Unfortunately for income investors, it looks as though interest rates are going to remain at ultra low levels for some time to come.

But don’t worry because the Australian share market is home to countless dividend shares. Two that offer generous yields are listed below. Here’s what you need to know about them:

BWP Trust (ASX: BWP)

BWP is the largest owner of Bunnings Warehouse sites across Australia, making it the envy of many retail landlords.

At the last count, BWP had a total of 68 properties which were leased to the home improvement giant. It also owns seven other properties, adjacent to its Bunnings properties, that are leased to other retailers.

Pleasingly, thanks to Bunnings’ strong performance during the pandemic, it has been able to collect rent as normal this year. This trend looks set to continue for the foreseeable future given the overall strength of the hardware giant’s business and Australia’s economic recovery. This could bode well for future dividend payments.

For now, the BWP board is aiming to pay a full year distribution of ~18.3 cents per share in FY 2021. Based on the current BWP share price, this equates to an attractive 4.4% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share to look at is Telstra. Thanks to its improving outlook due to the T22 strategy and its separation and asset monetisation plans, Telstra’s dividend appears to have finally bottomed at 16 cents per share.

And with management targeting a return to growth in FY 2022, it may not be long until the company is in a position to start thinking about dividend increases once again.

Goldman Sachs is a fan of the company. Its analysts currently have a buy rating and $4.00 price target on the company’s shares. 

The broker is forecasting 16 cents per share fully franked dividends for the foreseeable future. Based on the latest Telstra share price, this will mean dividend yields of 4.65%.

More reading

• Why it might be time to give the TPG (ASX:TPG) and Telstra (ASX:TLS) share price a second look
• ASX 200 down 0.4%: Xero sinks, Telstra hit with $50m fine
• Telstra (ASX:TLS) share price higher despite being hit with $50 million penalty
• Why has the Telstra (ASX:TLS) share price retreated from its 52-week high?
• Brokers name 3 ASX shares to buy now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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ASX investors have been keeping a close eye on the government’s spending plans.

And for good reason.

The Federal Budget is a doozy.

As the government continues to prioritise getting the economy up to full speed and standing on its own 2 legs, they’ve loosened the purse strings to the hilt.

This will see the budget deficit likely reach 7.8% of Australia’s GDP, its highest share of GDP since the post-World War II rebuild efforts in 1946.  

However, Shane Oliver, head of investment strategy and chief economist at AMP Capital, said the government’s focus on growing the economy rather than staying within budget “is the right thing to do at present”.

Oliver spearheaded AMP Capital’s Webinar yesterday.

I covered off his overall take on the Federal Budget as well as his 5 essential tips for ASX investors in separate articles.

Here, we’ll focus on the budget’s likely impact on the ASX, as well as Australia’s red-hot residential property market.

How the Federal Budget will impact the ASX

While cautioning about the likelihood of a short-term correction on the ASX (which may currently be underway), Oliver’s mid-term outlook for the All Ordinaries Index (ASX: XAO) is decidedly bullish.

“One of the things the share market likes is more stimulus,” he said. With plenty more stimulus contained in the Federal Budget, this will be good for earnings. Indeed, he expects to see “very strong earnings growth”.

Oliver added the following words of caution:

Just allow that shares have had a very strong run up already this year, up until the record high a couple of days ago. At some point we’re going to see a bit of a correction. Now they are normal. They make everyone nervous, but they are normal.

Despite forecasting a correction (generally defined as a pullback of more than 10% but less than 20%, which is labelled a ‘crash’), Oliver is bullish on his outlook for the overall performance of the ASX this year. “I reckon shares will end the year higher than they are presently,” he said.

Positive factors he listed that will support the ASX performance over the medium term include: the rollout of effective coronavirus vaccines; the reopening of developed nations; a falling US dollar, the safe-haven currency, which is normally positive for shares; and easy fiscal and monetary policy continuing, with stimulus still working its way through the economy.

ASX dividend shares were also on his radar.

According to Oliver, “The dividend yield on shares, which was cut last year, is now on the way back up again.”

AMP forecasts grossed-up yields, taking franking credits into account, of around 5% this year.

