In early afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. At the time of writing, the benchmark index is up 1.15% to 7,176.9 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Inghams Group Ltd (ASX: ING)

The Inghams share price has jumped 9.5% to $3.44. Investors have been fighting to get hold of the poultry producer’s shares after it provided FY 2021 guidance well-ahead of the market’s expectations. For the 12 months ending 25 June, Inghams is forecasting statutory EBITDA of $438 million to $448 million and statutory net profit after tax of $80 million to $87 million. This has been driven by the benefits derived from operational efficiencies implemented throughout the year and improved trading conditions.

Latitude Group Holdings Ltd (ASX: LFS)

The Latitude share price is up 3.5% to $2.53. This follows the release of a market update. The instalments and lending company revealed that its loan volumes for the six months ending 30 June 2021 are expected to come in at $3.7 billion. This will be an increase of 7% on the prior corresponding period. Management expects this to lead to a first half net profit after tax of between $115 million and $120 million.

Rio Tinto Limited (ASX: RIO)

The Rio Tinto share price is up 3% to $123.74. This follows a similarly strong gain by its London-listed shares during overnight trade. Strong economic data appears to have given the resources sector a major lift today. At the time of writing, the S&P/ASX 200 Resources index is up 2.4%.

Tabcorp Holdings Limited (ASX: TAH)

The Tabcorp share price is up 2.5% to $5.19. The catalyst for this was news that BetMakers Technology Group Ltd (ASX: BET) has made a $4 billion offer to acquire Tabcorp’s Wagering and Media operations. The offer comprises $1 billion in cash and $3 billion in BetMakers shares. BetMakers believes the proposal would bring together two highly complementary businesses to create a competitive global wagering and technology platform with scalable operations across both B2B and B2C markets.

More reading

• ASX 200 up 1.1%: Tabcorp receives $4bn offer, KKR wants Link’s PEXA business
• Why the Latitude (ASX:LFS) share price is rising today
• BetMakers (ASX:BET) share price sinks on Tabcorp takeover proposal
• Why the Inghams (ASX:ING) share price is racing 10% higher
• 4 ASX 200 resource shares poised to deliver: AMP Capital

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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week a strong note. The benchmark index is currently up 1.1% to 7,174.2 points.

Here’s what is happening on the market today:

BetMakers makes Tabcorp a $4 billion offer

The Tabcorp Holdings Limited (ASX: TAH) share price is pushing higher today after BetMakers Technology Group Ltd (ASX: BET) made a $4 billion offer to acquire its Wagering and Media businesses. The offer comprises $1 billion in cash and $3 billion in BetMakers shares. BetMakers believes the proposal would bring together two highly complementary businesses to create a competitive global wagering and technology platform with scalable operations across both B2B and B2C markets.

Latitude update

The Latitude Group Holdings Ltd (ASX: LFS) share price is storming higher after the release of a market update. The instalments and lending company revealed that its loan volumes for the six months ending 30 June 2021 are expected to come in at $3.7 billion. This will be an increase of 7% on the prior corresponding period. This is expected to lead to a first half net profit after tax of between $115 million and $120 million.

Link receives offer for PEXA

The Link Administration Holdings Ltd (ASX: LNK) share price is on course to end the week on a positive note. Investors have been buying the administration services company’s shares after it revealed that private equity firm KKR has tabled an offer that values PEXA at $3 billion on a 100% basis. Link owns 44.18% of the property settlement business. The Link Board is considering the proposal.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday has been the South32 Ltd (ASX: S32) share price with a 6% gain. A number of resources shares are recording strong gains today. The worst performer has been the CSR Limited (ASX: CSR) share price with a 5% decline. The majority of this decline is due to the building materials company’s shares trading ex-dividend this morning.

