Retail investors in the US are shaping up to be better stock pickers than the professionals during the COVID‐19 rebound this year.

These mum and dad investors have generated returns that are twice that of hedge funds, according to Reuters.

I believe everyday ASX investors in Australia are also beating the pros at their own game. As reported in July, retail investors here have rushed to buy embattled ASX stocks during the COVID market meltdown.

It appears that US retail investors have done the same – turning the idiom “fools rush in where angels fear to tread” on its head!

I’ll tell you why this is significant later in this piece.

Stocks most popular with retail investors in 2020

Online trading platforms showed that the US stocks most popular with retail investors have performed much better than the overall market.

These stocks include the likes of the Amazon.com, Inc. (NASDAQ: AMZN) share price and Tesla Inc (NASDAQ: TSLA).

Reuters said that a basket of 58 US stocks popular with retail investors have surged 80% this year.

This compares to a 14.5% rise in the S&P 500 Index (INDEXSP: .INX) and a 40% return from hedge funds run by some of the brightest minds in the financial sector.

In Australia, our equivalent to Amazon and Tesla is the Afterpay Ltd (ASX: APT) share price. I suspect retail investors have been snapping up the stock more so than fund managers.

2020 is the year for “fools”

Perversely, it may be the lack of so-called “sophistication” that allowed retail investors to race ahead of the pros. These amateurs don’t believe in diversification and have a portfolio that’s concentrated in a few stocks that have led the rebound.

They were also less worried about controlling and managing risks. On the other hand, professionals have been cautious about pumping capital into a falling market earlier this year.

Retail investors beating pros to starting line

You can blame central banks for this. Retail investors have thrown caution into the wind when their savings are attracting close to zero returns. Other safe investment options are also underperforming when interest rates are at rock bottom and central bankers are flooding financial markets with cash.

This leaves retail investors few options and they are the ones diving head first into equities when the pros were still working out how deep the waters were.

Double, double toil and trouble

Some are drawing comparisons with the dotcom crash of 2000 as retail investors don’t seem to mind buying stocks that experts think are overpriced.

The “hot” US retail stocks of 2020 are trading on negative price-earnings multiples on average because many don’t make a profit, added Reuters.

“Of course it’s a bubble,” Mark Taylor, a sales trader at Mirabaud Securities, told Reuters.

“But money is free, liquidity is high, it’s never been easier to trade for retail punters, there’s no savings rate or bond yield and everyone wants the bubble to pop.”

Retail investors in winners circle

Sceptics waiting for the day of reckoning may need to exercise patience. The rebound in global economic growth as vaccines become available means that share markets are likely to keep rallying in 2021.

This is likely to force fund managers and other professionals left behind by retail investors to play catch-up quick.

Otherwise, they risk underperforming for a second year running and face uncomfortable questions from irate clients.

More reading

• What will happen when Tesla (NASDAQ:TSLA) joins the S&P 500 today?
• How to invest in US shares in 2021
• Better buy: Amazon vs Chewy
• Amazon has a new strategy to capture India’s e-commerce market
• World’s 10 biggest companies are now worth 12% of Earth’s GDP

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors.

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Tesla and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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 year 2020 has not been kind to the transport sector, with some of the biggest names biting the bitter pill in a year that’s been lost to the coronavirus pandemic.

Airlines and airports have naturally been hit hard this year. However, there are also some transport shares that have done well in 2020.

Let’s take a look at the top 3 winners and losers in ASX transport shares in 2020.

First, the losers…

Company	1-year share price return	Current share price	Market cap
1. Qantas Airways Limited (ASX: QAN)	-33%	$4.89	$9.2 billion
2. Sydney Airport Holdings Pty Ltd (ASX: SYD)	-28%	$6.35	$17.2 billion
3. Aurizon Holdings Ltd (ASX: AZJ)	-25%	$4.04	$7.47 billion

Qantas Airways

The national carrier’s share price has seen some volatility this year, being pushed up and down at the slightest news on the virus outbreak.

The Qantas share price lost 33% this year, after losing 70% in March and dropping to its 52-week low of $2.03. The share started to pick up in November after news of successful vaccine testing was announced to the market.

Light is starting to appear at the end of the tunnel however, with the airline saying last week that its budget offshoot Jetstar will already exceed pre-COVID volume of flights within 3 months.

Although international leisure travel may still be months away, the airline revealed that its domestic capacity was already at 68% of pre-COVID levels for December, rising to nearly 80% for quarter-three.

Qantas delivered underlying profit before tax (NPAT) of $124 million for full year FY20, down 91% from FY19.

