Category: Stock Market

Key Points

• Northern Star shares up 6.86% to $9.35
• Strong performance by Kalgoorlie and Yandal, but operations at Pogo lagging behind
• On track to meet guidance for FY22

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The Northern Star Resources Ltd (ASX: NST) share price is up and away on Thursday. This comes after the company released the results for its second quarter of FY22.

At the time of writing, the Australian gold miner’s shares are up 6.86% to $9.35.

Let’s take a look to see how Northern Star performed over the 3-month period.

What’s did Northern Star report?

The Northern Star share price is on the move in early morning trade following the company’s latest performance report.

For the quarter ending 31 December, Northern Star revealed a modest result whilst managing COVID-19 impacts.

Gold sold during the three months totalled 392,655 ounces at an all-in sustaining cost (AISC) of $1,631 per ounce.

Northern Star noted that Kalgoorlie and Yandal continue to perform in line with expectations. On the other hand, Pogo delivered below expectations but is well-positioned to increase mining rates in the second-half of FY22.

Despite the small hiccup, the company advised it is on track to meet its FY22 guidance of 1.55 million ounces to 1.65 million ounces. AISC is also expected to be in the range of $1,475 to $1,575 per ounce.

Net mine cash flow for the quarter came to $175 million. This is due to the company investing $150 million in growth capital and $28 million in exploration activities.

Northern Star declared a healthy balance sheet with $774 million in liquidity, excluding $700 million in undrawn available facilities. Cash and bullion stood at $588 million, along with $300 million in corporate bank debt.

The company’s hedge book (total outstanding contracts and transactions) is at 1.13 million ounces at an AISC of $2,405 per ounce.

Management commentary

Northern Star managing director, Stuart Tonkin touched on the company’s performance, saying:

During the quarter we safely advanced our growth strategy towards becoming a 2Mozpa producer and entered into a convertible funding agreement with Osisko Mining that we believe has the potential to deliver significant value for shareholders.

We remain on track to meet our FY22 guidance, which incorporates the current WA border closure and associated labour and cost impacts. Our experience at Pogo in Alaska has provided examples of the disruption we may face in WA and the mitigating actions required to reduce operational impact.

About the Northern Star share price

Over the last 12 months, Northern Star shares have failed to take off, dropping more than 30%. In 2022 alone, the company’s shares are relatively flat.

Based on valuation grounds, Northern Star is ASX’s 50th largest company with a market capitalisation of approximately $10.82 billion.

The post Why the Northern Star (ASX:NST) share price is surging 7% today appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Is the Northern Star (ASX:NST) share price trading at attractive levels?
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Aaron Teboneras owns Northern Star Resources Limited. 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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Key points

• Santos had a record year in 2021 and was able to take advantage of strong energy prices
• The merger with Oil Search completed late in the year
• This sets Santos up to “deliver even stronger outcomes in 2022”

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The Santos Ltd (ASX: STO) share price is on the move on Thursday morning.

At the time of writing, the energy producer’s shares are down slightly to $7.18.

Why is the Santos share price falling?

The Santos share price is falling today despite the release of its fourth quarter update which revealed a record performance in FY 2021.

According to the release, Santos achieved production of 22.9mmboe during the fourth quarter. This was up 5% quarter on quarter but a touch short of the market’s expectations. Nevertheless, this took its full year production to a record of 92.1mmboe, which is up 4% year on year. This includes 1.7mmboe from Oil Search assets following the completion of their merger on 11 December.

The energy giant also revealed a 7% increase in sales volume to 26mmboe for the quarter. Though, this wasn’t enough to stop the company from posting a 3% decline in annual sales volume to 104.2mmboe.

Pleasingly, thanks to stronger pricing, Santos still recorded a 34% increase in quarterly sales revenue to US$1,532 million and a 39% lift in annual sales revenue to US$4,714 million.

