The S&P/ASX 200 Index (ASX: XJO) is gaining in late morning trade, up 0.3%.

The ASX 200 has largely managed to shrug off concerns over the ongoing pandemic and renewed lockdowns. It’s up 12.5% in 2021, a stellar 8 months by any standards.

August saw most ASX 200 companies reporting their full year (or in some cases half year) results for the 2021 financial year.

This month also saw the index hit a new record closing high of 7,628.9 points on 13 August.

While it’s down 1.3% from the all-time high, the index remains up 0.4% since reporting season kicked off at the beginning of the month.

Now, with earnings season all but done and dusted, investors are wondering, what’s next for ASX 200 shares?

The experts’ outlook for the ASX 200

To get an idea of what’s ahead, we turn to the experts who say lockdowns are likely to impact revenue and drive up costs for some ASX 200 companies. At the same time, very few are willing to offer guidance in today’s uncertain environment.

Catherine Allfrey, principal and portfolio manager at WaveStone Capital, says, “The numbers don’t lie.”

According to Allfrey, (quoted by the Australian Financial Review):

There’s been a clear revision in the market’s earnings expectations for the 2022 financial year… We’ve seen CEOs come out and warn the market to expect a tough first half, with many companies not operating due to lockdowns and others dealing with margin pressure due to factors such as elevated freight costs.

Shane Oliver, head of investment strategy at AMP Capital, highlighted the lack of guidance for FY22. He says, “An air of uncertainty is hanging around because even though results were solid and there were good payouts, which is normally a good sign, the outlook statements were either lacking or non-committal.”

The AFR notes that Macquarie’s market’s forecast for earnings per share (EPS) growth in FY21 is down to 10.5% from 13% before earnings season commenced.

Morgan Stanley’s chief Australian equity strategist Chris Nicol also noted many companies had not provided guidance, saying just 39% of companies had done so.

“Supply chain and cost friction was a key theme to watch going into the season,” he said, noting that  with more companies mentioning terms like ‘headwinds’, ‘wages’, and ‘inflation’, “this makes the set-up for the first half of financial year 2022 earnings more challenged”.

ASX 200 companies exposed to potential increased supply chain costs could find their shares under pressure.

The upsides and downsides of FY21 reporting season

According to AMP’s Oliver, 40% of the ASX reporting results “have surprised on the upside“. While that’s slightly below the average of 44%, he noted that only 18% “surprised on the downside which is well below the norm of 26%”.

Oliver also said that 75% of companies reported increased earnings year-on-year while 88% upped or maintained their dividends.

Citing analysis from Richard Coppleson at Bell Potter, he said shareholders are looking at a record $30 billion plus in dividend payments along with more than $20 billion in buybacks.

He estimated dividend growth of roughly 57% from FY20 levels, certainly welcome news in today’s low interest rate environment.

What’s next for ASX 200 shares?

So what can we expect in the months ahead for ASX 200 shares?

According to Oliver:

Shares remain vulnerable to a short-term correction with possible triggers being coronavirus, the inflation scare and US taper talk, likely US tax hikes and a debt ceiling standoff and geopolitical risks. But looking through the short-term noise, the combination of improving global growth and earnings helped by more fiscal stimulus, vaccines ultimately allowing a more sustained reopening and still low interest rates augurs well for shares over the next 12 months.

The remarkable bounce back from the early pandemic lows isn’t something we’re likely to see repeated on the ASX 200. But if Oliver’s right, the outlook remains solid.

The post Soaring profits and record dividends…what’s next for ASX 200 shares? appeared first on The Motley Fool Australia.

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• The Aussie Broadband (ASX:ABB) share price is up 40% in a month. What’s next?
• ASX 200 midday update: Harvey Norman’s record profit, PointsBet posts large loss
• Here’s why the 88 Energy (ASX: 88E) share price is frozen today
• Regis Healthcare (ASX:REG) share price leaps on return to profit

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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The Aussie Broadband Ltd (ASX: ABB) share price has been a standout performer, surging almost 40% in the past month.

