The SEEK Limited (ASX: SEK) share price was out of form on Tuesday and sank 7%.

Investors were selling the job listings giant’s shares due to weakness in the tech sector and the shock revelation that its founder and CEO, Andrew Bassat, was stepping down.

Will the SEEK share price perform better today?

The SEEK share price could be given a boost today by news that it has finalised an agreement to sell down its stake in the China-based Zhaopin business.

According to the release, the company has entered into an agreement with a consortium of investors led by Primavera Capital Group.

Primavera is a leading China-based global investment firm, which will become Zhaopin’s largest shareholder. Following the completion of the sale, SEEK’s ownership will reduce from 61.1% to 23.5%.

The company expects to receive gross proceeds of ~A$697 million, which implies a Zhaopin valuation of ~A$2.2 billion.

Management advised that the sale is a continuation of SEEK’s strategy to manage its portfolio and create the right structure to support Zhaopin’s long-term growth aspirations.

What’s next?

When SEEK released its half year results yesterday, it decided against declaring an interim dividend.

However, in lieu of an interim dividend, the Board intends to declare and pay a dividend of ~20 cents per share following receipt of SEEK’s proceeds. The record and payment dates will be determined upon declaration of the dividend.

Management also notes that the sell down of Zhaopin will impact its ability to meet its $5 billion aspirational revenue target by FY 2025. Depending on completion, it could also impact its ability to achieve its FY 2021 guidance.

However, management notes that its long-term strategic drivers and substantial revenue opportunity remains intact regardless of the sale.

SEEK’s CEO and Co-Founder, Andrew Bassat, commented, “We are very proud of our journey with Zhaopin. When we first invested 15 years ago Zhaopin was a loss-making and distant number three player. Our long-term approach combined with the strong management team led by Evan Guo has transformed Zhaopin into a market leader across many key metrics and it now generates strong cash flows.”

“The Consortium will play an important role in helping Zhaopin to deliver on its long-term growth strategy.” “Through this transaction, SEEK has achieved a strong return of over 5x and we have rebalanced our portfolio weightings. This transaction also creates significant balance sheet flexibility to re-deploy capital into high returning initiatives across SEEK.”

More reading

• ASX 200 goes higher, Afterpay sinks, Adbri impresses
• Why the Afterpay (ASX: APT) share price is down 8% today
• Why Afterpay, Austal, Perenti, & SEEK shares are tumbling lower
• ASX 200 flat: SEEK CEO exits, Afterpay sold off, BOQ surges higher
• Seek (ASX:SEK) shares sink as founder steps down

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK 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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Exchange traded funds (ETFs) can be a fantastic way to balance out your portfolio.

This is because ETFs provide investors with easy access to a large and diverse group of shares that you wouldn’t usually have access to.

With that in mind, I have picked out two ETFs that are popular with investors right now. Here’s what you need to know about them:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

The first ETF to look at is the incredibly popular BetaShares NASDAQ 100 ETF. As you might have guessed from its name, this ETF gives investors exposure to 100 of the largest non-financial companies on the famous Nasdaq index.

This means that investors will be buying a slice of some of the world’s most well-known and highest quality companies. These include the likes of Amazon, Apple, Facebook, Microsoft, Netflix, Tesla, and Google parent, Alphabet.

In addition to this, the index includes a number of upcoming companies which could be the tech stars of the future.  

The BetaShares NASDAQ 100 ETF share price has generated a return of 17% over the last 12 months.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Another ETF to consider is the Vanguard MSCI Index International Shares ETF. This ETF provides investors with exposure to 1,528 of the world’s largest listed companies from major developed countries.

Vanguard notes that it offers investors low-cost access to a broadly diversified range of securities that allows them to participate in the long-term growth potential of international economies outside Australia.

Among its largest holdings are the likes of Apple, Johnson & Johnson, JP Morgan, Nestle, Procter & Gamble, and Visa.

The ETF also offers investors a source of income. At the last count, its units were providing investors with a 1.9% yield. While not the largest yield you’ll find, it is still significantly better than term deposits and savings accounts.

More reading

• 2 top ETFs to buy and hold
• 2 of the best ETFs for ASX investors to buy today
• 2 great ASX growth shares to buy
• Nasdaq at record high! Here’s what it means for the ASX 200
• 2 ETFs to buy for strong diversification

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 BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a number of software as a service (SaaS) ASX shares that could be worth considering as quality additions to a portfolio.

