Technology shares have been pummelled over the last 4 months.

Dominated by growth stocks that rely on low-interest rates for future earnings, inflation fears have seen investors abandon the darling sector of last year.

The S&P ASX All Technology Index (ASX: XTX), in fact, has lost about 15% since February. Yikes.

But ECP Asset Management analyst Damon Callaghan argued this week there are ASX tech shares that will actually benefit from higher inflation.

“We believe concerns of rising discount rates impacting present day valuations need to be weighed in conjunction with potential changes to business profitability,” he said on the company blog.

“It’s important to appreciate how changing macroeconomic environments can affect the profitability of individual businesses.”

Two examples Callaghan cited of tech companies that will benefit from rising inflation are Hub24 Ltd (ASX: HUB) and Netwealth Group Ltd (ASX: NWL).

How Hub24 and Netwealth make money

Both companies provide wealth management software platforms.

Callaghan said Hub24 and Netwealth are clear leaders in their field, holding 2% and 4% of the market respectively.

“Each business is increasingly taking market share, aided by a structural adviser shift to independence and general incumbent platform dissatisfaction across the industry.”

But unlike many other technology companies, the near-zero interest rates in the past couple of years have depressed their business.

This is because a core source of profitability for both is the ‘cash spread’ generated from the money they hold from investors.

“The platforms pay clients interest on uninvested cash, typically with reference to the RBA cash rate (i.e. RBA less 0.50%),” said Callaghan.

“Platforms then utilise their scale, pooling tens of thousands of client accounts, and provide this cash at a wholesale rate to tier-1 banks. For example, Netwealth recently disclosed its standing contract with Australia and New Zealand Banking Group Ltd (ASX: ANZ) pays it RBA plus 0.95%.”

The difference between the interest received from the banks and the interest it pays investors is all sweet profit for Hub24 and Netwealth.

How Hub24 and Netwealth benefit from higher inflation

But since the arrival of COVID-19, the Reserve Bank slashed its cash rate to below 0.5%. This means the margin for Hub24 and Netwealth has disappeared.

“Every basis point below 0.50% ate into the spread earned by both Hub24 and Netwealth,” said Callaghan.

“In the Netwealth example, the running cash spread was cut from 1.45% down to 1.05%.”

This is why if the RBA rate spikes up, both these platform providers will be cheering.

“With economic normalisation, extreme liquidity support and record low rates will no longer be a necessary monetary policy setting — and potentially sooner than expected,” Callaghan said.

“When this period of heightened stimulus passes, we see scope for Hub24 and Netwealth cash spreads to normalise back to pre-COVID levels.”

Using forecasts for the 2023 financial year, ECP Asset Management estimates both software providers will see a 40% boost in profit expectations if “historic” cash spreads returned. 

“The consensus earnings headwinds caused by excess liquidity are now behind the wealth platforms, and are set to accelerate profit growth when this economic recovery matures.”

Hub24 shares were down 1.61% at Friday’s close to trade at $27.58. They started the year at $21.73.

Netwealth stocks were up 1.76% on Friday to change hands at $15.05. They began 2021 at $16.35.

The post 2 ASX tech shares to boom when inflation rises: analyst appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Hub24 Ltd and Netwealth. The Motley Fool Australia owns shares of and has recommended Netwealth. The Motley Fool Australia has recommended Hub24 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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There is an ASX-listed business that generates returns while hardly spending a cent.

Two fund managers this week pointed out how the remarkable revenue model of Deterra Royalties Ltd (ASX: DRR) is worth considering as a long-term investment.

Although the ASX has always been very resources-heavy, it has surprisingly not encountered many mining royalties companies like Deterra.

In fact, according to TMS Capital portfolio manager Ben Clark, it is “the first pure play mining royalties company” to trade in Australia.

“Deterra’s cornerstone asset is 80% of a royalty stream owned since 1994 over Mining Area C (MAC) — an enormous block of land in WA that contains the MAC iron ore mine being mined by BHP Group Ltd (ASX: BHP),” he posted on Livewire.