More reading

• Why the Latitude (ASX:LFS) share price is rising today
• BetMakers (ASX:BET) share price sinks on Tabcorp takeover proposal
• Link (ASX:LNK) share price on watch after receiving PEXA offer
• 5 things to watch on the ASX 200 on Friday
• The Pepper Money (ASX:PPM) share price sinks below listing price

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

Tesla Motors‘ (NASDAQ: TSLA) Model 3 sedan is losing some of its luster. The popular electric vehicle (EV) has been dropped by Consumer Reports as one of its Top Picks, and the Insurance Institute of Highway Safety (IIHS) plans to strip it of the organization’s Top Safety Pick+, its highest-level award.

These developments closely follow the company’s announcement earlier this week that it is replacing radar in the relatively low-cost model with the camera-based Tesla Vision system. It is doing the same with the Model Y SUV, again a comparatively budget offering in its category.

In the announcement Tesla warned that “For a short period during this transition, cars with Tesla Vision may be delivered with some features temporarily limited or inactive.” These include Autosteer and Emergency Lane Departure Avoidance.

This doesn’t sit well at all with safety proponents. In an article on the designation withdrawals, Consumer Reports quoted its Vice President of Advocacy David Friedman as saying that “If a driver thinks their vehicle has a safety feature and it doesn’t, that fundamentally changes the safety profile of the vehicle.”

“It might not be there when they think it would save their lives,” he added.

Tesla hasn’t yet responded directly to the Consumer Reports and IIHS moves, and since it likes to control the message it likely won’t. Regardless, the loss of those prestigious designations just isn’t a good look for the carmaker, which continues to have numerous issues with vehicle safety of late.

Still, the company and its stock have a great many believers no matter the prize count in its trophy case. The shares traded 1.9% higher on Thursday, eclipsing the 0.1% gain of the S&P 500 index.

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

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The Cann Group Ltd (ASX: CAN) share price is falling during morning trade. This follows the cannabis company’s announcement of a revised revenue guidance for FY21.

At the time of writing, Cann shares are exchanging hands for 43 cents, down 2.27%.

What’s dragging the Cann share price down?

Investors are selling off Cann shares today after digesting the company’s update.

In today’s release, Cann advised that a number of delays have affected its revenue guidance for FY21.

In particular, third-party manufacturing and starting material supplier issues have pushed back its shipping schedule. This means that customers will receive Cann products at a later date than originally expected, resulting in deferred revenue receipts.

The company also noted that its international regulatory submissions to enter new markets has been extended. This relates to both local and overseas market clearances. However, Cann is working hard to have its order and fulfilment cycle more streamlined, especially to Germany.

As a result, Cann is forecasting revenue to fall between $4 million and $5 million for FY21. This compares to its earlier revised guidance projections of $8 million to $10 million on 15 February. The remaining balance of the latter revenue assumption is expected to roll into FY22.

At the end of April, the group dispatched more than 20,000 bottles of cannabis extract to its German customer and partner, iuvo Therapeutics. Those products have since been GMP-released for sale, with the company stating that initial sales look promising.

Furthermore, its United Kingdom market is tracking along nicely, with a pipeline of orders scheduled in FY22.

Words from the CEO

Cann group CEO Peter Crock touched on the company’s performance, saying:

We have continued to make really important headway this year, and while timelines have been frustratingly drawn out, in some part due to COVID, the achievements we have made in securing regulatory pathways, and the foundations we have set for supply to Australian patients and export markets stands us in good stead.

We have also strengthened our future revenue base with the recent acquisition of Satipharm and access to an important differentiated technology platform. Further, we have demonstrated an ability to deliver sizable orders to our customers, as shown by our delivery to iuvo last month.

Cann shares have been on a steady decline over the past 12 months, shrinking in value by more than 60%.

More reading

• Cann (ASX:CAN) share price continues to rise despite product recall

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The Select Harvests Limited (ASX: SHV) share price is sliding today after the company released its results for the 6-months up to 31 March 2021.

At the time of writing, shares in the fruit and nut grower are trading for $5.80 each – down 2.68%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.84% higher.

Let’s take a closer look at the numbers and what they mean for the Select Harvests share price.