Businesses that provide software as a service to clients can usually rely on attractive, regular cashflow and high gross margins because of the software nature of the service.

These two companies could be ones to think about:

Class Ltd (ASX: ELO)

Class describes itself as the leading cloud-based SMSF administration software. It also has other services including Class Portfolio which can be used for investment portfolio accounting, administration and reporting. It also offers Class Trust, which is a service for accountants to automate significant parts of the trust administration process.

The company has also made acquisitions to provide different services including ReckonDocs, NowInfinity and Smartcorp. Management are pleased with the ReckonDocs acquisition because it provides Class with another high margin and customer acquisition business to further scale and grow revenues.

The SaaS ASX share recently announced its FY21 half-year result which revealed that revenue was up 27% to $25.9 million, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 29% to $10.4 million and the EBITDA margin was maintained at around 40%.

Class’ customer base increased by 183% to 4,456. The Class board decided to declare an interim dividend of 2.5 cents per share.  

The company also announced that one of its main clients, Findex, had signed up to use the NowInfinity documentation suite for its national accounting network. Findex uses Class’ SMSF, portfolio, NowInfinity trust register and corporate compliance software. It’s also the cornerstone pilot for Class Trust. Class said that Findex is an example of how the Class multi-product offerings are resonating with customers.

Broker Ord Minnett liked the ReckonDocs acquisition and the positive sign of Findex signing up to so many products.

The broker pointed out that Class only has a market share of around 10%, meaning it has a lot of potential growth. It also likes that Class has a very high client retention rate.

It has a share price target of $2.40 for Class.

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and expense management provider. The company offers a combined platform of its different products to help organisations with their people, processes and pay. The ASX share operates on a SaaS model, receiving recurring revenue.

It recently announced its FY21 half-year result which showed that revenue was up 29.3% to $30.6 million, which was helped by annualised recurring revenue (ARR) rising by 42.8% to $74.2 million. Cash receipts for the period were up 25.5% to $34.4 million.

It made an EBITDA loss of $0.8 million, which was an improvement of $1.8 million compared to the prior corresponding period.

ELMO’s customer base continues to grow. Its mid-market customers total rose 95.7% to 2,892, whilst it finished the half with 7,146 Breathe small business customers. The mid-market gross profit margin increased to 88.5%, up from 84.6%. New customers purchased an average of four models.

Breathe is a business that it acquired in the UK to expand its growth potential in that market. Management believe that this acquisition places the company as the leading provider of HR solutions to small businesses in the region. It also acquired Webexpenses in the UK, which has a mid-market customer base. ELMO believes the small business market segment is a $2.2 billion opportunity.

The SaaS ASX share may be on the hunt for more acquisitions because it says it “remains well capitalised to fund growth initiatives.”

In FY21 it’s expecting ARR to finish between $81.5 million to $88.5 million. ELMO is expecting to generate $65 million to $71 million of revenue for the year, whilst an EBITDA loss of $2.4 million to $7.4 million is expected in FY21.

More reading

• 2 exciting ASX growth shares to buy this month
• Top brokers name 3 ASX shares to buy today
• Here’s why the ELMO (ASX:ELO) share price is surging 6% higher today
• 2 outstanding ASX growth shares that could be strong buys
• 2 quality SaaS ASX shares to buy in February 2021

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 and recommends Elmo Software. The Motley Fool Australia owns shares of Class Limited. 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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Are you looking to bolster your income portfolio with some quality ASX dividend shares? Then you might want to take a look at the ones listed below.

Here’s what you need to know about these ASX dividend shares:

Coles Group Ltd (ASX: COL)

The Coles share price has come under pressure since the release of its half year results this month. Although the supermarket giant delivered an impressive result, its outlook spooked the market. While the pullback is disappointing, it appears to have created a buying opportunity for income investors.

According to a note out of Goldman Sachs, in response to its results, its analysts have reaffirmed their buy rating but trimmed their price target slightly to $20.70. This is notably higher than the current Coles share price of $15.91.