Clark said Deterra earns money from two sources: 1.232% of revenue from the royalty area and a one-off $1 million payment for each 1 million tonne increase in annual production.

BHP is set to expand production at this site in the next few years, which would appear to bode well for Deterra.

Perpetual head of equities Paul Skamvougeras reckons it’s “the best royalty that you can own globally and one of the highest quality“.

“Reasons being, its mine life is probably 50 years — if not more,” he told a Livewire video.

“In terms of counterparty risk — your counterparty is BHP, that’s who you’re hoping will pay you. We think that they can meet those obligations.”

But here’s the extraordinary thing. Deterra doesn’t need to put in any capital to keep receiving this recurring revenue.

‘This is unheard of’: 500% return on equity

Deterra’s financials are “unique”, according to Clark.

“In the first half of the financial year, the company reported underlying EBITDA of $47.8m at a phenomenal EBITDA margin of 97%,” he said.

“This is unheard of and reflects the fact that there is virtually no cost to the company in earning this revenue, BHP takes on all the risk and capital spend required. The company’s ROE is over 500%.”

In Skamvougeras’ opinion, the money would keep flowing in regardless of the iron ore price.

“It doesn’t matter whether iron ore is US$220 or US$25, the production from BHP is going to keep coming out because they’re very, very low on the cost curve,” he said.

“And there’s no capital to spend, so the royalty owner doesn’t have to spend any capital, increasing production.”

After analysing other royalty companies around the world, Clark’s convinced Deterra is one of the best.

“Using a relatively conservative 2023 iron ore price assumption, the company could pay a dividend well in excess of 10%,” he said.

“Quality royalty streams are tightly held, and few come to market.”

The Deterra share price has actually sunk by around 10% since the start of the year. It lost 4.64% on Friday to stop trade at $4.32.

The post This ASX share makes money for doing nothing appeared first on The Motley Fool Australia.

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Tony Yoo as 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 post LIVE COVERAGE: ASX expected to rise; Gold rebounds appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Kate O’Brien owns shares of Apple and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. 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) has just delivered investors an additional week of gains to record yet another new all-time high. After May gave the ASX 200 a total of three new high watermarks, June is off to a flying start, with the ASX 200 hitting 7,300 points during intra-day trading for the first time ever on Friday.

The index also closed at a record high of 7,295.4 points on Friday afternoon. So another week, another record high. Let’s talk about what pushed the ASX 200 up last week.

Well, for starters, we got a few economic announcements last week that was conducive to higher shares. Firstly, the Reserve Bank of Australia (RBA) kept the cash rate at the record low of 0.1% when the RBA’s board held its monthly meeting on Tuesday. While this move probably surprised no one given the RBA’s comments on what needs to happen in the economy to see higher rates, it still reaffirms that the share market is one of the few places a substantial yield is available in this current climate. 

Secondly, we got some data from the Australian Bureau of Statistics (ABS) on Wednesday that should be universally celebrated. The Australian economy is now 0.8% larger than where it was prior to the pandemic. The ABS’ GDP figures showed that the economy grew 1.8% in the quarter ending 31 March 2021, as well as 1.1% annually.

Strong economic growth is obviously a good sign for ASX companies. As such, this news would probably have given investors a confidence boost. We can see this in the healthy show the ASX 200 put on on Wednesday (more on that in a minute).

Banks and miners push ASX 200 higher

But the ASX 200 can’t rise without the major blue-chip shares within it rising as well. And that’s exactly what we saw last week. The ASX banks and big miners led the ASX 200’s gains. Commonwealth Bank of Australia (ASX: CBA) continued to build on its recent momentum and pushed well past the $100 per share threshold it broke just a few weeks ago. It managed to put on another 1.9% last week to push above $102 per share. The other 3 major banks also had top weeks, with Westpac Banking Corp (ASX: WBC) making a new 52-week high.

A once-again rising iron ore price (which pushed back over US$200 per tonne over the week) also gave a big boost to BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). Fortescue shares shone especially brightly with a 3.84% gain for the week. Rising oil prices also helped push the ASX energy sector much higher, with Woodside Petroleum Limited (ASX: WPL) pushing nearly 9% higher over the week.

