The Zip Co Ltd (ASX: Z1P) share price was on form in January and surged higher.

In fact, the buy now pay provider’s shares were the best performers on the S&P/ASX 200 Index (ASX: XJO) with a 37.4% gain.

Why did the Zip share price rocket higher in January?

Investors were buying Zip shares in January following the release of its second quarter update.

As you might have guessed from the share price reaction, Zip delivered a very positive update which revealed further strong growth across both its ANZ and US operations.

According to the release, for the three months ended 31 December, Zip delivered a 103% increase in transaction volume to a record of $1.6 billion. From this, the company generated an 88% increase in quarterly revenue to $102 million.

A key driver of this growth was its exceptionally strong performance during the month of December.

During the month, Zip posted monthly transaction volume of $628.4 million. This was a 104% increase over the same period last year and annualises to transaction value of over $7.5 billion.

The majority of this growth came from the key US market. 

Zip’s QuadPay business recorded a 217% increase in second quarter transaction volume to $673.1 million. This was underpinned by a 180% lift in customer numbers to 3.2 million and a 655% jump in merchants to 8,400.

Supporting this was its ANZ business, which recorded a 60% increase in transaction value to $908.7 million. ANZ customer numbers grew 39% over the prior corresponding period to 2.5 million and merchants lifted 43% to 30,100.

Another positive that went down well with investors was its bad debts metric in the ANZ market. Its net bad debts decreased from 2.43% to 1.93% over the three months, which was in line with management’s expectations. Monthly arrears in the ANZ market remain steady at 0.95%.

Zip’s Managing Director and CEO, Larry Diamond, was pleased with the quarter and appears confident on the company’s growth trajectory.

He said: “We are extremely pleased to deliver another exceptional set of numbers with the quarter really delivering a significant step change for the Company, confirming our position as one of the fastest growing players in the sector.”

Adding that Zip is “extremely well placed to continue this momentum into 2021 as the global shift away from the broken credit card model continues.”

Zip will be releasing its half year results in the coming weeks and providing more colour on its financials. All eyes will be on the Zip share price when that is released. 

More reading

• 3 reasons to consider Sezzle (ASX:SZL) at this share price
• Zip and Vulcan were among the most traded ASX shares last week
• 2 ASX growth shares to buy in February
• Leading brokers name 3 ASX shares to sell today
• These ASX 200 shares are on fire in 2021

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 ZIPCOLTD 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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There are some ASX dividend shares that have income yields of more than 4%.

The Reserve Bank of Australia (RBA) has lowered the official interest rate to just 0.25%, which is making it difficult for investors who are looking for income.

Here are three businesses that have dividend yields of more than 4%:

Brickworks Limited (ASX: BKW)

Brickworks is an ASX dividend share with one of the longest dividend records on the ASX – it hasn’t cut its dividend for over four decades.

Whilst the company is best known for being a building products business, its dividend is actually supported by two asset groups.

One asset group is its 50% stake of the industrial property trust with partner Goodman Group (ASX: GMG). Industrial property is in higher demand these days with an elevated level of online shopping from consumers and logistics needs from businesses. This trust provides growing rental profit distributions to Brickworks and Goodman.

There are currently two high-tech warehouses being built by the trust for Amazon and Coles Group Ltd (ASX: COL) at the Oakdale site in Sydney. These new buildings will send the gross asset value of the trust to more than $3 billion once they’re completed. It will increase the rental profit distributions to Brickworks by more than 25%. That could help fund the ASX dividend share’s payout in the coming years.

Brickworks also owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has a diversified portfolio. Soul Patts has been steadily growing its dividend and capital value for Brickworks over time. 

At the current Brickworks share price it has a trailing grossed-up dividend yield of 4.5%.

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi Australia is one of the largest retailers on the ASX. It operates JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys.

At the current JB Hi-Fi share price, it has a trailing grossed-up dividend yield of 5.2%. This dividend came about after a 76.5% increase to the final FY20 dividend to 90 cents per share, bringing the total FY20 dividend to 189 cents per share, an increase of 33.1% compared to FY20.

