The Ansell Limited (ASX: ANN) share price is on the rise this morning, up 3% on the open. This follows the release of the company’s results for the first half of the 2021 financial year (H1 FY21).

At the time of writing, shares in the company have retreated slightly, trading up 0.88% at $38.91.

What results did Ansell report?

In this morning’s release, the personal protection safety solution provider reported sales for the half year reached $937.8 million. That’s up 24.5% from H1 FY20 and up 22.9% in terms of organic growth.

(Organic growth compares the two periods at constant currency – using average foreign exchange rates – and excludes the impacts of acquisitions and divestments.)

Ansell’s healthcare segment had organic growth of 37.3%, while the company reported industrial organic growth of 7.0%.

Earnings before income and tax (EBIT) grew 60.6% over the previous corresponding period. Ansell credited sales growth coupled with higher production volumes and manufacturing efficiencies for much of the earnings growth.

Earnings per share (EPS) were also up 65.5% to 82.9 cents per share (cps), and profit attributable came in at $106.5 million, an increase of 61.9% year-on-year.

Ansell raised its half year dividend to 33.2 US cents, up 52.6% from the first half of the 2020 financial year and representing roughly a 40% dividend payout. Looking ahead, the company aims for a 40-50% dividend payout ratio from its profit attributable.

From the management

Commenting on the results, Ansell CEO Magnus Nicolin said:

We were able to deliver better than expected growth across all of our strategic business units. Exam/SU, Life Sciences and Chemical saw stronger performance partially driven by COVID-19 whilst Surgical and Mechanical SBU’s were able to demonstrate favourable performance and market share gains despite facing industry headwinds.

Our capacity expansions are progressing well despite the challenges of operating in a COVID-19 environment. During the first half, we started five new production lines and expect another eight production lines to go live during the second half.

Looking ahead, Nicolin stated that by 2022-2023 financial year, he expects Ansell will have more than doubled its in-house capacity to produce single use gloves and suits.

The company forecasts strong demand for personal protective equipment (PPE) will persist for the next 12 months, saying that even after 70% of the population is vaccinated, increased demand for most of its products will remain.

Ansell share price snapshot

Counterintuitively, Ansell’s share price was sold off heavily during the COVID fuelled panic last year, selling along with most other ASX shares. But shares have come back strongly since late March, reaching an all time high of $42.91 per share on 9 November.

Though the share price has retraced a bit from that record high, the Ansell share price is up 20.3% over the past 12 months and up 11.1% so far in 2021.

By comparison the S&P/ASX 200 Index (ASX: XJO) is up 3.1% in 2021.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. 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 Redbubble Ltd (ASX: RBL) share price is sinking today following the release of its half-year result for 2021.

In early morning trade, shares in the e-commerce company are down an astonishing 13% to $6.07.

Let’s take a look and see how Redbubble performed over the H1 FY21 period.

Financial highlights

The Redbubble share price is deep in negative territory despite announcing significant growth across its business’ key metrics.

A catalyst for the fall could be that customer orders were affected by COVID-19 constraints during December. The temporary issue was caused by shipping partners who were unable to provide assurances in delivering products on time to customers. Consequently, lower sales margins in December were realised.

Despite the delays in shipping orders at the end of the period, the company experienced strong sales throughout the first-half.

For the six months ending 31 December, Redbubble reported marketplace revenue (total revenue less artist revenue) of $352.8 million. This was up 96% over the prior corresponding period (pcp). When using a constant currency basis, revenue actually grew 105% compared to H1 FY20. The result reflected strong customer demand throughout the holiday season with around 572,000 artists making sales. This was an increase of 76% year-on-year.

Most of its business came from its United States customer base which accounted for 69% of total gross transactions. The next in line was the European Union with just 14%. Following the EU was the United Kingdom and the Australia/New Zealand region, at 11% and 6% respectively.

Gross profit came to $144 million, which represented a lift of 118% from the same time last year. Again, on a constant currency basis, this metric actually further increased to 127%.

Earnings before interest and tax (EBIT) stood at $41.8 million. A massive improvement over the H1 FY20 result where EBIT recorded a loss of $1.9 million.

The group achieved an operating cash inflow of $79.7 million compared to $40.9 million over the pcp. The leadership team did carefully manage operating expenses. However, the strengthening of the Australian dollar in Q2 led to a favourable currency impact of $2.2 million.

