This week I’ve been looking at the small side of the market at shares that have been tipped to have big futures.

Continuing with that theme, here are two more small caps to watch in 2021:

MNF Group Ltd (ASX: MNF)

The first small cap share to look at is MNF Group. It is a leading provider of Voice over Internet Protocol (VoIP) technology to businesses and consumers.

This technology allows telephone calls to be made over the internet. Due to the NBN rollout and the work from home initiative, demand for MNF’s VoIP services has been growing strongly this year. This led to the company recording a 27% increase in recurring revenue to $101.5 million in FY 2020.

In addition to this, the company revealed a 17% increase in phone numbers on its network to 4.5 million. Management notes that this metric is a key performance indicator for future growth. This bodes well for its performance in FY 2021.

Morgan Stanley is positive on the company. Its analysts currently have an overweight rating and $6.30 price target on its shares.

PlaySide Studios Limited (ASX: PLY)

PlaySide Studios is a recently listed Melbourne-based independent video game developer. It is one of the largest in the country with a total of 52 titles developed. This includes games based on original intellectual property and games developed with Hollywood studios such as Disney, Nickelodeon, and Warner Bros.

In respect to the latter, this includes games related to popular brand including Jumanji, The Walking Dead, Batman, Superman, Teenage Mutant Ninja Turtles, and Disney Pixar’s Cars.

Thanks to these titles, in FY 2020 PlaySide Studios delivered revenue of $7 million, which was up 55% year on year.

This is still only an incredibly small slice of the mobile games market it operates in. Management estimates that this market is worth $77.2 billion per annum at present. This gives it a significant runway for growth in the future.

More reading

• The PlaySide Studios (ASX:PLY) share price is up 100% since its IPO
• 3 recent ASX IPOs to watch
• Experts pick the best ASX IPO of 2020
• PlaySide Studios (ASX:PLY) share price doubles on ASX debut

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

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There are some ASX dividend shares that continue to pay dividends even through all of the disruption from COVID-19 and the other impacts.

Not every business was able to continue to keep paying dividends during 2020. But these two did keep paying, and increased their payments:

Brickworks Limited (ASX: BKW)

Brickworks is a diversified property business that has several segments.

It has an Australian building products division that manufactures and sells things like bricks, paving, masonry, precast and roofing. Brickworks said that FY21 first quarter earnings were well ahead of the prior corresponding period with a “solid” pipeline of work for the remainder of FY21 with help from government stimulus measures. The major capital projects are on schedule.

Brickworks also has a building products division in North America after acquiring three businesses, being Glen Gery, Redland Brick and Sioux City Brick. The company says that it has market leadership across the north east, Midwest and mid-Atlantic regions. In the first quarter of FY21, sales in North America were below expectations with significant COVID-19 uncertainty. However, management are expecting improved earnings once conditions normalise.

The ASX dividend share is looking to its joint venture property trust with Goodman Group (ASX: GMG). Earnings for Brickworks are derived from selling surplus operational land into the trust at market value, then Goodman funds the infrastructure works to create serviced land ready for development.

Once a lease pre-commitment is secured, the serviced land can then be used as security, with debt funding used to cover the cost of constructing the facilities. With this relationship, Brickworks gets access to Goodman’s development expertise and network of customers, and Goodman gets access to Brickworks’ prime industrial land.

The trust recently secured a lease pre-commitment for 20 years with Amazon at Oakdale West in Sydney. This is the second major pre-commitment secured at the site, after the first one by Coles Group Ltd (ASX: COL). Brickworks said that securing Amazon’s tenancy demonstrates how it’s well positioned to benefit from the ongoing e-commerce revolution with the development an example of the increasing complexity of facilities in response to the growing need for automation and innovation from customers.

When the two facilities are complete, it will grow the gross assets of the trust to more than $3 billion and it will also increase the net rental distributions by more than 25% to the ASX dividend share. The Amazon and Coles facilities will cover less than 40% of the available area at Oakdale West, providing significant further growth opportunities for the trust over the next five years.

Brickworks also owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Soul Patts itself is a consistent ASX dividend share. Soul Patts is invested across a variety of industries including telecommunications, building products, resources, financial services, listed investment companies (LICs) and agriculture.

