 (up 13% year on year).

Not only is the number of customers growing, but the annual revenue per active customer is increasing as well. In the 2019 calendar year, the average active customer spend was $210. In 2020, this figure was $213 and, in 2021 it rose 5.3% year on year to $224. The company said that this reflects a larger proportion of returning customers and “strong” average order value growth. In HY22, there was returning customer growth of 56%.

The company has implemented strategic initiatives to reduce the loss of customers within the first year and improve retention, such as its mobile app and a loyalty program.

Adore Beauty is also growing its core product range and it’s targeting related ‘verticals’ that the company believes stay true to its ‘brand voice’ and that customers will respond to.

Some of those verticals include ‘fragrance’ and ‘Korean beauty’.

Growing industry

Some businesses, or entire sectors, can benefit from a tailwind that can help grow demand and revenue.

According to Adore Beauty’s sources, Australia’s beauty and personal care market is an $11.2 billion market, with a forecast CAGR of 3.8% to 2024.

The online beauty and personal care sales account for $1.3 billion, or 11.4%, of the total market. It’s growing faster than the overall market and is forecast to increase at a CAGR of 26% to 2024. Adore Beauty claims to be the market leader in online beauty, with a 13% market share.

Further, Adore thinks that the online beauty market can benefit from several tailwinds.

First, COVID-19 has accelerated the shift from in-store shopping to digital channels.

Second, demographics can organically help its growth. Digital native ‘millennials’ and ‘Gen Z’ are entering the online shopping world.

Finally, online sales in Australia are “significantly under-penetrated” compared to the US and the UK.

Long-term margin expansion

The Adore Beauty share price could benefit in the long-term from the company’s plans to grow its profit margins.

The ASX share plans to benefit from operating leverage to grow its contribution profit margin percentage.

It’s going to scale its private-label offering, which is expected to increase its margins.

The ASX share also expects to increase its marketing return on investment (ROI) as the company benefits from the impact of returning customers, the growth of brand awareness, and its mobile app.

Adore Beauty also plans to forge closer relationships with brands to optimise terms and increase brand funding.

Growth will also allow the business to slow its investment in fixed costs.

The post 3 factors that could make the Adore Beauty share price too good to miss appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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