The Zip Co Ltd (ASX: Z1P) share price has had a reasonably positive start to the week.

After being up as much as 5% at one stage, the buy now pay later (BNPL) provider’s shares are up 1% to $7.09 late in the session.

Why is the Zip share price rising today?

The Zip share price was given a boost today by news that the company is expanding into the European and Middle East markets. The company will be doing this in the same way it entered the United States market, by acquiring an established player in both markets.

In Europe, Zip is acquiring the shares it doesn’t already own in Twisto Payments for 89 million euros (~A$140 million). Whereas in the Middle East, the company is acquiring the shares it doesn’t already own in UAE-based Spotii for US$16 million (~A$21 million).

Management commented: “Zip has adopted a similar approach to Quadpay, which proved to be highly successful. By initially making low-risk minority investments, Zip is well placed to validate cultural fit and management alignment, stress test the business plan and identify synergies, and plan for integration.”

It also notes that Europe is a $1.1 trillion annual ecommerce market and Twisto’s license can be passported to all 27 member states of the European Union. And while the Middle East market is much smaller, it is growing fast.

The acquisition of Spotii is expected to complete in the third quarter of calendar year 2021, whereas the Twisto acquisition is expected to complete in the fourth quarter.

Judging by the performance of the Zip share price, investors appear happy with the news.

Should you invest?

While brokers have yet to run the ruler over this news, one broker that was already bullish on the Zip share price is Citi.

Its analysts recently upgraded Zip’s shares to a buy rating with an $11.30 price target.

In addition to this, fellow broker Morgans currently has an add rating and $10.39 price target on the company’s shares.

Based on the middle of these price target ($10.85), this implies potential upside of over 50% from where the Zip share price trades today.

More reading

• Why Corp Travel, Domino’s, Kogan, & Zip shares are storming higher
• ASX 200 up 0.1%: Aristocrat results, Zip’s global expansion continues
• Zip (ASX:Z1P) share price higher on European and Middle East expansion news
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• Why Zip (ASX:Z1P) and these ASX growth shares are highly rated

The post Is the Zip (ASX:Z1P) share price in the buy zone? appeared first on The Motley Fool Australia.

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Risk is one of those words that ASX investors probably use a little too much. Especially considering it can mean different things to different investors.

Classical modern portfolio theory teaches that share market risk has a linear relationship with returns. That is, the higher returns you want, the more risk you have to take. Whilst the merits of this theory are still being debated, it does posit an interesting question: How can you evaluate the risks of investing in a particular ASX share?

Well, an easy way to assess risk is to look at how much money a business makes. It sounds simple, but there are two kinds of companies that you can buy on the ASX. Those that are valued on the money they make today. And those that are priced for the money they might make in the future.

Risk on, risk off

Take ASX 200 growth share Afterpay Ltd (ASX: APT). Afterpay is currently being priced with a market capitalisation of $26.62 billion.

Looking at Afterpay’s full-year results from last year (FY2020), and we can see that the company brought in $44.4 million in earnings before interest, tax, depreciation and amortisation (EBITDA). A $26.6 billion company bringing in $44.4 million in earnings? That valuation sounds a little silly. But those earnings grew at an annual rate of 73%. As such, we can reasonably assume Afterpay is being priced for the money it could make in the future, rather than its current earnings. If Afterpay (hypothetically) grows its earnings at 73% every year for a decade, its valuation starts to look a lot cheaper.

But something like the ASX 200 blue chip Coles Group Ltd (ASX: COL) is a different kettle of fish. Last year, this company reported earnings before interest and tax (EBIT) of $1.39 billion for FY2020. On today’s pricing, Coles has a market capitalisation of $22.24 billion (lower than Afterpay’s, incidentally). This tells us that Coles is probably being priced for the cash it generates today, rather than the growth it might deliver in the future. This makes sense. Coles is an established, mature, dividend-paying business.

Birds in the bush

And that’s where risk comes in. Coles has runs on the board right now. It has shown it has what it takes to generate large volumes of cash flow today. As such, it is fundamentally less risky than Afterpay, which might deliver the same levels of cash one day, if its growth rates continue and everything goes as planned.

