• Catapult (ASX:CAT) share price tumbles 5% on broker downgrade

    An ASX investor looks devastated as he watches his computer screen, indicating bad news

    The Catapult Group International Ltd (ASX: CAT) share price has come under pressure on Friday.

    In late afternoon trade, the sports analytics and wearables company’s shares are down almost 5% to $2.15.

    Why is the Catapult share price under pressure?

    There are a couple of catalysts for the weakness in the Catapult share price on Friday.

    The first is profit taking after some strong gains recently. Prior to today, the Catapult share price was up over 17% since the end of last week.

    This was driven largely by investors snapping up shares after the release of its FY 2021 results on Thursday.

    Although the company reported a decline in revenue, it continues to report growth in the right areas.

    For the 12 months ended 31 March, Catapult posted a 7.4% decline in revenue to $67.3 million for the 12 months. This was driven by its planned shift from capital sales to SaaS deals and the severe impact from COVID delaying new business.

    In respect to the former, the company’s subscription revenue growth accelerated to 12.5% in the fourth quarter. This compares to 3.3% for FY 2021 and means that its subscription revenue is now 79% of total revenue. This is up from 71% a year earlier.

    What else is weighing on its shares?

    As well as profit taking, a broker note could be weighing on the Catapult share price today.

    According to a note out of Bell Potter, its analysts have downgraded the company’s shares to a hold rating but lifted their price target to $2.40.

    While Catapult’s FY 2021 result was stronger than Bell Potter was expecting and it was pleased with the progress it is making with subscription revenues, it isn’t enough to continue with its buy rating.

    The broker felt that Catapult’s shares were fully valued after yesterday’s gains and downgraded them to a hold rating.

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  • Sell ASX 200 shares in May and go away? Not a good idea in 2021

    Turning down AGL shares represented by man placing hands up in front of him and frowning

    That old stock market adage ‘sell in May and go away’ tends to crop up around this time of year, for obvious reasons. It’s a crusty old proverb that no one seems to really know where it came from, or how it applies to modern investing. The idea is that May somehow represents an annual high point for share markets, including the ASX. So we should all sell all our ASX shares just before winter, and perhaps buy back in…. at some point.

    You can already see the logic here is a little flimsy. But we Fools like to put our money where our mouths are. Last year, this writer looked at the historical performances for the S&P/ASX 200 Index (ASX: XJO) over a few past Mays. The result? There’s not much to write home about. But you can check out the very sophisticated visual representation here.

    So is there any good reason, at all, to sell in May and go away? Given today is this May’s second-last trading day, it’s a good time to ask.

    Sell in May and go away?

    Well, to answer that succinctly, and perhaps definitively, here’s a couple of quotes from the great investor Warren Buffett from our friends over at Fool.com:

    I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

    Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.

    If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.

    Does that sound like Mr Buffett would endorse a ‘buy in May and go away’ investing strategy? 

    Indeed, the ASX 200 has performed a coup de grâs of sorts on this idea in 2021. Any ASX 200 investor who sold their shares on 30 April would have missed out on, not one, but two new record highs that the ASX 200 has hit over the month. The first came on 11 May, and the second, just today. Indeed, the ASX 200 (at the time of writing) has managed to add a healthy 2.2% over the month so far. Unless Monday brings us one of the worst one-day selloffs ever, it’s likely that May will be a month in the green for ASX 200 shares. Case closed? Well, at least until May 2022. 

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  • The Andromeda (ASX:ADN) share price is soaring 7% today. Here’s why

    Rising mining ASX share price represented by man in hard hat making excited fists

    The Andromeda Metals Ltd (ASX: ADN) share price is rocketing today on news of a memorandum of understanding with AEM Technologies Inc.

    The agreement could see Andromeda build a facility to process halloysite-kaolin from the Great White deposit – a joint venture between Andromeda and Minotaur Exploration Ltd (ASX: MEP) – into high purity alumina (HPA).  

    After reaching 8.29% higher in early trade, the Andromeda share price has slightly retreated and is swapping hands for 22 cents at the time of writing, up 7.3%.

    The Minotaur share price has also taken a similar trajectory today and is currently up 4.55% trading at 11.5 cents after a 9% peak near the open.

    Let’s take a look at today’s news from the company.

    Andromeda’s potential new kaolin venture

    Andromeda has entered into an understanding with AEM to use the tech company’s patented process to make HPA using kaolin.