As seems to be the case these days, the only ASX sectors showing significant losses in the face of this rising ASX 200 tide were tech shares and gold miners. On the latter, ASX gold shares went backwards over the week, after a couple of strong weeks of performance thanks to a rising gold price. Last week, gold prices got somewhat stuck in the mud, and investors subsequently seemed to lose their zeal for the sector (more on this later).

Likewise, investors may still be getting jitters over the tech sector’s exposure to higher interest rates down the road, and backed out of shares like Zip Co Ltd (ASX: Z1P) and Appen Ltd (ASX: APX). This follows a similar pattern to what happened on the US markets over the week.

How did the markets end the week?

The ASX 200 started the week at 7,179.5 points and ended up at 7,295.4 points for a healthy week-to-week gain of 1.61%. Mondy and Tuesday started things off on the wrong foot with back-to-back losses of 0.25% and 0.27% respectively. But Wednesday’s strong economic figures changed a few hearts and minds out there it seems since the ASX 200 put on a healthy 1.05% gain that day. This was backed up on both Thursday and Friday with gains of 0.59% and 0.49% respectively.

Meanwhile, the All Ordinaries Index (ASX: XAO) also fared very well. The All Ords started out at 7,424 points and finished up at 7,543.3 points for a congruent gain of 1.61%.

Which ASX 200 shares were the biggest winners and losers?

Put the coffee on, because it’s time for our Foolish gossip pages where we look at the ASX 200’s best winners and poorest losers of the week. So, as always, let’s start with the losers:

Worst ASX 200 losers	% loss for the week
Nuix Ltd (ASX: NXL)	(23.2%)
Silver Lake Resources Limited (ASX: SLR)	(12.6%)
Mesoblast Limited (ASX: MSB)	(8.9%)
Appen Ltd (ASX: APX)	(8.9%)

Nuix was the ASX 200 wooden spooner last week, with a hefty loss of 23.2%. This ASX newcomer has been a disappointing investment since its initial public offering (IPO) last year, and things got a lot worse for investors last week. Nuix nit a new low on Friday of $2.57 per share and closed just above that at $2.59. The catalyst for this move was yet another earnings guidance downgrade from the company.

Silver Lake Resources was also a poor performer last week. This ASX gold miner led the losses in its sector with a 12.6% fall. As mentioned above, falling gold prices and a risk-on market at record highs left gold miners unloved last week. 

Health care company Mesoblast was also in the firing line last week. A third-quarter update had investors hitting the sell button after the company reported that its losses were widening.

And finally, tech company Appen was also left in the cold. The tech sector was having a rough time of it anyway last week. But when the markets found out Appen CEO Mark Bryan had recently sold a large parcel of shares, it evidently wasn’t in a forgiving mood.

Now with the losers out of the way, let’s have a look at last week’s winning ASX 200 shares:

Best ASX 200 gainers	% gain for the week
Origin Energy Ltd (ASX: ORG)	15.7%
Worley Ltd (ASX: WOR)	15.6%
Inghams Group Ltd (ASX: ING)	12.3%
Santos Ltd (ASX: STO)	12.2%

Energy generator and retailer Origin was the ASX 200’s best performing share last week, putting on an extra 15.7%. That was despite no major news out of the company. It’s possible investors were responding to some love from brokers last week. Or otherwise, the news that rival AGL Energy Limited (ASX: AGL) may need to pursue a capital raise to fund its demerger ambitions might be increasing Origin’s appeal.

Engineering company Worley was also feeling the love last week. This move upward seems to have been sparked by an investor day event Worley held last week. 

Poultry company Inghams was also sharing the sunshine. Inghams shares are now up close to 22% since 27 May, when the company released a well-received trading update. Last week’s moves appear to be an extension of that momentum.

And finally, ASX energy share Santos was also in demand last week. As we discussed above, energy prices had a strong week, with Brent crude now back above US$70 per barrel for the first time since the pandemic started. This has benefitted Santos shares the most in their sector and the company is now up more than 20% year to date.