The ASX dividend share has delivered more growth in the first half of FY21 with sales growth of 23.7% to $4.94 billion, a 75.9% increase of earnings before interest and tax (EBIT) to $462.7 million and an 86.2% increase of net profit after tax (NPAT) to $317.7 million.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT). It owns a diverse portfolio of farms across different sectors including almonds, macadamias, cropping (sugar and cotton), vineyards and cattle.

One of the main aims of Rural Funds is to increase its distribution by 4% per annum for investors, which is comfortably more than annual inflation.

There are two main ways that Rural Funds achieves that distribution growth.

Firstly, it has rental growth built into its contracts with high-quality tenants. The rental income at some farms grows by a fixed 2.5% per annum. At other farms the rental income growth is linked to CPI inflation. There are also occasional market reviews at some farms.

The ASX dividend share has a number of high quality tenants like Olam, JBS, Select Harvests Limited (ASX: SHV) and Australian Agricultural Company Ltd (ASX: AAC).

The other way that Rural Funds is growing its rental income is by investing in rental productivity improvements at some of its farms, particularly cattle in recent years. This has the benefit of increasing the farm value and also hopefully increasing the rental potential of that farm.

At the current Rural Funds share price, it has a distribution yield of 4.6% based on the guidance of a FY21 distribution of 11.28 cents per unit.

More reading

• 2 strong blue chip ASX shares rated as buys by brokers
• This ASX company will double its earnings this year: fundie
• 2 ASX 200 shares to buy for dividends
• 3 ASX dividend shares rated as strong buys by brokers
• 2 reliable ASX dividend shares for income investors to buy

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Nitro Software Ltd (ASX: NTO)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $3.50 price target on this document productivity software company’s shares. This follows the release of Nitro’s fourth quarter update last week. That update saw Nitro record a 64% increase in annualised recurring revenue (ARR) to US$27.7 million. Morgan Stanley was pleased with Nitro’s stronger than expected ARR and its growing proportion of subscription revenues. The broker believes the company is well-placed to continue its solid growth. The Nitro share price ended the week at $3.13.

Macquarie Group Ltd (ASX: MQG)

Another note out of Morgan Stanley reveals that its analysts have retained their overweight rating and lifted the price target on this investment bank’s shares to $155.00 ahead of its upcoming third quarter update. According to the note, the broker expects Macquarie’s third quarter profit to be roughly flat on the prior corresponding period. Looking further ahead, Morgan Stanley feels the company is positioned to outperform the market consensus estimate for FY 2021. The Macquarie share price last traded at $131.40.

Webjet Limited (ASX: WEB)

Analysts at Credit Suisse have upgraded this online travel agent’s shares to an outperform rating with an improved price target of $5.40. According to the note, the broker believes Webjet is well-positioned to bounce back in 2022 from pent-up demand and market share gains in both the B2C and B2B segments. Credit Suisse is still expecting a sizeable loss from Webjet in FY 2021, before forecasting a return to profitability in FY 2022. The Webjet share price ended the week at $4.78.

More reading

• 3 very impressive ASX quarterly updates from last week
• GameStop frenzy: 3 shorted ASX shares that could shoot up
• The latest ASX stocks to be hit by broker downgrades
• 2 small cap ASX shares growing at a quick rate
• 2 fantastic ASX tech shares to buy in February

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Webjet Ltd. The Motley Fool Australia has recommended Nitro Software 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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Building a nest egg large enough to produce a generous passive income in retirement is likely to be a key goal for many people.

Previously, it may have been possible to simply save money each month to achieve this aim. However, low interest rates over recent years, and especially after the 2020 market crash, mean that a cash savings account is unlikely to be helpful in building a retirement nest egg.

As such, now may be the right time to start buying shares on a regular basis. Even modest amounts invested in a diverse range of stocks could produce a generous income in older age.

Avoiding savings accounts

While having some cash on hand is always a good idea due to the potential for unforeseen circumstances, relying on savings to produce a retirement nest egg could lead to significant disappointment. They offer extremely low returns at the present time, as policymakers across the world have sought to stimulate the economy through a loose monetary policy.

In many cases, savings accounts may even struggle to keep up with inflation over the long run, as policymakers become more concerned about economic growth than a rising price level. As such, beyond having some emergency cash, avoiding savings accounts could be a sound means of improving the potential for a large retirement nest egg.