At the end of December, Redbubble had a closing cash balance of $129.7 million.

The board moved against declaring an interim dividend, instead opting to reinvest into the company’s growth strategy. In addition, it also noted that due to the uncertain economic environment, it will be prudent with its cash.

Words from the CEO

Looking towards the future, Redbubble CEO Michael Ilczynski commented:

The strategic priority for the Group now is to ensure we extend the market leadership we have established. We intend to invest in both the artist and customer experiences, to improve loyalty and retention and to ensure long-term growth.

Redbubble share price snapshot

The Redbubble share price has been a standout performer over the past 12 months, accelerating to more than 460%. The company’s shares hit a low of 40 cents in March, before moving on an upwards trajectory.

Based on the current share price, Redbubble commands a market capitalisation of around $1.8 billion.

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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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The GWA Group Ltd (ASX: GWA) share price has been sneaking up over the past 6 months, gaining more than 52% despite challenging market conditions.

However, shares in the water solutions product provider have dipped today, dropping 1.35% at the open to $3.66.

Let’s review some highlights from the half-year results released today to see what drives the GWA share price.

GWA Group financial results

For the half-year period ended 31 December 2020, GWA’s normalised net profit after tax was $20 million, a 17% dip compared to the previous corresponding period (pcp).

GWA grew revenue in New Zealand and the United Kingdom, but this was offset by the weaker Australian market. Group revenue for the half-year period slid 4.4% to $197.2 million.

GWA advised that these losses reflected an overall decline in market conditions.

However, despite the challenges, operating cash flow jumped 18% to $49.7 million.

The company also reduced its net debt from $144.8 million on 30 June 2020 to $125 million on 31 December 2020.

The GWA interim dividend paid out will be 6 cents per share, fully franked, payable on 20 April 2021. This compares to 8 cents per share for the pcp and 3.5 cents per share for the final dividend for FY20. 

Positioning GWA share price for growth

GWA advised that it continues to execute its growth strategy as market conditions improve. Commenting on what lies ahead, managing director Tim Salt said:

We launched new ranges of taps, showers, accessories and sanitaryware under the Caroma brand in Australia and New Zealand and new Methven showerware ranges in Australia, New Zealand and China.

We introduced Germgard® antibacterial glazing to our sanitaryware to capitalise on consumers’ heightened concerns over safety and hygiene following the COVID-19 outbreak.

Meanwhile, our touchless intelligent bathroom system, Caroma Smart Command®, continues to represent a growth opportunity in the commercial segment.

The system has now been successfully installed in 77 sites with a solid bank of additional projects in the pipeline. We have completed the first pilot installation in Asia with further activity planned over the next year.”

The GWA share price is closing in on the same price levels it was trading at a year ago, and is now down just 4.8% over the previous 12-month period.

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Motley Fool contributor Gretchen Kennedy 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 ELMO Software Ltd (ASX: ELO) share price is surging higher on Tuesday morning.

At the time of writing, the cloud-based human resources and payroll platform provider’s shares are up 6% to $6.70.

Why is the ELMO share price surging higher?

Investors have been buying ELMO shares this morning following the release of its half year results. Those results revealed that ELMO has once again delivered another six months of strong growth.

For the six months ended 31 December, the company reported a 29.3% increase in statutory revenue compared to the prior corresponding period to $30.6 million.

Things were even better for its Annualised Recurring Revenue (ARR), which now stands at a record $74.2 million. This is an increase of 42.8% compared to a year ago. This strong ARR growth was driven by a combination of both organic growth and acquisitions.

Driving this strong growth was a large increase in mid-market customers. ELMO now has 2,892 mid-market customers, up 95.7% on the prior corresponding period. From this cohort, it generates ARR of $67.3 million. This represents almost 91% of its total ARR.

The company’s small business segment is supporting its growth as well. The newly acquired Breathe business grew its customer base to 7,146 customers by the end of December.

As expected, ELMO posted a small operating loss of $0.8 million. Despite this, the company is well capitalised with a $71.3 million cash balance and a new $34.5 million debt facility with Commonwealth Bank of Australia (ASX: CBA).

Delivering on its growth strategy

ELMO’s CEO and Co-Founder, Danny Lessem, was pleased with the half and notes that the company is delivering on its growth strategy.

