ASX shares can be a great tool to use to unlock a second income of $1,000 per month. I wouldn’t be concerned even if I had no savings because of the potential of compounding.

Bank savings accounts are finally offering a decent interest rate. Having money parked in a high-interest savings account can earn a decent rate. But, I think there’s less compounding potential than ASX shares – businesses can grow their profit while paying a (growing) dividend. Investors can decide to spend those dividends and still get growing passive income or decide to re-invest the dividends for even stronger wealth-building.

The first step, and perhaps the hardest, is to save money to invest. That requires spending less than you earn, one way or another.

I’d try to save at least $750 a month by making some changes with my spending choices, though each household’s finances are different – some people may be able to save $500 per month while others may be able to invest $2,000 per month or even more.

When we’ve got some cash, we need to decide where to invest it. Receiving $1,000 per month is equivalent to $12,000 per year. Getting that much of a second income could require a portfolio worth $300,000 (at a 4% dividend yield or 4% withdrawal rate).

Where to invest it?

There are three different ways that I’d consider investing my savings to build my portfolio.

I’ll just mention that all of the financial numbers mentioned below are just for demonstration and generally don’t account for tax, as I’d need a crystal ball to know what future returns are going to be and what’s the best option for each individual circumstance.

Index-based ETFs

Index-based exchange-traded funds (ETFs) are funds that allow people to invest in a portfolio of businesses. They’re usually low-cost, offer good diversification and track the returns of the share market.

An example is the Vanguard MSCI Index International Shares ETF (ASX: VGS) is an ETF that invests in the global share market, owns more than 1,400 businesses and has produced average returns per year of more than 10% over the long-term, though past performance is not a guarantee of future performance.

I would keep investing $750 per month in this ETF and re-invest the distributions until I’d reached a minimum of $300,000. If the VGS ETF returned an average of 10% per annum, then this would take 15 years.

To unlock a second income, I’d then sell 4% of the ETF’s value each year to get $12,000 per annum out of the portfolio.

ASX growth shares

Another option could be to choose ASX growth shares that may be able to grow in scale significantly and create wealth. If an investor chooses right, they may be able to grow their wealth the most with this path, but it can also come with more risk.

It’s very hard to say what the future returns of each individual growth share are going to be.

I believe there are some growing businesses that could pay much larger dividends in the future, funded by the growing profit. Those ASX growth shares could pay the required dividends for a second income in 10 or 15 years. I’d look at names like Lovisa Holdings Ltd (ASX: LOV), Johns Lyng Group Ltd (ASX: JLG), Healthia Ltd (ASX: HLA) and Bailador Technology Investments Ltd (ASX: BTI).

Some ASX growth shares don’t pay dividends but are very promising to me, such as Xero Limited (ASX: XRO), Temple & Webster Group Ltd (ASX: TPW) and Volpara Health Technologies Ltd (ASX: VHT). They may pay dividends in the distant future, but buying these sorts of names could require selling 4% of the $300,000 portfolio value to unlock $12,000 of a second income.

I would also consider investing in a growth-focused ETF like the Vaneck Morningstar Wide Moat ETF (ASX: MOAT) if I were thinking with a growth mindset and then sell 4% of the value each year.

ASX dividend shares

A final option to consider could be to choose ASX dividend shares that could deliver solid capital growth and are already paying a good dividend yield.

If these ASX dividend shares keep growing their profit and dividend, we could just live off the dividends and not need to think about selling any of the portfolio. Plus, there would probably be some helpful franking credits coming from these names to boost the yield.

Three of my favourite ideas for an ASX dividend share portfolio that could also deliver growth would be Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and Wesfarmers Ltd (ASX: WES). I’d also consider names like Premier Investments Limited (ASX: PMV) and Sonic Healthcare Limited (ASX: SHL).

Foolish takeaway

I think each of the avenues I’ve talked about can help unlock a second income. The ETF route (including the MOAT ETF) would probably be the simplest path, as I wouldn’t need to worry about which ASX shares to own.

