After surging to a new all-time high price of $43.66 in August, Appen Ltd (ASX: APX) shares have now lost almost 60% of their value and are trading at just $17.38.

This is also not far off the 52-week low of $15.15 the Appen share price fell to during the worst days of the COVID-19 crash last March.

It’s a massive about-face for a company that was once considered a must-have growth share. Along with WiseTech Global Ltd (ASX: WTC), Afterpay Ltd (ASX: APT), Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO), Appen was a member of the WAAAX group of stocks – media darlings and supposed disruptive industry innovators.

Simply put, Appen specialises in machine learning and artificial intelligence (AI). The company provides large amounts of data to help its clients ‘train’ their AI applications and improve automation techniques. Using Appen’s platform, clients can improve the functionality of their AI applications and drive better outcomes.

For example, Appen can provide visual imagery data to a company developing self-driving vehicles to train a computer to recognise cars, pedestrians, traffic lights and other road hazards. Or, it could provide large amounts of audio and text data to help a bank’s chatbot recognise all the different ways a customer might ask to open a new account or request personal loan information.

Appen services some of the biggest tech companies in the world, including Google, Facebook, Amazon and Microsoft, and is also growing its presence in China.

Results hit Appen share price

Appen recently released its annual report for the year ended 31 December 2020. The company reported revenues of almost $600 million for the year, an increase of 12% over FY19. Underlying earnings before interest, tax, depreciation and amortisation expenses (EBITDA) was up 8% to $108.6 million, although the underlying EBITDA margin fell 7 basis points to 18.1%.

While this was a solid result in a difficult year, sales fell short of analyst expectations, and the Appen share price slumped on the day the results were released.

Outlook

Uncertainty around the continued impacts of the pandemic, particularly during the first half of 2021, have weighed on Appen’s outlook. The company anticipates underlying EBITDA to be in the range of $120 million to $130 million, which would represent year-on-year growth of between 10% and 20% over 2020.

However, this outlook relies heavily on strong performance over the second half of 2021. Appen concedes that there are many short-term challenges for the company to contend with. These include uncertainty around post-COVID economic trends which may impact clients’ resourcing for AI development projects.

Appen share price snapshot

Despite having plummeted from its 52-week high, the Appen share price has managed to edge 1.4% higher over the past year. It has, however, fallen more than 44% over the last six months. Based on the current Appen share price, the company has a market capitalisation of around $2.14 billion.

Foolish takeaway

The market hates uncertainty, and with so much of Appen’s performance this year dependant on a potential post-pandemic economic recovery, many investors have decided to jump ship early. Only time will tell if they were right.

More reading

• 5 things to watch on the ASX 200 on Friday
• 2 ASX tech shares to buy after the selloff
• ASX tech correction? 10 of the worst-hit shares
• ASX All Technology Index teetering on verge of a bear market
• 5 things to watch on the ASX 200 on Tuesday

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Rhys Brock owns shares of AFTERPAY T FPO, Altium, Appen Ltd, and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Altium, Amazon, Facebook, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and WiseTech Global and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Facebook. 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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VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) is a high-performing exchange-traded fund (ETF) that could be one of the best to consider.

Why are ETFs useful?

Investing in ETFs allows investors to get exposure to a number, sometimes a big number, of businesses with just one investment.

Whilst there are ETFs that give exposure to over a thousand holdings, other ETFs may only own a few dozen holdings.

About VanEck Vectors Morningstar Wide Moat ETF

It’s an ETF provided by VanEck, one of the larger ETF providers on the ASX, though it’s not as big as others like Vanguard or Blackrock.

At the moment it owns around 50 holdings. These businesses are rated as high quality by the equity research team at Morningstar. The analysts are looking for companies that have wide economic moats. In other words, it means the ETF focuses on businesses that Morningstar analysts believe have sustainable competitive advantages, which can lead to good returns for VanEck Vectors Morningstar Wide Moat ETF.