Comparing that to the 0.5% from bank deposits, Oliver said, “Obviously that creates a flow of money into share markets through time.”

As for potential risks to the ASX performance, Oliver noted 3: China tensions spiralling; dangerous COVID variants; and an inflation spike.

Inflation is coming to the ASX but likely transitory

The key risk of the Federal Budget to ASX shares that Oliver pointed to was that it could push the Reserve Bank of Australia (RBA) to raise rates faster than the central bank has said it will.

The RBA remains adamant it will not move to raise before 2024. A date AMP Capital already believes is a bit optimistic.

“We’re expecting them to raise rates in 2023,” Oliver said. “Two years away, but a little earlier than the Reserve Bank is talking about. That’s still a long way away. But all this extra stimulus could bring forth the timing of that a bit.”

Not that you should expect any significant returns from your cash deposits anytime soon.

“If you’re a bank depositor, you’re still going to get really low rates for some time to come,” Oliver said. He noted that even if the RBA does start raising rates, the increase will likely be fractional. First moving the cash rate from 0.10% to 0.25%, and then 0.50%.

“They’re still going to be very low numbers. I don’t think you’re going to get a lot of relief as a bank investor or bank deposit investor.”

Oliver is equally bearish on his outlook for the returns you’re likely to get from long-term government bonds. “With bond yields at around 1.7%, you’ve got a lot of running yield. If bond yields rise over time as the global economy continues to recover, which will probably happen, then you get capital loss.”

Even if inflation does come back stronger than the RBA forecasts, Oliver doesn’t expect it will be sustained. Rather it’s more the result of temporary distortions from post-pandemic lockdowns creating a bottleneck of supply due to lockdowns running into the resurgent demand. That and the big price slump from a year ago distorts the year-on-year price rise figures.

“There’s a good probability that when companies see demand pick up they ramp up production again which pushes prices back down,” he said. “And eventually the spending will rotate back to services and take the pressure off of goods.”

The 40-year trend of declining inflation looks over

While Oliver doesn’t believe the inflation pressures will be an issue for more than the next 12 months, he did say that we’ve probably seen the lowest point in interest rates and inflation, both of which were historically low for several years before the onset of the pandemic.

This will eventually impact ASX shares that are more dependent on earnings growth as well as property more dependent on rental growth, both of which have benefited for years from falling rates. However, Oliver doesn’t expect this to become an issue for the next year or so.

Higher debt levels for residential property

Moving away from the ASX, Oliver looked at the extra stimulus in the Federal Budget for residential property.

That includes “more assistance for homebuyers via deposit schemes with a Family Home Guarantee to help 10,000 single parents buy their own home with just a 2% deposit”.

“I think it’s great to help first-time buyers and single parents,” Oliver said. “But if you make it easier for that group to get in without dramatically changing the supply and taking something away from other groups then you just end up with higher prices, and people getting in with very high debt levels.”

Oliver noted that there were no forced sales during the downturn, “so with the reopening, prices took off”.

He said, “Growth slowed a little in April but the residential property market is still very, very strong. You can see that in the auction clearance rates.”

By 2023 AMP Capital forecasts that housing price growth may pause, or even “come down a bit”. That’s a factor of low population growth with a virtual halt to immigration along with an increasing number of unit completions.

“In the meantime, we’re on a bit of a run,” Oliver said. “I reckon this year we’ll see [housing] price growth of 15%, and next year around 5%.”

More reading

• Laybuy (ASX:LBY) share price slides despite key UK appointment
• Has the A2 Milk (ASX:A2M) share price finally found a bottom?
• ASX 200 falls below 7,000, Xero sinks, Afterpay falls
• Fund managers have been buying EML Payments (ASX:EML) and this ASX share
• Advanced Human Imaging (ASX:AHI) share price is sinking, but why?

Motley Fool contributor Bernd Struben 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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Laybuy Holdings Ltd (ASX: LBY) shares were sinking today despite the company’s update on a key new appointment in the United Kingdom. By the market’s close, the Laybuy share price had fallen 3.7% to 65 cents. For context, the All Ordinaries Index (ASX: XAO) also had a pretty average day, closing around 1% lower.

Let’s take a look at what the buy now, pay later (BNPL) provider announced.