However, the ASX dividend shares route is the one I’m pursuing with my real portfolio because I like the cash flow and franking credits that are created by that route.

For my own portfolio, I like the long-term record that Soul Pattinson and Brickworks have already demonstrated for dividends and wealth creation, and I think that can continue.

The post No savings? Here’s how I’d target a second income of $1,000 per month from scratch appeared first on The Motley Fool Australia.

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More reading

• $10k invested in Vanguard MSCI Index International Shares ETF (VGS) 5 years ago is worth how much?
• No savings at 40? Here’s my 3-step plan for $1,500 of passive income a month
• Could buying the Vanguard Australian Shares Index ETF (VAS) at under $90 help me retire early?
• 3 reasons to buy Wesfarmers shares today
• 2 of the best ASX 200 blue chip shares to buy: Morgans

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments, Brickworks, Healthia, Johns Lyng Group, Lovisa, Temple & Webster Group, Vanguard Msci Index International Shares ETF, Volpara Health Technologies, Washington H. Soul Pattinson and Company Limited, and Xero. The Motley Fool Australia has positions in and has recommended Brickworks, Volpara Health Technologies, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and Xero. The Motley Fool Australia has recommended Bailador Technology Investments, Healthia, Johns Lyng Group, Lovisa, Premier Investments, Sonic Healthcare, Temple & Webster Group, VanEck Morningstar Wide Moat ETF, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX buy now, pay later (BNPL) shares are attracting attention today amid news the industry will soon be regulated under the Credit Act.  

That means companies offering interest-free products that allow consumers to pay for purchases in instalments will need to hold a credit licence and will have to assess users’ ability to afford such debts.

Right now, stock in iconic ASX BNPL provider Zip Co Ltd (ASX: ZIP) is down 6.6%, trading at 53.8 cents.

Meanwhile, shares in Block Inc (ASX: SQ2) – the owner of former-market darling Afterpay – are slipping 1.63% at $87.75.

Smaller ASX BNPL share Splitit Inc (ASX: SPT) is also down, trading 2.61% lower at the time of writing.

Let’s take a closer look at the regulations apparently set to take the industry by storm.

ASX BNPL shares slump amid talks of greater regulation

Financial Services Minister Stephen Jones will outline the government’s plan to regulate BNPL providers under the Credit Act this morning, ABC News reports.

“BNPL looks like credit, it acts like credit, it carries the risks of credit,” Jones will reportedly tell the Responsible Lending and Borrowing Conference.

Under flagged changes, BNPL providers will need to meet responsible lending obligations. That means they’ll have to determine if consumers can afford to pay back BNPL debt before allowing the use of their products.

The industry is currently exempt from major regulation as participants don’t charge interest.

News of the changes comes on the back of a Treasury paper released in November 2022.

It put forward three suggested regulatory paths for BNPL products, with the government apparently taking the middle ground. It’s gunning for more than an affordability test but not as far as to regulate providers like credit card providers.

ABC News quoted Jones as saying:

The plan will protect people from the spirals of harm that unregulated, unrestricted lending can cause.

Simon Docherty, chief customer officer at Frollo, said recent research by the fintech found usage of BNPL services has jumped 25% year-on-year. Meanwhile, one in four users has resorted to using a credit card to pay off BNPL debt.

How much such changes will impact ASX BNPL shares will likely vary between providers. Zip, for instance, already holds a credit licence and conducts affordability tests on consumers in Australia, as my Fool colleague Bernd reported last year.

The post Credit call: ASX BNPL shares slump as regulation arrives appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• The Zip share price has zoomed 12% higher in a week. Is this the beginning of a turnaround?
• Did the Sezzle share price really just leap 3,000%?!
• Here are the 10 most shorted ASX shares

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 positions in and has recommended Block and Zip Co. The Motley Fool Australia has positions in and has recommended Block. 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 a disappointing start for many ASX shares and the All Ordinaries Index (ASX: XAO) so far this Monday. At the time of writing, the All Ords has slipped by 0.34%, dragging the Index down to around 7,445 points. But let’s talk about one ASX All Ords share that is spectacularly defying this gloom today.