This growth strategy is underpinned by three pillars: segment expansion, module expansion and geographic expansion.

In respect to its segment expansion, he commented: “With the acquisition of Breathe, ELMO now services two distinct market segments, the small business market (<50 employees) and the mid-market (50 to 2,000 employees). The small business market segment is a new $2.2 billion opportunity.”

Commenting on its module expansion, Mr Lessem said: “We continue to broaden ELMO’s all-in-one solution, offering new modules to our new and existing customers. These new modules create additional revenue streams and increase our competitive moat. In the half, we were able to add an expense management module to the suite through the acquisition of Webexpenses, providing a significant cross-sell opportunity.”

And finally, the CEO spoke about its geographic expansion. He said: “In 1H21 we also laid important foundations to build out ELMO’s business in a new geography, the United Kingdom (UK). The acquisitions of Breathe and Webexpenses are powerful examples of ELMO expanding its market opportunity in line with its growth strategy. Both businesses are based in the UK. Breathe places ELMO as the preeminent provider of HR solutions to small businesses in the region and Webexpenses provides a solid operational and mid-market customer base there.”

Outlook

ELMO has reaffirmed the guidance it provided to the market in January.

It continues to expect FY 2021 ARR of $81.5 million to $88.5 million. This will be an increase of 47.9% to 60.6% year on year.

Management has also reiterated guidance for revenue of $65 million to $71 million and an operating loss of $2.4 million to $7.4 million. 

Chat with management

I was fortunate to have the opportunity to chat with management following the release of the results.

Mr Lessem was pleased with the result and notes that its operating leverage is starting to show. ELMO’s EBITDA improved by 69.5% during the half compared to revenue growth of 29.3%.

We also spoke about the UK and the impact that COVID-19 was having on its expansion there. Positively, the company’s UK operations are growing strongly despite the country being locked down since the beginning of January.

Management believes this reflects the resilience of the business model. It also appears optimistic that its growth could accelerate in a post-COVID environment when businesses return to normal and there is an upswing in procurement.

Another question I posed to management was the operating loss guidance. Given that ELMO recorded a first half operating loss of $0.8 million, I was curious what might lead to a potential operating loss of $7.4 million.

Mr Lessem explained that the company has worked through a wide range of scenarios that reflect the current environment and that a $7.4 million operating loss is a worst case scenario. He is hopeful that as the second half progress, ELMO will be in a position to narrow its guidance ranges.

All in all, management appear confident on the future and its aforementioned three pillar growth strategy.

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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 Elmo Software. The Motley Fool Australia has recommended Elmo Software. 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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In morning trade the BHP Group Ltd (ASX: BHP) share price is pushing higher following the release of its half year results.

At the time of writing, the mining giant’s shares are up 2.5% to $46.90.

How did BHP perform in the first half?

BHP had a very positive half thanks to a strong production performance and favourable commodity prices.

For the six months ended 31 December, the Big Australian reported a 15% increase in revenue to US$25.64 billion. And thanks to a 3-percentage point expansion in its operating margin to 59%, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 21% to US$14.7 billion.

Also growing strongly was the company’s free cash flow, which increased 39% over the prior corresponding period to US$5.2 billion.

This strong free cash flow generation allowed the BHP board to declare a fully franked interim dividend of US$1.01 per share (~A$1.30 per share). This is up 55% on the prior corresponding period and represents an 85% payout ratio.

What were the drivers of its growth?

The vast majority of BHP’s earnings were generated from its iron ore and copper assets.

The iron ore segment generated EBITDA of US$10.2 billion. Pleasingly, more of the same is expected in the second half, with management reaffirming its full year unit cost guidance.

The copper segment contributed US$3.7 billion in EBITDA. It is also on track to achieve its guidance for the full year.

Finally, the metallurgical coal and petroleum businesses contributed US$0.1 billion and US$0.8 billion of EBITDA, respectively, during the half. While the met coal segment fell short of guidance in the first half, it is still expected to achieve its full year guidance. The petroleum business is performing in line with expectation.