And while Santos reported a 62% increase in annual capital expenditure to US$1,387 million, that couldn’t stop the company from generating US$1.5 billion in free cash flow for the year. This was a record and more than double 2020’s level.

Santos’ Managing Director and Chief Executive Officer, Kevin Gallagher, commented: “Our disciplined, low-cost operating model continues to drive strong performance across the business and has positioned us to take full advantage of the increase in commodity prices. The completion of the Oil Search merger delivers us the size and scale to deliver even stronger outcomes in 2022 and beyond.”

“Our merger with Oil Search delivers increased scale and capacity to drive a disciplined, low-cost operating model and unrivalled growth opportunities over the next decade – with a vision of becoming a global leader in the energy transition,” he added.

Guidance for FY 2022 will be provided with its full year results next month.

The post Santos (ASX:STO) share price lower despite record FY 2021 performance appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here’s why BlackRock plans to keep these carbon intensive ASX 200 shares
• Own Santos (ASX:STO) shares? Top broker thinks it ‘can pay higher dividends’
• Is this driving Santos (ASX:STO) and Woodside (ASX:WPL) shares higher on Monday?
• 5 things to watch on the ASX 200 on Monday

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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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.

Two months ago, it seemed inevitable that Ethereum (CRYPTO: ETH) would break through the $5,000 ceiling. The popular cryptocurrency hit an all-time high just below $4,900 in mid-November, and momentum was on its side. But it didn’t happen.

Digital currencies have corrected sharply in recent weeks, and Ethereum has tumbled along with most of the market. With the digital currency trading at roughly $3,150 on Wednesday morning, it would have to climb 59% to hit $5,000. A milestone that seemed so attainable and obvious just a couple of months ago now seems so far away.

Ethereum can still get there. There’s never a dull moment for the world’s second-most-valuable cryptocurrency. It’s just no longer a foregone conclusion that it will happen anytime soon. Let’s break down the bullish case for Ethereum hitting $5,000 as well as the roadblocks that could stop that from happening.

Eyes on the prize 

Ethereum didn’t plant the flag on crypto; it didn’t arrive on the market until the summer of 2015. But it did raise the bar when it comes to what crypto’s blockchain could do. Ethereum made smart contracts possible, and in the process has become the cornerstone to thousands of the market’s decentralized apps. There are plenty of smaller cryptocurrencies that run circles around it in terms of speed, bandwidth, and cost, but right now it continues to be the undisputed top dog in this niche.

A popular metric for sizing up protocols in the world of decentralized finance is total value locked, or TVL. Ethereum currently has $138 billion in TVL, representing the value of the assets that are currently being staked in a specific protocol across all decentralized finance apps worldwide. Ethereum has 60% of the market, and its TVL is nearly eight times greater than its closest rival. 

The problem with 60% in TVL is that Ethereum’s share of the market has been shrinking. A lot of the faster and cheaper protocols are gaining ground on it, and that’s what makes the next phase of its migration to proof of stake so important.

Ethereum is currently proof of work, a mining method that has its advantages but ultimately makes it costly to do business with and an eco-unfriendly drain on energy resources. The rivals that are gaining ground on Ethereum are proof of stake, and its migration to the new protocol (currently expected to happen in June, but we’ve seen timelines get bumped before) will help it compete more effectively with the cryptocurrencies nibbling away at its market share. 

If Ethereum hits $5,000 later this year, it will likely require a successful move to proof of stake. Delays will give smaller players more opportunities to grab market share, and the Ethereum bullish case will be harder to justify if it’s no longer the obvious lead horse in the smart-contract revolution. 

Naturally, Ethereum itself isn’t immune to the wild price swings of the crypto market. All but 2 of the 15 most valuable crypto tokens have moved sharply lower over the past month. There was a time when crypto was disconnected from growth stocks, but both markets have been weak since November. Cryptocurrencies would sometimes move higher when inflation reared its head, but that hasn’t been a bullish catalyst these days. 