New general manager

Investors were selling Laybuy shares despite the company progressing its plans to drive growth across the United Kingdom.

According to its release, Laybuy has appointed Mr John Gillian into a newly created role of general manager of the UK and Europe. Laybuy highlighted the appointment as an important step in capitalising on its opportunities within the UK market.

In Laybuy’s FY21 fourth-quarter results released last month, it highlighted that its UK operations delivered annualised gross merchandise value (GMV) of NZ$358 million. This represents a 230% jump (NZ$108 million) on the prior comparable period. Most importantly, the strong result makes the UK Laybuy’s largest market. The company said its UK merchants, along with strategic partnerships, are driving the rapid growth. Laybuy shares also slumped on the day the results were released.

Furthermore, Laybuy expects to gain robust instore traction with the United Kingdom launch of its ‘Tap to Pay’ product this month. The feature is seen as a way forward in a post-COVID-19 environment. Both Australia and New Zealand successfully rolled out the product in Q3 FY21.

In the role, Mr Gillian will be responsible for all UK operations, including developing a strategy to support growth. Management noted Mr Gillian’s achievements in holding the position as vice president for global adtech company, Criteo.

Laybuy managing director Gary Rohloff commented:

John’s proven track record in working with some of the largest merchants in the world at the most senior level, combined with his passion for championing the customer makes this appointment a particularly exciting one for Laybuy’s growth plans.

Mr Gillian will be based in London and commence the role from next month.

Laybuy share price summary

Over the past 12 months, the Laybuy share price has fallen by more than 65% and is 50% down year to date. The company’s shares have been trending lower ever since its listing in early September 2020.

Based on the current share price, Laybuy presides a market capitalisation of roughly $114 million, with 174 million shares outstanding.

More reading

• Why is the Zip (ASX:Z1P) share price down 11% so far this month?
• The Afterpay (ASX:APT) share price breaks below $100
• Laybuy (ASX:LBY) share price slides despite ‘record Mania sales’
• Why the Afterpay (ASX:APT) share price is sliding 5%
• ASX 200 falls, BHP rises, Afterpay sinks

Motley Fool contributor Aaron Teboneras 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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One of the most disappointing S&P/ASX 200 Index (ASX: XJO) shares over the past few months has to be the A2 Milk Company Ltd (ASX: A2M). A2 Milk shares have had an absolute clanger over the past year or so, following years of rapidly compounding returns.

Just for a refresher, A2 Milk climbed from 56 cents a share in April 2016 to a high of $20.05 a share in July last year. That’s a climb worth around 3,500%, enough to turn a $1,000 investment into almost $36,000.

But how the mighty have fallen. Since peaking at over $20 a share in July, A2 Milk has fallen quickly, and dramatically, out of favour with investors. Today, the A2 Milk share price sunk as low as $5.44 — the lowest level the dairy company has plumbed since mid-2017. From its peak last year, that’s a fall of over 72%. 72 cents in every dollar gone. Ouch.

Why did this happen? Well, everything that could have gone wrong at A2 seems to have gone wrong – Murphy’s Law at its finest.

Firstly, the coronavirus pandemic dried up A2’s lucrative daigou export channel. This is where customers buy A2 Milk products and resell them in China. Obviously, with the borders being shut and all, it’s a lot harder for customers to get these products to China these days. And the escalating diplomatic spat between the Australian government and the Chinese government isn’t helping matters at all.

A2 shares suffer from all sides

But the company has been unable to right its ship, as it were. Just this week, the company was forced to downgrade its FY2021 guidance for the fourth time. It also flagged inventory issues, which might necessitate heavy discounting to resolve. It wasn’t pretty – A2 Milk shares lost 15% on the news.

So how much has this debacle cost investors? Well, a lot. Anyone who has bought A2 shares after September 2017 is probably underwater for a start. A2 Milk has never paid a dividend, so there’s no comfort to be found down that avenue either.

If an investor bought $10,000 worth of A2 Milk back in July last year at the company’s high point, they would only have roughly $2,800 left of their position today. Even if an investor ‘bought the dip’ back in December, when A2 lost more than 20% in one day after one of its many FY2021 downgrades, they would be in a world of pain. A $10,000 position back then would only be worth ~$5,520 today.