The winning spree is continuing on Tuesday, with the company’s shares this morning leaping to an all-time high of $4.14.

At the time of writing, they have partially retreated to $3.95, still a gain of 5.33% on yesterday’s closing price.

Aussie Broadband share price rallies after FY21 results

The Aussie Broadband share price is on the rise after the company released its FY21 results on Monday.

Despite a well-rounded FY21 performance, Monday’s trading session proved to be a volatile one for the Aussie Broadband share price.

At the morning bell, it opened 4% higher to an intraday high of $3.84, before selling pressure dragged it well into negative territory, down 2.4% to lows of $3.60 by lunchtime.

Aussie Broadband shares finished the bumpy session 1.63% higher at $3.75.

While its shares might have whipsawed back and forth, the company delivered a strong FY21 performance and an uplift in market share across internet and mobile services. Highlights include:

• Revenue rose 84% to $350.3 million;
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) surged 433% to $19.1 million before initial public offering costs;
• Total broadband services increased 53% to 400,848;
• Mobile services lifted 102% to 25,606;
• Business and wholesale broadband services up 90% to 37,498.

What’s next for Aussie Broadband?

Looking ahead, Aussie Broadband managing director Phillip Britt commented, “We will continue our marketing and sales focus on organic growth of our residential and business/enterprise segments, as well as exploring new channels for growth. We will continue to review merger and acquisition opportunities that are aligned with our strategy and culture and would deliver value for our shareholders.”

Britt highlighted the company’s fibre build as a catalyst to drive cost savings and growth.

“We anticipate that our fibre network will start to show financial benefits not only through offloading existing leased infrastructure but also through the opportunity to directly connect customers to our own network,” Britt said.

According to the results, the fibre build will be complete this financial year. The company said more than 1,200 km of Aussie Broadband-owned fibre will be in the ground on completion.

The fibre build is expected to result in more than $15 million per year saving in backhaul charges from FY23 onwards.

Changing to be solutions focused

Aussie Broadband aspires to become a “one-stop-shop” for customers’ communications and IT requirements. Instead of selling connections to customers or third parties, the company said it wants to become an “expert [in] design, advice and implementation of solutions”.

The company’s results highlight a number of solutions-focused products under development. This could see the company branch out into cloud services, managed hardware and security in the near term.

Aussie Broadband share price snapshot

The Aussie Broadband share price has delivered a four-fold increase from its initial public offering price of $1.

From a year-to-date perspective, the company’s shares have almost doubled from their closing price of $2.00 on 31 December 2020.

The post The Aussie Broadband (ASX:ABB) share price is up 40% in a month. What’s next? appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun owns shares of Aussie Broadband Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband 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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At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) is on course to record another small gain. The benchmark index is currently up 0.2% to 7,519.8 points.

Here’s what is happening on the ASX 200 today:

Harvey Norman shares lower despite record profit

The Harvey Norman Holdings Limited (ASX: HVN) share price is dropping today despite delivering a record profit in FY 2021. For the 12 months ended 30 June, the retail giant reported a 15.3% increase in total aggregated sales to $9,491 million and a 63% jump in profit after tax to a record $743.1 million. However, news that sales were down sharply in July and August due to lockdowns appears to be weighing on its shares.

PointsBet shares lower on results

The Pointsbet Holdings Ltd (ASX: PBH) share price is also tumbling today following its full year results release. The sports betting company delivered a 228% increase in turnover to $3,781.4 million. However, due largely to a big increase in its marketing spend, PointsBet recorded a statutory loss after tax of $187.1 million.