In addition, Goldman is forecasting dividends of 62 cents per share in FY 2021 and 67 cents per share in FY 2022. If this proves accurate, income investors will receive fully franked 3.9% and 4.2% yields, respectively.

Super Retail Group Ltd (ASX: SUL)

Another company that delivered a strong half year result was Super Retail. The diversified retail group reported a 23% increase in sales to $1.78 billion and a massive 139% increase in underlying net profit after tax to $177.1 million. 

This strong result was driven by solid like for like sales growth across the company and supported by impressive online sales. The latter jumped 87% over the prior corresponding period to $237.4 million.

Positively, its outlook remains positive, particularly given the weak base the company is cycling through Easter and into May. This could mean a similarly strong full year result in August.

Goldman Sachs is a fan of the company and responded to its result by reiterating its buy rating and lifting its price target to $15.00. The broker is also forecasting a dividend of ~81 cents per share in FY 2021 (including a special dividend). Based on the current Super Retail share price, this represents a fully franked 6.9% yield.

More reading

• Goldman Sachs upgraded these ASX 200 shares after outstanding results 
• 3 ASX blue chip shares that just raised their dividends
• ASX 200 Weekly Wrap: ASX lower despite bumper dividends
• 2 fantastic ASX dividend shares to buy
• 2 buy-rated ASX dividend shares for your income portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought back from a tough start to record a strong gain. The benchmark index jumped 0.85% to 6,839.2 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to give back some of yesterday’s gains on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open 33 points or 0.5% lower this morning. In late trade on Wall Street, the Dow Jones is down 0.2%, the S&P 500 is down 0.4%, and the Nasdaq index has sunk a further 1.4%. The latter could weigh heavily on local tech shares today.

Woolworths half year results

The Woolworths Group Ltd (ASX: WOW) share price will be one to watch today when it releases its highly anticipated half year results. According to a note out of Goldman Sachs, its analysts are forecasting total revenue of $35,789.7 million for the first half. This will be a 10.1% increase on the prior corresponding period. In respect to earnings, it is expecting a 5.3% increase in first half net profit to $1,030.2 million.

Oil prices mixed

Energy producers such as Oil Search Ltd (ASX: OSH) and Santos Ltd (ASX: STO) will be on watch today after a mixed night of trade for oil prices. According to Bloomberg, the WTI crude oil price is down slightly to US$61.66 a barrel and the Brent crude oil price is up 0.25% to US$65.40 a barrel. Oil prices are trading close to 52-week highs.

Blackmores results

The Blackmores Limited (ASX: BKL) share price could be on the move today when it hands in its half year report card. Due partly to weakness in the daigou channel, a soft result is expected from the health supplements company. Analysts at Goldman Sachs are forecasting a 7.9% increase in revenue to $318.2 million but flat earnings before interest and tax at $27.8 million. The broker is also expecting dividend payments to be resumed after a one-year hiatus. It is forecasting an interim dividend of 46.8 cents per share.

Gold price softens

It could be a tough day for gold miners including Resolute Mining Limited (ASX: RSG) and St Barbara Ltd (ASX: SBM) after the gold price softened. According to CNBC, the spot gold price has fallen 0.3% to US$1,803 an ounce. This may have been due to profit taking after a series of solid gains by the precious metal.

More reading

• ASX 200 goes higher, Afterpay sinks, Adbri impresses
• The Mercury NZ (ASX:MCY) share price zaps up. Here’s why
• ASX investors watch out for a rise in interest rates in 2022
• Here’s why Oil Search (ASX:OSH) just slashed its dividend
• Why the Austal (ASX:ASB) share price got torpedoed today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of 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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The S&P/ASX 200 Index (ASX: XJO) rose by around 0.9% today to 6,839 points.

Here are some of the highlights from the ASX:

Adbri Ltd (ASX: ABC)

The Adbri share price was the best performer in the ASX 200, rising by 10.5%.

Construction business Adbri announced its FY20 report, showing that revenue dropped by 4% over the year to $1.45 billion. It blamed lower residential activity which affected its concrete and cement volumes. This offset improved sales of lime and concrete products.

Underlying net profit after tax (NPAT) fell by 6% to $115.6 million, but this was actually better than the guidance that it had previously given before it was withdrawn due to COVID-19.

It generated $93.7 million of statutory profit, with cashflow from operations growing by 32.6% to $256.2 million.