What’s a moat?

Whilst legendary investor Warren Buffett isn’t the one picking the shares for this portfolio, he has previously said some wise words about moats. Guru Focus has quoted Mr Buffett:

What we’re trying to find is a business that, for one reason or another – it can be because it’s the low-cost producer in some area, it can be because it has a natural franchise because of surface capabilities, it could be because of its position in the consumers’ mind, it can be because of a technological advantage, or any kind of reason at all, that it has this moat around it.

But we are trying to figure out what is keeping – why is that castle still standing? And what’s going to keep it standing or cause it not to be standing five, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle?

And then if we feel good about the moat, then we try to figure out whether, you know, the lord is going to try to take it all for himself, whether he’s likely to do something stupid with the proceeds, et cetera.

VanEck Vectors Morningstar Wide Moat ETF’s returns and fees

Not many ETFs are able to outperform the S&P 500 – but this one has.

At 28 February 2021, VanEck Vectors Morningstar Wide Moat ETF had outperformed the S&P 500 over the last month, three months, six months, three years, five years and since inception.

In terms of the actual numbers, VanEck Vectors Morningstar Wide Moat ETF’s net return over the last five years has been an average return per annum of 17.3% per annum. The ETF has an annual management fee of 0.49% per annum.

Over the last decade, the index that the ETF tracks has returned an average of 18.5% per annum.

What are some of the biggest VanEck Vectors Morningstar Wide Moat ETF holdings?

All of the businesses are listed in the US, though plenty of the earnings come from overseas sources.

The positions that currently have a weighting of 2.5% or more include: Charles Schwab, John Wiley & Sons, Wells Fargo, Corteva, Bank of America, Cheniere Energy, US Bancorp, Boeing, Intel, Blackbaud, Berkshire Hathaway, Aspen Technology, Constellation Brands, Raytheon Technologies and General Dynamics.

More reading

• 2 high quality ASX ETFs to buy this month
• Brace for even more new ETFs to hit the ASX
• 2 top ETFs to buy in March
• 2 top ETFs to buy and hold
• 2 high quality ETFs for ASX investors to buy in February

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. 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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An incredible 435,000 share market virgins in Australia bought their first shares since COVID-19 lockdowns hit these shores.

That’s according to new research from Investment Trends, which found the number of active investors in Australia reached a new record of 1.25 million at the end of 2020.

It seems there is now a new generation interested in investing in equities, with 1-in-6 of those new investors aged under 25.

“COVID-induced market volatility and a low interest rate environment were important prompts for first-time investors entering the market,” said Investment Trends head of research Irene Guiamatsia.

“But even more prominent was the desire to learn a new skill, highlighting how many Australians chose to spend their free time during the lockdowns.”

Trading in foreign shares exploded during COVID-19

After the stock market crash in March, US shares rebounded far more spectacularly than Australian stocks. Since 23 March, the S&P/ASX 200 Index (ASX: XJO) has risen 47.7% while the S&P 500 Index (SP: .INX) has shot up more than 74%.

This piqued the interest of many local investors, with the number of Australians actively trading foreign shares doubling from the previous year.

There are now 109,000 Australians that actively dabble in shares outside our borders.

“The spectacular recovery witnessed by US stocks in the second half of 2020 has captured the attention of a global audience, prompting many Australians to consider investing beyond local equities,” Guiamatsia said.

“A greater choice of investment platforms has been a key driver for uptake, with recent new entrants giving investors more choice than ever.”

As well as specialist foreign market services like Stake, mainstream brokers like CMC introduced $0 brokerage trading of US shares for Australians in the past year. 

Newbies need education 

However, the influx of first-time share investors means trading platform providers need to pump up their education efforts.

Low-fee online brokers have lowered the barrier to entry for everyday Australians. But experts last year warned this could lead to social and financial problems similar to gambling.