BHP’s Chief Executive Officer, Mike Henry, commented: “BHP has delivered a strong set of results for the first half of the 2021 financial year. Our continued delivery of reliable operational performance during the half supported record production at Western Australia Iron Ore and record concentrator throughput at Escondida. Our operations generated robust cash flows, return on capital employed increased to 24 per cent and our balance sheet remains strong with net debt at the bottom of our target range. The Board has announced a record half year dividend of US$1.01 per share, bringing BHP’s shareholder returns to more than US$30 billion over the past three years.”

The Chief Executive also commented on the sky high iron ore price, stating: “Our analysis indicates that before prices can correct meaningfully from their current high levels, one or both of the Chinese demand/Brazilian supply factors will need to change materially.”

Outlook

The good news for shareholders and the BHP share price, is that the company is positive on the future.

It said: “We remain positive in our outlook for long-term global economic growth and commodity demand. The 2020s hold great promise in this regard, with policymakers in key economies (for example China, Japan and the US) signalling a durable commitment to pro-growth agendas alongside heightened ambitions to tackle climate change.”

“Population growth, the infrastructure of decarbonisation and rising living standards are expected to drive demand for energy, metals and fertilisers for decades to come,” it concluded.

Following today’s gain, the BHP share price is now up 22% over the last 12 months.

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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.

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The Breville Group Ltd (ASX: BRG) share price is on the move this morning following the release of its first half results.

At the time of writing, the appliance manufacturer’s shares are up 7% to $32.85.

How did Breville perform in the first half?

For the six months ended 31 December, Breville reported a 28.8% increase in revenue to $711 million. This comprised Global Product revenue growth of 34% to $592.9 million and Distribution revenue growth of 7.9% to $118.1 million.

Management advised that its strong top line performance was driven by growth in all regions and categories. This was supported by the working from home (WFH) and premiumisation trends, as well as its operational decision to invest in inventory in May following its capital raising.

Things were even better for its operating earnings. Breville posted a 32% lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to $112.4 million.

It notes that this was driven by its strong revenue growth and improved gross margins. The latter was thanks to lower promotional spend, a swing in mix to premium products, and a weaker US dollar, which more than offset increased freight costs.

On the bottom line, the company delivered a 29.2% increase in net profit after tax to $64.2 million.

However, despite this strong profit growth, the Breville board decided to slash its interim dividend by 36.6% to a fully franked 13 cents per share. The company advised that this reflects its decision to reduce its target payout ratio to allow continued funding of growth opportunities on a cash-neutral basis.

It also advised that the previously activated dividend reinvestment plan has been suspended until further notice.

Management commentary

Breville’s CEO, Jim Clayton, was pleased with the half.

He said: “A good half for the Group, building on the momentum seen over the last few reporting periods and benefiting from the WFH phenomenon. All regions and categories delivered growth, despite experiencing very different and erratic retail backdrops.”

“We continued to accelerate our double-digit EBIT growth, while tactically investing in selected growth drivers and capabilities. Geographic expansion is delivering an increasingly diversified and balanced global portfolio, adding growth and resilience in a dynamic market environment.”

Outlook

Positively, the strong first half has led to the company upgrading its guidance for the full year. This appears to have offset any disappointment around the dividend cut and helped drive the Breville share price higher today.

According to the release, assuming no significant change in economic conditions in its major trading markets, it expects FY 2021 EBIT to be approximately $136 million. This compares to its previous guidance of $128 million to $132 million.

It also advised that its investment in New Product Development and Go To Market (NPD & GTM) as a percentage of net sales is approaching the strategic goal of 12%. In light of this, investment levels “will be flexed in 2H 21 depending on the sales growth delivered.”

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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.

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Buying dividend shares for income in 2021 could be a sound move. In many cases, they offer significantly higher yields than are available on other income-producing assets such as cash, bonds or property.

However, due to the uncertain economic outlook, it is crucial to check that a company can afford its dividends.

Similarly, diversifying across a wide range of income shares with dividend growth potential could be a shrewd move that leads to less risk, as well as higher returns, in the long run.

Checking affordability among dividend shares

Buying dividend shares with high yields may sound like a simple solution to a common problem in a low interest rate environment. While this strategy can be successful, in some cases stocks with high yields are facing difficult operating outlooks that could weigh on their capacity to pay dividends at the expected rate.

As such, it is sensible to check how affordable a company’s dividend is before buying it. Otherwise, an investor may buy high-yielding stocks that ultimately need to reduce dividends to pay their other expenses.