The Adbri board announced a final dividend of 7.25 cents per share, which brought the total FY20 dividend to 12 cents per share.

In terms of the outlook, Adbri said that trading conditions are expected to remain challenging until the stimulus measures completely offset underlying softness in east coast construction markets. However, some areas of the business will be supported by a growing number of mining projects.

SEEK Limited (ASX: SEK)

The SEEK share price fell over 7% in reaction to its updates today. It was one of the worst performers in the ASX 200.

It said that Andrew Basset will step down as managing director and CEO, to transition to the new full-time role of executive chair and CEO of SEEK Investments. Ex-Commonwealth Bank of Australia (ASX: CBA) Ian Narev will become the boss.

The SEEK board believes the SEEK Asia Pacific and Americas and SEEK Investments businesses can benefit from a greater degree of independence and focus, and is in a unique position to have two experienced executives lead its operating business and its investment arm.

SEEK wants the Investments business to be an investor and business builder that partners with emerging leaders to support their aspirations and deliver strong long-term returns. Keys to its success will include the ability to operate independently and access third party capital.

For SEEK, the focus is on the growth opportunities for the Asia Pacific and Americas business and relevant adjacencies, whilst retaining economic exposure to Investments and Zhaopin.

However, the company did say that Zhaopin and itself are in advanced discussions with a consortium looking to acquire an ownership interest in Zhaopin.

In terms of the FY21 half-year result, the ASX 200 share reported that group revenue was down 6% to $819.1 million. SEEK ANZ revenue was down 1%, Zhaopin revenue was down 8% and SEEK Asia revenue was down 23%.

Looking at group earnings before interest, tax, depreciation and amortisation (EBITDA), it dropped by 1% to $245.9 million. The EBITDA margin improved from 28% last year to 30%.

SEEK’s reported net profit dropped 8% to $69.7 million. It spent 8% more on depreciation and amortisation because of product and technology investment.

There was no FY21 half-year dividend declared, though the board intends to restart dividends at the full year result.

Regarding the full year forecast, it’s expecting revenue to be around $1.7 billion, EBITDA to be approximately $460 million and reported net profit to be around $100 million.

Other hefty ASX 200 movements

A number of ASX tech shares and growth shares were sold off today. The Afterpay Ltd (ASX: APT) share price dropped 7.2% and the Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price dropped 8.5%.

Two businesses fell more than 10%. They were: the Perenti Global Ltd (ASX: PRN) share price after reporting its result and the Austal Limited (ASX: ASB) share price after losing its US boss.

At the green end of the ASX 200, the AUB Group Ltd (ASX: AUB) share price rose by 10% after reporting its result.

More reading

• The Mercury NZ (ASX:MCY) share price zaps up. Here’s why
• Why the Afterpay (ASX: APT) share price is down 8% today
• ASX investors watch out for a rise in interest rates in 2022
• Adbri (ASX:ABC) share price soars on strong FY20 result
• Why the Austal (ASX:ASB) share price got torpedoed today

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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.

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The Select Harvests Limited (ASX: SHV) share price will be on watch after announcing the conclusion of its comprehensive strategic review of growth options and supply chain solutions for the food division.

Divestment plan for a Select Harvests asset

Select Harvests explained that the strategic review found that the Thomastown facility is not a core part of the future supply chain requirements and the strategic focus of the business is best directed to investing in the Carina West processing facility where it adds value and markets its almonds for sale in the domestic and export markets.

How did it reach that decision?

The conclusion was reached after considering multiple options including upgrading the existing Thomastown facility, developing a new production facility, outsourcing value-added production or investing in the Carina West facility and moving more value-added almond processing from Thomastown to Carina West, merging the Carina West and Thomastown facilities.

Select Harvests said that the decision has been made to restructure the food division to focus on Select Harvests’ competitive advantage in growing, value adding and marketing almonds in the domestic and export markets by expanding the Carina West facility.

The nut company announced that it has appointed its corporate adviser, Kidder Williams, to seek expressions of interest in the consumer branded business and Thomastown processing facility.

Carina West plan

Select Harvests revealed that it’s working on a progressive 18-month transition plan to move more almond processing from Thomastown to Carin West. That will mean investing in more jobs at the facility, as well as production capacity, new technology and new warehousing.