The suspicion is that trading platforms receive a fee for each transaction, so there is little incentive for them to encourage their customers into a ‘buy and hold’ mindset.

Some modern share trading apps are also “gamified”, increasing the adrenaline rush in the chase for short-term wins.

“[Trading apps] claim that it makes it easier for investors to understand stocks. But at the same time, the simplicity encourages retail investors to trade without undertaking thorough research,” said senior lecturer in behavioural finance at RMIT University, Angel Zhong.

“A big selling point of these apps is the low transactional threshold, which encourages investors to buy low-priced stocks. In finance research, low price [is] a feature associated with what we called the ‘lottery-like’ stocks.”

The Investment Trends study showed Australian share investors are indeed craving information. Strategy education was sought from 27% of investors, while another 20% craved daily newsletters from their broker.

“Too many times we’ve heard stories of investors getting caught up in FOMO, making rash short-sighted investing decisions,” said Guiamatsia.

“But our research highlights that investors are hungry for knowledge, resources and tools to help them build long-term wealth. Investment platforms that effectively support their clients on their investment journey will stand out.”

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 unmoved, Flight Centre soars, Afterpay keeps falling
• 3 blue chip ASX shares with dividend yields over 5% today
• Peter Costello thinks this will spark the next ASX market crash
• Is it ok to buy ASX 200 shares at a 52-week high?

Motley Fool contributor Tony Yoo 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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There are some small ASX shares that reported impressively according to Naos Asset Management. They could be worth watching. 

One of the listed investment companies (LICs) in Naos’ stable is called Naos Emerging Opportunities Company Ltd (ASX: NCC). It targets small stocks with market capitalisations under $250 million. This LIC generally invests in industrial companies.

Since the LIC’s inception, its portfolio’s investment performance after all operating expenses, but before fees and taxes, was 12.3% per annum to the end of February 2021.

Despite a negative impact from its holding of BTC Health Ltd (ASX: BTC), the Naos Emerging Opportunities Company investment portfolio managed to make a return of 4.3% in February 2021.

Naos attributed its good performance to the reports delivered by its holdings, including the below three which it still believes remain undervalued with catalysts that may eventuate during the rest of FY21.

Experience Co Ltd (ASX: EXP)

Experience is an adventure tourism company that offers experiences of tandem skydiving, indigenous experiences and tours to the Great Barrier Reef.

Naos said that the small ASX share released a highly commendable result with the business remaining profitable and cash flow positive in a challenging environment due to COVID-19 effects.

The fund manager has stated numerous times that it believes a significant amount of progress has been made by the current management team and that will have a positive impact on the future profitability of the business with the return of domestic tourism demand.

Initiatives by Experience include gross distribution agreements, corporate cost initiatives, new product offerings and asset base realisation. Naos believes that over the next two years, helped by small acquisitions, it can be a business that generates around $50 million of earnings before interest, tax, depreciation and amortisation (EBITDA).

Saunders International Ltd (ASX: SND)

Saunders International is a small ASX share that provides construction, maintenance and engineering services to the energy, resources and infrastructure sectors. Some of its clients include Sydney Water, the Australian Government, Lendlease Group (ASX: LLC) and Rio Tinto Limited (ASX: RIO).

Naos said that Saunders International probably released the strongest result in the Naos Emerging Opportunities Company portfolio.

The fund manager said that recent half-year results have shown losses or minimal profits. But in this report it made a “significant” profit with earnings before interest and tax (EBIT) of $4 million and declared an interim dividend for the first time in almost three years.

Saunders International managed to exceed its entire FY21 guidance in just the first six months of FY21.

The small ASX share’s management has said that they don’t see any slowdown in the financial performance of the business a with a new revised FY21 revenue target of $110 million to $110 million and EBIT margins of between 7% to 8%, which implies a stronger second half.

Naos believes the guidance may prove to be conservative with several industry tailwinds supporting the business for the next 12 months to three years. The fund manager said there could be opportunities that are the largest in the company’s history.