The investment income alone from the property trust and Soul Patts shares funds the Brickworks dividend. Brickworks hasn’t cut its dividend for over 40 years.

Brickworks currently has a grossed-up dividend yield of 4.4%.

Pacific Current Group Ltd (ASX: PAC)

Pacific Current is a business that aims to invest in exceptional investment managers to help them grow with Pacific’s expertise and funding.

Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It is on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It’s paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”

In FY20, Pacific Current grew its dividend per share by 40% to $0.35. The ASX dividend share funded this with an 18% increase in underlying earnings per share (EPS) to $0.51. Funds under management (FUM) grew by 62% to $93 million with GQG delivering most of the growth and representing most of the existing FUM.

In the first quarter of FY21, the FUM went up 14% to $106.4 billion. Again, the vast majority of FUM growth during the period came from fund manager GQG.

Pacific Current is now trading at 11x FY21’s estimated earnings and has a trailing grossed-up dividend yield of 8.1%.

More reading

• 3 ASX shares to buy for 2021
• ASX 200 rises 0.5%
• 2 star stocks for your ASX retirement portfolio
• 3 small cap ASX dividend shares to buy
• Leading fund manager names the ASX dividend shares to buy in 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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Taking the time to find the best shares to buy now could be a worthwhile move over the long run. It may allow an investor to avoid low-quality businesses, and to invest money in the most appealing companies operating in a specific sector.

As such, now could be the right time to analyse annual reports and read the latest investor updates to unearth the strongest businesses in a variety of sectors. Doing so could boost an investor’s returns and improve their financial situation over the long run.

Focusing on specific sectors to find the best shares to buy now

A first step in unearthing the best shares to buy now may be to understand which businesses are the strongest in their specific sector. To achieve this goal, an investor will need to understand the key drivers and catalysts within a specific industry, as well as the potential risks that could cause businesses to experience major challenges.

Clearly, understanding an industry takes time. Therefore, it may be a good idea to zero-in on a small number of sectors to gain knowledge of them, rather than seeking to become a generalist in a wide variety of industries. Doing so could provide an investor with a competitive advantage over their peers if they understand how an industry could realistically evolve over the coming years.

While determining the best shares in any sector is subjective, they are likely to be those companies with large competitive advantages over their peers. For example, they may have unique products or strong brand loyalty that has led to wider margins in the past relative to their sector rivals. They may be more likely to maintain such advantages over the long run.

Analysing individual companies

Once the best shares in a specific industry have been found, assessing their individual merits could be a shrewd move. In other words, they may have a competitive advantage over peers, but if they lack a sound strategy for the future or a weak balance sheet then they could prove to be risky investments.

Therefore, assessing a company’s financial position and how it will navigate potentially uncertain months in 2021 could be a shrewd move. The simplest means of achieving this goal is to view its recent annual report and investor updates. They provide an insight into its finances and qualitative factors such as how it intends to make use of industry-wide growth trends to its advantage.

Buying the most appealing stocks at low prices

Of course, the best shares to buy now may not necessarily trade at cheap prices. The stock market recovery in 2020 may have lifted their valuations to relatively high levels.

While it may be tempting to wait for dirt-cheap prices, in some cases it can be worth paying a premium for high-quality businesses. Over time, they can offer less risk and higher rewards than their peers, which may translate into higher returns for their investors.

More reading

• 2 newly listed ASX shares to watch in 2021
• Moderna’s stock has surged 488% in 2020: Is it a buy for 2021?
• 3 ASX shares to buy for 2021
• Top brokers name 3 ASX shares to sell today
• 3 top ASX share picks for 2021 from NZ 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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The last few months have seen a large number of companies complete their initial public offerings (IPOs).

Two standouts that have caught the eye are listed below. Here’s why they will be on watch in 2021:

Doctor Care Anywhere Ltd (ASX: DOC)

Doctor Care Anywhere is a growing UK-based telehealth company aiming to deliver high-quality, effective, and efficient care to its patients, whilst reducing the overall cost of providing clinical services.

Earlier this month the company’s shares landed on the Australian share market after completing an IPO which raised $102 million at 80 cents per share. Since then, the company’s shares have surged higher and are currently fetching $1.20.