The nut business isn’t hanging around, it’s going to start investing immediately, with the stock pad currently being increased and a new paste machine arriving in April. Some of the investment was already in the long-term plan but has been brought forward due to the recent Piangil acquisition.

The Carina West facility will remain as an almond-only facility to avoid allergen contamination.

Select Harvest managing director Paul Thompson said:

We are focussed on delivering the best long-term return for our business and outstanding customer service to our customers. The expansion of the Carina West facility will create a supply chain that enables us to strengthen our competitive advantages in growing, value adding and marketing almonds in the domestic and export markets.

More reading

• The Uniti (ASX:UWL) share price is up 20% in 2021: Can it go higher?
• Platinum (ASX:PTM) share price on watch after strong profit growth
• What I’m paying attention to, this earnings season
• The Lefroy (ASX:LEX) share price rose by 237% today. Here’s Why
• Why the Atomo Diagnostics (ASX:AT1) share price closed 7% down today

Motley Fool contributor Tristan Harrison 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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It was a very positive day of trade for the Uniti Group Ltd (ASX: UWL) share price on Tuesday.

The telecommunications provider’s shares rose 9% to a record high of $2.15 before closing at $2.10..

This means the Uniti share price is now up 20% since the start of the year.

Why is the Uniti share price surging higher?

Investors were bidding the Uniti share price higher on Tuesday after the release of its half year results. Those results revealed strong growth in revenue, earnings, and free cash flow.

For the six months ended 31 December, Uniti reported a 148% increase in revenue compared to the prior corresponding period to $54.6 million.

Thanks to stronger margins, earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 307% to $29.3 million.

Furthermore, based on its performance in December, Uniti’s annualised revenue and EBITDA run-rate was $200 million and $116 million, respectively.

It was a similar story for its free cash flow. Operating free cash flow less capital expenditure was $18.3 million for the half. But at the end of December, its annualised operating free cash flow run-rate was $72 million.

What were the drivers of its growth?

The key drivers of Uniti’s growth during the half were a series of acquisitions.

During the period, the company completed three accretive acquisitions. These were OptiComm, Harbour ISP, and the Velocity network assets from Telstra Corporation Ltd (ASX: TLS). Positively, the integration and synergy realisation plans are on or ahead of schedule for these acquisitions.

In addition to this, management notes that all of Uniti’s business units are benefiting from various strong tailwinds. These include greater digital services uptake, consumption, technology, strengthening residential property markets, and lifestyle factors. The latter are making fibre broadband an essential service.

While no guidance has been given for the full year, Uniti’s Group Managing Director and CEO, Michael Simmons is very positive on the future.

He explained: “The fact that 75% of our existing fully funded, contracted fibre order book will be deployed in the coming 5 years , and is continuing to grow at improving rates, assures our shareholders of continued steep earnings growth and free cash generation over both the near and longer term.”

Can the Uniti share price go higher?

Late last month, Bell Potter put a buy rating and $2.20 price target on its shares.

With the Uniti share price now trading within sight of this, the upside may be limited in the short term.

However, Bell Potter is likely to reassess its price target in the coming days after fully digesting the result. This could potentially lead to a higher price target. Investors may want to watch out for that.

More reading

• Why the Uniti (ASX:UWL) share price just broke its record high?

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

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The Platinum Asset Management Ltd (ASX: PTM) share price will be one to watch on Wednesday.

This follows the release of the asset manager’s half year results after the market close.

How did Platinum perform in the first half?

The company was a positive performer during the first half, which could bode well for the Platinum share price tomorrow.

According to the release, for the six months ended 31 December, Platinum recorded an 8.5% increase in revenue to $166.6 million and a 14.4% lift in net profit to $90.4 million. Earnings per share came in at 15.6 cents.

Management advised that the main contributor of the increase in revenue, profit, and earnings per share was the mark to market gains on its seed investments, including dividends. These made an overall gain for the half year of $36.2 million before tax. This compares to a gain of just $7.7 million before tax in the prior corresponding period.

Also supporting its profit growth was a reduction in costs. Platinum’s total costs were $37.3 million for the half, which was down $3.3 million from a year earlier. This was achieved through cost savings on custody and registry fees, business development expenses, and legal, compliance, and other professional expenses.

