The Champion Iron Ltd (ASX: CIA) share price is racing higher in late-afternoon trade. This comes after the company announced the completed acquisition of the Kamistiatusset iron ore project (Kami Project). At the time of writing, the iron ore miner’s shares are swapping hands for $5.98, up 6.03%.

What’s driving the Champion Iron share price higher?

Investors are picking up Champion Iron shares in anticipation of the company’s exciting future prospects.

According to its release, Champion Iron advised it has formally finalised the acquisition of the Kami Project.

The sale involves a cash consideration of $15 million from Champion Iron to former Kami Project owners, Alderon Iron Ore. In addition, roughly $19.4 million of secured debt accumulated from Alderon has been repaid.

As part of the agreement, Champion Iron will also receive an additional 8 million tonnes annually of port capacity in Sept-Isles, Que. Currently, the company sends its Bloom Lake iron ore concentrate to the same port.

Located near Labrador City, Newfoundland and Labrador in Canada, the Kami Project is a high-grade open-pit iron ore mine. Alderon Iron Ore also conducted a feasibility study in September 2018. Additionally, Champion Iron is seeking to revise the project’s scope and update its feasibility in the near term.

Champion Iron CEO David Cataford commented:

This acquisition adds a large scale and highly prospective project to our portfolio. In addition, by securing additional port capacity, this further de-risks our Bloom Lake Phase II expansion project, which is currently under construction. In keeping with our track record of diligently evaluating and transforming opportunities into valuable assets, we look forward to revising the Kami Project’s scope and updating its previously completed feasibility study, along with its potential to positively impact local communities and the regional economy, which is and has always been a key goal for our Company.

Over the past 12 months, the Champion Iron share price has gained over 200% and is up 25% year-to-date.

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Motley Fool contributor Aaron Teboneras 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 Sonic Healthcare Ltd (ASX: SHL) share price could be a hidden opportunity for investors to take advantage of.

Sonic shares haven’t done too much when you compare the current share price of $35.40 to the price of $30.78 on 6 March 2020.

But the business has actually been generating a lot of profit growth because of COVID-19 testing and this could be where an opportunity is waiting for investors.

How is the business going?

Sonic is a diversified pathology business with global operations across countries like the USA, Germany, Australia, the UK, Ireland, Switzerland, Belgium and New Zealand.

The company’s base/pre-COVID-19 business proved to be resilient in the first half of FY21, with revenue only down by 1% despite further waves of the COVID-19 pandemic.

It’s the COVID-19 testing that has really accelerated earnings for the business. Half-year revenue increased 33% to A$4.4 billion earnings before interest, tax, depreciation and amortisation (EBITDA) and net profit after tax (NPAT) went up 166% to $678 million.

The company’s COVID testing is playing an important part in controlling the pandemic. It has done over 18 million COVID-19 tests and it’s now seeing growing demand for immunity serology tests.

Why could the Sonic share price be an opportunity?

Firstly, the trading update that Sonic gave was particularly interesting. It said that it’s expecting a strong second half result based on the revenue growth trend in January and February.

It also revealed that “experience shows that temporary base business declines are more than offset by increased COVID-19 testing revenue”. If there are further waves, profit may increase faster, rather than being slowed down. 

The company continues to look for further growth opportunities, including acquisitions, contracts and joint ventures. It’s currently bidding on “significant” opportunities in Australia, the UK, the USA and Canada.

Sonic is showing signs of being increasingly resistant to impacts from COVID-19, partly thanks to the geographic and healthcare diversification of the business.

Earnings estimates seem to suggest that the market believes there will be a big decrease in Sonic’s earnings from FY21 to FY22, as COVID-19 testing drops off. For example, both Commsec and the broker Morgan Stanley seem to think that earnings per share (EPS) could decline by approximately $1 from this financial year compared to FY22.