A wrap of the ASX 200 blue-chip shares

Before we go, here is a look at the major ASX 200 blue-chip shares as we commence yet another week on the ASX boards:

ASX 200 company	Trailing P/E ratio	Last share price	52-week high	52-week low
CSL Limited (ASX: CSL)	38.72	$291.37	$320.42	$242
Commonwealth Bank of Australia (ASX: CBA)	22.8	$102.52	$102.64	$62.64
Westpac Banking Corp (ASX: WBC)	22.99	$26.87	$26.88	$16
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	17.69	$29.20	$29.55	$16.40
National Australia Bank Ltd (ASX: NAB)	21.11	$27.51	$27.84	$16.56
Fortescue Metals Group Limited (ASX: FMG)	8.64	$22.97	$26.40	$13.56
Woolworths Group Ltd (ASX: WOW)	38.69	$43.35	$43.46	$35.37
Wesfarmers Ltd (ASX: WES)	33.31	$55.24	$56.44	$40.80
BHP Group Ltd (ASX: BHP)	27.51	$48.75	$51.82	$33.73
Rio Tinto Limited (ASX: RIO)	16.11	$124.62	$132.94	$90.04
Coles Group Ltd (ASX: COL)	21.67	$17.04	$19.26	$15.15
Transurban Group (ASX: TCL)	–	$14.27	$15.64	$12.36
Sydney Airport Holdings Pty Ltd (ASX: SYD)	–	$6.12	$7.49	$4.99
Newcrest Mining Ltd (ASX: NCM)	17.77	$27.45	$38.15	$23.08
Woodside Petroleum Limited (ASX: WPL)	–	$24.07	$27.60	$16.80
Macquarie Group Ltd (ASX: MQG)	18.68	$154	$162.06	$111.25
Afterpay Ltd (ASX: APT)	–	$94.48	$160.05	$47.09

And finally, here is the lay of the land for some leading market indicators:

• S&P/ASX 200 Index (XJO) at 7,295.4 points.
• All Ordinaries Index (XAO) at 7,543.3 points.
• Dow Jones Industrial Average (DJX: .DJI) at 34,756 points after rising 0.52% on Friday night (our time).
• Bitcoin (CRYPTO: BTC) going for US$35,815 per coin.
• Gold (spot) swapping hands for US$1,891 per troy ounce.
• Iron ore asking US$205.62 per tonne.
• Crude oil (Brent) trading at US$71.89 per barrel.
• Australian dollar buying 77.41 US cents.
• 10-year Australian Government bonds yielding 1.69% per annum.

That’s all folks. See you next week!

The post ASX 200 Weekly Wrap: ASX hits 7,300 points for the first time appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited, Bitcoin and Newcrest Mining Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Appen Ltd, Bitcoin, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Appen Ltd, COLESGROUP DEF SET, Macquarie Group Limited, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Nuix Pty 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 Australian share market is home to a number of quality companies with solid growth prospects.

Two that have been tipped to grow strongly over the long term are listed below. Here’s why analysts think investors should be buying their shares:

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is Australia’s leading online beauty retailer and has been growing strongly in FY 2021 thanks to the shift to online shopping.

And while the company’s growth is likely to moderate significantly in FY 2022 when trading conditions return to normal, it looks well-placed for growth in the years that follow. Particularly given the aforementioned shift online, which is still in its infancy for the beauty and personal care (BPC) market.

Management notes that the BPC market in Australia is worth $11.2 billion and is expected to grow at a 26% CAGR to 2024. Furthermore, online sales currently comprise 11.4% of the BPC market, which is a notably lower rate of penetration than in developed markets like the US, UK and China.

UBS is a fan of the company. Its analysts currently have a buy rating and $5.40 price target on the company’s shares. The broker believes Adore Beauty’s sales could double between FY 2021 and FY 2025.

IDP Education Ltd (ASX: IEL)

Another ASX growth share to look at is IDP Education. It is a leading provider of international student placement and English language testing services, and the co-owner of the International English Language Testing System (IELTS). This is the English test that is trusted by more governments, universities and organisations than any other. It also operates English language teaching schools in South East Asia.