Investors appear to have been impressed with its growth prospects and a recent announcement. In respect to the latter, that announcement revealed that the telehealth company has signed a new channel agreement with Allianz Partners. It is one of the world’s largest insurance and assistance companies.

This agreement will give Allianz Partners international private medical insurance policyholders and their dependents based in Europe access to Doctor Care Anywhere’s digital health services.

Looking ahead, the company’s founder and CEO, Dr Bayju Thakar, is positive on the future.

Following its IPO, he commented: “Whilst today marks an important milestone in Doctor Care Anywhere’s journey, we believe it is only the beginning as we look to become a leader in digital health, not just in the UK but globally, by delivering a joined-up and simple patient journey. The capital we’ve raised via the IPO will allow us to better serve our current patients with a broader range of services and to execute on our clear and ambitious growth plans.”

Nuix Limited (ASX: NXL)

Nuix is a leading provider of investigative analytics and intelligence software with a vision of “finding truth in a digital world.” It helps customers from around the world in many different industry verticals process, normalise, index, enrich, and analyse data from a multitude of different sources.

The company’s software has been used in a number of important investigations over the last decade and a half. This includes the Panama Papers, the Banking Royal Commission, organised crime rings, corporate scandals, and terrorist activities.

Demand has been strong for its services and led to Nuix reporting a 25.9% increase in total revenue to $175.9 million in FY 2020. This revenue is largely from subscriptions, with subscription revenues now accounting for 88.7% of its total revenue.

Pleasingly, the company’s Chairman, Jeff Bleich, appears to believe the company’s strong form can continue.

Upon listing, he commented: “Nuix’s growth strategy seeks to expand its presence across geographies and in targeted industry verticals by winning new customers, employing an industry‑centric “land and expand” strategy across industry verticals, continued investment in functionality of the Nuix platform, and improvements in overall operating efficiency and extracting potential benefits of increased scale.”

“In addition, Nuix believes that growth can be accelerated by focusing on building a network of strategic partners to provide complementary delivery and market expansion capabilities, as well as through a considered approach to value accretive mergers and acquisitions,” he concluded.

The Nuix share price has been a strong performer since listing on the ASX boards. At the time of writing, it is fetching $8.19, which is almost 55% higher than its IPO price of $5.31 per share.

More reading

• Experts pick the best ASX IPO of 2020
• Why a2 Milk, Doctor Care Anywhere, McPherson’s, & Volpara are pushing higher
• Why the Doctor Care Anywhere (ASX:DOC) share price is surging 11% higher
• Here’s how Nuix (ASX:NXL) and these recent IPOs are performing since listing
• Creso Pharma and Nuix were among the most traded shares on the ASX last week

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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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.

All eyes were on the biotech Moderna (NASDAQ: MRNA) in 2020. It wasn’t quite a popular name in the pharmaceutical space, as it has no approved products on the market yet. But its sudden entry in the COVID-19 vaccine competition grabbed a lot of attention, and it became the second company to win approval in a race with dozens of players. No wonder its stock has surged 488% so far this year, while the S&P 500 has gained 16%.

On Dec. 11, Pfizer (NYSE: PFE) and its German biotech partner BioNTech (NASDAQ: BNTX) became the first to receive an Emergency Use Authorization (EUA) from the Food and Drug Administration for a coronavirus vaccine candidate, BNT162b2. Moderna became the second company to receive the EUA for its vaccine, mRNA-1273, on Dec. 18. The former vaccine displayed 95% efficacy while the latter showed 94.1% efficacy in the still-ongoing phase 3 trials.

So now that Moderna’s vaccine is out and the inoculation process has begun, is the company still a good investment?

Now that the vaccines are out, we will see how effective they are in treating COVID-19. At one point in December, Moderna’s stock had surged up to 768%, but it seems to be simmering down now. That could be because the vaccine market has tremendous competition, and ultimately the value of one particular vaccine might decline. 

Investing in this market is risky. Moderna did wonders in a short period, but its future heavily depends on its COVID-19 vaccine. Most of its other vaccines in clinical trials use the same mRNA technology, so the success of mRNA-1273 will validate other treatments in its pipeline. There’s a lot riding on the vaccine’s success.

MRNA data by YCharts.

If you’re already invested in Moderna, I would suggest holding it. And any investors who still want an entry in this risky game should keep their allocation small with this biotech.