But the decline may not be as much as investors are expecting. The number of new COVID-19 cases may be a lot lower in the US than a few months ago, and the vaccination rate is impressive, but that doesn’t necessarily mean that testing is going to drop off as much. Indeed, the US is starting to see COVID cases increase again in several major population areas as restrictions are lifted.

There is also the worrying prospect of variants spreading in Europe and North America that appear to be more contagious, able to reinfect people, be more resistant to vaccines and be more serious for younger people. This may mean that demand for Sonic’s testing capabilities goes on longer than expected.

There’s also the prospect that Sonic uses some of its elevated profit generation to acquire other global healthcare businesses to cement its market position.  

Sonic Healthcare share price valuation

According to Morgan Stanley, the Sonic Healthcare share price is valued at 13x FY21’s estimated earnings and 20x FY22’s estimated earnings.

After the 6% increase to the interim dividend, Sonic has a trailing partially franked dividend yield of 2.5%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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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The Xref Ltd (ASX: XF1) share price is surging today after the company announced its revenue has increased by 36% this year while its costs have remained flat.

The Xref share price has risen 16% today to 29 cents per share.

Xref is a human resources technology company that automates the candidate reference process for employers. Essentially, it provides a data-driven analytics process that replaces the human, phone-call references that most people are familiar with.

It gathers data on the employee, the company and the role and then uses this to provide a report to hiring directors, letting them know whether the employee is suitable for the role they’re advertising.

It derives most of its revenue from Australia but also has a presence in Canada, the United Kingdom, Norway, New Zealand, and the United States.

Xref third-quarter update results

Xref released its third-quarter update today, showing revenue has increased 36% to $3 million, and sales have increased by 62% to $4 million. Meanwhile, its cash expenses have decreased by 17% to $3.5 million, and its cash balance has increased to $6.4 million.

New clients acquired in the quarter contributed 13% of total sales. Xref has built a strong customer base in the healthcare industry and has now entered a new geographic market in South Africa. Its new clients in Australia include the Australian Prudential Regulation Authority (APRA̼̩),  Cash Converters, and the Children’s Cancer Institute.

Its expanding profile of blue-chip clients outside the healthcare industry is partly behind the strong Xref share price performance.

Xref has simultaneously scaled back event and travel̩ development costs and office leases and has reduced its headcount from 18 to 64 people. This has driven a material reduction in cash expenses while continuing to support growth in sales.

The Australian company is also aiming to transition its credit-based cloud-based platform service to an annual recurring revenue (ARR) subscription model.

Xref share price snapshot

The Xref share price has risen 18% this week, 23% this month and 163% over the past year, but is down 20% overall in 2021 so far. It’s beaten the ASX technology sector by 69%.

More reading

• Air New Zealand (ASX:AIZ) share price takes off on Trans-Tasman travel bubble news
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Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xref Limited. The Motley Fool Australia has recommended Xref 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 Air New Zealand Limited (ASX: AIZ) share price is flying today. The positive price movement comes amid intense speculation regarding travel today. This was later confirmed by the New Zealand government, announcing quarantine-free travel between Australia and New Zealand.

At the time of writing, shares in the Kiwi carrier are up 6.65% to sell for $1.69. By comparison, the Qantas Airways Limited (ASX: QAN) share price is up 2.75% and the S&P/ASX 200 Index (ASX: XJO) is up 0.97%.

Let’s take a closer look at today’s news and how it’s affecting the Air New Zealand share price.

Trans-Tasman travel bubble

According to the Australian Broadcasting Corporation (ABC), reports emerged this morning that New Zealand prime minister, Jacinda Ardern, would announce a trans-Tasman travel bubble between her nation and Australia. In a press conference late this afternoon, Prime Minister Arden confirmed these reports.  Furthermore, announcing that New Zealand would accept Australian international arrivals without first having the need to quarantine. The borders will open 11:59pm NZST Sunday 18 April 2021.

“Quarantine-free travel between Australia and New Zealand will be safe,” Ms. Arden said.