While demand for its services has unsurprisingly being hit hard by COVID-19, trading conditions have been improving. For example, at the end of the first half, the company reported that testing volumes were broadly in line with those experienced in the final month of 2019 before the pandemic. And although recent outbreaks since then may have stifled its recovery, it looks well-placed to continue it once things are under control again.

Morgan Stanley remains very positive on the company. It recently retained its outperform rating and $30.00 price target on its shares.

The post 2 outstanding ASX growth shares rated highly appeared first on The Motley Fool Australia.

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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 Idp Education Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. 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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If you’re unhappy with the low interest rates on offer with savings accounts and term deposits, then you might want to take a look at the numerous dividend options on the Australian share market.

Two ASX dividend shares that could help you beat low rates are listed below. Here’s what you need to know about them:

Sonic Healthcare Limited (ASX: SHL)

The first ASX dividend share to look at is Sonic Healthcare. Over the last couple of decades, Sonic has grown to become one of the world’s leading healthcare providers, with operations in Australasia, Europe and North America. It currently employs more than 1,500 pathologists and radiologists, and more than 10,000 medical scientists, radiographers, sonographers, technicians and nurses.

Sonic has been a strong performer in FY 2021 thanks largely to increased demand for COVID-19 testing. This led to the company reporting a 33% increase in first half revenue to $4.4 billion and a massive 166% increase in first half net profit to $678 million.

Credit Suisse is a fan of the company. Its analysts currently have an overweight rating and $40.00 price target on its shares. The broker is forecasting dividends of 97 cents per share in FY 2021 and 98 cents per share in FY 2022. Based on the latest Sonic share price of $35.16, this will means yields of 2.5% and 2.6%.

Super Retail Group Ltd (ASX: SUL)

Another ASX dividend share to look at is Super Retail. It is the retail group behind the BCF, Macpac, Rebel, and Super Cheap Auto retail brands.

Super Retail has also been a strong performer in FY 2021. This has been driven by a favourable redirection in consumer spending during the pandemic. In the first half of FY 2021, Super Retail reported a 23% increase in sales to $1.78 billion and a 139% increase in underlying net profit after tax to $177.1 million. And with international travel still some way off, it looks set to continue to benefit in the near term.

Goldman Sachs is positive on the company and is anticipating a strong full year result in August. It expects this to lead to Super Retail declaring a bumper full year dividend of 81 cents per share. Based on the latest Super Retail share price of $13.49, this will mean a fully franked 6% dividend yield.

The broker currently has a buy rating and $15.00 price target on its shares.

The post 2 excellent ASX dividend shares for income investors appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares 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 shares of and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Sonic Healthcare 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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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a positive week with a solid gain. The benchmark index rose 0.5% to 7,295.4 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market is expected to open the week slightly higher this morning. According to the latest SPI futures, the ASX 200 is expected to open the day 7 points or 0.1% higher. This follows a positive end to the week on Wall Street, which saw the Dow Jones rise 0.5%, the S&P 500 climb 0.9%, and the Nasdaq storm 1.5% higher.

Oil prices push higher

It could be a positive start to the week for energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) after oil prices pushed higher on Friday. According to Bloomberg, the WTI crude oil price rose 1.2% to US$69.62 a barrel and the Brent crude oil price rose 0.8% to US$71.89 a barrel. Oil prices recorded strong weekly gains thanks to OPEC’s promise to be disciplined with its production.

Tech shares on watch

Australian tech shares such as Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) could push higher today after their US counterparts ended the week strongly. The tech-heavy Nasdaq index jumped a sizeable 1.5% on Friday night. This followed the release of a US jobs report that showed solid gains, boosting confidence in the country’s economic comeback. As the local tech sector tends to follow the Nasdaq’s lead, this bodes well for today’s trade.

Gold price rebounds

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch today after the gold price rebounded on Friday night. According to CNBC, the spot gold price rose 1% to US$1,892.00 an ounce. This appears to have been driven by softening bond yields. This wasn’t enough to stop the gold price from recording a small weekly decline.