Select Harvests share price falls with profits

For the first half of FY21, net profit after tax collapsed 92.7% from the prior corresponding period (pcp) to $1.27 billion. Total revenue actually increased 37.4% to $84.8 billion in the period.

Cost of sales, however, shot up 71.8% at the same time. Select Harvests attributed the rising revenue to more crop harvests (and therefore sales). At the same time, the company claims the increase in costs outpaced revenue because of higher water rights prices. Water rights prices are lower this year and the company expects this to flow through to the next financial report.

In today’s release, Select Harvest was also pessimistic about the future prices of almonds, its main product. The company says almond prices are set mostly by output from California. It is expecting supply from the state to increase into the next year, thus hampering the almond price.

The price of almonds was already down 20% on the pcp to $6.00 a kilogram.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) are down 62.9% on the pcp to $12.8 million. Earnings per share (EPS) sunk 94.3% to 1.1 cents and, unsurprisingly, no interim dividend was paid.

Management commentary

Select Harvests managing director Paul Thompson said of today’s results:

As anticipated, lower global almond prices have negatively impacted earnings, delivering a first half financial result well below recent prior periods.

With a record breaking 2020 Californian crop and a USDA Subjective Almond Estimate indicating another large crop this year, we are anticipating low levels of pricing for the remainder of 2021.

Looking forward to the 2022 crop, our tree health remains good with strong 2021 vegetative growth and high bud load. Water prices are expected to remain relatively low given current weather forecasts and storage levels. Global demand for almonds continues to increase at a steady rate, as plant-based protein consumption grows in all markets.

Select Harvests share price snapshot

Over the past 12 months, the Select Harvests share price has decreased 11.42%. Before the COVID-induced market sell-off of March 2020, company shares ended a trading day as high as $9.18 at the beginning of that year.

Given its current share price, Select Harvests has a market capitalisation of $679 million.

More reading

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• BetMakers (ASX:BET) share price sinks on Tabcorp takeover proposal

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The Telstra Corporation Ltd (ASX: TLS) share price is edging higher on Friday morning.

At the time of writing, the telco giant’s shares are up 0.5% to $3.48.

This latest gain means the Telstra share price is now up 16% since the start of the year.

Can the Telstra share price keep pushing higher?

According to one leading broker, the Telstra share price could continue to rise from here.

A note out of Goldman Sachs reveals that its analysts have been looking at the telco sector and have ultimately retained their buy rating and $4.00 price target on the company’s shares.

Based on the latest Telstra share price, this price target implies potential upside of 15% over the next 12 months excluding dividends. If you include the 16 cents per share dividend the broker is forecasting, this potential return stretches to 19.5%.

What did Goldman say?

Goldman Sachs has been looking at current trading conditions in the mobile and fixed markets. And while it feels that the company’s mobile deal with JB Hi-Fi Limited (ASX: JBH) could be limiting market repair, it isn’t enough to impact its forecasts or recommendation.

Speaking about the mobile market, Goldman said: “VOD [Vodafone] extended the discounts on its Red Postpaid plans for an extra week, now expiring June 3. We expect this reflects VOD intention to see what TLS does with its JBH promotions, given that the $800 gift card / $99 TLS plan expires on June 2 (VOD & Optus have both criticized these promotions as preventing market repair).”

It also notes that the recent SingTel result appears to indicate that mobile pricing is increasing and will be sustained.

The broker said: “Commentary on SingTel FY21 result was positive, suggesting higher mobile pricing in Australia is here to stay as the business focuses on improving profitability; and Optus returned to postpaid sub growth following 12m of declines; however, we expect TPG declines have continued YTD given border restrictions.”

What about the fixed market?

Goldman points out that NBN pricing has lifted modestly across the NBN 50 speed plans. Though, it feels Telstra could be more aggressive with its fixed wireless plans.