Can the compnay turn things around?

But perhaps investors have been too bearish on A2. If sentiment turns too viciously, or emotionally, against a company, it can often create a value-driven buying opportunity. And high-growth shares like A2 Milk tend to inherently come with a lot of volatility.  So what do the brokers think?

Well according to CommSec, investment bank Goldman Sachs thinks this might be the case. It recently downgraded A2 from its old price target of $9.69 a share but is still aiming for $6.96, albeit with a ‘neutral’ rating. That’s still a good 25% higher than the current A2 share price. Yesterday, my Fool colleague James Mickleboro also reported that broker Morgans has a $6.65 price target for A2 Milk.

So some reckon we may have found a bottom for the A2 Milk share price and things can get better from here. Investors will no doubt be hoping that they’re right.

More reading

• ASX 200 falls below 7,000, Xero sinks, Afterpay falls
• Top brokers name 3 ASX shares to sell today
• ASX 200 down 0.4%: Xero sinks, Telstra hit with $50m fine
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops again, Pushpay rises, CSR climbs

Motley Fool contributor Sebastian Bowen owns shares of A2 Milk. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) fell around 0.9% today to 6,983 points.

Here are some of the highlights from the ASX:

Growth shares flattened

Many of the previously high-flying ASX shares are being pummelled at the moment on inflation worries which may lead to rising interest rates.

Looking at the ASX boards, the Afterpay Ltd (ASX: APT) share price was one of the worst performers as it dropped around 5.5%. A2 Milk Company Ltd (ASX: A2M) was another that fell heavily, just over 5%.

Other growth names also fell by more than 5% including Sezzle Inc (ASX: SZL) and Splitit Ltd (ASX: SPT).

Orica Ltd (ASX: ORI)

Orica announced its FY21 first half result today for the six months to 31 March 2021.

The business reported the sales revenue was down 9% to $2.62 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 25% to $361.5 million and earnings before interest and tax (EBIT) declined 51% to $151.8 million.

Underlying net profit after tax dropped 56% to $73.4 million. Statutory half-year profit fell 54% to $76.7 million.

Orica explained that ammonium nitrate volumes were down 1% on the prior corresponding period at 1.04 million tonnes and down 9% excluding volumes from the Exsa business which was acquired on 30 April 2020.

This profit decline was because of a number of market factors including ongoing COVID-19 disruptions, geopolitical issues and unfavourable foreign exchange movements.

However, the ASX 200 company said it is maintaining a disciplined approach to its balance sheet and capital management, while improving cash generation and controlling debt and gearing. Operating cash flow improved 46% to $158 million, with net debt finishing at $1.7 billion.

The board declared an interim dividend of 7.5 cents per share, which was within its target payout ratio of 42%.

Orica’s outlook is improving, with volumes in the second half expected to be better than the first half. However, COVID-19 and the trade issues between Australia and China continue to be a factor.

The company is expecting FY21 second half EBIT to be lower than the FY20 second half.

Xero Limited (ASX: XRO)

The Xero share price fell around 14% after releasing its FY21 result to investors.

Operating revenue increased 18% to NZ$848.8 million, whilst annualised monthly recurring revenue (AMRR) rose 17% to NZ$963.6 million.

Total subscribers increased to 20% to 2.74 million, bringing the total subscriber lifetime value (LTV) up by 38% to $7.65 billion.

The ASX 200 share’s free cashflow rose 110% to NZ$56.95 million. EBITDA grew by 39% to NZ$191.2 million and net profit after tax rose significantly to NZ$19.77 million.

Xero CEO Steve Vamos said:

As well as responded to our customers’ needs during the pandemic, we continued to execute our strategy, with strong revenue and subscriber growth, completion of a significant capital raise, and the acquisitions of Planday, Tickstar and Waddle.

The past year has brought home to many people in small business the need to understand in real-time their financial position and how it may change. The value and important of our customers place on their subscription and connection to the broader Xero community is increasing.

Looking ahead we believe small business will be a major driver of economic recovery in a post-pandemic world. Small businesses make up more than 90% of businesses in the markets Xero operates in, and represent a significant contribution to economic activity, jobs and the community.