History has been kind to Ethereum in its less than seven years of trading, and buying the dip has been a smart call in the past. But with rival denominations piling up use cases, and uncertainties heading into the crucial phase of the Ethereum 2.0 migration, it isn’t the golden child it was last year. Doubt isn’t a bad thing, and if anything, it gives Ethereum investors a wall of worry to climb higher if it’s able to execute its goals in 2022.

Hitting $5,000 is within reach this year, and that would be a spectacular return of nearly 60% from today’s starting line. The risks are high as well, but crypto investors know that going in — the moment they buy into the volatile world of digital currencies. 

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

The post Can Ethereum reach $5,000? appeared first on The Motley Fool Australia.

More reading

• Is Ethereum losing steam in 2022?
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• Crypto is crashing: Should you invest now?
• Bitcoin, Ethereum, and Dogecoin surge higher as crypto markets recover
• Why Bitcoin, Ethereum, and Dogecoin plunged today

Rick Munarriz owns Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Ethereum. 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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If you’re looking for options in the resources sector then you may want to take a look at the South32 Ltd (ASX: S32) share price.

This is because this mining giant has been named as one of the best options for investors in the sector by the team at Goldman Sachs.

Is the South32 share price good value?

Goldman recently named four reasons why Fortescue Metals Group Limited (ASX: FMG) could be a sell, you can read about that here.

Whereas on this occasion, the broker has named four reasons why the South32 share price is in the buy zone.

According to the note, the broker has a conviction buy rating and $4.60 price target on the miner’s shares. This implies potential upside of over 12% before dividends.

And if you include the very generous dividends Goldman is forecasting in FY 2022, the potential total return increases to over 23%.

Why is the broker bullish?

The four reasons that Goldman is bullish on the South32 share price are its valuation, strong free cash flow outlook, increased capital returns potential, and positive project news flow.

In respect to its valuation, the broker notes that the miner’s shares are trading at an attractive 4x forward EV/EBITDA excluding the yet to complete acquisition of a 45% stake in the Sierra Gorda copper mine in Chile.

As for its free cash flow, the broker commented: “We forecast a more than doubling in EBITDA in FY22 and a compelling FCF yield of c. 18%/17% in FY22 & FY23 (over 20% at spot), driven mostly by exposure to base metals (aluminium & alumina c. 50% of FY22 EBITDA zinc/nickel c. 20%), and the restart of the Alumar aluminium smelter in Brazil & recent acquisition of a minority stake in the Mozal aluminium smelter in Mozambique.”

A third reason to be positive is the prospect of capital returns. Goldman explained: “We assume the buyback continues to be extended (at US$250mn p.a) and S32 continues to pay out 70% of earnings (40% ordinary, 30% special dividend component). On our estimates, S32 is on a dividend yield of c. 11-12% in FY22 & FY23.”

Finally, Goldman notes that there is positive project news flow on the horizon which could boost the South32 share price.

It said: “We highlight the potential for capex on the US$800mn Dendrobium next domain (DND) met coal project to be reduced (which we would view as a positive). S32 is currently selling a base metal royalty portfolio (no value in our model).”

The post 4 reasons Goldman says the South32 (ASX:S32) share price is a conviction buy appeared first on The Motley Fool Australia.

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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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ASX shares will be heavily impacted by the direction of interest rates in the coming year, according to IML Investors Mutual.

This means that it’s now more important than ever to avoid the speculators and buy up businesses that actually have firm growth prospects.

“We expect central banks to raise interest rates fairly sharply over the next 18 months to more ‘normal’ levels,” read a memo to clients from IML analysts.

“As such, we continue to steer away from the riskier parts of the sharemarket and remain focused on identifying and holding what we assess to be good quality companies, are well managed, which offer sound value, and which can grow their earnings and do well over the next 3 to 5 years.”

Here are 2 such examples from IML’s Australian Smaller Companies Fund:

The company you’ve never heard of, but actually have

The name HT&E Ltd (ASX: HT1) — short for Here, There and Everywhere — may not be familiar to many investors.