Webjet trading update

The Webjet Limited (ASX: WEB) share price is pushing higher today following the release of a positive trading update by the online travel agent. That update reveals that the company’s key WebBeds business returned to profitability during the month of July. Pleasingly, it has continued to be profitable in August and is expected to remain this way in September.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Clinuvel Pharmaceuticals Limited (ASX: CUV) share price with an 8% gain. This is despite there being no news out of the biopharmaceutical company. The worst performer has been the Mesoblast Limited (ASX: MSB) share price with an 11% decline following the release of its full year results.

The post ASX 200 midday update: Harvey Norman’s record profit, PointsBet posts large loss appeared first on The Motley Fool Australia.

More reading

• Which ASX shares are leading the way on the ASX 300 today?
• Harvey Norman (ASX:HVN) share price down 5% despite strong FY21 growth
• Mesoblast (ASX:MSB) share price slides 10% following FY21 earnings
• Webjet (ASX:WEB) share price higher on positive trading update
• PointsBet (ASX:PBH) share price on watch after stellar sales growth but $187m loss

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 shares of and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Harvey Norman Holdings Ltd. and Pointsbet Holdings 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 88 Energy Ltd (ASX: 88E) share price is frozen today as it prepares to release news to the market.

The company’s shares are halted at their previous closing price of 3.2 cents.

According to the oil and gas company’s request for the trading halt, it’s planning to announce news of a capital raise this week.

Let’s take a closer look at 88 Energy’s upcoming capital raise.

Why are 88 Energy’s shares frozen?

The 88 Energy share price is on ice today as the company prepares to announce news of a capital raise.

88 Energy expects its share price will remain stagnant until Thursday morning at the latest.

The capital raise will be 88 Energy’s second this year. In February, it raised $12 million in a placement. As part of the placement, sophisticated and institutional investors could get their hands on a piece of 88 Energy for 0.8 cents.

The 0.8 cent price tag represented a 27% discount on the 88 Energy share price’s prior close of 1.1 cent.

Most of the funds from the February cash raise were earmarked to go towards the Project Peregrine‘s Merlin-1 well, along with its holding in the project’s Harrier-1 well.

The obvious question regarding 88 Energy’s soon-to-be-announced capital raise is: what does it need the extra cash for now?

In the company’s recent half-year results, released earlier this month, it noted it has around $14.8 million of cash in the bank.

Additionally, 88 Energy paid off US$16.1 million of debt using funds from the sale of its Alaskan oil and gas tax credits in July. It is now debt-free.

However, earlier this month 88 Energy confirmed it has found light oil at Merlin-1. It also recently announced good news of its Umiat oil field. Finally, it was granted 100% of Project Peregrine’s working interest in July.

Perhaps the market could soon be wowed with a flurry of activity from 88 Energy. It does appear to be primed to make moves on its big-ticket projects.

All may be revealed sometime between now and Thursday morning.

The post Here’s why the 88 Energy (ASX: 88E) share price is frozen today 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 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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The Regis Healthcare Ltd (ASX: REG) share price is leaping higher in morning trade, up 6.09% to $2.09 per share.

Below we take a look at the residential aged care provider’s financial results for the year ending 30 June (FY21).

Regis Healthcare share price up on FY21 results

Some top results likely moving the Regis Healthcare share price this morning:

• Revenue from services increased 3.5% from FY20 to $701.4 million
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $137.8 million, down 2.7% year-on-year from $141.6 million
• Net profit after tax (NPAT) of $19.9 million compared to a loss of $700,000 in FY20
• Declared a final dividend of 4.63 cents, 50% franked

What happened during the reporting period for Regis Healthcare?

During the financial year, Regis reduced its debt by 39.8%, down to $142.4 million from $236.7 million at the end of FY20.

Average occupancy at its facilities edged 0.7% higher, to 88.9% from 88.2% the prior year.

As an operator of aged care facilities, COVID-19 mitigation measures were prioritised. All residents were offered vaccination via a government program. Regis also secured a separate provider, offering vaccines to all willing residents and employees.