Warren Buffett once said of investing that ‘a bird in the hand is worth two in the bush’. This can be applied to what Coles and Afterpay have on offer today. Of course, some investors like chasing companies that might have bushes full of birds. But Buffet implies it’s a whole lot less risky if they’re in the hand.

So if you’re wondering which of your ASX 200 shares are the ‘riskiest’ today, have a look at how much cash they generate, and what they are being priced at. That will give you a great feel for how risk-tolerant your ASX share portfolio is.

More reading

• Morgans picks small cap ASX shares with near-term share price catalysts
• Expert says buy these ASX expensive defensives as market momentum is peaking
• ASX 200 up 0.1%: Aristocrat results, Zip’s global expansion continues
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• 2 quality ASX 200 tech shares that might be buys

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I spent a decent amount of time out in the garden over the weekend.

Some mowing, but mostly carrying two cubic metres of pine bark from a pile at the end of the driveway and down into the vege patch.

I was replacing the pine bark that got washed down the hill in the recent storms.

The access meant that I couldn’t use a wheelbarrow, so it was two plastic buckets at a time.

Up.

Back.

Up.

Back.

The good news is that it’s done. And that it was finished before the rain.

The bad news is that it turns out I’m not as young as I used to be, and I’m nursing a pulled shoulder muscle.

Speaking of which, I refuse to accept that my advancing years are the cause of my interest in growing veges.

When my son was born, we wanted him to experience having a vege garden.

To appreciate where some of his food came from. 

To be part of the process.

And, hopefully, to make picking a berry off a bush, a tomato off a vine or an apple off a tree something natural.

So, when we moved to the NSW Southern Highlands 5 years ago, we wanted to be able to have a larger vege patch and some more fruit trees.

See… it’s not my advancing age at all!

At least, that’s what I tell myself.

Speaking of veges, winter tends not to be a particularly bountiful time for most of them. Some, yes, but not most.

I planted some peas and beans a few weeks back.

(And some lettuce and other greens, but the snails got them. Little buggers. Snail traps going in next weekend, now I have the new pine bark laid!)

They’re an exercise in patience (the veges, not the snails!).

For a week or two, nothing happens.

And I mean literally nothing. At least nothing that can be seen by the human eye.

Then, a small tendril pokes its way out of the ground.

Then, almost nothing, for another couple of weeks.

Maybe it’s growing, but the pace is so slow, it’s hard to tell.

And a couple of the would-be pea plants die.

But then, you start to notice some growth. 

Or at least it seems like growth.

Then a little more.

Now, the pea plants are a good 20cm high, and the beanstalks are thickening and sprouting more leaves.

Give it a couple of weeks, and the peas will double in height.

Then another couple of weeks, and they’ll double again — growing more in a couple of days than they did in a couple of weeks, just a month or so ago.

Oh come on… surely I’m not going to make that literal a comparison, am I?

The whole ‘pea plant as an analogy for compound interest’ thing?

Surely not.

Yep. I am. (And don’t call me Shirley).

But for what it’s worth, I’m not reaching for a banal analogy specifically because I had a point to make.

In this instance, it was literally the reverse.

Yesterday morning, while I was bucketing pine back, I noticed how suddenly the peas had grown, when they were seemingly much smaller only a few days ago.

But it makes sense.

Root systems spread and go deeper, giving the plants a better and more plentiful source of nutrition.

The leaves multiply, giving the plant ever more surface area to utilise for photosynthesis.

Growth begets growth.

Is it a hackneyed example? Probably.

I can’t recall using it before, or even someone else using the analogy, but I’m sure they have.

Sometimes, though, cliches are cliches for a reason, and analogies are analogies because the similarities are just too clear to ignore.

So here goes:

When you start investing, the dollar value of your compound gains can be reasonably small… but give it time. Remember the maths.

Not every investment will live and thrive. Some of your portfolio will disappoint. You don’t stop growing peas because one plant dies.

As I said, growth begets growth. One leaf becomes two. Two become four. Four become eight. Soon enough, you have 16 times as many leaves as you started with.

Investing requires discipline and a little education, but surprisingly little ongoing effort. Some pruning, some fertilising.. But the returns don’t scale with effort, past a certain point. They scale with time.

