Since bottoming out at $2.90 on March 25, shares in ASX automotive retailer AP Eagers Ltd (ASX: APE) have almost doubled in price in recent weeks and are now back up to $5.43 as at the time of writing. With sales slumping during the coronavirus lockdowns, new investors have responded positively to the raft of cost-cutting measures the company has put in place to see it through the crisis.

Towards the end of April, AP Eagers announced that it had made the difficult decision to cut around 1,200 employees from its workforce at a saving of around $6 million a month. Those at the top of the company will be feeling the pinch as well, with non-executive directors foregoing their director fees and senior executives taking a 50% pay cut. AP Eagers has also been working with its landlords, suppliers and other key stakeholders to defer lease commitments and other payments. It has also frozen all non-essential capital expenditure.

The company’s balance sheet remains strong, with $270 million worth of cash and undrawn debt facilities still at its disposal. Additionally, the company’s suppliers have provided it with $122 million worth of working capital facilities.

Finally, it’s also worth noting that the sale of the company’s refrigerated logistics business to private equity firm Anchorage Capital Partners is still progressing. However, AP Eagers has now had to settle on a $75 million sale price instead of the originally agreed $100 million due to the negative economic impacts from the coronavirus.

Shares in ASX digital car classifieds business Carsales.com Ltd (ASX: CAR) have also performed well recently, up almost 40% from their 23 March low of $10.47 to $14.27 as at the time of writing. In its most recent COVID-19 update, released to the market on 23 April, it announced a similar range of cost-cutting measures that it hoped would see it through the crisis.

As with AP Eagers, Carsales has decreased the size of its workforce, temporarily standing down around 250 mostly frontline staff. Board and executive remuneration for the remainder of the financial year have also been slashed by 20%.

Interestingly, Carsales noted that traffic to its website had remained high throughout the pandemic, despite lead volumes dropping by 25% in April. The international arms of its operations have seen varying impacts from COVID-19: while the Brazilian geography has suffered in recent weeks after escalating outbreaks in that country, revenues in South Korea have continued to grow.

Should you invest?

Even in an economic downturn, people will still have a need for cars and other vehicles. This doesn’t exactly make AP Eagers or Carsales defensive plays, but both should continue to generate revenue even in a prolonged period of economic recession. After all, the AP Eagers company has a history dating back over 100 years.

However, there may still be a shift in demand away from luxury brands and towards cheaper used cars. If this occurs, it could theoretically present a greater rebound opportunity for online classifieds business, Carsales. Consumers may be less inclined to visit dealerships and may instead choose to buy their cars directly from the seller online.

Not only that, but as Carsales is now an internationally diversified company with operations in both Brazil and South Korea, these global revenue streams could also help to keep the company afloat during these uncertain economic times. And with its shares trading almost 25% below their pre-coronavirus highs, Carsales may still offer good value to new long-term investors.

More reading

• 3 ASX shares growing dividends over the last decade
• Carsales share price down 26% since February. Is it now a good buy?
• ASX 200 starts the week strongly, up 1.3%
• Analysts think this ASX auto share could be turning the corner
• Market close: ASX 200 ends 0.5% higher

Motley Fool contributor Rhys Brock owns shares of carsales.com Limited. The Motley Fool Australia has recommended carsales.com Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Will these ASX car dealers bounce back after COVID-19? appeared first on Motley Fool Australia.

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I think that one of the most promising areas of the market to invest in at the moment is the tech sector.

In this area there are a good number of companies with the potential to grow strongly over the next decade and generate outsized returns for shareholders.

Three ASX tech shares that I think are worth considering are listed below. Here’s why I like them:

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a provider of software products and services to financial institutions including BNP Paribas, Fidelity, and Mercer. Thanks to the increasing popularity of its Sonata wealth management platform, it has been growing its earnings at a strong rate over the last few years. I believe there is still a long runway for growth for Sonata, which should be complemented by recent acquisitions. These acquisitions look set to provide Bravura with new avenues for growth in industries benefiting from structural tailwinds.