As at 27 August, the company reports 78% of residents have had 2 doses while 58% of staff is double dosed. Regis received $7.7 million of government funding and $4.2 million of government grants in relation to costs incurred from COVID-19..

On 9 August, Regis announced that it had “identified potential underpayments of employee entitlements” going back 6 years and affecting some current and former employees. The review is ongoing, but Regis provided $35 million in the financial statements in relation to the issue. $7.1 million of this comes off the FY21 profit before income tax. The rest has been “recorded as a prior period restatement”.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) moved to acquire Regis in September in an initial confidential, non-binding indicative proposal, valuing Regis Healthcare’s share price at $1.65. In November WHSP upped the offer to $1.85 per share.

Regis said the proposals were rejected as they “materially undervalued the company”. In January, WHSP withdrew its proposal.

The final dividend is payable 30 September. It takes the full-year dividends to 6.63 cents per share, or 100% of FY21 NPAT.

What did management say?

Commenting on the results, Regis’ CEO, Linda Mellors said:

Regis has performed strongly, responding to a range of significant events, including the threat to residents and employees from the global pandemic, an extended Royal Commission, the Australian government’s reform agenda, and various internal matters. Each challenge has been met with commitment and focus from a highly experienced team…

The company continues to review the progress of the COVID-19 pandemic and take necessary steps to protect the health, well-being and safety of residents, clients and employees.

What’s next for Regis Healthcare?

Looking ahead, management said it wasn’t prudent to provide guidance in the current macro-environment and the ongoing pandemic.

Mellors said:

Our focus on providing quality resident care, service and accommodation to support improved occupancy remains a high priority, while the reduction in debt places the company in a strong position to take advantage of various growth opportunities as they emerge.

The Regis Healthcare share price is up 68% over the past 12 months.

The post Regis Healthcare (ASX:REG) share price leaps on return to profit appeared first on The Motley Fool Australia.

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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 shares of and has recommended Washington H. Soul Pattinson and Company 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 S&P/ASX 300 Index (ASX: XKO) is relatively flat today as earnings season begins to wrap up for most companies.

At the time of writing, the ASX 300 is up 0.10% to 7,513 points. Still, just a smidgen off its all-time high record of 7,625 points reached in the middle of this month.

Nonetheless, let’s take a look at which ASX 300 shares are some of the biggest movers on Tuesday.

Kogan.com Ltd (ASX: KGN)

The Kogan share price is steaming ahead despite no market sensitive news being released by the e-commerce company.

It appears investors are buoyant on Kogan shares after a broker weighed in their thoughts on the company last week.

Credit Suisse released a note on Thursday cutting its price target for Kogan by 7.6% to $14.06. Although this is a reduction, it’s worth noting the estimate implies an upside of around 20% based on today’s price.

Kogan shares are up 6.61% to $11.78 at the time of writing.

Webjet Limited (ASX: WEB)

Another mover is Webjet shares, which are advancing following a positive trading update released from the online travel agent.

The company noted that its WebBeds business returned to profitability in July, surprising the market despite current lockdowns. Furthermore, it expects WebBeds to remain profitable in the coming months.

The Webjet share price is up 3.46% to $5.69.

Appen Ltd (ASX: APX)

Following suit, Appen shares are rebounding after a heavy sell-off during the past week following its first-half results last week.

The annotated dataset provider hasn’t provided any news since then, however, JPMorgan revised its outlook on Appen shares.

The broker significantly decreased its rating by 45% to $13.50. However, at the current Appen share price of $10.41, up 3.69%, this gives an upside of about 30%.

And the biggest fallers?

Mesoblast Limited (ASX: MSB)

Heading south is the Mesoblast share price after the company released a disappointing full year result for FY21.

Mesoblast reported losses across the board despite announcing significant regulatory and clinical progress for its lead product candidate, remestemcel-L.

The Mesoblast share price is down a sizeable 10.61% to $1.77.