More reading

• Should you buy Afterpay (ASX:APT) and this ASX tech share following the selloff?
• What’s driving the Afterpay (ASX:APT) share price to 8-month lows?
• 3 reasons why the Xero (ASX:XRO) share price selloff could be an opportunity
• Why American Pacific Borates, NAB, Perenti, & Xero are tumbling lower
• Top brokers name 3 ASX shares to sell today

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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I like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye are summarised below. Here’s what these fund managers have been buying:

EML Payments Ltd (ASX: EML)

A notice of change of interests of substantial holder reveals that Commonwealth Bank of Australia (ASX: CBA) has been buying this payments company’s shares via its Avanteos Investments and Colonial First State businesses.

According to the release, the bank has increased its holding in EML Payments by ~3.75 million shares from ~18.3 million to ~22.06 million shares. This equates to a 6.1% stake in the company, which is up from 5.06% previously.

One leading broker that would be supportive of these purchases is UBS. Last month the broker responded to the company’s announcement of the acquisition of Nuapay by retaining its buy rating and lifting its price target to $6.20.

The EML Payments share price is currently trading at $5.18. This implies potential upside of almost 20% over the next 12 months.

IDP Education Ltd (ASX: IEL)

Another notice of change of interests of substantial holder shows that Bennelong Funds Management has been increasing its stake in this language testing and student placement company.

According to the notice, Bennelong Funds Management has acquired approximately 5.5 million IDP Education shares, lifting its stake to a total of ~25.3 million shares. This means it has increased its interest from 7.7% to almost 9.1%.

Once again, analysts at UBS are likely to approve of these purchases. Last month the broker put a buy rating and $29.05 price target on the company’s shares.

The compares to the latest IDP Education of $20.81, which represents potential upside of almost 40% over the next 12 months.

More reading

• Broker tips IDP Education (ASX:IEL) share price to smash the market in 2021
• Little ASX software share to explode once everyone wakes up: fundie
• 3 buy rated mid cap ASX shares for the long term
• 2 impressive ASX shares to buy in May 2021
• 2 top ASX growth shares rated as buys

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has recommended EML Payments. 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 Advanced Human Imaging Ltd (ASX: AHI) share price has plummeted today after the company released a commercial agreement with e-Mersion Media. 

Advanced Human Imaging shares are down 8.19% to $1.07 at the close of trade today, against a huge 12-month return of 610%. Let’s see why the smartphone-based human scanning technology producer has been wobbling lately.

Advanced Human Imaging deal

In today’s release, Advanced Human Imaging advised it has just signed a binding term sheet, which is an informal pre-contractual agreement, with e-Mersion Media.

e-Mersion Media is a Melbourne company that specialises in providing digitisation capabilities to print magazines. It focuses on increasing magazine engagement through interactive touch and videography.

The deal will allow Advanced Human Imaging to spruik its technology through e-Mersion’s digital portal, utilising the company’s audio, video and other engagement capabilities.

e-Mersion will advertise Advanced Human Imaging’s body scanning services to highly targeted customers through its digital magazines.

Advanced Human Imaging’s report says that e-Mersion publications “have the potential to reach millions of consumers every month via channels they operate within and clients they service”. 

Management comments

Advanced Human Imaging CEO Vlado Bosanac spoke about the company’s thought process, saying:

When I met the guys from e-Mersion, they shared with me their digital publication platform. My immediate thought was its just a hybrid version of Kindle. When they demonstrated an interactive magazine they had enhanced, it could not have been further from what I was thinking.

I was floored by the level of interaction and how the content was a combination of touch, video, and sound. I can see people interacting with this enhanced magazine technology and using their in-device camera empowered with our technology to have a health check or simply size a garment before they order right there in the magazine.

Advanced Human Imaging share price snapshot

It seems the company’s investors have not been as excited by the deal as its CEO. The Advanced Human Imaging share price has fallen by an incredible 70 cents (46% of its value) in just 13 days since the end of April.

Advanced Human Imaging shares fell by a similar margin just seven days ago on news of a similar tech partnership with Discovery subsidiary Vitality.