Making a passive income from shares

In place of savings accounts, a diverse portfolio of stocks could lead to a far more generous passive income. The stock market has a long track record of producing high single-digit returns that could provide growth to modest amounts of money invested on a regular basis.

Now may be an opportune moment to start investing in shares due to their low valuations. Many sectors have not yet fully recovered from the 2020 stock market crash. This could mean that they offer wide margins of safety that translate into high capital returns in the coming years. They may be able to catalyse a portfolio so that it produces a higher growth rate, and a larger nest egg, than investing in an index tracker fund that mirrors the performance of, for example, the FTSE 100 Index (FTSE: UKX) or S&P 500 Index (SP: .INX).

Building a $25,000 income

Even if an investor matches the performance of the wider stock market, they could invest a modest amount each month to produce a worthwhile passive income in retirement.

For example, assuming the same 8% annual total return managed by the stock market in recent decades, a $500 monthly investment could be worth $750,000 within 30 years. From this, a 3.5% annual withdrawal would produce an income of over $25,000. This could provide greater financial freedom and flexibility in retirement versus relying on cash. It could even allow an investor to retire earlier than would otherwise have been the case.

More reading

• 2 quality SaaS ASX shares to buy in February 2021
• Top brokers name 3 ASX shares to sell next week
• 2 explosive ASX tech shares to buy in February
• 2 ASX shares that this fundie really likes right now
• 2 strong blue chip ASX shares rated as buys by brokers

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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There are quite a few quality software as a service (SaaS) ASX shares that could be worth looking at in February 2021.

Businesses that make their money through a SaaS model usually have attractive levels of recurring business and the software nature of the company means it can have high operating profit margins.

Here are two examples:

ELMO Software Ltd (ASX: ELO)

ELMO describes itself as a cloud-based human resources (HR) and payroll software provider. The company offers customers a unified platform to streamline processes for HR and also manage payroll and rostering, time and attendance. It operates on a SaaS business model based on recurring subscription revenue.

The SaaS ASX share recently released its FY21 second quarter update to the market. It said that it achieved record cash receipts over a 12-month period of $64.5 million, which was up 23% compared to the prior comparative period.

For the quarter ending 31 December 2020, it received cash receipts of $18.8 million, which was an increase of 22.1% compared to the prior corresponding period.

The company has been busy with acquisitions over the last few months. In October 2020 it acquired Breathe, which expanded ELMO’s market opportunity with entry into the small business market in Australia, New Zealand and the UK. In December 2020 it acquired Webexpenses, which gave the SaaS ASX share entry into the expense management sector. Management also said this accelerated ELMO’s mid-market expansion into the UK market.

Annual recurring revenue (ARR) increased by 42.8% year on year to $74.2 million at 31 December 2020. This was driven by new customer growth, the cross-sell to the SaaS ASX share’s existing customer base and boosted by the acquisitions of Breathe and Webexpenses.

For FY21, ELMO is guiding that ARR will finish in a range of between $81.5 billion and $88.5 million. FY21 revenue is expected to be between $65 million and $71 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to finish as a loss somewhere in the range of negative $2.4 million to negative $7.4 million.

Altium Limited (ASX: ALU)

Altium is one of the world’s leading electronic PCB software businesses. It says that its software focuses on electronics design systems for 3D PCB design and embedded system development. It boasts that its products are found everywhere from world leading electronic design teams to the grassroots electronic design community.

A key focus of the SaaS ASX share is Altium 365, its new cloud platform.

The company is pivoting the business towards Altium 365 after separating its cloud operations from its software business and will focus on growing the market opportunity and expansion into the broader electronics ecosystem.

Altium’s management is referring to this change as Altium’s Netflix moment which is commonly referred to in the high-tech industry as a hard pivot to the cloud. Netflix started off as a DVD business.

Each Altium division will have its own leadership and organisational roadmap, which will allow the cloud business to develop at a different cadence and to form a SaaS-like organisational structure around its product and go-to-market processes.

One benefit from this change is that it will be able to separate high-volume sales from high-touch sales to support the SaaS ASX share’s journey to 100,000 subscribers by 2025 and dominate the PCB design industry.

Sergey Kostinsky has been appointed to the role of President and he will be responsible for driving high performance in the execution of all operational domains with a particular emphasis on the rapid development and adoption of Altium 365.