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

More reading

• Here are the US shares ASX investors are buying
• How the 21st century actually started in 2020
• Where will Moderna be in 5 years?
• The most popular coronavirus stock may lose half its value by 2023
• Is Moderna stock a hold?

Sushree Mohanty 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 three ASX shares in this article that could be solid performers during 2021, if 2020 trends are continued.

Here are three ideas:

Pacific Current Group Ltd (ASX: PAC)

Pacific is a multi-boutique asset management business that wants to partner with “exceptional” investment managers. It provides strategic business development to help them grow, either with funding or expertise.

Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It’s on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It is paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”

In FY20 the ASX share grew its underlying earnings per share (EPS) by 18% to $0.51 cents, funds under management (FUM) grew by 62% to $93 billion and the dividend went up 40% to $0.35 per share. In the FY21 first quarter its funds under management (FUM) grew 14% to $106.4 billion.

The company is considering launching a fund to invest in fund managers because there are more opportunities than it can invest in itself. Pacific would receive management fee revenue from the fund, as well as co-investment rights.

At the current Pacific Current share price it’s valued at 10x FY22’s estimated earnings. It also has a trailing grossed-up dividend yield of 8.1%.

Kogan.com Ltd (ASX: KGN)

Kogan.com is one of the e-commerce ASX shares to have grown significantly during 2020 with a large rise of online shopping.

FY20 saw Kogan.com’s gross sales go up 39.3% to $768.9 million, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) went up 57.6% to $49.7 million and net profit after tax (NPAT) went up 55.9% to $26.8 million. EPS grew by 61.1% to $0.29 and total dividends per share increased 46.9% to $0.21.

One of the main things that Kogan.com is focused on, aside from simply growing the overall business, is increasing its membership (Kogan First) numbers. Mr Kogan, the founder of the company, has spoken about the benefit to the ASX share of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”

Kogan.com’s margins continue to increase. In FY17 its EBITDA margin was 4.3%, in FY20 it had grown to 9.3%. This appears to have continued into FY21. In the first four months to October 2020, whilst gross sales increased by 99.8%, gross profit went up 131.7% and adjusted EBITDA went up 268.8%.

At the current Kogan.com share price, it’s valued at 26x FY23’s estimated earnings.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX share that specialises in facilitating electronic donations to large and medium US churches.

The company has grown a lot during the difficult COVID-19 period. In the FY21 half-year result for the six months to 30 September 2020, Pushpay said that its operating revenue rose by 53% to US$85.6 million which helped the gross margin increase from 65% to 68% and the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) jumped 177% to US$26.7 million.

In FY21 Pushpay is expecting to grow EBITDAF by over 100%, to a range of between US$54 million to US$58 million. It’s also expecting more operating leverage to accrue as it grows in size.

At the current Pushpay share price it’s valued at 25x FY23’s estimated earnings.

More reading

• Here’s how the S&P/ASX All Technology Index fared in 2020
• 2 ASX tech shares to buy for 2021
• If you thought 2020’s tech share rally was impressive, hold on for 2021!
• The ASX tech shares to buy in 2021
• Here are 6 of the top performing ASX fintech shares of 2020

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 Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Kogan.com ltd and PUSHPAY FPO NZX. 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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With most brokers taking a well-earned break over the holiday period, research notes are few and far between right now.

In light of this, I thought I would take a look at a few that have been released over the last few weeks that remain very relevant today.

Three sell ratings that you might want to pay attention to are listed below:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating and $30.00 price target on this payments company’s shares. The broker has held firm with its bearish view despite Afterpay reporting a record-breaking month of trade in the United States in November. UBS has concerns over management’s selective disclosures. It notes that there was no October sales update, nor was there any bad debt data for November. The Afterpay share price is currently trading at $118.37.

Fortescue Metals Group Limited (ASX: FMG)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating but lifted the price target on this iron ore producer’s shares to $17.45. According to the note, the broker has upgraded its earnings forecasts over the coming years to reflect higher than expected iron ore prices. However, this isn’t enough for a change of rating and the broker appears to believe its shares are still overvalued at the current level. The Fortescue share price is changing hands for $23.98 this afternoon.