ASX Ltd rated as a sell

The ASX Ltd (ASX: ASX) share price may be overvalued according to analysts at Goldman Sachs. This morning the broker responded to the stock exchange operator’s May update by reiterating its sell rating and $67.46 price target on its shares. Goldman believes its earnings risks are skewed to the downside, particularly in futures.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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James Mickleboro doesn’t own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Xero. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Xero. 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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There are plenty of options out there for growth investors on the Australian share market.

Two that are highly rated are listed below. Here’s what you need to know about them:

Dubber Corp Ltd (ASX: DUB)

The first ASX growth share to look at is Dubber. It is a software company that provides businesses with a scalable call recording service.

The company’s cloud-based technology allows businesses to record, manage, and analyse their phone calls and communications.

Demand for Dubber’s offering has been growing strongly over the last couple of years, leading to a significant increase in active customers and revenue.

And with the company just announcing an agreement with global giant Cisco, its growth prospects look even more positive. That agreement will see Cisco Webex Calling and Cisco Unified Communications Manager Cloud (UCM) now include Dubber call recording as part of all Cisco Webex and UCM services at no additional cost to users.

After which, if a user or business requires additional features, such as extended storage, video recording, transcription, sentiment analysis or AI-enriched insights, they can then upgrade their Dubber plan from within Cisco’s Control Hub with immediate access and effect.

Shaw and Partners currently has a buy rating and $3.03 price target on the company’s shares.

Nearmap Ltd (ASX: NEA)

Another ASX growth share to consider is Nearmap. It is a leading aerial imagery technology and location data company’s platform provider.

Like Dubber, demand for its offering has been growing strongly in recent years. Pleasingly, management appears confident that this will continue. So much so, it is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term.

And while a patent infringement notice is likely to weigh on sentiment in the near term, Morgan Stanley remains positive on the company. It also notes that just 25% of its North American revenue is subject to the patent dispute. 

Morgan Stanley has an overweight rating and $3.20 price target on the company’s shares.

The post 2 top ASX shares for growth investors appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Dubber Corporation and Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Dubber Corporation and 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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There are some ASX shares that plenty of brokers like at the moment.

Everyone has a different opinion about each business. But if multiple analysts like the same company then it could be an opportunity:

Steadfast Group Ltd (ASX: SDF)

Steadfast Group says it’s the largest general insurance broker network and the largest group of insurance underwriting agencies in Australasia, with growing operations in Asia and Europe.

It has a broker network that get better market access, exclusive products and services through the Steadfast Group. Steadfast has underwriting agencies that designs, develops and provides specialised insurance products and services to brokers inside and outside of Steadfast. Steadfast also has a number of complementary and supporting businesses for insurance like technology, risk, life insurance, reinsurance and lawyers.

Steadfast is currently rated as a buy by at least four brokers, including Credit Suisse which has a price target on Steadfast of $4.60. It noted the recent profit upgrade.

In that upgrade, the ASX share increased its earnings expectations after a “strong” first nine months of FY21 with revenue growth of 7.2% and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 20.5%.

After good organic growth and accretive acquisitions, Steadfast said that it’s expecting underlying net profit after tax (NPAT) to come in a range of $127 million to $132 million – that guidance was increased from a range of $120 million to $127 million. Underlying earnings per share (EPS) is expected to grow by 15% to 20%.   

Steadfast said that strategic partners continue to implement moderate premium price increases.

FINEOS Corporation Holdings PLC (ASX: FCL)

FINEOS is an ASX software share that provides software to the employee benefits and life, accident and health industry. It says that it helps customers upgrade from outdated legacy administration systems to a modern purpose-built, customer-centric product-suite. It enables improved operational efficiency, increased effectiveness and excellent customer care.

It’s currently rated as a buy by at least three brokers, including the ones at Macquarie Group Ltd (ASX: MQG) that have a price target of $4.63 on FINEOS. That suggests a possible upside of over 20% over the next 12 months. Macquarie thinks that FINEOS can claim more wins which could help.