More reading

• Advanced Human Imaging (ASX:AHI) share price sinks despite positive update
• Advanced Human Imaging (ASX:AHI) share price wobbles on agreement
• What’s with the Advanced Human Imaging (ASX:AHI) share price today?
• Why has the Advanced Human Imaging (ASX:AHI) share price plunged 5%?

Motley Fool contributor Lucas Radbourne-Pugh 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 4DS Memory Ltd (ASX: 4DS) share price was rising against the tide of today’s negative ASX market trend. This followed the memory storage provider’s announcement of a renewed partnership agreement.

By the market’s close, 4DS Memory shares were trading at 14 cents a pop, up 7.7% for the day. In comparison, the All Ordinaries Index (ASX: XAO) ended the day sitting at 7,194 points, down 1.2%.

What does 4DS do?

4DS Memory is a semiconductor company that develops resistive random-access memory (ReRAM). With research facilities in Silicon Valley, the start-up tech is focused on commercialising its product to become a replacement for more traditional Flash memory storage.

Renewed agreement

Investors were buying up 4DS Memory shares today after the company announced a positive update to the ASX.

According to its release, 4DS Memory has signed a renewed joint development agreement (JDA) with Western Digital Corporation subsidiary, HGST. The partnership will see both companies work together for another 12 months, marking 8 consecutive years of partnership.

4DS Memory is currently developing its interface switching ReRAM technology with HGST as well as digital innovation hub, IMEC.

CEO and managing director of 4DS Memory Dr Guido Arnout welcomed the renewal, saying:

We are very pleased that Western Digital and HGST have renewed our joint development agreement following a review of our significant progress during the past twelve months. This progress includes the Second Platform Lot currently in the final fabrication stage at imec that we will receive in early June for analysis.

HGST signed the agreement well ahead of its initial due date of 30 June 2021.

4DS Memory share price review

It’s been a great 12 months for investors, with the 4DS Memory share price jumping by more than 200%. Year-to-date performance, however, has been less impressive, with the company’s shares rising by just 12%.

4DS Memory shares reached a multi-year high of 28 cents in January this year before retreating to their current level. 

The company commands a market capitalisation of roughly $170 million, with approximately 1.3 billion shares outstanding.

More reading

• Up 21%, why the Bod (ASX:BDA) share price is smoking the market today
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• Here’s why the QuickFee (ASX:QFE) share price is zooming 28% higher
• ASX 200 Weekly Wrap: Shares have average week but a great month
• Why the Prospa (ASX:PGL) share price has surged 7%

Motley Fool contributor Aaron Teboneras owns shares of 4DSMEMORY FPO. 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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Concerns about inflation, interest rates, and valuations have put a lot of pressure on the tech sector this year. While this is disappointing, it does appear to have dragged a good number of tech shares down to very attractive levels.

When the dust finally settles, here’s why these ASX tech shares could be the ones to buy:

Afterpay Ltd (ASX: APT)

The Afterpay share price is currently trading at $84.50. This means the buy now pay later (BNPL) focused payments company’s shares are now down 47% from their 52-week high of $160.05.

While the company’s shares are certainly at the high end of the risk scale due to the enormous amount of future growth that is already being priced in, Afterpay does appear well-placed to deliver on expectations.

This is due to the increasing popularity of BNPL with both consumers and merchants. In respect to the former, Afterpay has been growing its global customer numbers at a rapid rate over the last few years. This has been complemented by a significant increase in repeat usage.

The good news is that Afterpay looks well-placed to continue its growth for the foreseeable future. This is due to its ongoing international expansion and new product launches. The latter will see the company release banking products via the Afterpay Money app in the near future.

Last week Morgan Stanley put an overweight rating and $149.00 price target on the company’s shares.

Altium Limited (ASX: ALU)

Another ASX share to consider when the dust settles is this leading electronic design software provider. The Altium share price is currently trading at $23.99, which is down 40% from its 52-week high of $40.21.

This could be a buying opportunity for patient investors due to the company’s strong long term growth potential. This positive outlook is thanks to its exposure to the rapidly growing Internet of Things and artificial intelligence markets. As these markets are underpinning an explosion of electronic devices globally, demand for its key Altium Designer and 365 platforms look set to increase materially over the next decade.