The Bigtincan Holdings Ltd (ASX: BTH) share price is on fire today. This ASX All Ords tech share has added a pleasing 16% so far this session, putting the company at 58 cents a share. That’s after Bigtincan shares closed at 50 cents each last Friday.

So what’s happening with this ASX All Ords share that has enticed investors so decisively today?

Well, Bigtincan put out a rather interesting ASX release this morning which looks like it is responsible for this big jump in value.

All Ords share in takeover fight

In this announcement, Bigtincan revealed that “recent media speculation” has been well-founded, and that the All Ords share has been on the receiving end of a takeover offer. Here’s what the company had to say:

In response to recent media speculation Bigtincan confirms that… it has received a confidential, non-binding, incomplete and indicative offer from Siris Capital Group, LLC (“Siris”) at an indicative offer price of $0.80 per share (the “Siris Proposal”).

Bigtincan’s independent board committee (“IBC”) does not consider it to be in the best interests of shareholders to progress that Siris Proposal at this time. Bigtincan has received other confidential approaches since that announcement.

The IBC will, with the assistance of its financial and legal advisers, continue to carefully consider any proposals that maximise shareholder value and continue to ensure it remains in compliance with its confidentiality and continuous disclosure obligations. There is no certainty that any such proposals will lead to a transaction.

That’s exciting news for shareholders, to be sure. What is likely to be really stoking these fires is the revelation that “Bigtincan has received other confidential approaches since that announcement”.

Shareholders tend to love a bidding war and it looks like multiple suitors are interested in a potential takeover.

Share price snapshot

Investors seem to have been speculating that something like that has been going on for a few weeks now.

It was only back on 10 May that Bigtincan shares were going for 41 cents each, down 24% in 2023. But since that day, this ASX All Ords share has rocketed more than 40%, leaving it with a year to date performance of 8.3% right now:

In saying that though, Bigtincan shares still remain down by more than 60% from their 2021 highs of around $1.50 per share.

It certainly looks like this ASX All Ords share will be very interesting to watch for the next few weeks and months. Who knows what might lie in store for Bigtincan going forward?

At the current Bigtincan share price, this ASX All Ords share has a market capitalisation of $350 million.

The post Guess which ASX All Ords share is soaring 16% amid a fresh takeover bid appeared first on The Motley Fool Australia.

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More reading

• Credit call: ASX BNPL shares slump as regulation arrives
• Buy this ASX tech share for big returns: Goldman Sachs
• Own Flight Centre shares? Broker says travel giant is ‘on the cusp of an earnings upgrade cycle’
• ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’
• Why is this ASX lithium share crashing over 10% today?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bigtincan. The Motley Fool Australia has positions in and has recommended Bigtincan. 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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Are you looking for options in the tech sector? If you are, then Objective Corporation Limited (ASX: OCL) could be the ASX tech share to buy this week.

That’s the view of analysts at Goldman Sachs, which are feeling very positive about the public sector software provider.

Why is Objective Corp an ASX tech share to buy?

Goldman Sachs recently attended Objective Corp’s inaugural investor day event and came away feeling comfortable that the company is well-placed to deliver on expectations in FY 2023. It explains:

We attended Objective Corp’s inaugural Investor Day on Friday 19 May in Sydney. OCL did not provide a quantitative trading update given the significant deal skew to May/June each year (in line with typical public sector procurement processes), although we came away incrementally more comfortable with our assumption for ARR growth to accelerate to +14% y/y in 2H23E (vs +12% in 1H23) given the positive commentary around customer adoption of new products and resilience of public sector demand.