You have to let them do their thing. You’re not going to do well as a gardener if you rip out the peas because they haven’t sprouted in the first month, or the apple tree if it hasn’t fruited in the first year. 

Gardening — like investing — rewards steady effort, and a lot of patience. Mostly, they both work best if you get the structure right, then largely leave them alone.

And, like investing, one day, you’ll remember how little you had, when you started, compared to how much you have, after time has done its work. You won’t necessarily notice, day by day, but it’s happening.

And the harvest is more than worth the time, effort and — remember — patience.

Fool on.

More reading

• Why AnteoTech, Fortescue, Synlait, & TPG shares are tumbling lower
• The MyState (ASX:MYS) share price is frozen today. Here’s why
• The Commonwealth Bank (ASX:CBA) share price hits new record highs
• Codan (ASX:CDA) share price tops performance on ASX Tech Index in 2021
• Morgans picks small cap ASX shares with near-term share price catalysts

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The S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up almost 0.2% to 7,042.4 points.

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

AnteoTech Ltd (ASX: ADO)

The AnteoTech share price is down 6% to 32.5 cents. Investors have been selling the surface chemistry company’s shares despite an update on its manufacturing plans. According to the release, AnteoTech plans to commence in-house manufacturing in Brisbane to enable the production capability of an additional 12 million test strips per annum. This will bring it total test strip production capability now to 32 million per annum. These strips are to be used in a COVID-19 rapid testing device. Investors may feel the investment is too late in the COVID cycle.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price has fallen 4% to $21.40. This iron ore giant’s shares have come under pressure on Monday following another pullback in the price of the steel making ingredient. According to Metal Bulletin, the spot iron ore price fell a sizeable 5.3% to US$200.72 a tonne on Friday.

Synlait Milk Ltd (ASX: SM1)

The Synlait Milk share price has tumbled 4.5% to $2.85. This follows the release of a second guidance downgrade this morning. According to the release, the dairy processor now expects to make a loss after tax of between NZ$20 million and NZ$30 million in FY 2021. This compares to its previous guidance for a breakeven result, which itself was reduced from a 50% year on year profit decline.

TPG Telecom Ltd (ASX: TPG)

The TPG Telecom share price is down almost 2.5% to $4.92. Investors have been selling the telco’s shares after it revealed that its cloud-based hosting service, TrustedCloud, was compromised in a recent cyber incident. However, it is worth noting that only two customers are believed to have been impacted. Furthermore, the business is being decommissioned and is scheduled to close at the end of August.

More reading

• TPG (ASX:TPG) shares whacked by cyberattack
• Why the AnteoTech (ASX:ADO) share price is racing higher
• Synlait (ASX:SM1) share price on watch after guidance downgrade
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• 2 ASX dividend shares with generous yields

The post Why AnteoTech, Fortescue, Synlait, & TPG shares are tumbling lower appeared first on The Motley Fool Australia.

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The MyState Limited (ASX: MYS) share price is in a trading halt today after the company announced a capital raising.

As such, the MyState share price will remain frozen at Friday’s closing price of $4.85 to enable the placement to be completed. Trading is expected to resume on Wednesday.

The financial and fund management company also detailed its strategy and outlook in today’s release. Let’s take a look.

MyState capital raising

MyState today announced it aims to “rapidly accelerate” its growth strategy through a placement to raise up to $80 million. The placement will comprise a $20 million institutional underwritten offer and a $60 million entitlement offering to all eligible shareholders. All shares under the capital raise will be issued at $4.30.

The company also outlined its new growth strategy for the coming years. MyState wants to bring in new customers by creating better experiences for them on its current platform. The company said it was turning to a more digital and intuitive platform to meet this goal.

It is also aiming to simplify operations while expanding its distribution network to enhance both productivity and distribution.

With these priorities, the company has outlined four objectives to be achieved by 2025:

• Accelerated home loan and retail deposit growth over the medium term, while maintaining asset quality.
• Improved operating leverage.
• Return on Equity accretion as capital is deployed.
• And sustainable growth in the company’s EPS over the medium term.