The tailwinds include the federal government focus on domestic fuel storage capability, infrastructure spend with a particular focus on regional programs including bridge replacement, there are also numerous and significant opportunities within the defence sector.

Big River Industries Ltd (ASX: BRI)

Big River is involved in many different timber operations. It’s a major manufacturer of softwood and hardwood formply and structural plywood products in Australia, a major seller of consumable formwork products in Australia, and it’s a national merchant of timber and associated building products to local trade, medium sized and enterprise sized companies.

The timber business produced a strong result according to Naos, with EBITDA growing by 15% compared to the prior corresponding period, which wasn’t affected by COVID-19.

The fund manager was excited by new information in the half-year result which Naos believes could potentially result in the small ASX share more than doubling its current annualised net profit after tax run rate of $6.2 million.

According to Naos, Big River Industries’ acquisition of Timberwood remains on track with the company trading well and forecast to contribute around $3 million of net profit after tax based on the current run rate.

The net cash inflow resulting from the closure of the Wagga Wagga facility and subsequent relocation to Grafton is expected to be around $10 million with an addition to net profit of around $2.5 million. The fund manager thinks the economic backdrop could also help grow future earnings.

More reading

• Qantas (ASX:QAN) share price rises despite fears tourism will struggle after JobKeeper
• 3 small cap ASX shares that powered higher in February 2021

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of EXPERNCECO FPO. 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 50 index is home to 50 of the largest listed companies on the Australian share market.

This means the index hosts many of the highest quality and most well-known companies that the ANZ region has to offer.

While not all of the shares on the index are necessarily in the buy zone, two that could be are listed below. Here’s what you need to know about them:

Ramsay Health Care Limited (ASX: RHC)

Ramsay Health Care is an ASX 50 share which could be worth considering. Although 2020 was a difficult year for the private hospital operator because of the pandemic, Ramsay appears to be over the worst of it now and positioned for growth over the long term.

In fact, analysts at Goldman Sachs believe Ramsay can grow its operating earnings at a compound annual growth rate of 7% between FY 2021 and FY 2024.

As a result, they believe its shares are great value at the current level. So much so, Goldman has put a conviction buy rating and $75.00 price target on the company’s shares.

Based on the current Ramsay share price of $63.15, this implies potential upside of almost 19% over the next 12 months.

It commented: “The stock is trading at 8.7x EBITDA for a 7% EBITDA CAGR (FY21-24E), towards the bottom of its 5-year range. We believe the improvement in near-term fundamentals is still not reflected in consensus forecasts or current trading multiples. We raise our 12-month TP to $75 and reiterate our Buy (on CL).”

Xero Limited (ASX: XRO)

Another ASX 50 share to consider is Xero. It is a leading cloud-based business and accounting software provider with a focus on small to medium sized businesses.

Over the last few years Xero’s platform has evolved from an accounting solution into a full service small business solution. This has supported strong growth in customer numbers and ultimately recurring revenues.

Goldman Sachs is also a fan of Xero and believes its growth still has a long way to go. This is due to the quality of its offering, the ongoing shift to cloud-based solutions, its global market opportunity, and burgeoning app ecosystem.

The broker currently has a buy rating and $157.00 price target on the company’s shares. This compares to the current Xero share price of $109.69.

Goldman commented: “…as it broadens and monetizes its app ecosystem, and expands into new geographies, we estimate this will open a further NZ$62bn in addressable TAM, providing a multi-decade runway for strong revenue growth. Combined with attractive unit economics at maturity (GSe 40% EBIT margins), we believe the long-term earnings opportunity for Xero is material.”