Mercury NZ Ltd (ASX: MCY)

Also in decline, are Mercury shares despite no news coming from the company since its full year results on 17 August.

However, the energy provider received a series of broker updates from Swiss investment bank, UBS, and Australian multinational company Macquarie.

Both agencies raised their price target by 1.4% to NZ$7.30 (A$7.03), and 1% to NZ$7.27 (A$7.00), respectively.

The Mercury share price is down 5.23% to $6.52.

The post Which ASX shares are leading the way on the ASX 300 today? appeared first on The Motley Fool Australia.

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• Why this leading broker sees value in the Webjet (ASX:WEB) share price
• Which ASX companies are starting off the week as the top movers in the ASX 300 today?

Motley Fool contributor Aaron Teboneras owns shares of Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd, Kogan.com ltd, and Webjet 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 Crown Resorts Ltd (ASX: CWN) share price has dipped into the red from the opening of trade on Tuesday.

Crown shares are now exchanging hands at $9.22 each, a 0.97% drop from the market open.

The casino group’s shares are on the move today after the casino group reported its FY21 earnings on Monday.

In it, Crown announced the suspension of its dividend for FY21. As such, shareholders will not realise any payout in FY21 from their Crown shareholdings.

Let’s investigate a bit further.

Why is Crown suspending its dividend for now?

It was a difficult year for the Crown Resorts share price in 2021, marred by money laundering allegations and Covid-19 impacts on the company’s operations. Crown’s casino licenses were also called into question after a royal commission earlier in 2021.

In its report, Crown recognised a 31% downturn in revenue from the year prior, whereas earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the year came in 77% behind FY20. This contributed to a 429% increase in after-tax loss to $261.6 million.

The company’s $892 million net debt service also remains at risk of default, should regulators revoke the group’s casino licenses, according to Crown.

In fact, as “part of the arrangement with lenders”, the group “agreed not to pay dividends” during the period in which certain “waivers” are in place on its debt.

These “waivers” are in reference to agreements reached with Crown’s lenders, regarding “a series of modifications to Crown’s existing financing arrangements”. For instance, the company was granted an extension of $650 million in debt with “near-term maturities” to October 2023.

Crown would not return to paying a dividend until at least halfway through FY22, the company said. The arrangement also means Crown’s largest shareholder, James Packer, will go without a payout for one more year, according to a report in The Australian.

Packer’s 37% shareholding has been a contentious issue of late, with US private equity firm Oaktree withdrawing its $3 billion offer to acquire the stake. Crown has also pushed back takeover offers from Blackstone and Star Entertainment for $8 billion and $12 billion, respectively.

Nonetheless, Crown shareholders will be hoping the group reinstates its dividend over the coming periods. For context, Crown declared a 37.5 cents per share dividend in FY20, franked at 25% of the Australian tax rate of 30%.

Crown Resorts share price snapshot

The Crown Resorts share price has had a difficult year to date, posting a loss of 5% since January 1. Despite this, Crown shares are still 1.5% in the green over the past 12 months.

These results have lagged the S&P/ASX 200 index (ASX: XJO)’s return of around 25% over the past year.

The post Crown Resorts (ASX:CWN) share price slumps amid dividend suspension appeared first on The Motley Fool Australia.

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• 10 ASX shares we’re overweight in right now: fund
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The author Zach Bristow 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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The Fortescue Metals Group Ltd (ASX: FMG) share price is bouncing back this week after the company released its FY21 full-year result.

The iron ore major reported a 74% increase in total revenue to US$22.3 billion and a 117% surge in net profit after tax (NPAT) to US$10.3 billion. The strong result was underpinned by a period of sky-high iron ore prices, where Fortescue received an average realised price of US$135/dry metric tonne (dmt) compared to US$79/dmt a year ago.

The Fortescue share price rallied 6.6% on Monday to $21.32 and is largely holding its gains in Tuesday’s session, slipping back 0.52% to $21.21 at the time of writing.

