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.

Stocks in the electric vehicle (EV) sector have attracted loads of attention following the success of Tesla‘s (NASDAQ: TSLA) stock and now its business. Tesla reported net income of more than $5.5 billion in 2021. That helped confirm the company could profitably grow as the EV sector matures, which many supporters and shareholders have preached for several years.

That has attracted speculative investors looking for “the next Tesla” and has driven valuations to astronomical levels for several companies, like Rivian Automotive, that have barely begun delivering vehicles. But several of China’s EV companies have already proven they can manufacture at scale. Although there are unique risks associated with these businesses, there are also concrete reasons why those who want exposure to the sector should consider investing in them now. 

Targeting the right markets

There’s a reason why Tesla’s first manufacturing facility outside the United States was built in China — it’s the largest automotive market in the world. Chinese EV makers have been working to take advantage of that, too. Nio (NYSE: NIO), XPeng (NYSE: XPEV), and Li Auto (NYSE: LI) have each been increasing sales quickly over the past two years. 

Although they’re building off of a much smaller base than Tesla, these three Chinese EV makers increased vehicle sales between 109% and 263% in 2021 compared to 2020 levels. And though Nio, XPeng, and Li are completely focused on electrified vehicles, Chinese internal combustion and EV automotive giant BYD (OTC: BYDDY) is producing many more new energy vehicles (NEVs), which are defined as both electric and plug-in hybrid models. Sales volume for BYD new energy vehicles soared 218% to more than 600,000 in 2021. It also told investors it expects to potentially double that in 2022 to 1.2 million, reports industry follower CnEVPost.

Though focused mostly on China to this point, these companies also plan to expand beyond those borders. BYD is a global company already, and Nio has established a presence in Norway. Nio has also said it plans to move into Germany, the Netherlands, Sweden, and Denmark in 2022. The International Energy Agency (IEA) predicts China and Europe will continue to dominate EV sales over the next decade, as shown below. 

Competition and other risks

The IEA Global EV Outlook for 2021 predicts two scenarios for EV sales over the next decade. The first, more conservative, view is based on stated governmental policy objectives. The second assumes a more aggressive sustainable development push that results in EV sales obtaining a 34% share of the automotive market by 2030 — more than double what the stated policy is expected to achieve. 

Though competition is ramping up from both start-up companies and established legacy automakers, both scenarios provide ample opportunity for the Chinese EV companies to continue growing sales. 

To be sure, Chinese EV companies and their respective shares carry added geopolitical risks. For this reason, investors should size allocations appropriately. But based on businesses that have already shown they can be successful, and markets that provide ample opportunities, investors wanting exposure in the sector shouldn’t overlook these companies. 

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

The post These 3 charts show why you might want exposure to China’s EV makers appeared first on The Motley Fool Australia.

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Howard Smith owns BYD, NIO Inc., and XPeng Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends BYD, NIO Inc., and 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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The Nearmap Ltd (ASX: NEA) share price is on the move on Wednesday morning following the release of its half year results.

At the time of writing, the aerial imagery technology and location data company’s shares are up 8% to $1.33.

Nearmap share price higher on strong half year results

• Annual contract value (ACV) portfolio up 28% to $147.7 million (or $143.3 million in constant currency)
• Reported statutory revenue up 23% to $67.5 million
• Reported statutory loss after tax of $11.9 million. This includes $9 million spent supporting its research and development (R&D) initiatives
• Group cash balance of $110 million and no debt
• Outlook: ACV portfolio now expected to close FY 2022 at the upper end of the $150 million to $160 million guidance range.

What happened during the first half?

For the six months ended 31 December, Nearmap reported a 28% increase in ACV to $147.7 million.

This reflects further strong growth in the North America market, with ACV rising 57% over the prior corresponding period to US$55 million. This was the third consecutive record half of growth for the segment and means its ACV now exceeds the ANZ portfolio.