Sydney Airport

The Sydney Airport story in 2020 has pretty much followed the fate of Qantas. 

The airport’s shares had fallen by 50% in March, before recovering as economic outlook progressively improved in the second half of the year.

The company revealed that for the month of November 2020, it saw total passenger numbers decline by 90.6% to 350,000.

Sydney Airport has suspended dividend payments for the first time ever in its history, after reporting a $51.8 million net loss after tax, compared to a profit after tax of $200 million in the corresponding 2019 period.

The airport’s shares will certainly be one to watch in 2021 when the economy and travel are expected to be back to normal.

Aurizon 

Aurizon is not perhaps covered tremendously in the media. After all, it’s a rail freight operator company.

However, the company is a large juggernaut, transporting more than 250 million tonnes of Australian commodities – connecting miners, primary producers, and industry with international and domestic markets.

The Aurizon share price has lost a bit of shine this year, losing 25% in value as commodities exports dwindle in the face of the pandemic. Near term headwinds will come in the face of the continuing Australia-China political spat, as Australian coal has apparently been added to Beijing’s ban list.

Given the tough market, the company actually delivered an impressive full year FY20 NPAT of $531 million, up from $473 million the previous year.

And now for the winners….

Here are the top 3 performing ASX transport shares in 2020. The winners have been dominated by small cap shares, with the airlines Rex leading the charge.

Company	1-year share price return	Current share price	Market cap
1. Regional Express Holdings Ltd (ASX: REX)	+64%	$1.965	$212.6 million
2.Alliance Aviation Services Ltd (ASX: AQZ)	+65%	$4.04	$646.6 million
3.Wiseway Group Ltd (ASX: WWG)	+15%	$0.22	$32.2 million

Rex Airlines

The Rex share price has gained 64% in 2020, with 25% made in the past month alone.

Rex has been a favourite for investors recently, after it announced that it will break out of its regional roots and start servicing the “golden triangle” route. 

The Golden Triangle refers to the Sydney-Melbourne-Brisbane routes – among the busiest in the world.

The airline was brought to its knees back in March as passenger numbers plummeted 90%. Rex subsequently announced a loss after tax of $19.4 million on a turnover of $321.8 million for financial year 2020.

Alliance Aviation

The Alliance Aviation share price has performed brilliantly in 2020, gaining 54% and reaching its all-time high of $4.08 on 18 December.

Why has the company performed solidly this year while other airlines floundered?

First, Alliance generates income by providing contract, charter and allied aviation services to the mining and energy industry, both locally and internationally. The company actually delivered a profit before tax of $47.7 million in FY20 (+24.1% compared to the previous year).

Unlike other aviation and airport businesses, Alliance Aviation provides aviation services to mainly iron ore, gold, copper and uranium sectors, with the commodities industry representing 53% of its total contract value in FY20. As some of these exports have maintained their strong demand this year, so has demand for Alliance’s services.

Wiseway Group

You can’t blame yourself for not having heard about this company.

Wiseway describes itself as “one of the leading forward freight companies in Australia”, offering “extensive high-quality services for the whole Australia wide and globally”.

The company services all aspects of international forwarding and logistics, including air freight, sea freight, customs clearance, transportation, warehousing, distribution, and logistics solutions.

The Wiseway share price has gained 15% this year, with revenues up 53% to $31 million for the first quarter of Fy21. This was up $10.7 million from the prior corresponding period.

The $31 million in revenue for FY2021 so far compares favourably with the total revenue of $102.6 million that the company banked in the entirety of FY2020.

More reading

• ASX 200 ends slightly down
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• ASX 200 Weekly Wrap: ASX hits new post-March high
• 3 recovery ASX shares to buy for 2021
• 2 ASX dividend shares for 2021’s zero interest rate world

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings 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 McPherson’s Ltd (ASX: MCP) share price will be on watch on Tuesday following the release of a trading update after the market close.

What did McPherson’s announce?

This afternoon McPherson’s confirmed that sales from its core brands in the Australian market continue to exceed last year’s figures.

According to the release, year to date, the company’s owned brands, excluding the Dr. LeWinn’s brand, have recorded sales growth of 7%.

This has been driven by double digit sales growth from the Manicare, Lady Jayne, and A’kin brands. Furthermore, market share growth has been recorded from 4 out of 6 of its owned brands.

The Dr. LeWinn’s brand continues to weigh on the company’s performance, though. Like A2 Milk Company Ltd (ASX: A2M), this has been caused by weakness in the daigou channel.

However, unlike a2 Milk, the sales of these products inside China haven’t been strong, with Chinese Singles’ Day sales falling well short of expectations.