It explained: “We note rational pricing across the NBN 50 speed plans (+1% yoy) and an increased focus on the high speed plans (250mbps/1gbps) which we estimate to be more profitable and margin accretive to RSPs (i.e., increasing TLS margins from c.9% (NBN50) to 29% (NBN1GB)). Telstra also announced it will increased Fixed Wireless plans to 1TB – which although positive, is not nearly as aggressive as we believe the industry should be (we would expect meaningful promotions/discounts to accelerate migration).”

In light of the above, Goldman continues to prefer Telstra over rival TPG Telecom Ltd (ASX: TPG).

Its analysts have retained their neutral rating and cut their price target on TPG’s shares by 5% to $5.90.

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

GameStop‘s (NYSE: GME) stock price recovery from single-digit levels began with a short squeeze inspired by Reddit’s WallStreetBets blog site. Outsized enthusiasm for the stock has offered a needed lifeline to GameStop, enabling it to raise capital and revive its ailing retailing business.

While this move increases the odds of GameStop’s survival, its business model and financials indicate limited further upside. That strongly suggests the stock is overpriced. Here’s why.

Competitive advantage and GameStop

The retailer previously built a competitive advantage as a one-stop-shop for all things gaming, especially electronic gaming. Customers could visit GameStop to find the latest video games, get refurbished hardware, and buy, sell, or trade games. However, the rise of downloadable video game sales slowly made GameStop an unnecessary middleman as gamers could buy games and upgrades more easily directly from manufacturers.

Nonetheless, some good news for GameStop has resulted. GameStop has used its capital to transform itself primarily into a “digital-first, omnichannel retailer.”

Also, it has replaced much of its previous executive management team, removing both the CEO and CFO. Experienced internet retail leaders such as incoming chairman of the board Ryan Cohen has joined the company. Cohen previously co-founded online retailer Chewy. Additionally, to adapt its buy-sell-trade business to a world of video game downloads, it has ventured into collectibles, board games, and other items.

Unfortunately, this move may also leave GameStop with a less significant competitive advantage. The collectibles business has existed for decades. While GameStop can serve as a name-brand outlet for such a business, it holds little discernible advantage outside of the GameStop name.

Moreover, one can say the same for its core game download business. Yes, it can aggregate available games from each of the manufacturers onto its website. For example, Microsoft (NASDAQ: MSFT) has agreed to give GameStop a cut for each Xbox game sold on its site. Still, investors have little visibility on the percentage GameStop receives. Furthermore, when comparing the Xbox site versus GameStop, the games sell for the same price, leaving GameStop with no advantage there.

GameStop, financially speaking

GameStop’s financials offer a mixed picture. In fiscal 2020, net sales fell 21% to just under $5.1 billion. However, due to dramatically lower cost of goods sold, more modest operating costs, and an income tax benefit, its net loss improved to just $215 million. GameStop lost $471 million in 2019.

Moreover, fourth-quarter fiscal 2020 net sales fell by only 3% from year-ago levels. GameStop also earned a before-tax profit of $11 million in that quarter. This time, it experienced higher operating costs that prevented it from coming close to the $69 million quarterly before-tax profit in Q4 2019.

The company did not publish an outlook. Nonetheless, even with the stock’s volatility, one cannot escape the 4,200% return the Reddit-inspired short squeeze helped bring to the company.

GME data by YCharts

However, this gain brings bad news from a valuation sense. While its 2.4 price-to-sales ratio may not appear high, it now sells for more than 29 times its book value. In comparison, Best Buy sells for six times its book value, and even Amazon boasts a price-to-book value ratio of only 16.

Still, since the stock trades in the $185 per-share range as of the time of this writing, it has raised funds by issuing shares. Now, almost 71 million shares have become available, up from 65 million in March. While this strategy can help save the company, shareholders pay the price in the form of less valuable shares. Worse, this dependence confirms that the stock remains in survival mode with no obvious path for prosperity.

The bottom line

The massive run-up in GameStop stock and the strategic shift to online sales may have saved GameStop. Now, GameStop holds the needed funding to make its digital-first transformation a reality.