Checking dividend shares for affordability can be done by comparing net profit with dividends. If shareholder payouts are covered more than once by net profit, there is headroom in case profitability falls in future. A figure below one suggests dividends may need to be cut at some point in future – unless there is a material improvement in profitability.

Dividend growth opportunities

As well as checking the financial standing of dividend shares, it could be prudent to understand the likelihood of them increasing shareholder payouts in future. Some high-yielding stocks may be attractive this year, but could become far less popular if their dividend growth is unable to match, or even beat, inflation over the coming years.

Clearly, dividend growth is closely linked to profit growth. As such, an investor must determine the prospects for improved earnings in the long run. Through analysing a company’s industry growth trends, its strategy and capacity to invest in new growth areas, it is possible to assess the likelihood of dividend growth in the long term.

Diversifying among income shares

Generating an income from a limited number of dividend shares is a risky process. It can mean that difficulties encountered by a small number of holdings have a large impact on the income generated by the entire portfolio.

Therefore, it is logical to diversify among a wide range of companies, sectors and regions when investing in dividend stocks. Doing so could be especially relevant right now, since many countries and sectors are experiencing more difficult operating conditions that others due to coronavirus. By diversifying, an investor can also obtain a more resilient income that grows at a faster pace, since they will be exposed to a wider range of dividend growth opportunities over the long term.

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Motley Fool contributor Peter Stephens 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 first half of FY21 (1H FY21) saw positive developments for ASX cannabis shares surrounding the regulation of medicinal cannabis products both locally and internationally. International markets were buoyed by the down-scheduling of cannabis by the United Nations Commission.

This is expected to result in stronger demand and open up new opportunities for ASX cannabis shares, particularly in the CBD space. The United States cannabis market also received a boost from the Biden election, with Democrats seen as far more proactive in legalising cannabis.

In Australia, the TGA down-scheduled low-dose CBD from being a prescription-only medicine to being a pharmacist-only medicine. This means Australian consumers will be able to buy CBD products over the counter at pharmacies. Demand for medicinal cannabis continues to grow in Australia.

Based on current growth rates, it is estimated more than 30,000 active patients are currently receiving medicinal cannabis products in Australia, up from just over 10,000 a year ago. So with this in mind, how did ASX cannabis shares perform in 1H FY21? 

How have these 3 ASX cannabis shares performed?

Althea Group Holdings Ltd (ASX: AGH)

Althea was founded in Melbourne in 2017 and holds licences to import, cultivate, produce and supply medicinal cannabis. Currently operating in Australia, the United Kingdom, Germany, and Canada, the company has plans to expand into emerging markets throughout Asia and Europe. 

Althea reported record revenue for the December quarter of $2.7 million, a 29% increase from the September quarter. Cash receipts were up 27% for the quarter and the number of healthcare providers that had prescribed Althea’s products increased by 32%. These increases have been reflected in the Althea share price, which has increased 62% over the past six months. 

In the United Kingdom, Althea saw record revenues in December of $206,706 – a 90% month-on-month increase. The company’s UK clinics continue to add new patients at a healthy rate with follow up appointments generating good repeat business.

In Canada, subsidiary Peak Processing Solutions entered an agreement with a Canadian listed beverage company to produce three cannabis-infused beverages. An initial order is expected to be delivered in Q1 2021 representing more than CAD$100,000 in revenue for Peak. A licence agreement was also entered to produce branded topical products. Peak has now signed contracts with total forecast revenues of CAD$4.65 million over the next 12 months. 

Althea finished 2020 with a healthy balance sheet thanks to a $6 million share placement. At 31 December 2021 cash on hand was $8.96 million. In January an additional $3.78 million was raised via an oversubscribed share purchase plan. Since the end of 1H FY21, Althea has also completed its first shipments of products to Germany and to UK-based distributor Grow Pharma. CEO Josh Fegan said, “Europe is fast becoming a global hub for medicinal cannabis….with operations in the UK and Germany, Althea is at the forefront of this next frontier.”

Ecofibre Ltd (ASX: EOF) 

Ecofibre is a biotechnology company that produces and sells hemp-derived products in Australia and the US. The company produces Australian grown hemp food products through its Ananda Food brand and develops hemp-based textiles and composites through its Hemp Black business.