However, Ms Arden warned travellers the borders could snap back shut again at a moment’s notice. This is similar to the situation many Australians have experienced travelling inter-state.

“We would likely suspend flights from a state with multiple suspected, unknown cases.” Ms. Ardern also confirmed the New Zealand government would not compensate any travellers who are affected by any sudden travel restrictions.

New Zealand shut its international borders at the onset of the COVID-19 pandemic in March 2020. In October, Australia opened its borders to New Zealand arrivals without the need to quarantine. After many aborted attempts, New Zealand will now open its borders to Aussies.

According to Stats New Zealand, Australians made up the largest portion of tourists in the country in February 2020, prior to the start of the pandemic. Around 132,000 Australians arrived in New Zealand that month. That’s 2.5x more than the next highest nationality (China). Since Australian choices of nations to visit is limited to one country, this could be good news for New Zealand tourism. The Air New Zealand share price rise today reflects this fact.

Air New Zealand share price snapshot

The Air New Zealand share price is up 106.79% since this time last year. Of course, the airline was deeply affected by the coronavirus outbreak, along with other travel shares. At the beginning of February 2020, however, the Air New Zealand share price was trading for $2.65. That’s a negative return on investment (ROI) of 36.04% to today.

Air New Zealand has a market capitalisation of $1.8 billion.

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The Lynch Group Holdings Limited (ASX: LGL) share price has commenced trading on the ASX today following the successful completion of its $206 million initial public offering (IPO).

However, despite the market pushing notably higher, it hasn’t been a great debut for the wholesaler of floral and potted products.

At the time of writing, the Lynch Group share price is fetching $3.48. This is down almost 3.5% from its listing price of $3.60.

What is Lynch Group?

Lynch Group was founded in Australia all the way back in 1915 by the family of Leo Lynch.

It was initially a floral grower and wholesaler but eventually expanded to become a vertically integrated wholesaler which pioneered supply to major supermarkets and into the Chinese market.

In 2015, Next Capital acquired a majority interest in the Lynch Group to accelerate its growth trajectory.

Since then, the company has successfully continued to execute on its growth strategy, which included the acquisition of a 20% interest in VDB Asia – a premium rose grower in China with two farms focused on production for the Chinese domestic market.

Some of the proceeds from the IPO will be used to acquire the remaining 80% stake in VDB Asia.

What is its market opportunity?

According to its prospectus, the company operates in an Australian market worth ~$1.4 billion and a Chinese floral sector estimated to be worth $19 billion.

Management notes that flowers are a unique product category that are highly perishable and have a short vase life. This results in a complex and time‑sensitive supply chain with high barriers to entry.

Furthermore, access to robust breeds, premium growers, delicate handling processes and end‑to‑end cool‑chain integrity are important in ensuring that flowers reach the desired end‑market in a saleable condition and with optimal vase life. This is something Lynch Group has in abundance.

Current Australian customers include Aldi, Bunnings, Coles Group Ltd (ASX: COL), David Jones, IGA, and Woolworths Group Ltd (ASX: WOW). Whereas in China, the company typically sells its products to wholesalers via its WeChat-based web shop.

Forecasts

Lynch Group is expecting to deliver strong earnings growth in calendar year 2021.

Its prospectus forecast is for pro forma revenue of $329 million, pro forma EBITDA of $54 million, and pro forma NPATA of $29.3 million. This means that its pro forma revenue and EBITDA will be up 16.1% and 25.7%, respectively, year on year.

Lynch Group’s CEO, Hugh Toll, appears positive on the future.

Commenting today, he said: “Over our 100-year history, Lynch Group has established itself as a pioneer in the Australian floral industry becoming the #1 wholesaler and partner to supermarkets in the floral category. Our know-how, systems and expertise are proving highly transferable into the significantly larger and fast-growing Chinese market, where we are replicating the success of our vertically integrated Australian model.”