    AEM produces HPA for high growth markets, including the lithium-ion battery sector. Its Canadian facility, where it undertakes the process, is the only one in the world capable of producing HPA at 99.99% purity from kaolin.

    If all goes to plan, Andromeda will build a facility in Australia to produce HPA using AEM’s patented method and kaolin from the Great White deposit.

    Andromeda and AEM will also consider entering into a commercial arrangement to sell Andromeda’s future HPA products through AEM’s distribution network.

    The memorandum of understanding will be exclusive for 90 days. During this time, Andromeda will carry out due diligence and testing on AEM’s HPA process.

    A large sample of Great White kaolin will also be sent for testing at AEM’s Canadian facility.

    Kaolin samples from Andromeda’s wholly-owned Mount Hope Project will also be tested to see if they’re a suitable HPA feed resource.

    According to Andromeda, AEM is planning to build an HPA plant in the United Kingdom. This means Andromeda could use the UK plant’s plans as a template to build its own.

    Commentary from management

    Andromeda managing director James Marsh commented on the MOU, saying:

    We have known for some time that our kaolin feed was a premium material for HPA production, but we have taken our time in order to be extremely thorough in identifying the right partner to drive this opportunity forward. Andromeda considers that having access to proven commercial technology in this sector will allow us to fast-track this HPA opportunity towards commercialisation.

    AEM CEO Julian Ford added:

    Access to Andromeda Metals’ high quality kaolin projects will help AEM in its goal to be the preferred supplier of HPA to the world’s new Electric Vehicle’s Lithium-Ion Battery giga-factories and global LED manufacturers.

    Andromeda share price snapshot

    The Andromeda share price has fallen 28.29% since the beginning of this year but is up 270% over the last 12 months.

    Andromeda has a market capitalisation of around $442 million, with approximately 2 billion shares outstanding.

    The Minotaur share price is also struggling on the ASX this year, down 38.84% year to date. Despite a hard 2021, Minotaur shares have also made significant gains in the past 12 months, up 140% since this time last year.

    Minotaur has a market capitalisation of around $55 million, with approximately 501 million shares outstanding.

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  • Why the Austal (ASX:ASB) share price is edging higher

    US navy ship sailing along at at sunset

    The Austal Limited (ASX: ASB) share price is rising today following the successful completion of acceptance trials by its newest ship.

    At the time of writing, the shipbuilding group’s shares are trading at $2.38, up 1.06%

    Completion of acceptance trials

    Investors are pushing the Austal share price higher after the company released a positive update.

    According to today’s announcement, the future USS Savannah has completed acceptance trials in the Gulf of Mexico. The new naval vessel is the 14th Independence-class littoral combat ship (LCS) built by Austal for the United States Navy.

    Acceptance trials consist of a number of tests conducted by Austal’s US team while the vessel is at sea. These include assessing the ship’s major systems and equipment for warfighting capabilities, before delivery proceeds.

    According to the company, the new combat ship is a high-speed, shallow-draft surface combatant with an aluminium trimaran hull that provides class-leading, multi-mission capability. The ship is designed to defeat littoral threats and provide access and dominance along coastal waters. In addition, the vessel has flexibility to execute surface warfare, mine warfare and anti-submarine warfare missions.

    The new naval vessel is scheduled for delivery to the US Navy late next month.

    The future USS Savannah will be homeported in San Diego, along with the other 13 Independence-class LCSs.

    Austal CEO Paddy Gregg commented:

    The successful completion of acceptance trials for Savannah, in the same week as the commissioning of [the USS] Mobile, clearly demonstrates the capabilities of the Austal USA team to deliver multiple naval ship programs for the US Navy, productively and efficiently.

    Austal said its US Independence-class LCS program is running at a full rate of production, with four ships under construction. The future USS Canberra is in its final assembly and readying for launch on 5 June. Furthermore, the USS Santa Barbara is also in the final stages of its assembly, while fabrication works are being done on USS Augusta and USS Kingsville. The future USS Pierre is expected to begin fabrication later this year.

    About the Austal share price

    Austal shares have fallen by more than 20% over the past 12 months. The company’s shares hit a 52-week high of $3.86 in June 2020, and a multi-year low of $1.98 in March this year. 

    On valuation metrics, Austal has a market capitalisation of about $853 million, with around 359 million shares on issue.

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  • Why BetMakers, CSR, EOS, & Fisher & Paykel Healthcare are tumbling

    The S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. In afternoon trade, the benchmark index is up 1.2% to 7,181.9 points.

    Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are tumbling:

    Betmakers Technology Group Ltd (ASX: BET)

    The BetMakers share price is down 15% to $1.36. Investors have been selling the betting technology company’s shares after it announced a $4 billion offer to acquire the Tabcorp Holdings Limited (ASX: TAH) Wagering and Media business. This comprises $1 billion in cash and $3 billion in BetMakers shares. The latter could significantly dilute existing shareholders.

    CSR Limited (ASX: CSR)

    The CSR share price has fallen 5% to $5.59. This decline is almost entirely due to the building materials company’s shares trading ex-dividend this morning. Eligible shareholders can look forward to receiving its fully franked 24 cents per share final dividend in their bank accounts on 2 July.

    Electro Optic Systems Hldg Ltd (ASX: EOS)

    The Electro Optic Systems share price has tumbled 8.5% to $3.83. This follows the release of the communications, defence, and space company’s annual general meeting update this morning. At the meeting, the company advised that it expects full year EBIT of between $20 million and $25 million. However, this is before its SpaceLink acquisition costs of $17 million. Management also warned that COVID-19 could have an impact on its financial and operational performance.

    Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

    The Fisher & Paykel Healthcare share price is down 2% to $27.37. This decline appears to have been driven by a broker note out of Credit Suisse. According to the note, the broker has downgraded the medical device company’s shares to a neutral rating and cut the price target on them to $30.00. It appears disappointed by management’s uncertain outlook for FY 2022.

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  • 2 ETFs that could be buys for strong diversification

    Block letters 'ETF' on yellow/orange background with pink piggy bank

    There are some exchange-traded funds (ETFs) that might be able to provide investors with strong diversification to international shares.

    The ASX only accounts for a small part of the global share market. There are many more businesses out there that Aussies can’t invest in on the ASX.

    ETFs can be a way to get that exposure whilst sticking to investments on the ASX.

    These two investments could be ideas:

    iShares S&P 500 ETF (ASX: IVV)

    The S&P 500 is an index of US-listed businesses. They are among the biggest in the world. At the top end of the list are global leaders of their industries.

    It has a long-term track record of delivering returns for investors because the US is where many of the world’s strongest businesses are invested.

    This particular ETF has a very cheap annual management fee of just 0.04% per annum. That means that hardly any of the investor returns are lost to fees. Active fund managers can charge both management fees and performance fees, which can reduce total returns over time.

    You may recognise some of the largest holdings in the ETF’s portfolio: Apple, Microsoft, Amazon, Facebook, Alphabet, Berkshire Hathaway, JPMorgan Chase, Tesla, Johnson & Johnson, UnitedHealth, Nvidia, Visa, Home Depot, Procter & Gamble, Walt Disney, Bank of America, Mastercard and PayPal.

    The performance of the S&P 500 has been superior to the S&P/ASX 200 Index (ASX: XJO) in recent years. Over the last three years the iShares S&P 500 ETF has produced an average of 17.4% and over the last decade it has been an average of just over 18%.

    According to Blackrock, iShares S&P 500 ETF has a price/earnings ratio of just over 32x.

    Betashares Nasdaq 100 ETF (ASX: NDQ)

    This is another ETF that is focused on the US share market. However, this one is only invested in businesses that are listed on a particular stock exchange in the US – the NASDAQ. The New York Stock Exchange is utilised more by old-school businesses whilst many tech shares are listed on the NASDAQ.

    Not only is this ETF more focused on tech, but it also only has 100 holdings. So investors can gain more exposure to the largest tech names.

    These are some of the largest positions in the portfolio right now: Apple (10.8%), Microsoft (9.6%), Amazon (8.3%), Alphabet (7.6%), Facebook (4.1%), Tesla (3.8%), Nvidia (3%) and Paypal (2.4%).

    The tech giants have performed strongly over the last several years, which has helped the returns of the Betashares Nasdaq 100 ETF. Since inception in May 2015 it has produced an average return per annum of 21.6%. Over the last three years the average return per annum has been 27.5%.

    The biggest businesses are the ones that are shaping the way we are living in certain areas in our lives, particularly since the onset of COVID-19. For example, Microsoft offers huge amounts of functionality for businesses and individuals in the shift to digital working and learning.

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  • Why the Peninsula Energy (ASX:PEN) share price is plummeting 8% today

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    The Peninsula Energy Ltd (ASX: PEN) share price is sinking today following the company’s capital raising efforts.

    At the time of writing, the uranium mining company’s shares are down 8.11% to 17 cents.

    What’s happening with the Peninsula Energy share price?