The good news is that Goldman doesn’t believe this ASX tech share will stop growing at a strong rate any time soon. In fact, the broker is expecting its growth to go up a gear in FY 2024 and FY 2025. It said:

In our view OCL is well placed to deliver robust and defensive earnings growth driven by (1) R&D and new product cycles accelerating the contribution from newer products including Nexus, Build and RegWorks; (2) cycling of revenue/earnings headwinds from model transition away from perpetual / services revenue and towards subscriptions; and (3) cost management into FY24, with +350/+250bps margin expansion driving +23%/+32% FY24/25 EPS growth when comping trough FY23E earnings.

Big returns ahead

In light of the above, Goldman Sachs sees plenty of value in this ASX tech share.

The note reveals that its analysts have a buy rating and $14.90 price target, which implies potential upside of 17% for investors over the next 12 months.

The post Buy this ASX tech share for big returns: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• Credit call: ASX BNPL shares slump as regulation arrives
• Guess which ASX All Ords share is soaring 16% amid a fresh takeover bid
• Own Flight Centre shares? Broker says travel giant is ‘on the cusp of an earnings upgrade cycle’
• ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’
• Why is this ASX lithium share crashing over 10% today?

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 positions in and has recommended Objective. 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 Scott Phillips.

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Much to the dismay of short sellers, Flight Centre Travel Group Ltd (ASX: FLT) shares have been on fire this year.

Since the start of 2023, the travel agent giant’s shares are up over 46%.

Where next for the Flight Centre share price?

Unfortunately for those that are shorting the company, Morgans is tipping its shares to rise even further over the next 12 months.

This is due to its analysts’ belief that the travel agent is on the cusp of “an earnings upgrade cycle which may continue for the next few years.”

In light of this, the broker currently has an add rating and $26.25 price target on the travel agent’s shares.

Based on the current Flight Centre share price of $21.22, this implies potential upside of approximately 24% for investors.

What else did the broker say?

Morgans has been impressed with Flight Centre’s recovery from the pandemic and believes the company is well-placed for strong earnings growth in the coming years. This is thanks to pent-up demand and its low cost base. It commented:

FLT’s group cost margin is now at an historic low reflecting permanent and structural cost base changes and growth in lower cost and highly scalable models (Independents and Online).

With greater confidence in the travel recovery and the benefits of FLT’s transformed business model starting to emerge, we think FLT is now at the cusp of an earnings upgrade cycle which may continue for the next few years. We have upgraded our forecasts and move to an Add rating with our new SOTP valuation of A$26.25.

All in all, the broker appears to believe this makes Flight Centre shares great value despite their heroics so far in 2023.

The post Own Flight Centre shares? Broker says travel giant is ‘on the cusp of an earnings upgrade cycle’ appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares
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• Here are the 10 most shorted ASX shares
• Flight Centre shares are trading around 52-week highs. Too late to buy?
• 2 ASX 200 travel stocks (not Qantas!) just upgraded by Citi

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 recommended Flight Centre Travel Group. 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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S&P/ASX 200 Index (ASX: XJO) lithium shares have enjoyed a strong rebound since lithium prices bottomed on 24 April.

Lithium stocks, big and small, came under pressure late in November when prices began to nosedive from all-time highs, tumbling more than 70% before finding support.

Prices for the battery-critical metal have since leapt around 25%, helping lift the fortunes of the lithium miners.

And most of the top lithium miners have continued to outperform over the past month.

Here’s how these five leading ASX 200 lithium shares have performed since 24 April (as at market close on Friday):

• Pilbara Minerals Ltd (ASX: PLS) shares are 18%
• Core Lithium Ltd (ASX: CXO) shares are up 15%
• Allkem Ltd (ASX: AKE) shares are up 33%
• IGO Ltd (ASX: IGO) shares are up 7%
• Liontown Resources Ltd (ASX: LTR) shares are up 3%

In early morning trade today, all of the above ASX 200 lithium shares are in the red.