Transurban Group (ASX: TCL)

Analysts at Citi have retained their sell rating and $12.83 price target on this toll road operator’s shares. This followed the release of an update on its North American operations earlier this month. That update revealed that Transurban has sold a 50% stake in its Greater Washington assets to AustralianSuper and two other funds. While the broker sees positives in the move and expects it to reduce its leverage, it believes the reduction in earnings could put pressure on dividends until the funds are redeployed. The Transurban share price is currently trading at $13.63.

More reading

• Here’s how the S&P/ASX All Technology Index fared in 2020
• ASX 200 drops lower
• If you thought 2020’s tech share rally was impressive, hold on for 2021!
• Here are 6 of the top performing ASX fintech shares of 2020
• Why Afterpay, DEXUS, Integrated Research, & Regis Healthcare are dropping lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban Group. 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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Brokers across the Tasman have been hard at work picking their top share ideas for 2021.

In a recent article, The New Zealand Herald surveyed six of the country’s top share brokers and asked them for their 5 top New Zealand share picks for 2021.

New Zealand’s benchmark NZX 50 Index (NZE: NZ50G) had a blinder of a year in 2020, returning 14% to 31 December, compared to precisely 0.1% for the S&P/ASX 200 Index (ASX: XJO). It’s a bit unfair to compare the two indexes given they have very different industry compositions, but clearly something good has been happening in NZ that is worth paying attention to. Fortunately, many of the biggest NZ companies are also listed on the ASX.

The survey asked brokers to choose the securities they think will provide best short-term performance over the next 12 months. This means a company’s long-term potential is not necessarily considered. The brokers also do not get to review or change their picks throughout the year. 

With that said, here are 3 companies the NZ brokers picked will do well in 2021 that also happen to be listed on the ASX.

EBOS Group Ltd (ASX: EBO)

EBOS Group is Australasia’s largest diversified healthcare and veterinary products distributor. The company generates more than $8 billion of revenue per year and grew revenue by 26.5% in the 2020 financial year.

EBOS was picked by no less than four of the six brokers surveyed. The company was picked for its solid growth outlook and robust demand for healthcare products as well as its increasing free cash flow and strong balance sheet. Brokers also noted that the company has a ‘defensive growth profile’, which means the share price may hold up better than other companies in 2021 if volatility strikes.

Spark New Zealand Ltd (ASX: SPK)

New Zealand telecoms company Spark was also picked by four of the six brokers as a likely winner for 2021. Interestingly, most of the reasons given relate the increasing investor demand for companies like Spark, which has a strong dividend and infrastructure-like defensiveness to earnings. In 2020, Spark’s revenue grew 2.5% and net earnings increased by 4.4%.

A2 Milk Company Ltd (ASX: A2M)

Despite a shocking year in 2020, a2 Milk was picked by two of the six brokers. The brokers backing a2 Milk suggest that 2020 could be a speed bump in the company’s long-term growth story. In 2021 they expect a2 Milk to continue to diversify its distribution channels away from reliance on the daigou channel (where shoppers buy products on behalf of others and send them back to China).

Other top ASX share picks for 2021

Among the other picks from the brokers to perform well in 2021 was breathing device manufacturer Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) and travel software company Serko Ltd (ASX: SKO).

The Fisher & Paykel Healthcare share price had a huge year in 2020, rocketing 50% with full year revenue growing 18%. Meanwhile the brokers highlighted that the Serko share price may stand to benefit from a recovery in travel demand as vaccines for the COVID-19 virus become more widespread.

More reading

• Why the A2 Milk (ASX:A2M) share price is down 18.5% in 2020
• What next for the a2 Milk (ASX:A2M) share price?
• 2 of the best ASX 50 shares to buy today
• Why a2 Milk, Adacel, Dusk, & Nuheara shares are charging higher
• Top brokers name 3 ASX shares to buy next week

Regan Pearson has no position in any of the stocks mentioned. You can follow him on Twitter @Regan_Invests. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Serko Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended 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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The Cimic Group Ltd (ASX: CIM) share price climbed slightly higher this morning, before dipping to its current price of $24.55 per share.

The share price movement comes on the back of a pre-market announcement from the Aussie building and construction group regarding a major sale.

Why is the Cimic share price on the move today?