But Altium isn’t a one trick pony. It also has other businesses with positive outlooks as well. These are its workflow solution platform NEXUS and electronic parts search engine Octopart. Both are supporting Altium’s growth and have sizeable market opportunities of their own. A testament to the quality of the NEXUS platform is that it counts Tesla and SpaceX as customers.

Management is positive on the future. Due to favourable industry tailwinds and its leadership position, it is targeting revenue of US$500 million by FY 2025/26. This will be more than double what it expects to achieve in FY 2021.

Analysts at Citi are positive on the company and have a buy rating and $33.50 price target on its shares.

More reading

• What’s driving the Afterpay (ASX:APT) share price to 8-month lows?
• Why are ASX tech shares like Afterpay (ASX:APT) crashing today?
• Will the Afterpay (ASX:APT) share price go up?
• Why Afterpay, CSR, Electro Optic Systems, & Estia Health are storming higher
• ASX 200 down 1%: CBA Q3 update, tech shares rise, Qantas update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO and Altium. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Should you buy Afterpay (ASX:APT) and this ASX tech share following the selloff? appeared first on The Motley Fool Australia.

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Gone are the days of a surging Afterpay Ltd (ASX: APT) share price. Its shares slipped to an intraday low of $81.85 today, dragging its year-to-date return to a grim -28%. 

What’s been impacting the Afterpay share price? 

The BNPL sector can’t seem to keep it together

In theory, the Afterpay share price should move in tandem with its ASX-listed and overseas BNPL peers, despite competing against each other for market share. The same arguably takes place for the big four banks, insurers, miners etc. 

At the height of the BNPL craze last year, the Afterpay share price surged 30% in quick succession from $70 in July to $90 in August. During the same period, competitors including Splitit Payments Ltd (ASX: SPT), Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: Z1P) were also quick to double in valuation.

This was during a time where it seemed like any announcement could warrant a surge in share price. For example, when Zip announced a partnership with Ebay and launched its Zip Business division on 26 August 2020, it triggered its share price to jump 25% on the day. 

Fast forward to today, it seems the opposite could be taking place. 

Take Openpay Ltd (ASX: OPY) for example. The company delivered a solid 3Q21 update last month, alongside an expansion into the US$55.8b US and UK veterinary markets in partnership with ezyVet.

The company said that it “continues to move with urgency to capture market opportunity and disrupt major payments markets with its highly relevant and transparent offering for merchants and consumers”. Despite the positive announcement, its shares edged 2.5% lower on the day. 

ASX-listed BNPL shares have been sharply sold off in recent weeks. Bigger players such as Sezzle and Zip have been able to stay in positive year-to-date territory. While smaller players such as Openpay, Splitit Ltd (ASX: SPT) and Humm Group Ltd (ASX: HUM) are fast approaching 6-12 month lows. 

Tech shares are falling out of favour 

The  S&P/ASX200 Info Tech (INDEXASX: XIJ) has slumped almost 20% year-to-date and is down a painful 4.87% at the time of writing.

This weakness might be understandable if the broader market was selling off. However, the S&P/ASX 200 Index (ASX: XJO) has pushed north of 5% since the start of the year.

US-listed BNPL giant dips 10% overnight 

To add further insult to injury, the US-listed Affirm Holdings Inc (NASDAQ: AFRM) share price dropped 10% lower on Wednesday night to a new all-time record low of US$49.82.

Foolish takeaway

The Afterpay share price is seemingly trapped between a rock and a hard place, with the broader tech sector selling off, BNPL peers sinking and its main US rival hitting record all-time lows. 

More reading

• Should you buy Afterpay (ASX:APT) and this ASX tech share following the selloff?
• Why are ASX tech shares like Afterpay (ASX:APT) crashing today?
• Why the Humm (ASX:HUM) share price just hit a 52-week low
• Is the Zip (ASX:Z1P) share price a beaten-down buy?
• Why Zip (ASX:Z1P) and these ASX growth shares are rated as buys

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post What’s driving the Afterpay (ASX:APT) share price to 8-month lows? appeared first on The Motley Fool Australia.

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