Yet despite this morning’s slip, the medium and longer-term outlook for the critical metal miners got another healthy boost over the weekend, courtesy of United States President Joe Biden.

How might the US help lift ASX 200 lithium shares?

On Saturday, Biden attended the Quadrilateral Security Dialogue (Quad) summit in Hiroshima.

Following on the heels of the G7 summit earlier in the day, Biden met with prime minister Anthony Albanese to discuss a range of issues. These included the need for Western nations to diversify their supply chains of critical clean energy metals.

This is encompassed under the Australia-US Climate, Critical Minerals and Clean Energy Transformation Compact, which runs parallel with the US$369 billion (AU$555 billion) Inflation Reduction Act (IRA).

In a sound bite that should pique the interest of investors in ASX 200 lithium shares, Biden said (quoted by The Australian Financial Review):

We are going to establish climate and energy as the third pillar of the Australia-US alliance. This will enable the expansion and diversification of clean energy supply chains, especially as it relates to critical materials.

Together, the leaders added that Biden will seek to have Australia added as a “domestic source” under the US Defense Production Act. Atop other potential advantages for ASX 200 lithium shares, this would open the door to new US investments in their projects.

Why is Biden eager to tap into Australia’s critical minerals?

China has long dominated the supply chain of a range of metals crucial for technology and the world’s push towards electrification, such as rare earth elements and lithium, which has potential national security ramifications.

And ASX 200 lithium shares look to be among the beneficiaries of the US push to diminish China’s dominance.

While Australia has the fifth-largest lithium reserves on the planet, it is currently the world’s biggest lithium producer.

And while there are sure to be numerous ups and downs along the way, that leaves ASX 200 lithium shares well-positioned to take advantage over the medium and longer term of this new “third pillar” of Australia’s alliance with the world’s top economy.

The post ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’ appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Bernd Struben 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 Scott Phillips.

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The Galan Lithium Ltd (ASX: GLN) share price is having a tough start to the week.

At the time of writing, the ASX lithium share is down 11.5% to $1.06.

Why is this ASX lithium share being crushed today?

Investors have been selling down Galan Lithium shares today after the company completed the institutional component of its capital raising.

According to the release, the company has received firm commitments to raise $31.5 million through an institutional placement priced at $1.05 per share. This represents a 12.5% discount to where this ASX lithium share was trading prior to its halt.

Management advised that strong support was received from domestic and offshore institutional and sophisticated investors.

This leaves the ASX lithium share with a pro forma cash balance of approximately $50 million. It will also seek to boost this a touch further with a share purchase plan. That plan is aiming to raise approximately $5 million from retail shareholders at the same price.

Why is Galan Lithium raising funds?

The proceeds of the capital raising will be used to purchase long lead items for the lithium carbonate (LCE) pilot plant and the Stage 2 definitive feasibility study at Hombre Muerto West. In addition, the money will provide contingency funding for additional Greenbushes South work, further exploration, and production well drilling.

Galan Lithium’s managing director, Juan Pablo Vargas de la Vega, was pleased with the outcome. He explains:

This is an exciting time to be involved in the Galan story. I wish to thank all the placement participants, old and new, who have strongly supported the Galan production plan that will take it from an initial smaller scale lithium producer to a big 60ktpa player. I also encourage all our loyal shareholders to get on board and participate in the entitlement issue which will get underway later this week.

The post Why is this ASX lithium share crashing over 10% today? appeared first on The Motley Fool Australia.

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The ASX growth shares I’m going to tell you about in this article are delivering excellent revenue growth each year. That’s a key reason why I think they can beat the market to 2025 and beyond.

When I think about what can help a business deliver good compounding returns, I’m hoping to see good revenue growth that can help deliver improving profit.

Net profit after tax (NPAT) is usually a key factor that investors look at to judge how much a business should be worth, so rising profit should, over time, equate to a rising share price.