Ecofibre’s Ananda Health brand produces nutraceutical products. The December half was a difficult one for this ASX cannabis share, with revenue falling 49% to $14.7 million. This was reflected in the Ecofibre share price, which has fallen 41% over the past six months. 

Nutraceuticals revenues fell during 1H FY21 with COVID-19 disruptions magnifying challenges in the highly competitive CBD industry. This was partially offset by revenue increases in the Ananda Food and Hemp Black brands. Ananda Food is now available in 1,250 Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) stores.

The food brand saw a 61% increase in revenues in 1H FY21 and is aiming to become the Australian hemp food processor of choice. Ecofibre is focused on reducing variable growing and manufacturing costs and utilising its expanded client base to work towards scale benefits. 

Ananda Health is a leading US pharmacy brand for CBD but saw major COVID-related disruption to its independent pharmacy channel during 1H FY21. Ananda Health is a premium-priced product, however, many pharmacies are carrying cheaper brands as well as product formats that Ananda Health does not manufacture.

Ecofibre repriced a number of products in November, reducing prices by 15% to 25%. New product formulations are also in the pipeline. A decline in in-store traffic has resulted in the development of an e-commerce channel that will allow pharmacies to sell Ananda CBD online. This is expected to launch in mid-2021. 

Cann Group Ltd (ASX: CAN)

Cann Group has established R&D and cultivation facilities in Australia and is pursuing a fully-integrated business model as a developer and supplier of cannabis and related products. In 1H FY21, Cann Group announced several important sales, with associated products expected to be shipped in Q3 FY21. This has been reflected in the Cann Group share price, which is up 57% over the past six months.

A shipment of 1,400 units of NOIDECS-branded medical cannabis products was made in December and will be used by Europe’s first and largest national medical cannabis registry. Iuvo Therapeutics, a leading European medicinal cannabis importer and distributor, has placed an initial 19,000 units order for Cann Group product which is expected to ship in the current quarter, pending regulatory clearances. 

Locally, various products have been supplied to white label customers and compound pharmacists. According to Cann Group, customers are forecasting steady growth over the balance of FY21 as the Australian patient pool continues to grow.

Projected revenues remain heavily weighted to the second half of the financial year as Cann Group continues to work through regulatory clearances in Australia and overseas. The company recorded $99,000 in receipts from customers in the December quarter, but expects revenue to be boosted from orders anticipated to ship in the current quarter. 

Cann Group secured a $50 million bank debt facility from National Australia Bank Ltd (ASX: NAB) during the December quarter, which will be used to construct its cannabis production site near Mildura. Site activities are scheduled to begin late this month. The final cost to complete the facility, which will have an initial capacity of 12,500kg, is expected to be $65 million. This will be funded via the debt facility as well as cash on the balance sheet. 

What’s next for ASX cannabis shares?

Australian consumers are eagerly awaiting the launch of the first over-the-counter CBD products in Australian pharmacies. ASX cannabis shares are in a race to get these products through the regulatory process and onto the market, knowing that there will be a first-mover advantage for those entering the space early.

As the market for cannabis products continues to grow both locally and offshore, ASX investors are eagerly watching the development of this industry. 

More reading

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• Here’s why the Althea (ASX:AGH) share price is jumping 7% today
• Why the Althea (ASX:AGH) share price has zoomed up 9% today

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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If you’re currently looking for some ASX tech shares to add to your portfolio, then you might want to take a look at the ones listed below.

Here’s why these ASX tech shares come highly rated right now:

Appen Ltd (ASX: APX)

The first ASX tech share to look at is Appen. It is the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. Appen works closely with some of the biggest tech companies in the world and has a strong position in the government sector through its Figure Eight business.

The Appen share price has underperformed recently after it revealed that COVID-19 headwinds were impacting demand. However, management appears confident that these impacts will be short term and expects its customers to start increasing their investment in machine learning and artificial intelligence again once the worst of the pandemic passes.

This could make now an opportune time to make a patient buy and hold investment in the company’s shares. Citi certainly believes this to be the case. It currently has a buy rating and $32.60 price target on its shares.

The broker believes that Appen is well-positioned to benefit from the expected increase in spending on artificial intelligence. It also sees opportunities for the company to expand its total addressable market.