More reading

• 2 fantastic ASX growth shares to buy immediately
• Could Australia be the next tech hub? Afterpay (ASX:APT) CEO thinks it should be
• Here are some of the best performing ASX tech shares today
• ASX 200 rises, Afterpay sinks, Vocus jumps
• Why ASX 200 tech shares could be in for another wild session

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price has had a turbulent 12 months, along with its fellow ASX travel shares. Investors were quick to dump Flight Centre shares as the company came to grips with international and domestic travel being either suspended or restricted.

With COVID-19 vaccines being hastily rolled-out across the world, could the Flight Centre share price be poised to continue its comeback in 2021?

What’s instore for Flight Centre in 2021?

Over the past 12 months, Flight Centre has seen its revenues dive as a result of the pandemic. The business was effectively put in hibernation mode to survive the economic fallout of travel corridors being shut down.

In the time since, management has taken drastic, cost-cutting measures to improve net operating cash flow. In December, the company achieved operating cash outflows of $30 million, compared to $43 million in July 2020.

Furthermore, Flight Centre boosted its liquidity to $1.2 billion as at the end of the calendar year, primarily through issuing convertible notes.

Fast-forward to 2021, the company stated that total transaction value (TTV) is beginning to gradually recover. Revenue margin is expected to increase when low-risk international travel returns. This is forecast to occur around the second-half of 2021.

With the company arguably having sufficient liquidity to weather any unforeseen surprises, it believes positive signs are now starting to emerge. Widespread vaccination roll-outs, along with rapid rebounds in demand when restrictions ease, are projected near-term tailwinds.

Broker upgrades

After Flight Centre reported its first-half results, Macquarie raised its price target for Flight Centre shares by 31% to $20.00. Morgans followed suit, also lifting its rating by 41% to $19.21. As the current Flight Centre share price sits at $19.44, after having gained 9.2% on Thursday, you could argue it’s fairly valued for now.

But since the pandemic is still far from over, the operating environment for ASX travel companies can still change very quickly, for both better or worse.

Flight Centre share price snapshot

Almost all ASX travel shares are still trading at considerably lower levels than where they were just 12 months ago. In particular, the Flight Centre share price fell from pre-COVID levels of around the $40-mark to now trade at $19.44. That represents a discount of more than 50%.

Based on valuation grounds, Flight Centre commands a market capitalisation of close to $3.9 billion, with approximately 199 million shares outstanding.

More reading

• Should the JobKeeper payment be replaced with discounted airfares?
• ASX 200 down 0.9%: Flight Centre & Webjet jump, Afterpay sinks
• Why Flight Centre, Qantas, ResApp, & Volpara are racing higher
• Qantas (ASX:QAN) share price rises despite fears tourism will struggle after JobKeeper
• Why analysts are backing these 2 ASX travel shares

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Flight Centre Travel Group 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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Real estate is booming, thanks to historic-low interest rates and pent-up savings from the COVID-19 pandemic.

Just this week, Sydney joined Brisbane, Adelaide, Canberra and Hobart in recording record-high house prices, past the previous 2017 peak.

So how does an ASX share investor take advantage of this?

There are the obvious real estate investment trust (REIT) shares, which directly invest in property.

Then there are secondary winners, such as the big banks or homewares retailers.

But two experts recently independently pointed out two media companies that are worth pursuing in light of soaring property prices.

Confused? Read on:

News Corporation (ASX: NWS)

Longwave Capital Partners portfolio manager David Wanis picked out News Corporation as an ASX share that’s enticingly undervalued.

According to Longwave’s analysis, News Corp’s ownership of real estate classifieds provider REA Group Limited (ASX: REA) makes up about 85% of the current share price.

But News Corp also has a US real estate business, Move Inc, plus its traditional operations for newspapers, Dow Jones, Foxtel, publishing and net cash.

So Wanis reckons the News Corp share price should be much higher if all these components are added up.

“We’re looking at a company where a reasonable sum of the parts’ value gives you almost twice the current share price,” he told a Pinnacle Investment webinar this week.