The strong growth in North America was driven by demand from Roofing, Insurance, and Government markets. ACV from these markets grew 62% over the prior corresponding period. The Insurance side of the business now accounts for almost 40% of Nearmap’s North American ACV.

This ultimately led to North American average revenue per subscription rising 29% to US$22,350.

Over in the ANZ market, Nearmap performed positively. It delivered an 8% increase in ACV to $71.9 million. Management advised that SME and midmarket segments continue to perform well, with encouraging improvements in the Enterprise market.

Management commentary

Nearmap’s Chief Executive Officer and Managing Director, Dr Rob Newman, commented: “Nearmap has delivered yet another exceptional result on the back of continued record performance in North America and an extension of our market leadership in Australia and New Zealand.”

“This has been enabled by our ongoing commitment to invest in our leading Research & Development initiatives, which are delivering strong returns and will continue driving our future growth. Refinements to our go-to-market strategy in North America eighteen months ago are now embedded into our business and today’s results demonstrate our team in North America are continuing to deliver outstanding results for our customers,” he added.

Outlook

In light of its strong first half performance, Nearmap now expects to hit the top end of its $150 million to $160 million guidance range in FY 2022.

Dr Newman commented: “We have delivered another record half of ACV growth whilst maintaining our Balance Sheet strength, this leaves us well positioned to continue our investment and execution of our go-to-market strategy. Core to our leadership is investment in our product and technology and we will focus this investment on ensuring we continue to provide increasing value to our customers.”

“We will complete prototype testing and commence manufacturing of our world leading aerial camera system, HyperCamera3. This represents a major milestone and will enable us to fly even higher and faster than we do today, significantly extending our already industry leading competitive advantage. This is ground-breaking technology being designed and manufactured right here in Australia and is the key priority for us for the remainder of FY22,” he concluded.

The post Nearmap (ASX:NEA) share price jumps 8% on ‘exceptional result’ 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 Nearmap Ltd. The Motley Fool Australia owns and has recommended Nearmap Ltd. 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 S&P/ASX 200 Index (ASX: XJO) officially fell into correction territory late last month after tumbling more than 10% in the first few weeks of 2022.

And the stocks hit hardest? Tech shares. The S&P/ASX 200 Info Tech Index (ASX: XIJ) is still down 20% year to date.

Fortunately, the generally indiscriminate drop has created many buying opportunities, according to Montgomery Investment Management  chair and chief investment officer, Roger Montgomery.

Let’s take a look at 2 of the ASX 200 tech shares he thinks are trading for bargain prices.

Is now the time to buy ASX 200 tech shares?

“The current equity correction has taken a lot of the froth out of the market,” Montgomery wrote in a piece published by Livewire. “But caught up in the carnage have been a number of high-quality companies with years of growth ahead.”

And carnage it has been. The market – particularly that of tech stocks, due to how they’re valued ­– has been dragged down amid talks of rising rates.

However, Montgomery believes there are now some beaten-down tech shares investors could take advantage of this year.

“The current equity correction will cull much of the leverage and froth built up in recent years,” he said. “What it won’t do is change the course of growth for many high-quality companies.”

He comforted wary investors, saying setbacks are a normal part of the market and investing cycle. He continued:

The market has been swinging manic-depressively for centuries. From wild bouts of optimism – when only the most enthusiastic appraisals will be entertained, to periods of deep depression – when sellers are willing to sell even the best companies for cents in the dollar, investors can count on one thing: opportunity.

Now is therefore the time to rebalance portfolios, taking advantage of the lower prices and [price-to-earnings (P/E)] deratings that have been experienced by some of the highest quality names in the market.

And what are those names? Here are the 2 ASX 200 tech shares Montgomery thinks are going cheap after the tech sell-off.

2 ASX 200 tech shares trading for a bargain

Megaport Ltd (ASX: MP1)

Megaport is No. 1 on Montgomery’s list of beaten down stocks with strong valuations.