While Fortescue shareholders can finally breathe a sigh of relief after a brutal month, Fitch Solutions believes an acceleration in global iron ore production is on the horizon.

Global iron ore production to accelerate

According to an article featured on Mining.com, analysts at Fitch Solutions forecast an acceleration in global iron ore production in the coming years.

“Global iron ore production growth will accelerate in the coming years, bringing an end to the stagnation that has persisted since iron ore prices hit a decade-low average of US$55.0/tonne in 2015.”

“We forecast global mine output growth to average 3.6% over 2021-2025 compared to -2.3% over the previous five years. This would lift annual production by 571mn tonnes in 2025 compared to 2020 levels, roughly the equivalent of India and Brazil’s combined 2020 output,” says Fitch.

The research firm pointed at Brazil and Australia as the main drivers of supply growth.

Fitch believes Brazil’s iron ore production growth will rebound in the coming years following a sharp contraction and stagnation between 2018 and 2020. Vale’s Brumadinho damn collapse in 2018 sparked a number of investigations into one of the world’s largest iron ore producers, Vale.

The disaster saw multiple operations come to a standstill and a heightened level of regulatory scrutiny in what Fitch described as “the deadliest environmental disaster in the nation’s history”.

Fitch forecasts Brazil’s iron ore production to increase at an annual average growth rate of 10.6% between 2021 and 2025.

The BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Fortescue share price topped at the beginning of August following weaker steel demand from China. Despite the recent collapse of ASX-listed ore miners, Fitch believes that the big three will re-invest “currently buoyant profit into additional production”, further supporting its narrative of an accelerating near-term iron ore output.

Looking beyond 2025, Fitch expects that “lower prices will eventually drag on production rates. We forecast annual production growth to average just 1.1% over 2026-2030, with output levels stagnating by the end of the decade”.

Fortescue share price snapshot

Despite Monday’s bounce, the Fortescue share price is still well in the red for 2021, down 13.75% year-to-date.

A mammoth dividend is on the horizon for Fortescue shares, with an ex-dividend date of Monday, 6 September for a final dividend of $2.11.

At today’s prices, the final dividend alone is worth a yield of 9.9%.

The post Fortescue (ASX:FMG) share price bounces despite looming iron ore supply outlook appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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.

Sector rotation is the rise of stocks in one industry, or sector, at the expense of stocks in other industries. For instance, investors fearing the broad market is poised for a correction may shed their riskier technology names and replace them with safer, more reliable utilities stocks. The selling causes technology names to lose value, while the buying pushes utilities stocks higher.

This stock-swapping process is rarely clear. Investors also don’t always replace tech names with utilities stocks. Sometimes they may choose to replace their more aggressive technology stocks with similarly risky energy names. It’s also not unusual for all stocks to be rising or falling in tandem, even if they’re doing so at different paces. The point is, nobody ever really knows how investors’ perceptions of different industries are shifting.

And there’s the rub. We know sector rotation is going to happen. We just don’t know how or when it’s going to take shape. The good news is, we can — and should — plan for this unknown.

A close look at some stock market charts just might bolster your bottom line in a big way by changing how you manage your portfolio… by making you less aggressive.

A huge gap between the best and worst

The circumstances of 2020’s COVID-19 pandemic were so unusual that nobody should be using last year as an example of how the market operates. The last time things were “normal” was 2019. So, that’s the year we’re going to use as the basis for our focus chart… and our bigger point. Using some of the more popular exchange-traded funds (ETFs) as proxies for the broad sector groups, we can see 2019’s overall gain of nearly 29% for the S&P 500 wasn’t even close to the same sort of gain some sectors made in the very same year. At the winning end of the scale you’ll find the Technology Select Sector SPDR (NYSEMKT: XLK) with a gain of almost 48%, while the Energy Select Sector SPDR (NYSEMKT: XLE) logged a gain of less than 5%.