With that in mind, the below two ASX growth shares are ones that could achieve a lot of profitable growth in the coming years.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a global retailer of affordable jewellery which is mainly aimed at younger shoppers.

With how low-cost the items that the company sells are, it’s very cheap for the company to expand its store network.

The company is already making good profit today, but the store numbers could grow significantly.

At the end of the FY23 first half it had a total of 715 stores, with 163 in Australia.

But, there are plenty of other established markets which have much larger populations than Australia yet much smaller store numbers, implying there is still plenty of growth potential for the company. For example, the UK only has 42 stores, France has 62 stores and Germany has 47 stores. It’s only just opened its first few stores in Hong Kong, Canada, Mexico and South America

The most promising place for growth for Lovisa, in my view, is the USA where it had 155 stores. It only had 81 at the time of the FY22 half-year result. I could easily see the number of Lovisa stores in the US growing to over 1,000 in several years.

It ended HY22 with 715 stores and had 746 stores by 22 February 2023. I think the 31.9% growth of NPAT and 44.8% revenue growth in HY23 is just a sign of things to come over the next few years, particularly if the ASX growth share expands into India and mainland China.

According to Commsec, the Lovisa share price is valued at 22 times FY25’s estimated earnings.

Siteminder Ltd (ASX: SDR)

Siteminder describes itself as the “world’s leading open hotel commerce platform”. It’s used by tens of thousands of hotels across 150 countries to sell, market, manage and grow their business.

Despite cycling against strong comparisons, it was able to report 28.7% revenue growth in the three months to March 2023, compared to the three months to March 2022. It also reported that annualised recurring revenue (ARR) at the end of the FY23 third quarter was up 28.5% to $150.3 million.

Siteminder commented that its “forward booking activity has to date been strong for this year’s northern hemisphere summer travel season.”

It noted “good momentum across all parts of the business” and “continued strength in global travel demand as outbound Chinese tourism builds.”

The ASX growth share also pointed to opportunities by its platform that will over time feature “automated and easy-to-use tools”

The company says that it’s focused on leveraging its scalable business model, which bodes well for future profitability if revenue can keep growing at a good pace.

I think that improving underlying profit margins could be a helpful driver of the Siteminder share price over the next few years.

The post I think these 2 ASX growth shares are a buy for 2025 and beyond 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 positions in and has recommended Lovisa and SiteMinder. The Motley Fool Australia has positions in and has recommended SiteMinder. The Motley Fool Australia has recommended Lovisa. 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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I believe the right small-cap ASX shares have the potential to deliver very good growth over the long term. Here, I’m going to tell you about two that could do well in the 2020s.

Businesses with less than $1 billion in market capitalisation can double in size and still be relatively small compared to large businesses such as Woolworths Group Ltd (ASX: WOW), Telstra Group Ltd (ASX: TLS), and Commonwealth Bank of Australia (ASX: CBA).

The earlier we can identify a business on a good growth journey, the better it is for achieving sizeable returns. In my opinion, the below two options are appealing companies.

RPMGlobal Holdings Ltd (ASX: RUL)

RPMGlobal is a software business that describes its focus on “delivering mining productivity through technology enablement”. The company touts its “innovative” service offerings as useful in guiding its customers through current and emerging challenges facing the industry worldwide. This includes “helping them meet the shift in social norms and consumer and investor expectations to zero-carbon”.

The company helps clients transition from existing cloud and enterprise solutions to a full software as a service (SaaS) offering. Some of its clients include South32 Ltd (ASX: S32), Fortescue Metals Group Ltd (ASX: FMG), Sayona Mining Ltd (ASX: SYA), and Glencore.

The small-cap ASX share is seeing good growth. In FY23, it’s expecting revenue to be $96.4 million, up 16% from its underlying FY22 revenue of $83.1 million. This could help the company deliver underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $14.2 million, up from $3.5 million in FY22.