The expert says it’s P/E ratio has tumbled 33.7% since 4 January, putting it squarely in the bargain zone.

The Megaport share price has slipped 28% year to date to trade at $13.69 at Tuesday’s close.

REA Group Limited (ASX: REA)

While REA doesn’t have a home in the ASX 200 tech sector, it does operate online-only real estate advertising platforms.

It houses realestate.com.au, flatmates.com.au, and Mortgage Choice.

Montgomery says REA’s P/E ratio has dropped 15.9% year to date.

It’s shares’ value has also fallen 19% since the start of 2022 to reach $137.95.

The post 2 quality ASX 200 tech shares with ‘years of growth’ ahead: broker 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. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and REA 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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The Insurance Australia Group Ltd (ASX: IAG) share price has shot up since delivering its FY22 half-year results last Friday.

At yesterday’s market close, IAG shares finished 0.42% higher at $4.74. That means its shares have gained almost 7% in the past week for investors.

In context, the S&P/ASX 200 Index (ASX: XJO) edged 0.51% lower to 7,206.9 points on Tuesday.

What’s the go with the IAG dividend?

In the half-year report for the 2022 financial year, IAG reported a mixed performance across key metrics.

In summary, gross written premium (GWP) lifted by 6.2% to $6,570 million over the previous corresponding period. This was primarily driven by new customer growth and strong retention across motor and home lines in the Australian business.

Insurance profit, however, tumbled by 57.7% to $282 million over H1 FY21. The sharp fall was attributed to significant natural peril costs largely from severe weather events in October.

Overall, net profit after tax (NPAT) rose to $173 million, compared to a loss of $460 million in the prior year.

Based on IAG’s cash earnings of $176 million, the IAG Board declared an unfranked interim dividend of 6 cents per share. This represents a 14.2% decline from the 7 cents declared in the prior comparable period.

Management noted that the latest dividend equates to a payout ratio of 84% of cash earnings.

The company’s dividend policy is to distribute 60%-80% of cash earnings in any full financial year.

When can IAG shareholders expect payment?

IAG will pay the interim dividend to eligible shareholders next month on 24 March.

However, to be eligible, you’ll need to own IAG shares before the ex-dividend date which is today, 16 February. This means if you want to secure the dividend, you will need to purchase IAG shares by today at the latest.

In addition, the company is offering a dividend reinvestment plan (DRP), with the election date falling on 18 February.

The issue price per share will be the average market price, with no discount for participants. Shares allocated under the DRP are likely to be purchased on-market.

The post Here’s everything you need to know about the IAG (ASX:IAG) dividend 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 owns and has recommended Insurance Australia 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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Goldman Sachs has been busy running the rule over some recent results and has picked out a couple of ASX 200 shares it thinks investors should be buying.

Here are the two ASX 200 shares the broker rates very highly:

IDP Education Ltd (ASX: IEL)

Goldman Sachs is a fan of this language testing and student placement company. Following its better than expected half year result last week, the broker commented that IDP is “a structural grower with risks diminishing.”

Its analysts have upgraded their earnings estimates for the second half (and beyond) on the expectation of a recovery in the Australian student placements

Goldman said: “We expect a stronger than usual 2H for IDP driven by an emerging recovery in Australian Student Placements, continued strength in Multi-destination SP and greater than initially forecast synergies in the Indian IELTS operations. There were also some one-off costs in 1H22 that shouldn’t repeat, such as A$4m of make-good staff costs as compensation for cuts taken in the pcp. We have increased our FY22 EBIT 7.6% to A$150m. FY22/FY23/FY24 EPS estimates increase +6.3%/+1.3%/+1.2%.”

The broker retained its buy rating and lifted its price target to $35.00. This implies 28% upside based on the current IDP share price of $27.28.

Megaport Ltd (ASX: MP1)

This network as a service company’s shares are also in favour with the team at Goldman Sachs.

Following the release of its first half results, the broker reiterated its buy rating and confidence that its growth will accelerate in the second half.