Global Therapeutics acquisition.

In addition to this, the company revealed that the Global Therapeutics acquisition from Blackmores Limited (ASX: BKL) completed successfully on 30 November and its integration is progressing smoothly.

Management believes that this reflects the professional, collaborative approach of Global Therapeutics, McPherson’s, and Blackmores.

McPherson’s new Chief Executive Officer and Managing Director, Grant Peck, commented: “McPherson’s year to date domestic sales growth reflects the consumer appeal of our market leading brands and our focus on new product innovation. All of the early signs are positive as we integrate Global Therapeutics into McPherson’s and realise the complementary capabilities of the combined teams. Domestically, we continue to drive cashflow to support our mature dividend profile and modest debt levels.”

Mr Peck, who was appointed CEO earlier this month after the sudden departure of Laurie McAllister following a series of terrible updates, also provided the market with guidance for the first half of FY 2021.

He revealed that McPherson’s is on track to achieve its previous first half underlying profit before tax guidance in the range of $6.5 million to $7.5 million. This represents an 11.8% to 23.5% decline on the prior corresponding period’s profit before tax of $8.5 million.

In addition to this, the new chief executive revealed that shareholders should expect a dividend March. He advised that the company’s dividend policy is to pay a minimum dividend of 60% of underlying profit after tax, subject to cash requirements.

In line with this policy and based on its forecast first half underlying earnings, an interim fully franked dividend of at least 3 cents per share is expected to be paid to shareholders in March.

Annualised, this represents a fully franked 4.5% dividend yield. This may be far better than many had expected after its recent updates and guidance withdrawal.

More reading

• Why Appen, McPherson’s, Northern Star, & PWR shares are dropping lower
• Why the McPherson’s (ASX:MCP) share price is sinking lower again
• Why Adore Beauty, Bank of Queensland, Bega Cheese, & McPherson’s are dropping lower
• Why is the McPherson’s (ASX:MCP) share price dropping 35% today?
• Why these All Ords shares have been smashed this month

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Blackmores 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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With only 3 full shopping days left before Christmas, let’s throw the spotlight on S&P/ASX 200 Index (ASX: XJO) retail shares. Specifically, 3 leading ASX retail shares that are well-positioned to potentially outperform the market in 2021.

If you’ve already finished your Christmas shopping for the year, good on you! If you still have a few items to cross off your Santa list, you’re far from alone.

Outside of the greater Sydney area, where a new wave of COVID-19 infections has unfortunately seen lockdown restrictions return, shoppers are increasingly returning to brick-and-mortar retailers.

Which is not to say that the rise of online retailing is over. It’s not. According to estimates from Macquarie, 20% of consumer spending will be online in 5 years.

But that still leaves the majority of spending occurring in physical stores. And with the rollout of vaccines expected to commence in Australia in February or March, the second half of 2021 could see a major return to in-store shopping.

Whether you prefer to do your shopping on your phone or computer, or face to face with clerks and shoulder to shoulder with your fellow shoppers, the 3 ASX retail shares we look at below have a strong presence in both online and physical store sales.

Cashed up consumers a tailwind for ASX retail shares

Credit Suisse analysts Grant Saligari and Annabelle Diamond are bullish on the outlook for Australian consumer spending in the final days of 2020 and through 2021.

According to the Australian Financial Review, the analysts say:

The market is too bearish on household goods and food expenditure. Under-spending on travel and a substantial savings buffer provide considerable downside support for spending.

The analysts expect the work from home trend established during the pandemic lockdowns to continue, even as more people do return to office. They estimate this could see a 4% increase in spending on electronics and furniture.

While international travel for Australians may recommence by mid-2021, the Credit Suisse analysts believe the tailwinds from cashed up consumers are likely to continue into the 2022 financial year:

A recovery in international travel in FY22 to 50 per cent of its pre-COVID-19 level would imply under-spending. While we acknowledge that travel substitution is likely a transitory impact, it is likely that some extension of under-spending will continue into FY22 at least.

With Australians unable to take international holidays, and many households benefiting from ramped up government support packages and early access to super, the AFR notes that the average Aussie’s credit card debt is already down more than $500 year-on-year, while the average bank balance is up $12,500.

And it’s not just less debt and more cash in the bank that’s likely to drive an increase in spending. According to the latest ANZ-Roy Morgan consumer confidence survey, consumer confidence is also up year-on-year.

Ka-ching!

Why Credit Suisse upgraded these retailers

With this consumer spending picture in mind, Credit Suisse has upgraded its views on these 3 ASX 200 retailers, in part based on the companies’ relatively low levels of debt.