“Led by a highly experienced management team and Board, we are well positioned to benefit from the continued structural shift to supermarket channels in the Australian market. There are also compelling opportunities in the developing Chinese market to continue to increase our production capacity, and partner with more retailers to grow our direct-to-consumer channel as we build out additional processing capacity in China,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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Two retailers that have done well during pandemic lockdowns have been electronics and homewares companies Harvey Norman Holdings Limited (ASX:HVN) and JB Hi-Fi Limited (ASX:JBH). With more people spending time indoors sprucing up their home entertainment systems, electronics sales went through the roof last year. This shift in consumer trends translated into major profits for both companies.

JB Hi-Fi

The JB share price exploded over the last 12 months, almost doubling from a 52-week low price of just $28.90 to be now trading at $51.01 (still only just shy of the all-time high price of $55.25 it reached in January).

It’s easy to see what has driven the massive gains in its share price. In its most recent financial results – for the first-half FY21 – JB reported a 23.7% jump in sales versus first-half FY20 to a staggering $4.9 billion. But an even better sign for shareholders was that JB grew its bottom-line at a faster rate than top-line revenues, with net profit after tax (NPAT) surging 86.2% to $317.7 million.

While JB did not commit to an earnings outlook for the remainder of FY21, the company did report continued high sales growth in January across its key brands and geographies. Total sales growth in Australia for January was 17.3% (versus 6.5% for January 2020), while in New Zealand total sales grew by 21.7% (versus -1.6% in January 2020), and for the Good Guys whitegoods brand sales increased by 14.1% (versus 1.4% in January 2020).

Harvey Norman

Harvey Norman stocks a broader range of household products than JB, including bedding and furniture in addition to electronics. However, it still taps into the same shift in consumer trends that have benefited JB Hi-Fi. Its share price has also gone bananas over the last twelve months, surging just over 100% since this time last year – from a low of just $2.80 to its current price of $5.64.

The company also reported stellar results for the first half FY21. Total aggregated company sales revenues were $5.12 billion, an increase of 25.8% over first-half FY20. The company’s profit after tax also soared by 115.8% to $438.17 million. Harvey Norman also reported strong sales for the early stages of the second half FY21 as well, with aggregated sales revenue for the period from 1 January 2021 to 23 February 2021 up 21% versus the same period in the prior year.

Foolish Takeaway

Both of these companies have enjoyed an exceptional trading period throughout the pandemic. Both are expanding their margins and growing bottom-line profit at breakneck speed – particularly for two already established brands. And while it might be too early to tell just yet whether the lockdown sales tailwinds will continue to extend far into 2021 for either JB or Harvey Norman, results for the early stages of FY21 have been promising. 

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Motley Fool contributor Rhys Brock 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 DroneShield Ltd (ASX: DRO) share price is on investor radar today after announcing an order from a new customer. In early afternoon trade, the drone technology company’s shares are swapping hands for 16.5 cents, up 3.1%.

DroneShield specialises in drone security technology. The company designs and develops detection systems that use specialised technology to protect people, organisations and critical infrastructure.

Its multi-layered products are centred around detection and disruption from unmanned aerial systems (UAS).

New customer opportunity

DroneShield shares are reaching higher after the company delivered a positive update to the ASX.

According to its release, DroneShield advised that it has received an initial order from a high-profile law enforcement agency in the United States.

DroneShield noted that the purchase order includes a mobile system of two passive/non-emitting UAS detection sensors. The platform is designed to operate in a mobile theatre with a rapidly deployed system setup. This allows the user to quickly detect and track incoming UAS.

The company stated that the contract is not material in value, but expected to lead to follow up orders. In addition, it’s possible that other United States law enforcement agencies could place their own orders should this initial order become successful.

Total customer receipts for this contract is expected to be included in DroneShield’s quarterly 4C report for Q2 FY21.