The broker explained: “We believe incremental commentary today was broadly positive and supportive of our 2H22 revenue acceleration (+42%/+48% in 1H/2H), driven by MVE and Partner channel traction.”

“We note: (1) Revenue per MVE customer grew to $11k (vs. $5k at FY21), with the company expecting it to largely stabilize at these levels (some dilution from smaller customers expected, but the new Fortune 500 customer was > $15k and expected to grow meaningfully over time); (2) Strong volume growth is expected, noting the MVE pipeline grew to 202 (vs. 129 at FY21); (3) Data centre rollout to accelerate in 2H to c.+40 (incl. 4 in Mexico, vs. +6 in 1H22); (4) MCR trends were highlighted as a very positive development (+20% connection in 6 months); (5) APAC trends were positive across all markets; Europe was better than we expected, ahead of meaningful channel upside.”

Goldman has a buy rating and $19.90 price target on the company’s shares. This suggests there is 45% upside for investors based on the current Megaport share price of $13.69.

The post Goldman Sachs names 2 ASX 200 shares with major upside potential 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 Idp Education Pty Ltd and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT 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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With interest rates at such low levels, at least for now, income investors may want to look at the dividend shares listed below for a source of income.

Here’s why these two ASX 200 dividend shares have been rated as buys:

Coles Group Ltd (ASX: COL)

The first ASX dividend share for investors to consider is retail giant.

This supermarket giant could be a top option thanks to its favourable dividend policy, long track record of same store sales growth, strong market position, and its sprawling store network.

In respect to the latter, Coles has over 800 supermarkets, over 900 liquor retail stores, and over 700 Coles express stores. But management isn’t settling for that and continues to expand its network and invest in its online business. The latter includes the construction of new smart distribution centres with automation giant Ocado.

Citi is positive on Coles. The broker currently has a buy rating and $19.60 price target on its shares.

As for dividends, it is forecasting fully franked dividends of 65 cents per share in FY 2022 and 72 cents per share in FY 2023. Based on the current Coles share price of $16.55, this will mean yields of 3.9% and 4.35%, respectively.

Commonwealth Bank of Australia (ASX: CBA)

Another ASX 200 dividend share for investors to consider is Australia’s largest bank, CBA. While its shares have bounced back strongly from recent lows following a better than expected half year result, it may not be too late to invest,

That’s the view of the team at Bell Potter, which last week upgraded the banking giant’s shares to a buy rating with a $108.00 price target.

The broker commented: “Cash NPAT was nearly on par with 2H21, a great outcome. There was also investment in operational execution (in line with the bank’s strategic priorities) coupled with a return of excess capital to shareholders of $2bn.”

Thanks to its strategic strengths of scale, brand, and diversification, which are supported by an irreplaceable infrastructure comprising over 1,100 branches, 3,800 Australia Post agencies, and nearly 3,600 ATMs, Bell Potter appears confident on the future and is forecasting earnings and dividend growth over the coming years.

Bell Potter is forecasting fully franked dividends per share of $3.87 in FY 2022 and $4.07 in FY 2023. Based on the current CBA share price of $99.49, this will mean yields of 3.9% and 4.1%, respectively.

The post 2 ASX 200 dividend shares analysts love appeared first on The Motley Fool Australia.

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Technology stocks have been hit especially hard in the past couple of months as fears of rising interest rates paralyse the market.

The S&P/ASX All Technology Index (ASX: XTX) has lost more than 23% since November, with pretty much all the ASX shares in that sector getting a haircut.

So it can be confusing to know which tech stocks are worth retaining the faith in and which ones might be struggling for a while yet.

The team at Firetrail this month reported to its clients 2 tech shares that have been an absolute drag on its fund’s performance. 

But they’re sticking with them for the long haul:

We bought more of this ASX share that fell 40%

Megaport Ltd (ASX: MP1) shares have plummeted almost 40% since mid-November.