But they have likely heard the company’s product sometime — in their car, on their smart speaker or even while shopping.

The company owns the Australian Radio Network, which runs many popular radio stations like the KIIS network, Chemist Warehouse Remix and the Pure Gold network.

It also runs outdoor advertising, from its roots as APN News & Media.

The IML team loved HT&E’s $308 million acquisition of regional radio network Grant Broadcasters late last year.

“This acquisition is an excellent fit for HT1 as it creates a truly national radio network that will give the company added reach and the enhanced ability to fulfil national briefs for agencies and larger advertisers.”

The memo also noted that HT&E had resolved its dispute with the Australian Taxation Office for “less than half the amount originally sought”. 

“With buoyant ad market conditions expected to continue into 2022, HT&E remains good value on a PE of 12 times FY22 and a yield of over 4%.”

HT&E shares are up about 11% over the past year. They closed Wednesday at $1.99.

Agricultural feed is a timeless demand

Ridley Corporation Ltd (ASX: RIC) is another ASX share that may not be immediately recognisable to retail investors.

The company, which produces animal feed and nutrition products, has seen its share price climb 66% over the past 12 months.

The IML team noted Ridley presented positive numbers at the annual general meeting late in the year.

“To November 2021, year to date EBITDA growth in both of Ridley’s reporting segments had exceeded the 16% growth seen in the prior corresponding period,” the memo read.

“In support of continued earnings growth, AGM commentary also highlighted further progress on delivering various business improvement initiatives, with the associated profit growth still to come.”

Despite the negative impact of COVID-19 on some of its customers, Ridley itself has navigated the pandemic ably.

“While the spread of Omicron seems hard to avoid, safety practices and employee buy-in has resulted in little lost time to date,” stated IML analysts.

“Despite the robust share price performance over the last 12 months, Ridley continues to look cheap, trading on a one-year forward PE of just 13x with a 3.8% dividend yield.”

Ridley shares closed Wednesday at $1.56.

The post 2 cheapie ASX shares looking pretty for 2022 appeared first on The Motley Fool Australia.

More reading

• This ASX All Ordinaries share has defied today’s sell-off to hit a new 6-year high

Motley Fool contributor Tony Yoo 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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Key points

• The Origin share price has surpassed its 52-week high 6 times in the last fortnight
• Its also gained 10% since the final close of 2021
• However, its underperforming against many of its energy sector peers

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The Origin Energy Ltd (ASX: ORG) share price has been on top of its game so far this year, having already gained 10% since the final close of 2021.

The boost has also seen the company’s stock hitting a new 52-week high 6 times. Its latest 12-month record was broken during yesterday’s session.

As of Wednesday’s close, the Origin share price is $5.78.

Let’s take a look at what might be moving the energy producer’s stock in the new year.

What’s boosting the Origin share price in 2022?

2022 is shaping up to be a good year for the Origin share price. That’s despite no news having been released by the company.

In fact, the last time the market received a price-sensitive announcement from the S&P/ASX 200 Index (ASX: XJO) energy provider was on 20 December. Then, it announced its $42 million acquisition of WINconnect.

Still, having started the year with a 52-week high of $5.48, the Origin share price’s 12-month high point has now been pushed to $5.84 – yesterday’s intraday high.

It was also boosted on Monday and 4 times last week.

Origin isn’t the only ASX 200 energy company performing well in 2022. In fact, year to date, much of the S&P/ASX 200 Energy Index (ASX: XEJ) is outperforming its stock.

The Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) share prices are leading the index. They’ve respectively gained 17% and 15% since the end of 2021.

Those of Santos Ltd (ASX: STO), Worley Ltd (ASX: WOR), and Whitehaven Coal Ltd (ASX: WHC) are also out in front of the energy provider’s stock.

For context, the ASX 200 has slipped 1.5% since the final close of last year.