However, survival is not prosperity, and with a weak competitive advantage, it could struggle to maintain its valuation long term. While it is not “game over” for GameStop, long-term investors will more likely win with other internet-centric retail stocks.

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

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• Here are the US shares that ASX investors were buying last week

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The Costa Group Holdings Ltd (ASX: CGC) share price is rebounding from yesterday’s selloff.

In morning trade, the horticulture company’s shares are up over 1% to $3.41.

Why did the Costa share price crash lower on Thursday?

The Costa share price crashed 24% lower yesterday following the release of its annual general meeting update.

Costa revealed that it is expecting its first half performance to be marginally ahead of the prior corresponding period. This is being driven by weakness in its domestic operations and currency headwinds.

Is this a buying opportunity?

According to a note out of Goldman Sachs, its analysts believe the selloff was overdone.

And while the broker has cut its price target by 9% to $4.85, it has held firm with its buy recommendation.

Based on the current Costa share price, this implies potential upside of 42% over the next 12 months.

What did Goldman say?

Goldman said: “CGC has released a trading update at its AGM. Performance across categories has been mixed YTD: international is performing very strongly, but challenges in domestic produce have emerged, particularly in the mushroom operations (labour sourcing) and the Avocado and Tomato categories (price deflation).”

“We see a positive earnings growth trajectory for the company over the medium term driven largely by volume growth from new plantings. However, the challenges observed through this half illustrate the leverage CGC has not only to agricultural conditions (as we saw through 2019), but also to market conditions.”

“We think the share price reaction today (-24%) is overdone, and with our revised 12m TP by -9% to A$4.85 providing 44% upside, we retain our Buy recommendation,” it concluded.

Goldman made the revision to its price target after reducing its FY 2021/FY 2022/FY 2023 by -22%/-12%/-14%. However, despite these downgrades, the broker still believes Costa can grow its earnings per share by a CAGR of 19% between FY 2020 and FY 2023.

In light of this, with the Costa share price trading at 19x estimated FY 2021, it sees a lot of value here for investors.

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The Latitude Group Holdings Ltd (ASX: LFS) share price is climbing in early trade today. At the time of writing, the company’s shares are changing hands for $2.50, a rise of 2.04%.

This comes after the instalments and lending business released a trading update for the first half of 2021.

How is Latitude performing?

The Latitude share price is climbing today following a positive update showing improved business performance.

According to this morning’s release, Latitude’s loan volumes for the six months ending 30 June 2021 (H1 21) are expected to come in at $3.7 billion.

This is an increase of 7%, with personal loan volumes up 25% in Australia, and 50% in New Zealand compared to H1 20.

Latitude noted the growth in volume comes despite its international and travel segment being impacted by COVID-19.

Those categories are forecast to be down 46% and 74% respectively on the prior corresponding period (pcp) due to border closures.

Gross loan receivables are projected to remain consistent with H2 20 levels at $6.5 billion. According to the company, this is because customers have been able to make early repayments on loans due to lower spending and government cash stimulus packages.

Costs are anticipated to fall by around 10% over the pcp due to management’s focus on its simplification program.

Pleasingly, the company’s book credit value has improved with net charge-offs predicted to decline by around 40% from H1 20.

As a result, Latitude expects a net profit after tax (NPAT) of between $115 million and $120 million for the six months ending 30 June 2021.

Management said the current 7-day lockdown in Victoria will not affect its H1 21 guidance.

Management commentary

Latitude managing director and CEO Ahmed Fahour said:

Volumes have recovered strongly in all areas other than travel and current indications are that this trend will continue for the remainder of 2021. Instalments volumes have been pleasing, particularly in the home segment, and we see this performance continuing. Personal loans and auto loans volumes are growing strongly and Latitude is now the number two originator of new personal loans in Australia and one of the leaders in New Zealand. We remain optimistic that travel volumes will recover quickly when borders reopen, although the reopening has been further delayed.