This morning, Cimic announced it has completed the sale of 50% of its subsidiary, Thiess. Thiess is the world’s largest mining services provider and was previously wholly owned by Cimic.

The price received for the 50% stake implies an enterprise value of $4.3 billion. For its stake, Cimic is set to receive $2.2 billion in cash from the completed transaction.

The Cimic share price is on the move in early trade following the news but remains down more than 23% for the year.

Cimic executive chair and CEO Juan Santamaria said the sale enables Cimic to “capitalise on the sector outlook and Thiess’ strong performance”.

The proceeds will be used to strengthen Cimic’s balance sheet by reducing debt and providing additional capital for organic growth.

Mr Santamaria said the retention of a 50% stake reflects the “ongoing strategic importance of Thiess” to Cimic’s business.

How has the Cimic share price performed this year?

Shares in the diversified construction group have been volatile in 2020 as the coronavirus pandemic has crimped growth.

The Cimic share price slumped to a 52-week low of $11.87 in the March bear market as investors were spooked by border closures and tightening restrictions.

Despite the lacklustre market reaction, today’s sale news is the latest move in a strong couple of months to close out the year. Shares in the Aussie company have jumped more than 30% since the end of September as the S&P/ASX 200 Index (ASX: XJO) has had one of its best quarters on record.

Cimic currently has a market capitalisation of $7.66 billion with a 6.3% dividend yield.

More reading

• The one overlooked warning sign ASX investors should watch for in 2021
• How does fiscal stimulus impact ASX share prices?
• ASX 200 down 0.6%: Flight Centre sinks, big four banks lower, Ramelius jumps
• Why the Woodside (ASX:WPL) share price slumped 33% in 2020
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Ken Hall 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 exciting entrants into the world of index investing in 2020 has undoubtedly been the S&P/ASX All Technology Index (ASX: XTX), or the ‘All Tech Index’.

Before this index was launched back in March, there was no easy way to track the performance of ASX tech shares. Although many of the shares in this index happen to come under the ‘Information Technology’ ASX sector, there are some that don’t. But with the All Tech Index’s launch, there was finally a single measure of the performance of the ASX’s best tech stocks, regardless of which sector they belong to.

So, as a refresher, the S&P/ASX All Technology Index was first launched at perhaps the worst possible time for a debut: 24 February 2020. I say that because this date happened to be fairly close to the ASX 200’s peak, before the coronavirus-induced market crash hit us in March. Indeed, by 23 March, the newly formed index was down more than 42%.

But since that date, the index has been on an incredible run. At 2,886.7 points, it is currently up (at the time of writing) 43% year to date, and almost 150% from the levels we saw on 23 March.

Before we start, let’s just go over how the All Tech Index actually works. According to the ASX, there are a few criteria for a company to be included in this index. These include a requirement that 30% of a company’s shares be liquid and available for trading, a market capitalisation of at least $120 million and a $120,000 minimum in daily trading volume. The index is rebalanced quarterly, with new IPOs eligible for inclusion after one quarter.

The top 20 ASX tech shares in the All Tech Index

So let’s breakdown the ASX’s newest index, and look at how its 20 largest constituents performed in 2020:

ASX tech share	Year to date performance (as of 30 December)	Index weighting	Market capitalisation
Afterpay Ltd (ASX: APT)	285.18%	21.7%	$33.64 billion
Xero Limited (ASX: XRO)	83.54%	13%	$21.47 billion
Seek Limited (ASX: SEK)	27.3%	7.7%	$10.11 billion
Computershare Ltd (ASX: CPU)	(12.48%)	5.7%	$7.9 billion
REA Group Limited (ASX: REA)	41.63%	5.7%	$19.68 billion
Nextdc Ltd (ASX: NXT)	87.29%	4.3%	$5.59 billion
Carsales.com Ltd (ASX: CAR)	20.13%	3.8%	$4.97 billion
WiseTech Global Ltd (ASX: WTC)	31.52%	3.7%	$9.97 billion
Altium Limited (ASX: ALU)	(0.32%)	3.2%	$4.48 billion
Link Administration Holdings Ltd (ASX: LNK)	(4.29%)	2.3%	$2.99 billion
Appen Ltd (ASX: APX)	11.81%	2.2%	$3.03 billion
TechnologyOne Ltd (ASX: TNE)	0.36%	1.7%	$2.66 billion
Iress Ltd (ASX: IRE)	(17.45%)	1.6%	$2.09 billion
Megaport Ltd (ASX: MP1)	38.81%	1.6%	$2.24 billion
Webjet Limited (ASX: WEB)	(44.57%)	1.4%	$1.78 billion
Pro Medicus Limited (ASX: PME)	55%	1.3%	$3.6 billion
Kogan.com Ltd (ASX: KGN)	158.63%	1.2%	$2.04 billion
EML Payments Ltd (ASX: EML)	7.61%	1.1%	$1.54 billion
Redbubble Ltd (ASX: RBL)	414.68%	1.1%	$1.52 billion
Codan Ltd (ASX: CDA)	54.73%	1%	$2.04 billion