Management comments

MyState chair Miles Hampton explained:

The capital raising will support the business to pursue a significant acceleration of its growth strategy. Since 2016, MyState has increased its home loan book by 43%. We now see an opportunity to build on that success and substantially increase our growth trajectory.

This is important as it helps us to remain competitive and provide the services that our customers expect whilst improving shareholder value.

Trading update and guidance

In MyState’s trading update and FY21 guidance also released today, the company advised it was well ahead of the prior corresponding period for the 10 months ending 30 April.

Highlights include a net profit after tax increase of 17.1%, and earnings per share (EPS) up 16.2%.

In terms of guidance, the company said it was on track to deliver growth in operating profit of 11%-14%.

More reading

• The Commonwealth Bank (ASX:CBA) share price hits new record highs
• Codan (ASX:CDA) share price tops performance on ASX Tech Index in 2021
• Morgans picks small cap ASX shares with near-term share price catalysts
• The BHP (ASX:BHP) share price keeps falling, could it be an opportunity?
• This beaten-up sector has some of the top performing ASX shares this year

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Commonwealth Bank of Australia (ASX: CBA) shares are powering ahead today. The CBA share price is up 1.1% in afternoon trading.

At the current price of $99.09 per share, Commonwealth Bank shareholders are only 91 cents away from seeing the stock crack the psychological $100 mark.

If CBA’s share price can hold onto the intraday gains, or add to them, today will mark yet another new record closing high for the big 4 bank.

CBA share price record

It took more than 7 years, but last week the CBA share price hit $98.84 per share. That finally saw shares surpass their previous record high, set in March 2015.

At the time (March 2015) analysts were eagerly predicting that CommBank would become the first ASX share to crack the $100 mark. While that honour fell to CSL Limited (ASX: CSL), CBA could join the 3-figure share price club any day now.

Today’s gain, outpacing the 0.3% increase posted by S&P/ASX 200 Index (ASX: XJO), sees the CommBank share price up 68% over the past 12 months. And the Commonwealth Bank has continued to outperform in 2021, with shares up more than 18% year-to-date.

On Friday the bank announced it will raise interest rates on its 3 and 4-year fixed-term owner-occupier loans by 0.05% and investor only loans by 0.10%, potentially adding to its bottom line.

Now investors will be looking to see if management gives any sign of upping the dividend payments alongside its appreciating capital value.

At the current price of $99.09 per share, CommBank pays an annual dividend yield of 5.0%, fully franked. The market cap stands at $174 billion.

More reading

• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• What happened with the Commonwealth Bank share price this week?
• Commonwealth Bank (ASX:CBA) hikes interest rates. Is the RBA wrong?
• Here’s 1 stock this fundie prefers over Commonwealth Bank (ASX:CBA) shares
• The ANZ (ASX:ANZ) share price leads the ASX 200 banks this week

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Shares in Codan Ltd (ASX: CDA) are leading the S&P/ASX All Technology Index (ASX: XTX) this year. The Codan share price has gained almost 60% in 2021 so far.

At the time of writing, shares in Codan are trading at $17.73, gaining 3.02% today. At the start of 2021, shares in the company were swapping hands for $11.28.

By contrast, the All Tech Index has fallen almost 10% since the beginning of the year.

Codan designs and manufactures communications and technologies designed for use in tough conditions. It produces radios, metal detectors, and mining automation systems. The company provides these to a number of users, including ‘Five Eyes’ military and intelligence agencies.

Codan has announced a number of acquisitions this year, as well as posting strong financial results. The company’s share price also managed to dodge the US-driven tech sell-off in March.

Let’s take a closer look at what Codan has been up this year.

Terrific 2021 to date

The first we heard from Codan this year was in mid-February.

Then, the company announced it had acquired US-based Domo Tactical Communications (DTC). DTC produces high bandwidth wireless communications and specialises in multiple-input multiple-output (MIMO) mesh networks.

The news saw the Codan share price hit what was then an all-time high of $13.64.

Two days later, Codan released strong results for the first half of the 2021 financial year.

On 1 April, Codan announced another acquisition, this time of critical communication technologies manufacturer Zetron Inc.