In the quarter ending 31 March 2021, it revealed that FY21 total revenue is on track to hit the upper end of its guidance range of $102 million to $105 million and achieve the targeted 30% growth in subscription revenue (before the contribution from the Limelight acquisition).

Since that quarterly update, the ASX share announced the acquisition of Spraoi for an upfront US$4 million and an earnout of up to US$6.6 million. Spraoi is a leading provider of machine learning capabilities for the employee benefits and life industry. It currently has eight clients and achieved US$6 million of revenue in the year to 31 December 2020 and is expected to be earnings accretive to FINEOS, excluding transaction costs, after its first full year.

FINEOS is excited by this acquisition because it gives it immediate opportunities to leverage from its existing client base and product capabilities.

The post 2 ASX shares that multiple brokers really like appeared first on The Motley Fool Australia.

More reading

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• ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares

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 recommended FINEOS Corporation Holdings plc. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended FINEOS Corporation Holdings plc and Steadfast Group 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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Our market is set to deliver to best returns in years if it holds on to its gains till June 30 and experts are rushing to upgrade their forecasts for ASX shares.

The S&P/ASX 200 Index (Index:^AXJO) jumped by nearly 24% (before dividend and franking) since the start of FY21. What’s more, futures pricing is predicting a positive start to trade tomorrow.

The experts have largely underestimated the rebound for our economy from the  COVID-19 disaster and have also undercooked their expectations for ASX shares.

Best performing ASX shares in FY21

From the way things are going, resource shares will dominate the leader board for this financial year. The Pilbara Minerals Ltd (ASX: PLS) share price, Lynas Rare Earths Ltd (ASX: LYC) share price and OZ Minerals Limited (ASX: OZL) share price are among those leading the charge.

Outside of resources, the ARB Corporation Limited (ASX: ARB) share price and Reece Ltd (ASX: REH) share price have also more than doubled.

Despite the ASX 200 breaking a new record high, several experts believe our market is heading higher before Christmas comes around.

Can ASX 200 shares deliver an extra 10% return in 2021?

Strategists from several leading financial institutions have upgraded their forecasts for the top 200 share benchmark, reported the Australian Financial Review.

The most bullish is Exchange Traded Funds (ETF) provider VanEck. It believes the ASX 200 will crack 8,000 points this calendar year. That represents around an additional 10% price upside for the index.

If its experts are right, the calendar return for the index would hit 21.4%. The AFR reckons this would be the best gain since 2009 after ASX shares rebounded strongly from the GFC.

VanEck’s bullish view was triggered by the better-than-expected GDP data for our economy. Australia expanded 1.8% in the March quarter and VanEck is forecasting GDP growth of 5% for 2021. That makes the RBA’s 4.75% prediction look conservative!

Experts rushing to upgrade forecasts for the ASX 200

Meanwhile, Commonwealth Bank of Australia (ASX: CBA) upgraded its estimates for the ASX 200 by 150 points to 7,350. That’s below JPMorgan’s 500-point upgrade in May for the benchmark to close at 7,500 for the calendar year.

JPMorgan believes that ASX mining shares will continue to power the market higher, but they will be supported by ASX banks.

The operating outlook for ASX banking shares has brightened significantly alongside our rapidly expanding GDP.

While ASX banks, like the CBA share price, have outperformed recently, these shares could still rally further due to dividend upgrades.

ASX 200 share valuations starting to look overstretched

Morgan Stanley also joined its peers and lifted its forecast for the top 200 index by 100 points last month to 7,200. But it warned that valuations are looking stretched as share prices are increasing faster than expected profits.

“We do see some price upside on a 12-month time horizon,” the AFR quoted Chris Nicol, Morgan Stanley’s Australian equity strategist.

“However, the bulk of expected total return will fall to income as dividend profiles continue to be rebuilt post COVID.”

The post Best returns in a decade leaves experts scrambling to upgrade ASX shares appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• $20,000 invested in these ASX shares 10 years ago would be worth how much?
• These were the best-performing ASX 200 shares last week
• These were the worst-performing ASX 200 shares last week
• Do ASX share portfolios provide enough diversification?

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 ARB Corporation 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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