Whispir Ltd (ASX: WSP)

Another ASX tech share to look at is Whispir. It is a growing software-as-a-service communications workflow platform provider operating in the Workflow Communications Platform as a Service market which has been tipped to be worth US$8 billion per year by 2024.

Whispir’s platform automates communications between businesses and their workers and customers. This allows users to improve their communications through automated workflows that ensure stakeholders receive accurate, timely, useful, and actionable insights.

The company has experienced very strong demand for its platform over the last 12 months, leading to some impressive annualised recurring revenue (ARR) growth.

This has continued in FY 2021, with Whispir recently releasing a very strong second quarter update. For the period ending 31 December, the company’s ARR grew 29.2% over the prior corresponding period to $47.4 million. This was also an 8.5% increase on its first quarter ARR.

Late last year Wilsons put an overweight rating and $5.10 price target on the company’s shares. This compares to the latest Whispir share price of $4.13.

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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 Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia has recommended Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 highly rated ASX tech shares to buy today appeared first on The Motley Fool Australia.

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

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

With so much momentum in both Tesla Inc (NASDAQ: TSLA)‘s stock price and its underlying business, is it a good time for the automaker to consider splitting its stock again?

Believe it or not, it’s only been six months since Tesla surprised investors with a 5-for-1 stock split announcement. Despite the stock splitting in fifths, its price has already appreciated to more than half of its pre-split value last August. In addition, it’s not just the stock that has seen momentum since last summer: The electric-car maker’s sales have surged, and profitability now looks like it’s here to stay. These may be signs that the growth stock could see another split this year.

Before we get into it, let’s tackle some basics.

What’s a stock split?

First, it’s worth explaining exactly what a stock split is. The most important thing to know about a stock split is that it technically doesn’t make investors any wealthier and doesn’t give the company whose shares are being split any incremental capital. A stock split is simply a division of one share into multiple new shares with a value totaling the original share.

Still don’t get it? Try this analogy: Assume you owned one share of Tesla. Now visualize this share as one full pizza. Next, someone walks up and slices the pizza into quarters. While you now have a sliced pizza, the total amount of food remains the same. The same is true for the total value of a shareholder’s ownership in a company before and after a 4-for-1 stock split.

The critical takeaway here is that a stock split doesn’t create shareholder value. Sure, Tesla stock has risen sharply since its recent stock split — but this doesn’t always happen following a stock split. Tesla stock’s rise is due to business performance, including strong sales growth and improving profitability. In addition, the company has simply grown on analysts and Wall Street and has become a stock market darling.

Why a Tesla stock split in 2021 is possible

Companies don’t usually consider a follow-up stock split unless several things happen. First, the stock should be trading significantly higher than its previous stock split. After all, one of the primary reasons companies split their stock is to make shares more affordable to retail investors. This makes the company’s shares more liquid and accessible to more investors.

Tesla certainly meets this criterion. Since the company announced a stock split last August, shares have risen almost 200% on a split-adjusted basis. Today, the stock is trading at a lofty price of more than $800 — well beyond the average share price of most companies.

Also making a good case for another stock split is Tesla’s strong business progress recently. If the stock’s rise was based solely on hot air, there’s no telling how long shares could stay at their elevated levels. And if shares had a good chance of losing all of their recent gains, why split shares again?

Fortunately, Tesla’s underlying business seems to be firing on all cylinders. Trailing-12-month vehicle deliveries at the time of Tesla’s stock split announcement were about 388,000. Today, that figure is at 500,000. Further, management has guided for deliveries in 2021 to exceed 750,000, showing how the company still seems to be early in its growth story.

Finally, Tesla’s quarterly free cash flow and cash on hand have risen from $418 million and $8.6 billion in the second quarter of 2020 to $1.9 billion and $19.4 billion in the fourth quarter of 2020, respectively, giving the company much healthier financials today.

Of course, Tesla investors shouldn’t count on a stock split in 2021. There’s simply no telling when the auto and green energy company might split its stock again — if ever. Further, there’s no reason to get excited about a potential stock split, as it doesn’t create any shareholder value. Nevertheless, there does seem to be a growing case for another stock split.

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

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• Tesla invests $2b in Bitcoin. Has crypto finally arrived?

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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 Tesla stock split: Is another one coming? appeared first on The Motley Fool Australia.

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

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