More reading

• 5 of the best ASX shares to buy in February
• 2 ASX growth shares to buy
• Brokers name 3 ASX shares to buy right now
• Here’s why the ELMO (ASX:ELO) share price is sinking lower today
• 2 exciting mid cap ASX shares to buy and hold

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium and Elmo Software. The Motley Fool Australia owns shares of and has recommended Elmo Software. The Motley Fool Australia owns shares of Altium. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Bubs Australia Ltd (ASX: BUB)

According to a note out of Citi, its analysts have retained their sell rating and cut the price target on this infant formula company’s shares to 51 cents. The broker made the move after Bubs’ second quarter update fell short of its expectations. Not only did the company’s sales miss expectations, but Bubs burned through more cash than it expected. Citi isn’t confident the third quarter will be any better, especially given the continued disruption in the daigou channel. The Bubs share price ended the week at 64 cents.

Galaxy Resources Limited (ASX: GXY)

Analysts at Morgan Stanley have retained their underweight rating and $1.35 price target on this lithium miner’s shares. The broker was disappointed with Galaxy’s quarterly update and notes that recoveries were lower than expected and costs came in higher than it forecast. In addition to this, Galaxy’s production and recoveries guidance for FY 2021 fell a touch short of its estimates. The Galaxy share price last traded at $2.69.

Reece Ltd (ASX: REH)

A note out of Morgans reveals that its analysts have downgraded this plumbing parts company’s shares to a reduce rating with a price target of $11.45. According to the note, the broker made the move after reducing its earnings estimates to reflect a stronger Australian dollar. In addition to this, the broker thought that its valuation was getting stretched after a strong gain over the last few months. The Reece share price was trading at $16.01 at Friday’s close.

More reading

• 2 beaten-up infant formula ASX shares to buy
• 3 ASX growth shares to buy in February 2021
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• 3 reasons why the Bubs (ASX:BUB) share price could be a buy
• ASX 200 drops 2%, IOOF and Afterpay shares sink, Bubs jumps

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia owns shares of and has recommended BUBS AUST 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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A new month is here, so what better time to look to see if there are any additions you could make to your portfolio to take it to the next level.

If you’re interested in the tech sector, then you might want to take a look at the shares listed below.

Damstra Holdings Ltd (ASX: DTC)

The first ASX tech share to look at is Damstra. It is a $250 million integrated workplace management solutions provider. It provides a cloud-based workplace management platform which is used by businesses globally to track, manage, and protect their workers and assets.

Damstra has been growing strongly over the last couple of years thanks to increasing demand for its solutions. This strong form has continued in FY 2021, with Damstra reporting record quarterly growth last week.

For the three months ending 31 December, Damstra delivered unaudited revenue of $6.9 million, which was up 33% on the previous quarter.

This update appears to have gone down well with analysts at Morgan Stanley. Last week the broker retained its overweight rating and $2.00 price target on Damstra’s shares. 

Nearmap Ltd (ASX: NEA)

Another ASX tech share to look at is Nearmap. It is an aerial imagery technology and location data company.

Nearmap has been growing at a strong rate over the last few years thanks to increasing demand for its services in the ANZ and North American markets. And although COVID-19 and foreign exchange headwinds appear to be stifling its growth in FY 2021, management remains very positive on the future.

It is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term, with underlying churn of less than 10%. This is expected to be achieved thanks to geographic expansions, new growth initiatives, and the quality of its technology.

One broker that has become bullish on the company is Goldman Sachs. It has just upgraded Nearmap’s shares to a buy rating with a $2.75 price target.

It commented: “NEA appears fairly valued relative to its A/NZ peer group but is attractively priced relative to US software peers with similar revenue growth + EBITDA margin outlooks.”

More reading

• Why the Damstra (ASX:DTC) share price is racing higher today
• ASX 200 up 0.35%: Afterpay & Appen push higher, big four banks rising
• 2 outstanding ASX tech shares to buy today
• 2 ASX growth shares to buy for big returns
• 4 growing small cap ASX shares to watch

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd and Nearmap 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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There are some ASX shares that fundie Wilson Asset Management (WAM) really likes at the moment.

WAM is a fund manager that operates a variety of listed investment companies (LIC) that run a variety of different strategies.