In light of its profit growth, a fully franked interim dividend of 15.6 cents per share was declared. This represents 100% of its earnings per share. Management advised that this was possible due to its limited capital requirements. It continues to expect that that most, if not all, future profits will be distributed by way of dividends

Funds under management growth

At the end of the period, Platinum’s funds under management (FUM) stood at $23.6 billion. This represents an increase of 10.4% since the end of June.

Platinum’s FUM increase was driven by its investment performance, which contributed $3.3 billion to its FUMs. This more than offset the net fund outflows of $1 billion.

Positively, its investment returns were strong for all of its funds and mandates for the half year.

Outlook

No guidance has been given for the full year, but management appears positive on its prospects.

It notes that the company is well positioned for future opportunities thanks to its highly differentiated product and strong position in the Australian retail market.

It also believes its offshore initiatives provide a platform for growth over the medium-term and notes that its investment team continue to deliver high research quality and a large idea base.

The Platinum share price is up 6.1% since the start of the year.

More reading

• Top brokers name 3 ASX shares to sell today

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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Today has been one heck of a news day.

Craig Kelly resigns from the Liberal Party.

The Job Seeker boost still finishes, as scheduled, but the ‘old’ rate will be increased (so, a cut and an increase, which should make absolutely no-one happy!).

SEEK Limited (ASX: SEK) co-founder Andrew Bassat is stepping aside as CEO.

Oh, and at the time of writing, the Aussie dollar has gained 2% in just 24 hours to now be buying 79.3 US cents.

Not to mention the regular earnings season ‘firehose’ of ASX companies reporting. My rough count was about a dozen of note, and another dozen or so that also delivered numbers today.

And there’s more news, again, with Moody’s cutting Victoria’s credit rating… and on and on it goes.

Frankly, I’ve spent quite a bit of time looking at earnings this morning.

But, in keeping with my note about Domino’s the other day, I thought it was worth sharing a few reflections.

Given the amount of information, I need to make sure I’m using my time effectively. I’m trying to put the 80:20 principle into play.

So, you know what I’m looking for most, this earnings season?

Big picture stuff.

I’m looking for companies that have delivered remarkable numbers – good, or bad.

They can provide opportunities to buy and/or sell, depending on the market’s reaction.

I’m looking for evidence of a trend continuing or changing.

That can show you when something has started working, is still working, or might be breaking down.

I’m looking for ‘proof of concept’ from businesses that talk a good game but are yet to show us the money.

That can be things like continued revenue growth, and/or evidence of scale benefits accruing to the bottom line, even if a company is still losing money.

Now, I don’t want to give you the impression that it’s only about the big picture.

Debt matters. Margins matter. Competition (present or potential) matters. So does leadership and a dozen other things.

And, depending on your style of investing, they can matter more than almost anything else.

But one way of harnessing good returns is seeing something that others don’t (or won’t), or finding it before the whole market catches on.

Or – and this is deceptively simple, and remarkably common, but under-practiced – simply looking out far enough to see the long term potential.

And while you can’t simply extrapolate (there’s a reason Kodak isn’t known, today, for being the dominant photographic printmaker), it’s worth considering whether a business’ momentum might suggest long term success.

The medical field is a good example, here.

Yes, there have been better (and worse) times to buy shares in CSL Limited (ASX: CSL), Cochlear Limited (ASX: COH) and ResMed (ASX: RMD).

But their success, over the long term, owes relatively little to the minutiae of financial ratios calculated to two decimal places. 

Again, I’m not saying they are irrelevant or worthless. Far from it.

But those companies have been successful, in the main, by having a head start. Being best at what they do. Having large and growing markets. And with business models that rewarded that growth, delivering gobs of profit for shareholders.

Now, that doesn’t mean those opportunities will go on forever. Of the three, there are real questions as to CSL’s growth opportunities and its response to competing technologies. 

And none of these companies are conventionally cheap, today. There is a price at which you should be prepared to sell and walk away.

But their stories of investment success owe much to their ability to take advantage of the bigger picture.

So, today, I’m reminding myself not to miss the forest for the trees.

That might work for you, too.

Fool on!

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Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd., ResMed Inc., 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 What I’m paying attention to, this earnings season appeared first on The Motley Fool Australia.

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