DroneShield CEO Oleg Vornik welcomed the new deal, saying:

We are pleased to continue expanding the breadth of our US customer base, now reaching into law enforcement. It is a large and important market, and this initial deployment will serve as a reference case for expected follow-on sales.

DroneShield share price summary

Over the last 12 months, the DroneShield share price has jumped to more than 65%, but down 3% year-to-date. The company’s shares reached a 52-week high of 25 cents in September last year.

At the current share price, DroneShield presides a market capitalisation of around $64 million, with close to 390 million shares outstanding.

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Motley Fool contributor Aaron Teboneras 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 Creso Pharma Ltd (ASX: CPH) share price has come under pressure today despite the release of a positive announcement.

At the time of writing, the cannabis company’s shares are down 5% to 20 cents.

What did Creso Pharma announce?

This morning Creso Pharma announced an important appointment in the United States.

According to the release, the company has named leading cannabis executive John Griese as its Director of US Business Development.

Mr Griese has considerable experience in the cannabis sector through previous roles with Blooms Farms and most recently as the Chief Operating Officer of Supreme Cannabis Company.

With the latter, Mr Griese was directly responsible for product development, commercialisation initiatives, procurement, manufacturing operations, and supply chain management.

The new US Business Development Director has also previously worked for Creso Pharma as its Americas Chief Operating Officer.

Why is Creso Pharma making this appointment?

Creso Pharma made the appointment in response to the global trend towards cannabis legalisation, as well as recent legislation in New York State legalising recreational marijuana.

Mr Griese will focus on New York, Vermont, and other states to delineate a strategy for Creso Pharma to begin delivering products into the USA.

This is certainly a worthwhile endeavour. The release notes that New York State is expected to become one of the largest recreational markets in the US with an estimated market value of US$4.2 billion per annum.

The company notes that its ability to export cannabis products into the USA will remain subject to the federal legalisation of cannabis. However, having Mr Griese commence supply, sale, distribution and partnership agreements now, pending federal legalisation, provides the company with an opportunity to be a first mover in this large market. It also believes it will provide it with a significant competitive advantage over its peers.

Creso’s Non-Executive Chairman, Adam Blumenthal, commented: “We are very excited to welcome John back to Creso and Board and management are very confident that his new role will unlock a number of potential opportunities for the Company throughout the US.”

“The recent legislative push in New York State highlights the ongoing shift towards the federal legalisation of recreational cannabis and John’s appointment shows Creso Pharma’s commitment to establishing a strong foothold in-country to unlock value for our shareholders.”

“To already have boots on the ground in the US will provide the Company with a key advantage over our competition. John has established relationships in the US market through his roles in California and Toronto and we look forward to leveraging his network in the coming months.”

More reading

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• Japan’s $103 million pot stock hypocrisy unmasked

Motley Fool contributor James Mickleboro 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 Rumble Resources Ltd (ASX: RTR) share price is surging today as the company starts drilling at its Earaheedy Zinc-Lead-Silver Project.

The Rumble Resources share price is up 28.5% at the time of writing, trading at $13.50 per share. 

Rumble Resources is a Perth-based mining company, focused on the acquisition, exploration and evaluation of base and precious metal projects. It’s currently exploring zinc, lead and silver deposits in Earaheedy, near Lake Carnegie in Western Australia.

Rumble Resources’ Earaheedy mine kicks off

Rumble Resources began reverse circulation (RC) drilling at its Earaheedy mine nearly one week ago today and its share price has been booming since. It’s targeting large tonnage, flat lying, near surface (open-pittable) sandstone-hosted zinc and lead deposits.

Shallow, open-pit mining generally produces the highest-grade results. Rumble Resources will know just how lucrative its current venture is in another two weeks’ time, when its current drilling program is scheduled for completion.

The drilling results will then be sent for assays (studies) and a more accurate lead, silver and zinc content of the mine will be known.