The news led its share price to close 9.5% higher than the previous day’s trade.

Codan share price snapshot

Codan shares have been having more than just a great few months on the ASX.

Since this time last year, the Codan share price has gained around 160%.

The company has a price-to-earning (P/E) ratio of 41.67 and it pays a dividend.

Codan has a market capitalisation of around $3 billion, with approximately 180 million shares outstanding.

More reading

• Codan (ASX:CDA) share price wobbles on news of a completed acquisition

The post Codan (ASX:CDA) share price tops performance on ASX Tech Index in 2021 appeared first on The Motley Fool Australia.

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The market looks caught in a fairly tight trading band since April as bulls and bears look to see who blinks first.

In this climate, a good way to pick ASX shares to buy is to target those with positive near-term catalysts, according to Morgans.

The broker’s advise comes as the S&P/ASX 200 Index (Index:^AXJO) bounces between both sides of breakeven today. The index has traded in a less than 200-point band in the past seven weeks.

Target ASX shares with near-term catalysts

Investors are torn between the strong earnings outlook for ASX shares and fears that share prices are primed for a big pullback.

As I reported last week, Morgans believes you should ignore the jitters and use any market weakness as a buying opportunity.

The broker highlighted some ASX 200 shares to buy as it expects them to release positive news in the near-term.

It expects that these good updates will propel their share prices even in the face of a broader market sell-off.

ASX small cap shares that could outperform in the near-term

But there are a number of little known ASX shares that many have overlooked that are also in this basket.

The first is the Kina Securities Ltd (ASX: KSL) share price. The small cap Papua New Guinea broker has around a 60% upside to Morgans’ share price target and you may not have to wait long for the Kina Securities share price to surge towards fair value.

“We expect closure of the WBC Asia Pacific acquisition in September to be a material catalyst, forcing the market to reconsider strong earnings growth into FY22,” said Morgans.

Dividend restart to light this ASX small cap

Another lesser followed ASX share is the Dalrymple Bay Infrastructure Ltd (ASX: DBI) share price.

Morgans reckons there is a close to 20% upside for the coal export port operator, although ESG conscious investors may shun shares with the “C” word.

But the broker believes that any news of the company restarting its quarterly dividends could light a fire under the Dalrymple Bay share price. This could come as June.

Looking for the X-factor

Those looking for more bang for their buck may want to consider the Micro-X Ltd (ASX: MX1) share price.

The X-ray technology developer that’s used for security and medical screening could see its share price surge in the coming weeks or months.

Morgans expects Micro-X to announce that it has secured European regulatory approval for its technology in the current quarter. There is a close to 80% upside for the Micro-X share price to the broker’s price target.

More reading

• Expert says buy these ASX expensive defensives as market momentum is peaking
• ASX 200 up 0.1%: Aristocrat results, Zip’s global expansion continues
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• 2 quality ASX 200 tech shares that might be buys
• 5 things to watch on the ASX 200 on Monday

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Over the last couple of weeks the BHP Group Ltd (ASX: BHP) share price has been falling and it has continued that downward trend further today. The resources stock is down 2% at the time of writing.

Since 10 May 2021, BHP shares have fallen by almost 10%. Considering the ASX market capitalisation of BHP is currently approximately $140 billion, a 10% drop is a hefty drop in dollar terms.

What is the latest news?

In the shorter-term, investors pay attention to BHP’s quarterly production numbers and the changing commodity prices.

Iron ore is the biggest profit generator right now. Whilst the iron ore price is a bit lower than the last week or two, it’s still above US$200 per metric tonne which is almost the highest it has been over the last five years.

A few weeks ago the business revealed how it performed in the performed in the three-month period to 31 March 2021.

Petroleum production was up 7% to 25.4 million barrels of oil equivalent (MMboe). Higher volumes reflect the increased Shenzi working interest (after completion in November 2020) and the impacts of Hurricanes Delta and Zeta in the Gulf of Mexico in the prior quarter.

Copper production was down 9%. Lower volumes were primarily a result of decreased throughput at Escondida, reflecting the impact of a reduced operational workforce due to the continuation of COVID-19 restrictions and lower concentrator feed grade.