The energy sector’s gains have likely been helped along by surging oil prices and rising coal prices amid an Indonesian export ban.

The post The Origin (ASX:ORG) share price has hit 6 52-week highs in 2022. Here’s why appeared first on The Motley Fool Australia.

More reading

• Here’s why BlackRock plans to keep these carbon intensive ASX 200 shares
• Why is the Origin (ASX:ORG) share price hitting new highs today?
• In the green: the 5 best ASX renewable shares of 2021
• How did the Origin (ASX:ORG) share price perform in 2021?
• ASX 200 (ASX:XJO) midday update: Afterpay hits 52-week low, energy shares rise

Motley Fool contributor Brooke Cooper 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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Key Points

• Fortescue share up 6% year to date
• Rebound in iron ore prices
• Strong Q1 FY22 result could lead to bumper year

The Fortescue Metals Group Limited (ASX: FMG) share price has powered ahead in the last couple of months.

At Wednesday’s closing bell, the mining outfit’s shares finished 1.49% lower to $20.44 apiece. This is a sharp recovery from when its shares were trading around the $14 mark in early November.

What happened with the Fortescue share price?

Investors have been buying up Fortescue shares following a surge in market confidence across the iron ore industry.

Previously, volatility in Fortescue’s key commodity, iron ore saw a downturn from August to the end of November. This was driven by a slowdown in Chinese demand for the steel making ingredient.

The Asian superpower applied political pressure to its steel producers in curbing reliance on Australian iron ore.

Chinese lawmakers introduced new rules, limiting the importation of iron ore in 2021 to no more than 2020 levels. This led to supply issues as China threatened to impose harsh penalties for steel mills that exceed production limits.

As a result, the price of iron ore more than halved during the course of last year. From reaching its lofty highs of US$200 in May, the steel making ingredient price shrunk to around the US$100 mark in the following months.

Fast-forward to today, the current iron ore price has rebounded to US$127 per tonne, an increase of 23% since 1 December.

In addition, the company’s subsidiary, Fortescue Future Industries will team up with energy behemoth, AGL Energy Limited (ASX: AGL).

Both companies entered into a Memorandum of Understanding (MOU) to develop a hydrogen hub for the Hunter Valley coal plants. Namely, this relates to the Liddell and Bayswater coal-fired power stations, which AGL plans to transform the site.

The Liddell coal-fired power station is scheduled to close down in 2023, with Bayswater going offline in 2025.

Fortescue boss, Andrew “Twiggy” Forrest will be involved with the development, which will consist of a 12-month feasibility study.

Can the Fortescue shares hit the $30 mark in 2022?

If the Fortescue share price is to reach $30 in 2022, the price of iron ore will need to accelerate further. Reaching levels above US$200 per tonne will indeed translate to bumper profit from the world’s fourth largest iron ore miner.

In its FY22 first quarter results, Fortescue revealed iron ore shipments of 45.6 million tonnes, up 3% on Q1 FY21.

Average revenue of US$118 per dry metric tonne represents revenue realisation of 73% of the average Platts 62% CFR Index.

In addition, C1 costs came to US$15.25 per wet metric tonne, which is considered one of the lowest in the industry.

A strong performance across the supply chain, together with the contribution of Eliwana could drive a record result in 2022. Furthermore, the inclusion of the Iron Bridge Magnetite project is expected to bring 22 million tonnes each year of high-grade iron ore concentrate. Key milestones to bring the project up to speed have been achieved, with production slated for December 2022.

It’s worth noting that Fortescue is scheduled to report its H1 FY22 scorecard to the ASX on 16 February.

The post Can the Fortescue (ASX:FMG) share price break the $30 barrier in 2022? appeared first on The Motley Fool Australia.