The LatitudePay+ (big-ticket buy now, pay later) pilot is currently in market and will move to full launch in 2H21. Latitude will also apply for the necessary licences to build its instalments business in Singapore and Malaysia in the coming months, in conjunction with our key merchant partners.

About the Latitude share price

Since listing on the ASX late last month, Latitude shares have dropped by around 7%. This is despite the company raising $150 million in its initial public offering (IPO) at $2.60 per share.

Based on valuation grounds, Latitude has a market capitalisation of $2.5 billion, with exactly 1 billion shares on its registry.

More reading

• The Pepper Money (ASX:PPM) share price sinks below listing price

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The BetMakers Technology Group Ltd (ASX: BET) share price is sinking on Friday.

In morning trade, the betting technology company’s shares are down 9% to $1.45.

Why is the BetMakers share price sinking?

The BetMakers share price is sinking after the company confirmed speculation that it is interested in acquiring the Tabcorp Holdings Limited (ASX: TAH) Wagering and Media business.

According to the release, the company has submitted a non-binding, indicative proposal to acquire Tabcorp’s Wagering and Media business for an enterprise value of $4 billion.

Under the indicative proposal, Tabcorp would receive $1 billion in cash, which BetMakers plans to fund through debt financing, and $3 billion in BetMakers shares. In respect to the latter, the number of shares to be issued will be fixed at the time a transaction is agreed and priced at a 15% premium to the traded price of BetMakers prior to signing.

Based on the 10-day volume weighted average price (VWAP) to 26 May 2021, the indicative proposal would provide Tabcorp shareholders with an approximate 65% interest (on a fully diluted basis) in the combined BetMakers and Tabcorp Wagering and Media business plus A$1 billion in cash to Tabcorp.

Furthermore, BetMakers has proposed that the share consideration is distributed in specie to Tabcorp shareholders on a pro rata basis. This will allows Tabcorp shareholders to convert their indirect interest in Tabcorp Wagering and Media into a direct and liquid shareholding in the combined entity, providing flexibility and choice.

The Combined Entity is expected to be moderately geared at less than 2.5x net debt / EBITDA on a pro forma basis.

Acquisition rationale

There are a number of reasons that BetMakers believes the acquisition and proposal represents a compelling value proposition for both sets of shareholders.

One is that it brings together two highly complementary businesses to create a competitive global wagering and technology platform with scalable operations across both B2B and B2C markets.

Management also notes that the combined entity will be able to take advantage of BetMakers’ technology and product innovation to compete more aggressively in an increasingly digital-driven consumer market.

Another is that global opportunities will be pursued by leveraging the incumbent and iconic Australian TAB brand and content with BetMakers’ established global network, market access and strong partnerships with US racing bodies.

It also expects the monetisation of Tabcorp Wagering and Media’s media content on a global scale through BetMakers’ network of global partners.

BetMakers’ Strategic Adviser, Matt Tripp, said: “I am excited by the potential opportunity to reinvigorate the Tabcorp Wagering and Media business. There is significant potential for the business to grow in partnership with BetMakers and I hope to get the opportunity to support the Australian racing industry which relies on the success and growth of TAB.”

“I have been very impressed with the world-class team BetMakers has put together and the enormous growth opportunities they have created globally, including in the rapidly emerging US wagering landscape, and the timing could not be better for this unique opportunity. Aside from the value that this offer is anticipated to unlock for shareholders in both companies, this is an incredibly exciting opportunity for the Tabcorp Wagering and Media business to maximise its commercial potential on a global scale.”

Tabcorp response

Tabcorp has acknowledged the receipt of the proposal. However, its Board has not yet formed a view on the merits of the proposal. It intends to assess it in the context of the previously announced strategic review.

The Tabcorp share price is up 4% on the news. Judging by the market’s reaction, it appears as though investors believe Tabcorp shareholders are getting the better end of the deal here.

More reading

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