Shares for REA Group, the operator of realestate.com.au, have had an excellent 12 months. They have gone from $87 to $136.75 at the close of trade Thursday.

In a market where many companies are trying to get their future performance to match the current share price, Wanis finds News Corp is going the other way.

“In a market where people are focused on areas trying to get to the current share price — putting in bullish assumptions to try to even achieve some of the market caps that are being applied — you have a situation where, with a bit of digging, you can find a pretty attractive situation.”

Nine Entertainment Co Holdings Ltd (ASX: NEC)

Investors Mutual assistant portfolio manager Marc Whittaker this week singled out Nine Entertainment as a potential beneficiary of the real estate boom.

He posted on Livewire that the company is already growing recurring revenue, with subscriptions for streaming service Stan and digital newspapers growing.

But similar to News Corp, it owns a substantial part of property classifieds business Domain Holdings Australia Ltd (ASX: DHG).

“Domain’s ongoing listings recovery and the expectation of carriage fee agreements with Facebook Inc (NASDAQ: FB) and Google should also provide earnings tailwinds,” said Whittaker.

Domain shares, like REA, have gone from strength to strength in the past year. They traded at $2.44 a year ago, but ended Thursday on $4.41.

While Nine’s traditional television business will do nicely during the COVID-19 recovery, Whittaker said its digital assets are where the long-term growth will come from.

“Digital earnings grew 53% year-on-year and now account for 41% of earnings, which we expect to rise to around 60% over the next three years.”

More reading

• Is Nine Entertainment (ASX:NEC) eyeing up regional broadcaster WIN?
• These 4 ASX shares just got upgraded to a ‘buy’ rating
• 5 ASX shares to buy in a market crash
• Why the Nine (ASX:NEC) share price is up 26% in 2021
• 5 things to watch on the ASX 200 on Monday

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Facebook, and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The ASX sharemarket game has begun… you might be completely new to investing. Maybe you’ve been interested in it for a while and are waiting to take the plunge. Potentially your mate dragged you into it a bit of competitive fun.

Whatever the reason, the virtual investment provides a straightforward starting point to invest in publicly listed Australian companies – just not with real money. It certainly has its place, but there are a few things you likely won’t learn from it.

The ASX share market is a game of emotions

This is most likely the biggest drawback… You probably won’t experience the same emotions as you would investing with real money.

When it is not real money at stake it is easy to shrug off a 10% or 20% loss. In reality, it’s hard, sometimes really hard. Particularly when you have worked hard for those dollars and they seemingly vanish, in minutes at times, the human psyche kicks in.

The ASX sharemarket game is a no-loss, no-win environment. As such, you likely won’t learn how to handle being down on a share. Some simplify investing to “buy low, sell high”, but all too commonly emotions override. As a result, investors can find themselves buying high and selling low.

These emotions cannot be simulated, and often the best way to learn is to dip your toes into the real thing to get a feel for it.

Skin in the game

Somewhat similar to the last point, but for a different reason. Having ‘skin in the game’ means you’ve got something to lose… or gain if you’re lucky.

For that reason, it acts as a motivator to be diligent and mindful with investments. On the ASX Sharemarket Game, there’s a maximum of $2,000 up for grabs – not too shabby. However, loss is a much stronger emotion than winning – it’s called negativity bias.

Hence, having skin in the game will act as a significant motivator to research companies and learn as much as possible.

Tends to reward the YOLO’ers

Lastly, because the ASX Sharemarket Game only runs for 15 weeks the ones that do well often apply a bit of the ‘YOLO’ mentality.

15 weeks is a small window, so shares that perform really well might have received a takeover bid, struck gold, FDA approval, or many other various short-term events. However, it doesn’t give enough time to truly consider the compounding nature of great long-term investments, nor the influence of dividends. Both of which can be attributed to legendary Warren Buffett’s wealth.

In conclusion, the ASX Sharemarket Game can be a lot of fun – but I would suggest if you are starting to think more seriously about investing, trying the real thing, even with a small amount of money, will teach you a whole lot more as a beginner investor.