Iron ore production was down 4% to 59.9 Mt. Lower volumes at Western Australia iron ore (WAIO) reflects weather impacts and planned ore handling plant and stacker maintenance at Newman, partially offset by improved car dumper performance.

Metallurgical coal saw production rise 1%. Queensland coal volumes were in line with the prior quarter as operations continue to be impacted by wet weather events.

Energy coal saw a large 34% increase in production thanks to higher volumes at Cerrejon as a result of a strike in the prior period, partially offset by lower volumes at New South Wales energy coal (NSWEC) with significant wet weather impacts and increased washed coal in response to reduced port capacity following damage to a shiploader at the Newcastle port.

Nickel saw production volumes fall 15% as a result of planned maintenance undertaken at the Kwinana refinery.

Is the lower BHP share price an opportunity?

BHP itself is looking to growth opportunities to help continue the strong performance it is experiencing.

The CEO of BHP, Mike Henry, said:

We are reliably executing our major projects, bringing on new supply in copper, petroleum and iron ore. The Spence Growth Option and Samarco are ramping up and West Barracouta, in petroleum, started production this morning. First production from petroleum’s ruby project is expected in the coming weeks and South Flank, with its higher grade and lump proportion, is on track to begin production in the middle of the year.

The brokers at Macquarie Group Ltd (ASX: MQG) are still confident about BHP shares. It noted that BHP said last week that the ASX miner will soon announce first production at the 80 million per annum South Flank iron ore project. Macquarie is expecting very strong profit in the FY21 second half. The broker has a price target on the BHP share price of $57 over the next 12 months. That suggests a possible upside of around 20%.

More reading

• ASX 200 up 0.1%: Aristocrat results, Zip’s global expansion continues
• AGL (ASX:AGL) may need a ~$600m capital raise to complete demerger
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week

The post The BHP (ASX:BHP) share price keeps falling, could it be an opportunity? appeared first on The Motley Fool Australia.

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ASX shares in the aged care sector have emerged as top performers this year after several years of decline.

Aged care operators including Estia Health Ltd (ASX: EHE) and Japara Healthcare Ltd (ASX: JHC) have surged an impressive 48% and 75%, respectively, year-to-date.

Why ASX aged care shares dipped to multi-year lows

The aged care industry has faced a number of regulatory and funding headwinds, raising concerns over weaker earnings and rising debt levels.

Aged cares shares first plunged in late 2016 after the government announced new service fee guidelines for residential aged care customers. This meant that several revenue sources would not be permissible under the new legislation. Between 26 August and 5 September 2016, the Estia share price plunged from $4.72 to as low as $2.08.

Two years later, the royal commission investigation into the aged care sector took another jab at these beaten up ASX shares.

The March COVID-19 sell-off last year added further insult to injury, which saw the Estia share price briefly trade for less than $1.

On 2 March this year, the final results of the royal commission were released — you can find a summary of recommendations and responses here.

What’s ahead for ASX aged care shares?

The Federal 2021/22 budget will see $17.7 billion of funding flow into the aged care sector over the next five years. The funding will address a number of royal commission recommendations including a $650 million investment to grow and upskill the aged care workforce and requirements that staff spend at least 3 hours and 20 minutes a day with each aged care resident from 2023 onwards.

Despite the Estia and Japara share price surging a respective 48% and 75% year-to-date, the recovery story is still in its early days. Both companies continued to deliver net losses during February half-year results, driven by factors including lower occupancy rates and shareholder class action settlements.

Looking forward, Japara’s half-year results flagged ongoing COVID-19 uncertainties and that the “funding environment is unclear and occupancy, although stabilising, remains weakened”.

While the road ahead could continue to be challenging for ASX aged care shares, we’re seeing the share prices of some of the sector’s companies emerge as top performers, bouncing strongly off multi-year lows.

More reading

• Brokers name 3 ASX shares to buy now
• ASX aged care shares boosted after 2021 Federal Budget
• Why Afterpay, CSR, Electro Optic Systems, & Estia Health are storming higher
• Estia Health (ASX:EHE) share price dips on class action settlement
• Estia Health (ASX:EHE) share price jumps 7% to new 52-week high

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