It operates: WAM Capital Limited (ASX: WAM), WAM Leaders Ltd (ASX: WLE), WAM Global Limited (ASX: WGB), WAM Microcap Limited (ASX: WMI), WAM Alternative Assets Ltd (ASX: WMA), WAM Research Limited (ASX: WAX) and WAM Active Limited (ASX: WAA).

Each month WAM outlines some of the ASX shares that it has a bullish opinion about across its portfolios.

Here are some of the ASX shares that the fundie likes right now:

Nuix Limited (ASX: NXL)

WAM Active described Nuix as a business that’s a leading provider of investigative analytics and intelligence software, with over 1,000 customers in 78 countries utilising the software to manage cyber security risk, compliance and fraud.

Originally, the company begin in the early 2000s with the development of an algorithm to search unstructured data.

As of today, the Nuix platform is underpinned by more than 15 years of research and development, with over $200 million of research and development costs incurred since 2008.

The effectiveness of Nuix’s software has led it to be used in the investigation of headline events including the ‘Panama Papers’ and the royal commission into misconduct in the banking, superannuation and financial services industry in Australia.

The ASX share is headquartered in Australia with 421 employees. However, approximately 80% of the company’s $175.9 million revenue that was generated in FY20 came from overseas.

There was some keen investor interest in Nuix when it first listed, with the Nuix share price rising 50% on its first day of trading. It now has a market capitalisation of $3.1 billion.

Serko Limited (ASX: SKO)

Serko is a New Zealand based online travel booking and expense management company for the business travel market.

Wilson Asset Management said that the ASX share has benefited from an uplift in travel and the state by state reopening of borders between New Zealand and Australia.

Serko said in its recent FY21 half-year result for the six months to 30 September 2020, total operating revenue of NZ$5.1 million was down 65% because of COVID-19 pandemic travel disruptions.

Half-year total travel booking volumes for the company during the period were down 77%, being 23% of the volumes in the same period a year ago, but have since risen to 35% for October (New Zealand at 76% and Australia at 26%).

However, the percentage of transactions occurring on its premium Zeno platform continues to increase, representing around 38% of online transactions in September, up from 25% of online transactions at the end of March 2020.

The bottom line was a net loss after tax for the period of NZ$10.1 million compared to a net loss of NZ$0.9 million in the prior period due to lower revenues and Serko investing in expansion into the Northern Hemisphere ahead of an anticipated travel market recovery.

Whilst there was an average net cash burn of $1.8 million per month for the six-month period by the ASX share, it was within the $2 million COVID-19 cost saving cap set by the company. After the recent capital raising, Serko had over $90 million of cash on hand at the time of releasing the report, which management said positioned the company well for an anticipated travel market recovery.

More reading

• Forget GameStop and buy these fantastic ASX growth shares
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• Revealed: ASX company underpaid staff $2.3 million
• 2 stellar small cap ASX shares rated as buys
• Wilson Asset Management thinks these 2 small cap ASX shares are a buy

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Serko Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd and Serko 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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 There are some blue chip ASX shares rated as buys by brokers.

It can sometimes be worth taking into account what brokers think because they are constantly looking at which shares look good value and what investments could make money. They have access to research and tools that many retail investors don’t.

Here are two blue chip ASX shares that brokers really like:

Australia and New Zealand Banking Group Ltd (ASX: ANZ)

The big four ASX bank share is rated as a buy by at least six brokers.

There have been a number of factors that brokers like about the major banks right now.

Credit Suisse has pointed out that one catalyst for the banks providing better returns for shareholders is the Australian Prudential Regulation Authority (APRA) ending the requirement for Australian banks to hold onto at least 50% of their statutory earnings.

There are other catalysts for the big banks according to brokers. The concerns about the Australian economy are dissipating and the news of the effectiveness of COVID-19 vaccines has seen a shift to value ASX shares, such as the big banks.

Australia’s strong house prices could be helpful for the banks in ensuring that bad debts don’t become too significant. There will also be the benefit of the credit provision top-ups not being repeated again.

Some brokers, such as Citi, believe that ASX bank shares’ net interest margins (NIM) won’t decline any further and that the market may still be too negative about the big banks’ upcoming results.

According to Commsec, the ANZ share price is valued at 13x FY22’s estimated earnings. Commsec also has an estimate of an annual dividend of $1.20 per share for FY22, which equates to a grossed-up yield of 7.25%.  