Xero Limited (ASX: XRO)

Another tech share to consider buying is Xero. It is one of the world’s leading cloud-based business and accounting software providers with a high quality and sticky product. Xero recently reported its full year results and revealed further impressive growth in sales and EBITDA. This was driven by strong customer growth and increases in average revenue per user. While the next few months may be trickier than normal because of the pandemic, I believe its long term prospects remain as positive as ever.

Zip Co Ltd (ASX: Z1P)

A final tech share to consider buying is Zip Co. I’ve been very impressed with the performance of the buy now pay later provider over the last couple of years and feel confident its strong growth can continue. Especially given its international expansion and the ever-increasing customer and merchant numbers on its platform. Another big positive was that Zip Co recently released a business update which showed that its growth has continued during the pandemic and its bad debts have remained low.

More reading

• Is the Xero share price a buy after last week’s dip?
• Leading brokers name 3 ASX shares to buy today
• Why Aristocrat Leisure, Newcrest, Santos, & Zip Co shares are charging higher
• 5 ASX 200 winners and 5 losers of the week
• These are the 10 most shorted ASX shares

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

The post 3 quality ASX tech shares to buy for strong long term returns appeared first on Motley Fool Australia.

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Tyro Payments Ltd (ASX: TYR) was once a highly successful IPO, soaring from its offer price of $2.75 per share to a record all-time high of $4.50 in just 2 months. However, coronavirus lockdown measures forced many of its EFTPOS terminal customers to temporarily or partially close business, resulting in its share price sliding almost 80% from peak to tough during the share market crash.

But, as the Australian economy is looking to progressively reopen, could it be time to buy Tyro shares? 

A swift share price recovery 

After hitting a low of just $0.97 per share in March, the Tyro share price has rapidly rebounded. It now sits at a comfortable price level of around $3.50. 

Tyro has remained incredibly transparent throughout the coronavirus pandemic, providing investors with weekly updates regarding its transaction values. So far, it has provided the following updates regarding 2020 vs. 2019:

• January: 27% increase 
• February: 30% increase 
• March: 3% increase 
• April: 38% decrease 
• May to 15 May: 20% decrease 
• Year-to-date: 18% increase 

March appears to be the consistent trough across many retail-related companies. The recent Afterpay Ltd (ASX: APT) business update noted that global underlying sales in the second half of March versus the first half of March were 4% lower. However, its sales rebounded strongly in April, up approximately 10% on the second half of March.  

I believe the relaxation of social distancing measures will result in a graduate recovery of Tyro’s transaction values. In the company’s prospectus, it cited that SMEs have been the main target size category for its terminals. As at 30 June 2019, Tyro provided payment services to over 29,000 Australian merchants, of which 77% were SMEs and 86% were in the health, hospitality and retail verticals. 

Many state governments including New South Wales and Queensland have already acted on stage one, allowing restaurants, cafes and shopping centres to open. Victoria has plans to advance to stage one by 1 June. 

Industry tailwinds 

Cash is declining as a method of payment in Australia in response to the perceived benefits of card payment such as convenience, rewards and security, and availability of electronic acceptance devices. The use of cash for payments in Australia decreased from 69% in 2007 to 37% in 2016. The coronavirus and fears around transmission through coins, notes and transaction contact is another catalyst and tailwind for card transactions. 

Foolish takeaway 

The worst may have passed for Tyro and the reopening of the Australian economy, particularly the hospitality and retail sectors, should see a gradual recovery in its monthly transaction volumes. While the Tyro share price has run up significantly in recent times, I believe the business has much more to look forward to. 

More reading

• Why all ASX investors should avoid this easy mistake in 2020
• Will the Afterpay share price stop at $40 or keep on running?
• These ASX 200 shares are up over 40% in 2020
• 3 fantastic ASX shares to buy when you’re young
• Why a buy and hold strategy for ASX shares is best

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

The post This ASX fintech share is soaring again as the economy reopens appeared first on Motley Fool Australia.

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