First up, Harvey Norman Holdings Limited (ASX: HVN), known for its wide offerings ranging from electronics and appliances to furniture and homeware. Credit Suisse upgraded its view to “outperform” with a target price of $5.30. That’s 11% above Harvey Norman’s current share price of $4.74.

Harvey Norman’s shares reached a low for the year on 23 March, trading for $2.45 per share. Year-to-date the Harvey Norman share price is up 17%.

The company pays a dividend yield of 3.85%, fully franked.

Next up is Wesfarmers Ltd (ASX: WES), whose subsidiaries include household names such as Bunnings Warehouse, Kmart Australia and Officeworks. Credit Suisse upgraded its view to “outperform” with a target price of $55.83. That’s 9% above the Wesfarmers’ current share price of $51.30.

Wesfarmers pays a 2.97% dividend yield, fully franked. Year-to-date the Wesfarmers’ share price is up 24%.

The third ASX retail share to receive an upgrade from Credit Suisse is JB Hi-Fi Limited (ASX: JBH), also raised to “outperform”. Credit Suisse set a new target price of $53.02 for the iconic electronics, appliance and whitegoods retailer. That’s 10% above JB Hi-Fi’s current share price of $48.38.

JB Hi-Fi pays a 3.94% dividend yield, 50% franked. Year-to-date the JB Hi-Fi share price is up 29%.

More reading

• Forecast double-digit surge in Aussie dollar could put brakes on ASX rally in 2021
• ASX 200 Weekly Wrap: ASX hits new post-March high
• These are the 7 best ASX retail shares in 2020
• Why this broker thinks the Wesfarmers (ASX:WES) share price can go higher
• Citigroup picks the best ASX retail stocks to own for 2021

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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) fell slightly on Monday, down 0.1% to 6,670 points.

Here are some of the highlights from the ASX today:

City Chic Collective Ltd (ASX: CCX) acquisition

City Chic is going to acquire UK plus-size brand Evans from the Arcadia group. Evans has a long history, having operated for 90 years as a high street retailer.

The ASX share is buying Evans’ e-commerce and wholesale businesses, which generated £26 million (A$46 million) of sales for the financial year to August 2020. The Evans website had 19 million visits in that time.

However, this acquisition doesn’t include the store network of more than 100 locations in the UK. The administrators are entitled to trade from the existing Evans stores until the end of March 2021, in order to liquidate existing stock in the stores. The franchise business, based primarily in Middle East, is also excluded from the acquisition.

The Evans group (online, wholesale, stores and franchise) generated over £60 million of annual sales prior to COVID-19. City Chic said that Evans has high online penetration with almost half of direct-to-consumer sales (stores and website) being through the digital channel.

The store portfolio has been shrinking for a number of years with customers changing to the digital channel, which City Chic thinks will minimise any e-commerce sales leakage as a result of the administration-led store liquidation. The acquisition will be funded from City Chic’s existing cash balance, which was A$121 million before the acquisition. Its $40 million debt facility will remain undrawn.

City Chic said that this acquisition will give it a platform to launch into a new market worth £5 billion annually in the UK, or $9 billion in Australian dollar terms.

The City Chic share price rose by more than 11% today.

Private health insurance premiums

Private health funds across Australia have today received approval from the Federal Minister for Health for increases to the private health insurance premiums.

NIB Holdings Limited (ASX: NHF) has received approval from the minister to increase insurance cover premiums for NIB health funds by an average of 4.36% across all products. The changes are effective from April 2021.

NIB managing director Mark Fitzgibbon said the premium changes were a balance of affordability whilst ensuring NIB members can access medical treatment when and where they need it.

Mr Fitzgibbon said: “Premium changes are never welcomed but the reality is that the cost of medical treatment continues to rise well above inflation and we’re increasingly seeing members access healthcare services with health insurance a critical funding tool enabling treatment and care.

“A perfect example is the concerning increase in members accessing member health services. In the 12 months to 30 September 2020 mentals health benefits totalled $48.8 million.”

NIB also said that its contribution to the industry’s risk equalisation scheme is also a driver of its premium increase.

The NIB share price went up 3.75% in reaction to this.

The biggest private health insurer, Medibank Private Limited (ASX: MPL), said that it was approved for its lowest premium rise in 20 years.

Medibank said it has received approval to increase Medibank and ahm health insurance premiums by an average of 3.25% from 1 April 2021.

The Medibank share price went up by 3.75% today.

Travel shares drop, then recover

Many of the ASX travel shares fell heavily at the open after New South Wales was cut off from the rest of the nation as hard borders went up again in reaction to the COVID-19 outbreak in the northern beaches of Sydney.