Brickworks Limited (ASX: BKW)

Brickworks is rated as a buy by at least six brokers.

This ASX share is a market leader of bricks in Australia. It has a number of brick brands including Austral Bricks, Bowral Bricks and Daniel Robertson.

It also sells other products like pavers, masonry, stone, roofing, specialised building systems, precast and cement. It’s represented in these categories by businesses like Austral Masonry, Urban Stone, Bristle Roofing, Terracade, Pronto Panel and Austral Precast.

In a recent trading update, Brickworks said that its Australian building products division has made a strong start to FY21 with first quarter earnings well ahead of the prior corresponding period.

Brickworks also has an American building division after making some acquisitions like Glen Gery. The company is already the market leader in the north east of the US. It has long-term growth plans there and wants to increase efficiencies across its manufacturing network. COVID-19 is hurting short-term growth, with sales below expectations in recent months. This is partly due to the deferral of projects. 

The ASX share also has two other assets.

Brickworks owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has steadily grown earnings and dividends for Brickworks. Soul Patts has a diversified portfolio in sectors like telecommunications, resources, listed investment companies (LICs) and agriculture.

The other main asset that Brickworks owns is a 50% stake of an industrial property trust alongside Goodman Group (ASX: GMG). This joint venture trust builds industrial properties like warehouses on Brickworks’ excess land that it no longer needs.

At the moment the trust is building two huge warehouses, one for Coles Group Ltd (ASX: COL) and one for Amazon. These buildings show that Brickworks can gain exposure to the e-commerce and logistics trend.

Once the two warehouses are completed over the next couple of years, it’s expected that the profit distributions to Brickworks will increase by at least 25% and the gross assets of the trust will rise above $3 billion.

More reading

• 2 ASX shares rated as strong buys by brokers
• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• ASX 200 down 2.3%: Bank shares tumble, InvoCare jumps, IOOF disappoints
• 2 top ASX dividend shares to buy in February
• 3 ASX dividend shares to buy in February 2021

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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While it could be tempting to jump on the bandwagon and buy GameStop shares, it would be a dangerous game to play.

This is because when Reddit is finished with the games retailer, the buying pressure is likely to fade and its shares will trend towards their true value. Something which experts believe is significantly lower than where it trades today.

In light of this, these ASX growth shares could be the ones to buy if you’re looking to build your wealth. Here’s why:

Nuix Limited (ASX: NXL)

The first growth share to look at is Nuix. It is a leading provider of investigative analytics and intelligence software. Nuix helps customers across the globe to process, normalise, index, enrich, and analyse data from different sources.

The company has a very strong reputation for good reason. Its software has played a key role in some of the most important investigations over the last decade. This includes the Panama Papers and the Banking Royal Commission.

Nuix has been performing very positively over the last 18 months and doesn’t appear to have had its growth stifled by the COVID-19 crisis. In FY 2020, the company delivered a 25.9% increase in total revenue to $175.9 million. This was driven largely by its subscription revenues, which now account for 88.7% of its total revenue.

One broker that is a fan of the company is Morgan Stanley. Earlier this month it put an overweight rating and $11.00 price target on the company’s shares. It believes Nuix is an attractive, long term, structural growth story.

Xero Limited (ASX: XRO)

Xero is one of the world’s leading cloud-based business and accounting software platform providers.

It has been growing at a very strong rate over the last few years and even during the pandemic, despite its impact on small businesses.

For example, during the first half of FY 2021, Xero’s subscriber numbers increased to 2.45 million. Thanks to this and an increase in average revenue per user, Xero reported a 21% increase in operating revenue to NZ$409.8 million and a 15% lift in annualised monthly recurring revenue (AMRR) to NZ$877.6 million.

Goldman Sachs has been impressed with its performance and believes it still has a very long runway for growth.

It recently initiated coverage on the company with a buy rating and $157.00 price target. Goldman believes Xero can achieve a 2030 subscriber footprint of 7.4 million and generate NZ$3.4 billion in annual revenue.

After which, it sees opportunities for Xero to monetise its app ecosystem and drive multi-decade strong growth.

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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 Xero. The Motley Fool Australia has recommended Nuix Pty 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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