More reading

• Fortescue (ASX:FMG) share price up amid hydrogen supply agreement
• 4 reasons Goldman says the Fortescue (ASX:FMG) share price is a strong sell
• Leading fund manager says these blue-chip ASX shares are buys right now
• Is the iron ore price set to slide?
• 5 things to watch on the ASX 200 on Monday

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. 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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Key points

• Analysts have picked two exciting ASX growth shares with compelling potential
• ELMO Software is a HR tech company that is rapidly growing in Australia and the UK
• Pinnacle is a quality investment manager that is quickly growing FUM and expanding its portfolio overseas

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The Australian Stock Exchange has a number of attractive ASX growth shares that have plenty of long-term growth potential.

Recent share market volatility has brought down the share prices of plenty of the ASX’s star performers.

With that in mind, these are two businesses that analysts like:

ELMO Software Ltd (ASX: ELO)

ELMO is a leading provider of HR and payroll software for small and medium sized businesses in Australia and the UK.

The ELMO share price has fallen by 21% since 25 November 2021. However, the business continues to grow and is delivering strong double digit increases each reporting period.

For example, in the first quarter of FY22, ELMO revealed its annual recurring revenue (ARR) had reached $88.5 million – an increase of 61% year on year, which included 35% organic ARR growth. It achieved 52% growth of actual revenue to $20.7 million and 78% growth of cash receipts to $27.7 million.

Management points to multiple levers to continue high growth. Those are: segment expansion, module expansion and geographic expansion.

Currently its segments are the Breathe business for small businesses with less than 50 employees and ELMO software for the mid-market with 50 to 2,000 employees.

In terms of modules, the ASX growth share is growing the number of modules it offers to clients, making the client more valuable in terms of revenue and making ELMO more useful to clients. One of the newest modules is COVIDsecure, which can track things like vaccination and testing.

Morgan Stanley currently rates ELMO as a buy with a price target of $7.80 – that’s almost 80% higher. However, a breakthrough for ELMO will be when being cashflow positive is clearer.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is an investment business that takes strategic stakes in fund managers, which it calls affiliates, like Coolabah, Hyperion, Plato and Solaris.

One of the main benefits of Pinnacle’s involvement for the affiliates is that it can take care of a number of administrative tasks like legal, compliance, product distribution and so on. The fund manager can focus on the investing.

This ASX growth share is seeing its total funds under management (FUM) managed by affiliates continue to grow through both organic net inflows as well as the occasional expansion of the portfolio. For example, it recently invested in Five V Capital, a private equity outfit.

In FY21 the business saw total affiliate FUM rise 52% to $89.4 billion, with total retail FUM growing 55% to $20.3 billion.

By October 2021, total FUM had risen to $90.9 billion, with retail FUM increasing to $23 billion.

On 23 November 2021, Pinnacle said it’s expecting to deliver growth in FY22 with aggregate affiliate FUM (at the time) more than 30% higher than the average FUM in FY21.

It also revealed it’s looking to take advantage of the significant offshore opportunity by evolving into a global multi-affiliate platform. Pinnacle has announced the establishment of its “first” North American affiliate. It will own 35% of this affiliate, which is a global and Canadian small cap equities fund manager in Canada.

It’s currently rated as a buy by Ord Minnett with a price target of $17 – that’s more than 30% higher than where it is today. The broker puts the Pinnacle share price at 26x FY23’s estimated earnings.

The post 2 top ASX growth shares with compelling potential 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. owns and has recommended Elmo Software and PINNACLE FPO. The Motley Fool Australia owns and has recommended Elmo Software and PINNACLE FPO. 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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Key Points

• The BrainChip share price has been one of the best performers on the ASX
• Positive developments has led to investors taking keen interest in the company
• Valued currently at $3.65 billion

The BrainChip Holdings Ltd (ASX: BRN) share price surged over the course of 2021. Market confidence in the company’s technology and interest in the artificial intelligence (AI) sectors led its shares to rally higher.

Since the beginning of 2021, the AI technology company’s shares accelerated by almost 60%. In comparison, the S&P/ASX 200 Index (ASX: XJO) gained roughly 13% over the same period.