    A major catalyst for the fall in today’s Peninsula Energy share price is an impending share dilution. According to today’s announcement, Peninsula Energy has completed a share placement to enable it to fund the purchase of natural uranium concentrates.

    The company received commitments from new and existing international and domestic institutions, raising $13.4 million before costs.

    According to the placement, about 89.3 million shares will be issued at a price of 15 cents apiece. This represents a 19% discount to Peninsula Energy shares’ last closing price of 18.5 cents on 25 May before they entered a trading halt.

    Peninsula Energy will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to 15% of its total shares to be issued without shareholder approval.

    The proceeds of the placement will be used to settle the purchase of 300,000 pounds of natural uranium concentrates. The company has entered into a binding agreement to purchase the concentrates at a price of US$31.35 per pound.

    The settlement is due next month, with the product to be stored at the Cameco facility in Ontario, Canada.

    Management said buying the uranium will support the company’s plans for its flagship Lance Project in Wyoming, United States.

    Lastly, Peninsula Energy says it will launch a $2 million share purchase plan to eligible investors. Up to 13.3 million new shares will be created, with the monies being put towards corporate purposes and working capital.

    Commentary from management

    Peninsula managing director and CEO Wayne Heili said:

    The acquisition of physical uranium underpins our focus on the transition of the Lance Project to a low pH ISR operation. Adding physical uranium to our balance sheet provides significant flexibilities and potential upside as we move towards the restart of operations.

    Importantly, holding uncommitted uranium inventories at a time when there is a strong and continued push by the United States Government to support nuclear power generation and the domestic production of critical minerals like uranium, enhances our ability to successfully participate in expanding market opportunities.

    The Peninsula Energy share price is up by around 50% since this time last year.

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  • Here’s why the Downer (ASX:DOW) share price is gaining today

    Family travelling on a bus

    Shares in Downer EDI Limited (ASX: DOW) are on the rise today after news the company’s joint venture has been awarded the contract to run Sydney’s Northern Beaches bus services.

    At the time of writing, the Downer share price is up by 2.86%, with shares in the company swapping hands for $5.75.

    The $900 million contract will see Keolis Downer run the Northern Beaches and Lower North Shore bus services for 8 years, beginning in October 2021.

    Keolis Downer is a joint venture between multinational transport company Keolis and Australian industrial company Downer.

    Let’s take a closer look at the news boosting the Downer share price today.

    $900 million bus services contract

    According to Keolis Downer, it hopes to use its time running Sydney’s Northern Beaches buses to introduce more frequent services and improved sustainability.

    The $900 million contract was awarded by Transport for New South Wales (TfNSW).

    During the 8-year contract, Keolis Downer will oversee a range of TfNSW initiatives, including the introduction of 125 electric buses. The electric buses will run from newly electrified depots in Brookvale and Mona Vale.

    Keolis Downer’s on-demand transport service Keoride will also become a permanent part of the network. Keoride allows public transport users to prebook a bus to arrive at a particular place and time. It then aligns other users’ requests to make a custom public transport network based on users’ needs.

    Keolis Downer will also introduce innovative headway technology. The technology will help bus drivers keep track of whether they’re running according to schedule. The company expects the technology to increase the reliability of the Northern Beaches bus service.

    Commentary from management

    Keolis Downer’s CEO David Franks said:

    We are very proud to partner with TfNSW to support the future growth and transformation of the Northern Beaches. Drawing on our experience locally and globally, we will launch a range of new initiatives to enhance the customer experience building from the already excellent bus services in the area…

    We look forward to further engaging with the community to deliver a safe, efficient and reliable transport system that supports the liveability and future prosperity of this vibrant, growing region.

    Downer share price snapshot

    Downer shares have been delivering a solid performance on the ASX lately. Currently, the Downer share price is up by around 8% year to date. It’s also gained around 25% since this time last year.

    The company has a market capitalisation of around $3.9 billion, with approximately 701 million shares outstanding.

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  • Breaking! ASX 200 hits another record share market high

    red arrow representing a rise of the share price with a man wearing a cape holding it at the top

    The S&P/ASX 200 Index (ASX: XJO) has done it again folks. The flagship ASX index has once again hit a new record all-time high today during mid-day trading. Just before midday, the ASX 200 clocked in at 7,183 points, a slight beat on the previous all-time high of 7,172 points (which was, unfortunately, a slightly more aesthetically pleasing number). At the time of writing, the ASX 200 has pulled back from that high, but it still sitting at 7,174.6 points, up 1.12% for the day.

