The Commonwealth Bank of Australia (ASX: CBA) share price continued to set new record highs last week. On Friday CBA shares hit an intraday, all-time high of $102.64 before closing the session at $102.52.

Last week, the Australian Bureau of Statistics (ABS) reported key lending indicators for new borrower-accepted finance commitments for housing, personal and business loans. The data could point to a continued recovery in consumer and business confidence, and for the broader Australian economy.

ABS lending indicators surge to record highs

The ABS reported that the value of new loan commitments for housing, owner-occupiers and investors increased 3.7%, 4.3% and 2.1% respectively in seasonally adjusted terms, in April 2021.

ABS head of finance and wealth Katherine Keenan said:

The value of new loan commitments for owner occupier housing reached another all-time high in April 2021, up 4.3 per cent to $23.0 billion. New loan commitments for investors rose 2.1 per cent to $8.1 billion, which was the highest level since mid-2017

The rise in owner occupier lending was driven by increased loan commitments for existing dwellings, which rose 9.2 per cent. Loan commitments to owner occupiers for the construction of new dwellings fell by 11.4 per cent, following a fall of 14.8 per cent in March. These were the first monthly declines since the Homebuilder grant was introduced in June 2020. However, the value of construction commitments remained at a high level.

From a year-on-year perspective, new borrower-accepted loan commitments for housing, owner occupier and investor increased 68.2%, 70.1% and 63.0% respectively in April.

In terms of business finance in April, the value of new loan commitments for construction fell 10.5% while loans for purchase of property rose 27.8%.

CBA share price at all-time highs

May was a breakthrough month for the CBA share price, closing above the iconic $100 mark for the first time ever. The move to record highs was supported by the bank’s continued momentum in earnings, evidenced by its third-quarter results.

In the March quarter, CommBank delivered a cash net profit after tax of $2.4 billion, almost doubling the weak $1.3 billion from a year ago, and also topping the $1.70 billion in 2019 and $2.35 billion in 2018. The results release pointed to the following aspects driving the bank’s solid earnings.

The Bank’s franchise strength was again evident with above system growth in home loans supported by strong funding volumes and continued focus on credit decisioning turnaround times. Domestic business lending continued to grow at more than three times system, with diversified growth across sectors. Household deposits growth was also above system, growing by $4bn in the quarter

The post The CBA (ASX:CBA) share price made another record high last week 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.

What happened

Shares of AMC Entertainment (NYSE: AMC) skyrocketed 160.4% in May, according to data from S&P Global Market Intelligence. The largest movie theater company in the world became the latest poster child of meme stock mania, as Reddit message board WallStreetBets fueled a massive spike in this beaten-down, highly shorted stock as the economy inched closer to a full reopening.

The massive move came in spite of a first quarter earnings report showing a huge cash burn of $325 million, more dilutive equity sales to keep itself afloat, and the company’s largest shareholder for the past nine years selling its entire stake.

With all of that going on, you might have expected the stock to go down. But of course, this is 2021, the year of the meme stock! So what the heck is going on?

So what

While AMC did report substantial first quarter cash burn at the beginning of the month, its U.S. theaters were only operating at 15% to 60% capacity in the March quarter, and only 27% of international theaters were open, also at limited capacity. With vaccinations accelerating faster than thought since March, reopening optimism apparently reignited the WallStreetBets message board on Reddit, because AMC’s stock began appreciating shortly after earnings.

On May 13, a few days after earnings, AMC sold another 43 million shares for $428 million, at nearly $10 per share. Given that the company had sold shares in the low-single digits last fall and winter, selling shares at $10 may have seemed like a great deal… if only management knew what was coming!

In the wake of the equity raise, sell-side analysts at B. Riley upgraded the stock, saying the raise likely lessened the need for more capital ahead of an industry recovery. While that bullish call bolstered the stock further, B. Riley only raised its price target from $13 to $16 — less than half of where shares trade now.

Then, as the stock climbed toward $12, Dalian Wanda, the Chinese group that had originally purchased AMC in 2012, sold all of its remaining shares on May 21. While most would take that as a hugely bearish sign, the stock inexplicably went on an enormous tear immediately thereafter, more than doubling to $26 per share by the end of the month.