More reading

• Why the Qantas (ASX:QAN) share price could shoot higher in 2021
• Software and bikes: 3 ASX shares ready to explode
• 2 small cap ASX shares to watch closely in 2021
• 5 things to watch on the ASX 200 on Friday
• 2 ASX dividend shares with 5% fully franked yields

Motley Fool contributor Mitchell Lawler 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 Qantas Airways Limited (ASX: QAN) share price was a positive performer yesterday after the Government announced a $1.2 billion stimulus package to support the domestic tourism market.

The airline operator’s shares rose by a solid 2.5% to end the day at $5.30.

This latest gain means the Qantas share price is now up 35% over the last six months.

Can the Qantas share price go higher?

The good news for investors is that one leading broker still believes the Qantas share price can go a lot higher from here.

According to a note out of Goldman Sachs this morning, its analysts have reiterated their buy rating and $6.38 price target on its shares.

This price target implies potential upside of approximately 20% over the next 12 months.

What did Goldman say?

Goldman was pleased with the news and believes the stimulus on tourism and leisure routes will underpin its expectations of a tourism/leisure led recovery in the Australian domestic market.

In addition to this, the broker expects the discounted ticket sale to support Qantas’ cash inflows.

“QAN actively re-paid c.A$2bn of revenues received in advance (RRIA) during 1H21, which we expect to re-build during the recovery phase. QAN’s 1H21 revenue received in advance stood at A$3.7bn and was A$2bn lower than pre-covid levels (1H21). The proposed ticket sale will aid QAN’s cash inflows and we expect rising RRIA to benefit net debt levels and ultimately equity valuations.”

It also expects the government’s package to provide direct support to retain employees, which should mean the airline won’t have to incur additional and upfront cash redundancy costs.

Another positive is that the offer of discounted fares tends to support full-fare purchases. Goldman explained:

“We have seen that historically flash sales have generated significant peripheral demand for full-fare ticket sales. During the NZ recovery last year, AIR.NZ announced a 3-day flash sale with the offer of 180k discounted seats and subsequently sold 250k seats within a 72 hours period. We expect a similar level of demand to be generated with this highly publicised offer.”

Exposure to the COVID-19 recovery

Overall, the broker believes Qantas is a great way for investors to gain exposure to the COVID-19 recovery. Goldman concluded:

“We reiterate our Buy rating on QAN.AX with our 12-month TP of A$6.38 (based on 50% SOTP (FY22E)/50% NPV) presenting 20% potential upside. QAN represents a strong recovery investment, if the Australian COVID-19 vaccination program has the effect of reducing community transmission of the virus and limits the need for domestic border closures.

The key downside risks to our view are from: (i) increased market capacity resulting from increasing competition; (ii) moderation in underlying passenger demand; (iii) higher fuel prices; (iv) weaker A$; and (v) worse outcomes than anticipated from the cost reduction program.”

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 unmoved, Flight Centre soars, Afterpay keeps falling
• Should the JobKeeper payment be replaced with discounted airfares?
• ASX 200 down 0.9%: Flight Centre & Webjet jump, Afterpay sinks
• Here’s why the Webjet (ASX:WEB) share price is flying

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Qantas (ASX:QAN) share price could shoot higher in 2021 appeared first on The Motley Fool Australia.

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A prominent ASX shares fund has revealed three stocks it has high hopes for after the recent results season.

Forager chief investment officer Steve Johnson said that Forager Australian Shares Fund (ASX: FOR)’s portfolio gained more than 4% over the February reporting period.

“In general, you’d give it a tick for reporting season,” he said in a Forager video.

“With COVID over the past 12 months, [results] were particularly closely watched, although often largely flagged by companies leading into reporting season.”

The Forager Australian Shares Fund share price has gone from $1.09 back in September to $1.40 as of Thursday’s close.