While BrainChip shares closed at 68 cents on 31 December, since then its shares have zoomed to incredible highs.

At Wednesday’s market close, the company’s shares finished up 14.52% to $2.13 apiece. It’s worth noting that early that day, its share price touched a record high of $2.34 before treading lower.

What driving BrainChip shares higher?

With the world ushering towards an era of technology innovation across AI platforms, the BrainChip share price has been racing ahead.

In the past few months, the company announced a number of positive developments regarding its Akida chip technology. This steered the company’s shares to strong gains in the latter part of 2021.

The party kicked off when the company struck a deal with Japanese semiconductor firm, MegaChips in November.

Under the deal, MegaChips will have access to BrainChip’s intellectual property for developing next-generation edge-based AI solutions. This will see the use in designing and manufacturing the Akida technology into external customer’s systems on chip designs.

More recently, BrainChip announced that Information Systems Laboratories is developing an AI-based radar research solution for the United States Air Force. The technology will employ BrainChip’s Akida neural networking processor as a tool to incorporate into their portfolio of research engineering and engineering solutions.

And just yesterday, the company announced that it had secured a United States patent regarding its neuromorphic artificial intelligence chips.

The key features on the patent protect the company’s neuromorphic processor. The function revolves around performing complex tasks on a digital input data, thus allowing AI to process images.

Clearly, investors have priced in a lot of good things to come for BrainChip, despite its sky-high valuation.

BrainChip share price snapshot

Over the last 12 months, BrainChip shares have gained more than 280%. The company’s share price reached an all-time high of $2.34 yesterday, before treading lower due to profit-taking.

When looking at valuation grounds, BrainChip has a market capitalisation of around $3.65 billion, with around 1.71 billion shares outstanding.

The post Why did the BrainChip (ASX:BRN) share price have such a stellar year in 2021? appeared first on The Motley Fool Australia.

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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. 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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Key points

• Zip delivers strong growth across its operations during the second quarter
• This led to record quarterly transaction value and revenue
• Zip’s customer numbers reached 9.9 million at the end of December

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The Zip Co Ltd (ASX: Z1P) share price will be on watch this morning.

This follows the release of the buy now pay later (BNPL) provider’s second quarter update.

Zip share price on watch after record second quarter result

The Zip share price will be in focus on Thursday after the BNPL provider reported further strong growth during the second quarter.

According to the release, Zip posted a 53% year on year increase in quarterly transaction volume to a record of $2.6 billion. This was driven by transaction volume growth of 64% to $1,161.2 million in the USA, 39% to $1,273.7 million in the ANZ region, 118% to $121.5 million in expansion markets, and transaction value of $32.3 million in the UK.

Playing a key role in this transaction growth was another jump in customer numbers. They grew 57% to 9.9 million. This was driven predominantly by its USA business, which recorded a 78% lift in customers to 5.7 million.

This ultimately underpinned record quarterly revenue of $167.4 million, which was up 58% over the prior corresponding period.

At the end of the period, Zip Australia had $431.9 million undrawn and available to fund receivables. Whereas Zip US had US$140.1 million undrawn and available to fund US receivables. Management believes this leaves it well placed with regards to its capital management requirements.

Zip Managing Director and Global CEO, Larry Diamond, said: “Some solid growth in the quarter as Zip delivered another very strong set of numbers. The business continues to execute on its strategy with growth driven by both customer and merchant acquisition, and the increasing levels of engagement as we pursue our mission of becoming the first payment choice everywhere and every day.”

“The growing contribution from expansion markets is pleasing and should continue to build in the medium term in line with Zip’s global strategy. Despite external noise and challenges the business continues to deliver and we are very well placed to continue the growth and momentum in 2022,” he added.

The post Zip (ASX:Z1P) share price on watch amid record second quarter performance appeared first on The Motley Fool Australia.

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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. owns and has recommended ZIPCOLTD FPO. 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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