XLE data by YCharts

From best to worst, that’s a performance difference of 43 percentage points, which is far more than the overall market gains in the average year! Just for some extra perspective we’ve also included the second-best and next-to-worst sector ETF performances in our look at 2019’s sector-based returns above. The gap between them is still pretty wide too, at 18 percentage points.

Surprised? A lot of people are.

Most investors understand some groups do better than others in any given year. What they may not realize, though, is how much better some sectors do compared to others. The 43 percentage points that separated tech stocks from energy stocks in 2019 is actually close to the usual spread between any year’s best and worst sectors. Investors that were overexposed to the technology sector in 2019 are thrilled with the decision, but folks holding out for a big rebound in energy stocks that year have to be disappointed they didn’t even match the overall market’s return.

Here’s the thing. As of early 2019, how many of us really knew technology stocks or the names that make up the the Financial Select Sector SPDR ETF (NYSEMKT: XLF) would do so well over the course of the coming twelve months? Or, how many of us knew the energy sector or the stocks that make up the SPDR S&P Telecom (NYSEMKT: XTL) would perform so badly? If we’re being honest, not many. And the people who did see what was coming were at least as lucky as they were smart.

This is why investors should diversify their portfolios across several sectors, if not all of them. The downside of holding too many stocks in the wrong sectors is much bigger than the upside of concentrating in the market’s winning sectors. Not only has your portfolio underperformed, you’ve now got one less year to make up that ground.

Leadership never lasts

And yet, there’s more to the story than the point made by a deeper look at 2019’s sector performance chart. You only have to go back and look at previous years’ sector performances to appreciate that sector leadership (and laggardship) is not only always changing, but also rather unpredictable.

Here’s 2018’s comparison. Technology stocks didn’t lead. Neither did financials. In fact, the only sector ETF to log a meaningful gain in 2018 was the Health Care Select Sector SPDR Fund (NYSEMKT: XLV). Energy stocks were once again at the bottom of the pile with nearly a 21% loss, but this time they were closely followed by the 16% setback suffered by the Materials Select Sector SPDR (NYSEMKT: XLB)…

XLB data by YCharts

… the very same materials ETF that did so well the year before. Yes, in 2017, technology stocks were back on top with a 32% gain, but the runner-up was the Materials Select Sector SPDR with nearly a 22% gain. And, similar to 2019, the difference between 2017’s best and worst-performing sector was an incredible 36 percentage points.

XLB data by YCharts

Here’s one more reference chart to consider: 2016’s sector comparison. That year, energy stocks (the same sector that would lag the next three years) led the market with a 25% gain. Also in 2016, telecom stocks (yes, another big laggard for the next three years) closely followed energy names with their 23% advance. The same technology stocks that have led the way most of the time since then were just mediocre performers in 2016, while the healthcare sector was the proverbial problem child with a 4% loss in 2016. From best to worst, 2016’s sector performances spanned 29 percentage points, rewarding oversized bets on energy but punishing big bets on healthcare and consumer staples.

XLE data by YCharts

The point is, no sector leads or lags for very long, and the performance differences resulting from these leadership changes can easily exceed 30 percentage points in just one year.

The way to win

If you have the inclination, information, and experience to do so, then sure, overexposing yourself to the right sectors and steering clear of the wrong ones could theoretically lead to market-beating gains. You don’t even have to successfully identify all the budding sector trends. Just spotting most of them is a way of improving your bottom line, as the gap between any given year’s best and worst-performing industries is surprisingly big.

The fact is, however, no one — not even market professionals — has a proverbial crystal ball when it comes to spotting sector rotation. Indeed, sometimes we seem particularly bad at spotting it. That’s a problem simply because the cost of getting it wrong can be even greater than the upside of getting it right.