There are three ASX shares the fund currently holds that showed exciting prospects during February reporting, according to Johnson and senior analyst Alex Shevelev:

RPMGlobal Holdings Ltd (ASX: RUL)

RPM Global provides technology services to the mining industry. It’s currently Forager Australian Shares Fund’s largest position. 

The business has been around for more than 50 years, so is a lot more mature than many of its tech peers on the ASX.

Shevelev was anxious going into the RPM results announcement because there had been a pattern of enterprise suppliers experiencing delays in signing contracts.

“It seems like in the result what we saw was, yes, a slowdown,” he said.

“But some of the detail in that presentation was very helpful to work out that in fact, in the last calendar quarter of a year things were turning around and so far this quarter we’ve actually seen a lot of new contracts signed.”

Software providers that sell to businesses rather than consumers had done it tough in the past year, according to Johnson.

“Last year, every 5 million [dollars] of contract wins that they’d done they made an announcement on the stock market. We hadn’t heard anything since the full year [results]. Last year they gave an AGM update that wasn’t great,” he said.

“So we were quite nervous about this result, yet the number was quite good, at least until the end of February.”

Johnson added that he was now “pretty excited” about RPM’s future, while Shevelev said RPM has attractive revenue dynamics.

“It’s important here that what we’re adding is a really high quality recurring subscription revenue. And because it’s a very low churn, so not much of it goes away year to year, every dollar we’re adding now will build up forwards.”

Life360 Inc (ASX: 360)

The Life360 share price skyrocketed in mid-January with the news that former Facebook Inc (NASDAQ: FB) executive Randi Zuckerberg had been appointed to the board.

Although listed on the ASX, the company is American and it sells trackers to US parents for their teenage kids.

Shevelev said with COVID lockdowns hitting that country hard, the demand for such an app would have waned.

“Nonetheless, the company has been able to increase revenue year-on-year, and with the reopening of the US with higher value plans and with more people actually taking on paid plans, they’re talking about revenue growth in the order of 25-35% in this current year.”

Johnson said the guidance was “surprisingly bullish”.

“There was also some talk in their announcement about either a dual listing or a relisting to the NASDAQ in the US, which would certainly apply higher evaluations in this climate than where we’re currently seeing in the share price.”

MotorCycle Holdings Ltd (ASX: MTO)

The coronavirus pandemic has been a boon for the motorbike and accessories seller, according to Shevelev.

“It’s been a phenomenal time to be selling motorcycles because you’ve had people being able to withdraw from super, you’ve had people being able to spend on domestic activities like motorcycles rather than international travel,” he said.

“Net profit was up 250% year on year, which is a phenomenal effort. And it looks like from the guidance that… activity level has continued into the current year.”

According to Johnson, MotorCycle Holdings’ balance sheet used to be “worrying” but the February accounts showed it was “completely fixed”.

“They’ve done a lot over the past few years to improve their market share, to grow the underlying size of the business and I don’t think we’ve yet seen the full impact of that in the results,” he said.

“So people are looking back and saying, well, if it goes back to 2019 profitability, and I put that on 12 or 13 times earnings, I get today’s price. I think there are sustainable earnings here, well and truly above what they made in 2019.”

Shevelev said the necessary reforms had now been made and it was just a matter of getting products into their stores.

“That’s actually very profit accretive because you don’t have to spend the extra operating costs.

“There’s a lot of self-help work that the company has done that, in addition to cutting costs, [is] really going to come through over the next couple of years.”

More reading

• Why the MotorCycle Holdings (ASX:MTO) share price is racing higher
• Why Flight Centre, Life360, Nanosonics, & Universal Store are racing higher
• The Life360 (ASX: 360) share price rips 18% higher on strong results

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of RPMGlobal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of RPMGlobal Holdings. The Motley Fool Australia has recommended Facebook and RPMGlobal Holdings. 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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