Just in January, the stock fell a painful 28%, dragging down the rest of the Firetrail Small Companies Fund.

“During the month Megaport released its quarterly result to the market. Whilst headline numbers were in-line, we were disappointed by the number of Megaport Virtual Edge (MVE) sales,” read the memo from Firetrail analysts. 

“Megaport reported 12 sales during the quarter relative to our expectations of 30.”

However, Firetrail has long-term faith in the virtual network provider and actually bought up more shares during this price weakness.

“Megaport remains a high conviction position and we increased our holdings during the month.”

Many other analysts agree with Firetrail, with 8 of 12 saying on CMC Markets that Megaport shares are a “strong buy”.

This tech company has halved its value

Nitro Software Ltd (ASX: NTO) shares have had an even worse time than Megaport, falling a stress-inducing 53% since November.

The software firm saw its stock price fall 25% just in the month of January.

“During the month the company reported an inline quarterly result and completed the acquisition of e-signature business, Connective,” stated the Firetrail team.

But similar to Megaport, the Firetrail Small Companies Fund is sticking with the document productivity software provider.

“Despite the weak share price performance following the acquisition, our recent due diligence has increased our conviction in the quality of the Connective business.”

It’s almost a consensus view among other analysts, with 7 out of 8 rating Nitro shares as a “strong buy”, according to CMC Markets. The 8th analyst says the stock is a “moderate buy”.

The post 2 ASX tech shares we’re backing through the turmoil: analysts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo owns MEGAPORT FPO and Nitro Software Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and Nitro Software 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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Brokers have identified some of the leading ASX growth shares that look like opportunities.

Share prices are always changing. But sometimes an improved business performance or a change in the valuation can make a stock look like a much more attractive opportunity.

With that in mind, these two ASX growth shares are highly rated by investment experts:

Idp Education Ltd (ASX: IDP)

IDP Education is currently rated as a buy by at least three brokers including UBS. The price target by UBS on the education business is $35.90. That implies a potential upside of around 30%.

The latest insights about IDP Education came after the FY22 half-year result. Total revenue grew by 47% to $396.8 million. This included 62% growth of English language testing to $256.7 million and 73% growth of multi-destination student placement growth to $79.6 million. English language testing volumes were up 79%.

Operating leverage helped IDP Education’s earnings before interest and tax (EBIT) grow by 61% to $77.9 million. The ASX growth share’s net profit after tax (NPAT) increased by 68% to $50.8 million.

Management believes that the strategic expansion and acquisition of the British Council’s English language testing operation in the high-growth market of India ensures it is poised for long-term growth in the world’s largest English language testing market.

IDP Education also said that it’s in a strong position for growth. Its investments are paying off, leading to increased demand for services.

UBS noted that strong performance by the Indian market, with synergies with the Indian acquisition projected to reach $20 million in FY23.

On the broker’s numbers, the IDP Education share price is valued at 42x FY23’s estimated earnings.

Megaport Ltd (ASX: MP1)

Megaport describes itself as a leading global provider of elastic interconnection services. Its platform enables customers to rapidly connect their network to other services across the Megaport network.

The ASX growth share connects more than 2,400 customers in over 760 enabled data centres globally. It works with partners like AWS (Amazon), Google, Microsoft Azure, Oracle, SAP, Salesforce and Cloudflare.

It’s rated as a buy by at least three different brokers, including Citi. The Megaport share price target from Citi is $20.20, suggesting capital growth potential of almost 50% over the next year.

Citi thinks that Megaport is going to be making positive cash flow by the last six months of FY23.

In the first half of FY22, Megaport reported that the monthly recurring revenue in the month of December 2021 was $9.2 million, 46% higher than December 2020. The profit after direct costs rose 69% to $30.9 million, with a nine percentage point increase to the profit after direct costs margin to 60%.

The business is still making a net loss, but it jumped 47% to $20.2 million, compared to a loss of $38.4 million a year ago.