Remember, lagging the broad market for any length of time means you’re behind on your goals, and the one thing you can never get back is time. That’s why we’re all truly better off just remaining well diversified all the time. 

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

The post These stock market charts will make you a smarter investor appeared first on The Motley Fool Australia.

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James Brumley 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.

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

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The Splitit Payments Ltd (ASX: SPT) share price edged 1.1% lower to 44.5 cents on Tuesday after the company released its 1H21 results.

Let’s take a closer look at the key takeaways of the buy now, pay later (BNPL) company’s results:

Splitit share price edges lower on record result and CEO change

• Merchant sales volume (MSV) increased 94% to US$172.5 million
• Gross revenue rose 79.7% US$5.5 million
• Total merchants jumped 167% to ~2,800
• Total shoppers lifted 83% to ~566,000
• Strong balance sheet including US$66 million in available cash and US$150 million credit facility

What happened to Splitit in 1H21?

The Splitit share price has been in a downtrend since late 2020, tumbling 65% year-to-date and down 75% in the last 12 months.

Despite a struggling share price, Splitit delivered a record first half-year performance with strong growth across its key metrics of MSV, revenue, active merchants and shoppers.

In the first half, multiple new large merchants with significant addressable MSV signed up to Splitit services including Google Japan. Splitit services are available in Japan’s Google Store to support instalment services for customers purchasing new Pixel 5 mobile phones, Nest products and Chromecast streaming devices.

Splitit described this high profile customer as an important step in its expansion into Asia, supplementing its growing merchant presence in key US and European markets.

The company added ~134,000 new shoppers in the first half, growing its customer base by 83% to ~566,000 shoppers. The company was pleased to highlight that its average order value remains over US$1,000 and continues to be a “critical differentiator” in an increasingly crowded BNPL market.

During the half, Splitit launched its SplititPlus payment gateway in April to reduce onboarding complexity for merchants. In addition, the company also announced that it will develop a white-label Platform as a Service offering to “broaden its opportunities and grow in non-core markets and categories”. The product has already secured new partnerships with leading Middle East BNPL provider, tabby, and leading BNPL in Pakistan, QisstPay.

In addition to its operational performance, Splitit advises that its CEO Brad Paterson will cease in this role and John Harper will be appointed as Interim CEO.

The leadership change announcement said that the Board determined “a proactive change of leadership is necessary for the company to continue building on its achievements and prioritise its ambitions to significantly expand merchant footprint across all geographies”.

Management commentary

Splitit Chair Dawn Robertson commented on the results, saying:

Splitit is pleased to report a strong first half, with the delivery of 94% YoY MSV growth, along with growth across other key metrics of revenue, merchants and shoppers. The ongoing development of our new product innovations, including Splitit Plus, and our strong global partnerships, are expected to provide more and more opportunities to increase ongoing acceptance as we pivot from a period of foundational build, into a period of scaling up.

Robertson flagged the recent M&A activity in the BNPL sector and why the Splitit offering can stand out.

Recent BNPL M&A activity has highlighted sector wide opportunities, which is likely to accelerate the strategic focus and commercial integrations across the entire sector. Splitit remains uniquely placed within the credit card / BNPL ecosystem with extensive commercial relationships that have only just begun to scale. Providing a point-of-sale solution to improve retailer conversion whilst leveraging a consumer’s existing credit, puts Splitit at the unique intersection of two significant markets – credit cards and BNPL. We believe this is a unique point of difference in an otherwise increasingly crowded market.

What’s next for Splitit?

The Splitit share price continues to underperform large-cap BNPL shares such as Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL), perhaps reflecting investor preferences for more established players.

Despite a struggling share price, the business believes it is “well placed to execute on the growth opportunities ahead”.

Splitit pointed to SplititPlus as a solution to address onboarding and integration complexity, while its emerging white-label offering could present opportunities to deliver complementary revenue.

The post Splitit (ASX:SPT) share slips on record half-year result and CEO transition appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T 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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