Not all tech shares see gains in 2020

As you can see, it’s been an overall positive year for the technology shares in this index. But there have also been some losers as well. Webjet stands out as the clear wooden spoon recipient here with a near-45% collapse in value over 2020 so far. We don’t have to probe too far into Webjet’s fundamentals to know why. As a travel company, the pandemic has been devastating for Webjet, which had to hold a highly dilutive share purchase plan earlier in the year to stay afloat.

Computershare, Iress and Altium were the other shares that have recorded year-to-date losses. Altium’s is a particularly interesting case. Altium shares rose more than 65% in value over 2019, and by more than 55% in 2018, so 2020 would have come as quite the shock for shareholders used to WAAAX high-octane growth from this company. Altium just never seemed to get its momentum back after the March share market crash. It’s possible that investors are finding the 6–12% revenue growth forecast for FY2021 just a little too boring compared with some of the other top ASX tech performers.

Afterpay and Xero dominate tech returns

On that note, let’s talk Afterpay and Xero, the two standout companies in this technology index. With current weightings of 21.7% and 13%, and year-to-date performances of 285% and 83.5%, respectively, these two companies have largely carried the All Tech Index in 2020.

Afterpay has had a phenomenal year. It managed to comprehensively shake off investor concerns at the start of the pandemic that it would be facing a recession-driven wave of defaults and delinquencies. Then the buy now, pay later leader announced a partnership with Chinese e-commerce giant Tencent Holdings back in May. With Tencent acquiring a 5% stake in the company, investors were reassured on Afterpay. It’s been onwards and upwards from there. The company spent the rest of the year breaking new all-time highs, most recently just a few days ago.

Also helping this company’s momentum were its FY2020 earnings. Back in August, Afterpay reported underlying sales growth of 112% and a 73% rise in earnings before interest, tax, depreciation and amortisation (EBITDA). Over the same period, Afterpay reported a 116% rise in global active customers. You could say that investors haven’t really been given a reason not to keep buying Afterpay in 2020.

Xero has delivered a similar growth story. Just last month, Xero reported stellar growth numbers for the six months ending 30 September. It announced revenue growth of 21% and subscriber growth of 19%. All in a period of just six months — no wonder Xero was also in investors’ sights in 2020.

A final note

For other top performers on the All Tech Index, it simply came down to the companies’ ability to turn the lemons of the pandemic into lemonade. Carsales benefitted from a tight market for second-hand vehicles in 2020. REA Group from a red-hot property market. Nextdc from continuing demand for back-end data services.

While there have been winners and losers in this index, I think we can fairly say that ASX tech shares haves been agile and innovative this year as a whole. And that has led to a stellar debut year for the All Technology Index.

More reading

• 2 quality ASX growth shares to buy for 2021
• ASX 200 down 0.6%: Flight Centre sinks, big four banks lower, Ramelius jumps
• Why the Redbubble (ASX:RBL) share price has rocketed 415% in 2020
• 2 ASX tech shares to buy for 2021
• ASX 200 drops lower

Sebastian Bowen 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 Altium, EML Payments, and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd, Kogan.com ltd, Link Administration Holdings Ltd, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia has recommended carsales.com Limited, EML Payments, IRESS Limited, Kogan.com ltd, Link Administration Holdings Ltd, MEGAPORT FPO, REA Group Limited, and SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s how the S&P/ASX All Technology Index fared in 2020 appeared first on The Motley Fool Australia.

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