Rumble own 75% of the project area and 100% of the exploration licence. Initial exploration in Earaheedy has shown promising results over the mine’s two major prospects, called Chinook and Magazine.

Shallow drilling and high grade hopes

The Chinook exploration shows “significant” shallow zinc and lead deposits over 200 metres horizontal width and up to 12 metres vertical true thickness. Rumble says the prospect shows “a strong association” with higher-grade zinc and lead mineralisation.

Its results indicate a potential sandstone channel and facies zone, which is conducive to developing higher-grade zinc and lead minerals due to favorable porosity and litho-geochemical conditions. This is partly why speculative investors are already sending the Rumble Resources share price surging.

The company’s Magazine prospect is similar. Rumble says it has intercepted shallow flat lying higher-grade zinc and lead mineralisation in two holes, which highlights the potential for significant sandstone hosted channels and facies zones. 

Rumble’s exploration target is between 40 to 100 million tonnes at a grade ranging between 3.5% zinc and lead, to 4.5%. It’s operating at a shallow depth of 80 metres, and more than 40 kilometres of open prospective strike has been defined.

Rumble Resources share price snapshot

The Rumble Resources share price is one of today’s biggest movers and its also up 28% this week, 35% this month and 17% this calendar year. Its returned 114% this past year, up 64% against the basic materials sector.

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2021 has been a frustrating year for ASX lithium shares, Galaxy Resources Ltd (ASX: GXY), Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) on the backdrop of an outstanding performance in late-2020. However, April has so far been a solid month for ASX lithium shares. Shares in ASX lithium are approximately 5% to 10% higher and within 20% of all-time highs. 

Why ASX lithium shares aren’t moving in 2021 

The Galaxy, Orocobre and Pilbara share price more than doubled between October 2020 and February 2021. This was driven by a broad range of factors. Furthermore, including a surging Tesla Inc (NASDAQ: TSLA) share price, Joe Biden’s stance on climate change, and higher lithium prices. 

However, the rapid appreciation of ASX lithium shares might have priced in current and near-term tailwinds. 

Broader weakness in lithium and renewable related sectors could also be a dragging factor. The Global X Lithium & Battery ETF (NYSEARCA: LIT) for example, fell more than 25% between 17 February and 25 March this year. This ETF invests in the full lithium cycle, from mining and refining through to battery production. The ETFs top three holdings include the world’s largest provider of lithium for electric vehicle batteries. Namely, Albemarle Corporation (NYSE: ALB), Chinese lithium giant Ganfeng, and multinational electronics company Samsung.

Lithium prices continue to grind higher 

Lithium prices have continued to push higher in March driven by an uplift in global demand. Fastmarkets provided the following commentary for recent lithium price movements:  

• Asian seaborne lithium prices were steady against a backdrop of tight availability and firm demand.  Meanwhile, Chinese suppliers have made aggressive offers for battery-grade lithium carbonate. 
• Spot trades in domestic Chinese market remained slow with consumers conducting “hand-to-mouth” purchases, but supply continued to be tight. 
• Europe, US battery-grade lithium spot prices continued to trend higher with deals reported at higher levels.

What’s next for ASX lithium shares? 

ASX lithium shares might continue to move sideways. However, the company’s are looking to ramp up production and push development projects forward to take advantage of higher prices. 

For Galaxy, this has involved ramping up production at its flagship Mt Cattlin mine. This was previously lowered to 60% of nameplate capacity. As well as advancing the development of its Sal de Vida lithium brine project. 

Pilbara follows a similar but more cautious approach where its half-year results commented that “any increase in production capacity will only occur once there is clear evidence of a sustained improvement in customer demand and pricing to support investment decisions and capital commitments”. Despite its more cautious tone, Pilbara did in fact make a significant $201 million investment to acquire neighbouring lithium miner, Altura Mining Ltd (ASX: AJM) late last year. 

 

More reading

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Motley Fool contributor Kerry Sun 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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