RPMGlobal is also anticipating strong growth in Southern Asia. The company says it’s “excited about the magnitude of the opportunities… entering the company’s software pipeline”. It reports it’s seeing increased interest in its next generation of mobile solutions which digitise forms and processes.

According to Commsec estimates, the small-cap ASX share is valued at 19 times FY25’s estimated earnings.

Propel Funeral Partners Ltd (ASX: PFP)

Propel is the second-largest funeral operator in Australia and New Zealand.

It’s steadily increasing its presence in the two countries by making bolt-on acquisitions. It recently announced the acquisition of Olsens Funerals in Sydney and J Fraser & Sons in Southland, New Zealand for up to $41.2 million.

The business is benefiting from Australia’s growing and ageing population. In fact, death volumes are expected to increase 3.1% per annum from 2021 to 2032 in Australia.

In the first half of FY23, the company saw a 14.3% rise in the number of funerals to 9,061 and a 7.5% rise in the average revenue per funeral. This helped its revenue grow 23.3% to $83.8 million, enabling operating net profit after tax (NPAT) to jump 34.9% to $11 million.

The small-cap ASX share has defensive earnings and a growing property portfolio that’s valued at around $142 million (at cost).

Commsec numbers suggest the company’s earnings per share (EPS) and dividend could grow each year to FY25. Using those projections, the Propel share price is currently valued at 21 times FY25’s estimated earnings with a possible grossed-up dividend yield of 4.9%. Those are appealing numbers to me.

The post 2 small-cap ASX shares I’d buy to target outsized returns appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended RPMGlobal. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Propel Funeral Partners and RPMGlobal. 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 Tyro Payments Ltd (ASX: TYR) share price is plummeting on news its long-term suitor has thrown in the towel on takeover talks.

Potentia Capital Management has walked away from discussions following nearly four months of due diligence in which the payment provider underwent advanced negotiations and engaged with regulators.

The Tyro share price is $1.255 in early morning trade, 18.24% lower than its previous close.

Let’s take a closer look at the news weighing on the All Ordinaries Index (ASX: XAO) fintech stock today.

All Ords fintech stock tumbles as takeover talks binned

It’s shaping up to be a rough day for Tyro shares. The stock is plummeting 18% in early trade after Potentia withdrew from change of control discussions.

Potentia was granted the opportunity to pore over the All Ords company’s books way back in January, with the fintech company hoping granting it access could encourage it to improve its previous offer.

The suitor put forward a bid for the payment solutions provider in September 2022, first offering $1.27 per share before upping its bid to $1.60 per share.

However, both offers fell short of Tyro’s expectations. The company initially scrapped takeover talks with Potentia, as well as then-competing suitor Westpac Banking Corp (ASX: WBC), in December.

Now, it’s Potentia’s turn to pull the plug. Tyro chair Fiona Pak-Poy commented on the news weighing on the company’s share price, saying:

The board and management team have worked with commitment and in good faith to facilitate a potential change of control transaction to be put to our shareholders for consideration.

We have appreciated Potentia’s engagement and are disappointed that they were ultimately unable to deliver a revised offer.

But the last few months haven’t been fruitless, Pak-Poy noted. The company delivered “substantial operational achievements” as it simultaneously engaged in the “long and drawn-out discussions”.

Such achievements included launching Tyro Pro, Tyro Go, and Tyro BYO. Not to mention, the company bolstered its full-year guidance last week.

Tyro share price snapshot

Today’s tumble sees the Tyro share price underperforming the All Ords over recent months.

The stock is currently 9% lower than it was at the start of 2023. Though, it is 18% higher than it was this time last year.

Comparatively, the All Ordinaries Index has lifted 5% year to date and 1% over the last 12 months.

The post Tyro share price plummets 18% as suitor abandons takeover talks appeared first on The Motley Fool Australia.

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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 positions in and has recommended Tyro Payments. The Motley Fool Australia has recommended Tyro Payments and Westpac Banking Corporation. 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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