Why did that happen? It’s hard to say. On May 26, sell-side firm CFRA upgraded AMC, but only from “Sell” to “Neutral” and giving an $18 price target. That coincided with the hashtag “#AMCSTRONG” trending on Twitter. The stock rallied about 20% that day and continued to rise through the end of the month. A short squeeze likely played into things, as nearly 20% of shares outstanding were sold short heading into May.

Now what

The stock’s rise has continued into June, along with more capital raises. On June 1, the company raised $230.5 million at $27.12 per share from hedge fund Murdick Capital. The stock surged 20% on the news, and Murdick sold all of its stake that same day, telling clients shares were “massively overvalued,” according to Bloomberg.

Murdick had also owned AMC’s debt, likely at distressed prices, so the equity raise may have been a ploy to increase the value of its debt by increasing AMC’s creditworthiness. Although a savvy trade by Murdick, it apparently sold too early as well, as AMC’s shares skyrocketed over 100% the next day, reaching a high of $72.62, and prompting trading halts. Incredibly, AMC was allowed to sell another 11.5 million more shares to the public the following day at $50.85 per share, raising a whopping $587.4 million while only minimally diluting shareholders. Shares ended last week at $47.91.

All in all, AMC has raised $1.246 billion this quarter, adding to the $813.1 million in cash it had at the end of the first quarter. The company is still likely burning through cash, so it likely has a little less than $2 billion in cash against a still-high $5.46 billion in debt — and some of that at very high interest rates. The company’s share count has also nearly quintupled from pre-pandemic levels to 502 million shares outstanding.

Ironically, with investors bidding up the stock and the company selling shares, likely well above intrinsic value, AMC has likely fended off bankruptcy for the foreseeable future and actually increased the intrinsic value of the company. For instance, if a company is really worth $1, but is able to sell shares at $10, let’s say, doubling its share count, it increases the company’s intrinsic value from $1 to $6 ($1 plus $5 per share in cash).

The problem? It’s still worth $6 — less than the $10 price at which investors bought shares. Ironically, the more shares the company sells above intrinsic value, the closer intrinsic value will move toward the sale price, but it will never exceed that value.

The big exception to that rule is if the company can use that cash to make high-return investments that will increase intrinsic value going forward. That is also possible, as CEO Adam Aron said on the Murdick capital announcement that “it was time for AMC to go on offense again,” saying AMC is pursuing the high-end deluxe theater chain Arclight Cinemas in California, which went bankrupt this year as a result of the pandemic, as well as other “highly attractive theater opportunities.”

So if AMC sold shares at high prices, and can then buy high-quality theaters at bargain prices, and if movie-going bounces back in a big way, it could in fact create value above where the company sold shares.

However, that still seems like a long shot. In 2019, before the pandemic, AMC reported “adjusted” free cash flow of $358 million — and that figure incorporated some generous adjustments. Still, assuming AMC can get back to its prior free cash flow on the new quintupled share count, that’s only about $0.71 per share. So, at the current stock price, shares are valued at 67.5 times 2019 adjusted free cash flow per share.

Of course, movie theaters weren’t exactly a growth industry prior to COVID, and could very well struggle to fully bounce back. Studios are shortening the window for theater exclusivity, and some may even begin releasing titles directly to streaming services in conjunction with theater releases.

While accretive theater acquisitions could add value, I doubt any acquisitions would materially increase AMC’s free cash flow, since AMC already has massive scale as the largest theater chain in the world.

Basically, shares seem massively overvalued from a fundamental point of view, and the stock is extremely risky at these levels. That doesn’t mean investors can’t make money on technical buying bursts like we’ve seen over the past month, but that’s not really investing; it’s subscribing to the greater fool theory.

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

The post Why AMC Entertainment skyrocketed 160.4% in May appeared first on The Motley Fool Australia.

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Billy Duberstein has the following options: short January 2022 $3 puts on AMC Entertainment Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Twitter. 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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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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