The ASX growth share continues to expand into other areas, with the Mexico launch planned for March 2022 with a partnership with KIO Networks to enable software-defined cloud interconnection. KIO is an IT services leader in Latin America. The initial launch includes four data centres across Mexico City and Queretaro. It will have the full suite of Megaport networks as a service (NaaS) capabilities.

The post 2 top ASX growth shares that are worth buying: brokers 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 Idp Education Pty Ltd and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT 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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The CSL Limited (ASX: CSL) share price will be one to watch closely today.

This follows the release of the biotherapeutics giant’s eagerly anticipated half year results.

CSL share price on watch after solid half

• Total revenue up 5.3% to US$6,041 million
• Gross profit margin down 3.4 percentage points to 57.1%
• Net profit after tax down 2.8% to US$1,760 million
• Net profit in constant currency down 5% to US$1,722 million
• Interim dividend flat at US$1.04 per share
• R&D investment up 13% to US$486 million

What happened during the first half?

For the six months ended 31 December, CSL reported a 5.3% increase in revenue to US$6,041 million. This represents a 4% increase to US$5,993 million in constant currency.

Management advised that this was driven by a 2% decline in CSL Behring revenue to US$4,216 million and an 18% lift in Seqirus revenue to US$1,592 million.

This reflects strong growth in seasonal vaccines, market leading haemophilia B product Idelvion, and specialty products Kcentra and Haegarda, which were partially offset by softer immunoglobulins and albumin sales due to constrained plasma collections in FY 2021.

However, due to a 3.4 percentage points decrease in its gross margin, CSL’s profits were lower year on year. It reported a 5% constant currency decline in net profit after tax to US$1,722 million.

But despite its weaker earnings, the CSL board has elected to maintain its interim dividend at US$1.04 per share.

Management commentary

CSL’s CEO, Paul Perreault, commented: “CSL has delivered a result in line with our expectations in a challenging environment brought about by the ongoing impacts of the global COVID pandemic.”

Mr Perreault was quick to address the elephant in the room – plasma collections.

He said: “Our core franchise, the immunoglobulin portfolio, has been impacted by the industrywide constraints on collecting plasma in FY21 during the course of the global pandemic. We have responded by implementing multiple initiatives in our plasma collections network, which has given rise to significant improvement in plasma volumes collected. Given the long-term nature of our manufacturing cycle, this will underpin stronger Ig and albumin sales going forward.”

The CEO also highlights the strong rebound in HPV royalties and the impressive performance of its vaccines business, Seqirus.

Mr Perreault said: “HPV royalties were up 134%2 as sales rebounded strongly to pre-COVID levels following strong demand and increased supply. Our influenza vaccines business, Seqirus once again delivered a strong performance with revenue up 17% at CC. This was achieved by significant growth in seasonal influenza vaccines driven by record demand and Seqirus’ differentiated and high value product portfolio.”

Outlook

CSL has reaffirmed its guidance for FY 2022. This will mean a net profit after tax in the range of approximately US$2.15 billion to US$2.25 billion at constant currency.

Though, it is worth noting that this guidance now includes US$90 million to US$110 million in transaction costs related to the Vifor Pharma acquisition. These costs were not part of its original guidance, so this is a quasi-upgrade of sorts.

This guidance is expected to be underpinned by improvements in plasma collections and increased demand for flu vaccines.

Mr Perreault explained: “Following the initiatives we have implemented in our plasma collections network, collections have been improving and are expected to underpin stronger sales in our core plasma therapies. Seqirus continues to perform strongly as increased demand for influenza vaccines together with our differentiated product portfolio will see it deliver another profitable year. Consistent with the seasonal nature of the business we anticipate, however, a loss in the second half of the year.”

The post CSL (ASX:CSL) delivers US$1.7bn half year profit and tips plasma collection rebound 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 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Capital H Management founder and chief executive Harley Grosser reveals two small-cap ASX shares that are in the buy zone, and the ones that he missed that still haunt him.