    When it rains, it pours, and the same can be said of record highs. It took the ASX 200 more than a year to recover from the coronavirus-induced share market crash that happened in March last year. It was on 21 February 2020 that the ASX had its last all-time high before this month – 7,162 points. That high watermark stood until 11 May 2021 because, shortly after it was hit, the ASX 200 collapsed more than 32% over the following month. Since 23 March, the index is now up close to 50%. In saying that, the ASX 200 has actually lagged other markets around the world. The US S&P 500 Index (INDEXSP: .INX) crossed its pre-COVID all-time high back in August last year. it has since printed record highs like confetti. It’s now a whopping near-25% above where it was in February 2020.

    ASX 200 record high: how did we get here?

    Well, the performance of any market capitalisation-weighted index depends mostly on the performance of its most heavily weighted shares. In the ASX 200’s case, that would be the big four banks, the big iron ore miners and CSL Limited (ASX: CSL). Well, most of those shares have had a top month, as you might expect. Commonwealth Bank of Australia (ASX: CBA) recently broke $100 a share for the first time ever. In fact, CBA has been the ASX share we can probably put this new high down to the most. It’s currently sitting at the top of the ASX 200 with a hefty market capitalisation of $177.1 billion, having climbed close to 20% in 2021 so far. The other ASX banks are also at, or over, their pre-COVID highs.

    BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) aren’t too high from their own all-time highs that have all occurred in recent months. CSL shares have actually been one of the laggards in the ASX 200. But even CSL is up more than 17% over the past 2½ months or so.

    So it’s been the collective efforts of these companies that we can largely thank for pushing up the ASX 200 to yet another all-time high. What’s next? Well, no one knows. But that’s what makes investing fun.

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  • 2 top ASX 200 shares that might be buys today

    speedometer depicting high performance ASX miners outperform

    The S&P/ASX 200 Index (ASX: XJO) has some shares that could get counted as top ideas today to think about.

    These businesses are ones that are among the leaders in Australia and may still have plenty of growth potential.

    Sonic Healthcare Ltd (ASX: SHL)

    Sonic Healthcare is a pathology business with a market capitalisation of over $16 billion according to the ASX.

    It has seen a high level of profit growth during FY21 because of all of the COVID-19 testing. FY21 saw net profit rise 166% to $678 million.

    With this high level of profit, Sonic is increasingly focused on further growth opportunities, including acquisitions, contracts and joint ventures, supported by its “very strong” balance sheet. At the time of the half-year result, it was bidding on “significant” opportunities in Australia, the UK, the USA and Alberta in Canada.

    Its pre-COVID, global base business is becoming increasingly less affected by social restrictions and fear of infection, through better community understanding of the dangers in delaying or avoiding essential healthcare services. The ex-COVID business only saw a 1% drop in revenue in the first six months of FY21.

    Sonic is currently benefiting from the operating leverage of using its existing infrastructure. That’s how profit was able to grow 166%, but revenue ‘only’ grew 33%.

    The healthcare ASX 200 share expects demand for COVID-19 PCR testing to continue into the foreseeable future. There’s also the potential growing demand for COVID-19 serology testing, in other words their immunity status.

    According to Commsec, the Sonic share price is valued at 23x FY22’s estimated earnings.

    Magellan Financial Group Ltd (ASX: MFG)  

    Magellan is an Australian-based fund manager that has around $110 billion of funds under management (FUM).

    The business continues to see an increase in its total FUM at a high profit margin. Magellan’s funds management’s business has a cost to income ratio (excluding performance fees) of 16.8%.

    Magellan has been looking into other initiatives to grow long-term profit. It has taken investment stakes in external ‘principal investments’ that meet certain criteria. The board has set a pre-tax hurdle of 10% per annum over the business cycle for the principal investment portfolio.

    Some of the early investments have been Barrenjoey, Finclear and Guzman y Gomez.

    In the FY21 half-year result, average FUM grew 9% to $100.9 million, net profit rose 3% and the interim dividend increased 5%.

    Magellan has recently told investors to expect the launch of Magellan ‘Futurepay’. That’s its upcoming retirement income focussed solution. It will be launched on 1 June 2021.

    The CEO of Magellan Brett Cairns said:

    We are pleased to announce the launch of Magellan FuturePay. We believe it will help address the challenges faced by many investors and their advisors.

    Ord Minnett rates Magellan as a buy with a price target of $52. The broker has estimated that Magellan is priced at 18x FY22’s estimated earnings.

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