Hottest ASX shares

The Motley Fool: What are the two best stock buys right now?

Harley Grosser: The first one is one that I think readers may have seen me mention before, but it’s just gotten to such attractive valuation levels that I think it’s a near-term buy — that’s Webcentral Ltd (ASX: WCG).

This is the telco, cloud services and domain management business. They’ve given $30 million of EBITDA guidance in FY23, which means it’s trading on a bit over four times EBITDA today, which is just way too cheap. 

They flag organic growth to kick in, and there’s definitely going to be M&A still to come — that’s the style of their management team. 

The stocks sold off heavily because of the merger they did with 5G Networks and a lot of shareholders that took scrip from 5G, we think, have just sold into a liquid market at the time the general markets are selling off.

We’d view that as an opportunity. And I think that at this price, it actually becomes an acquisition target itself for someone like web.com or one of the majors to just lob a bid, because to us it just looks too cheap. 

We think that’ll correct in time. But in the meantime, I’d probably say it’s a near-term buy opportunity.

MF: This is the company that’s also betting on existing domain owners to transfer to the new .au domains to accelerate its business?

HG: Yeah, that’s correct. That’s just one of the tailwinds behind this business. They’ve given us a brief update on how sales have gone in .au thus far. We expect more detail at the half-year results this month. We think that’ll be positive. It’s definitely going to be growing as a nice tailwind. 

One important point to note is that with domains, if you’re Webcentral, you receive the cash for, let’s say for a two- or three-year domain sale, upfront — but then you only book the revenue each month as it’s incurred. So what you’ll see is you won’t see revenue jump, but you’ll see a cash jump.

So I’d just flag that’s probably the metric to watch, but hopefully the company will give more detailed numbers around how that looks.

MF: And your second best buy at the moment?

HG: Well, the other one that we’ve been buying lately is ARC Funds Ltd (ASX: ARC) for the reasons that I outlined earlier. 

So last year when we joined the board, all of 2021 was just about pivoting the strategy, giving us a good sort of platform to launch off. I think we did that with the two managers that we secured in Magnum and Mario. They’re both now going well, Mario’s up and running and Magnum will launch their fund fairly soon. But this year, with the share price re-rated and with our shareholders happy and everything going in the right direction and a really nice pipeline, we think this year is all about growth. So we’ve been buying that of late. 

We expect it to, like I said before, it all comes down to execution. If we do our job, then I think we’ve got some upside there.

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

HG: In small caps we’ve got heaps of stocks wrong and you can’t avoid getting them wrong. It hurts when you lose money, but it’s just part of the game. 

At Capital H we try to pride ourselves on being a small-cap specialist, which means that we need to be across the entire market. It doesn’t annoy me if we get a stock wrong, it doesn’t annoy me if we take a view on a stock and then that view is wrong. But what does annoy me is if we don’t get around to making the effort to look at a stock and at least form a view, then they end up being multibag — that really frustrates me. 

So there’s been unfortunately plenty of those over the last sort of 10 years or so. Too long to list, but we try to use that frustration when we do miss one to get onto the next one. 

MF: Is there one painful one off the top of your head you could name?

HG: I remember years ago, Altium Limited (ASX: ALU). We missed that one, when we were much smaller.

I think probably one that was in our wheelhouse that we missed because it was a bit big for us was Pinnacle Investment Management Group Ltd (ASX: PNI). Pinnacle has the same business model as ARC Funds. That’s one that we probably should have been more across. 

But look, everyone missed Afterpay. We probably should have been more across the Afterpay story. That was one that I didn’t really understand from a product user perspective and therefore missed the stock.

The post 3 ASX shares I missed that haunt me to this day appeared first on The Motley Fool Australia.

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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. owns and has recommended Afterpay Limited, Altium, and PINNACLE FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Webcentral Limited. The Motley Fool Australia owns and has recommended Afterpay Limited 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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