At the end of the day’s trading, the Webjet Limited (ASX: WEB) share price finished 0.4% lower, the Flight Centre Travel Group Ltd (ASX: FLT) share price dropped 1.8%, the Qantas Airways Limited (ASX: QAN) share price fell 0.6%, the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price dropped 0.8% and the Helloworld Travel Ltd (ASX: HLO) share price declined 4%.

More reading

• Why the Medibank (ASX:MPL) has surged 4% higher today
• What will happen when Tesla (NASDAQ:TSLA) joins the S&P 500 today?
• Under attack! Why the WiseTech Global (ASX:WTC) share price is down 9%
• The most crazy ASX chart of 2020
• Why Elixinol Global, Flight Centre, Mesoblast, & WiseTech shares are dropping lower

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Helloworld Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and NIB Holdings 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 Medibank Private Ltd (ASX: MPL) share price is surging more than 4% higher today to start the pre-Christmas trading week strongly.

This follows a market update this morning on changes to its health insurance premiums from April next year.

Why is the Medibank Private share price surging?

The Aussie private health insurer has received approval to increase its Medibank and ahm health insurance premiums. From 1 April 2021, premiums will rise by an average of 3.25% – the lowest average premium increase in 20 years.

The Medibank share price has rocketed 4.1% higher to $3.05 per share today. The news buoyed investors in an otherwise soft day of trade on the ASX across sectors.

It’s been a tough year for Aussie health insurers with the Medibank share price falling 4.2% lower in a year dominated by coronavirus concerns.

The story is similar for the NIB Holdings Limited (ASX: NHF) share price today. Shares in the rival health insurer have climbed 3.1% higher today but remain down 9.5% for the year.

The NIB share price has also surged after the company announced an average premium increase from 1 April next year of 4.36% across all products. In contrast to Medibank, that premium increase is higher than the 3-year average premium increase of 3.55%.

NIB managing director Mark Fitzgibbon noted the impact of the planned premium increase. NIB’s annual average premium per single equivalent unit will be $2,844 compared to an industry average of $3,119.

Foolish takeaway

The Medibank share price has been a bright spot in a soft start to the week for the S&P/ASX 200 Index (ASX: XJO).

The benchmark Aussie index is down 0.1% to 6,669 points as COVID-19 concerns continue to hang over markets. WiseTech Global Limited (ASX: WTC) and AGL Energy Limited (ASX: AGL) are among the biggest losers on Monday.

Medibank now boasts a market capitalisation of $8.4 billion with a price to earnings (P/E) ratio of 26.7 and a 3.9% dividend yield.

More reading

• What will happen when Tesla (NASDAQ:TSLA) joins the S&P 500 today?
• Under attack! Why the WiseTech Global (ASX:WTC) share price is down 9%
• The most crazy ASX chart of 2020
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• Here’s what is driving the NIB (ASX:NHF) share price higher today

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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The Cimic Group Ltd (ASX: CIM) share price is down today, despite a positive announcement today that its subsidiary Ventia has won a Telstra contact. This most recent news comes hot on the heels of Ventia announcing a contract award with Anglo American, pre-market today.

At the time of writing, the Cimic share price is down 1.2% to $25.49.

A closer look at Cimic

The Cimic Group provides a range of services to the infrastructure, resources and property markets. These include construction, mining, mineral processing, engineering, concessions, and operation and maintenance services.

The company operates in more than 20 countries throughout Asia Pacific, the Middle East, North and South America, and Sub-Saharan Africa.

Telstra contract win

According to its release, Ventia, which is 50% owned by Cimic Group, was awarded a field optimisation contract with Telstra Corporation Ltd (ASX: TLS).

Under the agreement, Ventia will carry out a number of works, which will include:

• network services, including mobile and wideband
• national optic fibre and data and IP services
• maintenance and building services to more than 40,000 exchange and network assets
• network integrity and facilities management of exchanges and other network sites.

Based on forecasted work volumes, the 3-year contract value is estimated to generate $570 million in revenue for Ventia.

Ventia, formerly known as Visionstream, has developed a mutually beneficial relationship with Telstra over a 25-year period. This latest contract award is another testament to the strength of the partnership between the two companies. 

What did management say?

Mr Tim Harwood, Ventia’s group executive of telecommunications, commented on the strategic win, saying:

The Telstra Field Optimisation contract provides us with an opportunity to strategically partner with Telstra as it simplifies its business.

This will be achieved by delivering the highest-quality field operations for Telstra at a lower cost that is based on economies of scale, effective optimisation programs and improved ways of working supported by digital enhancements.

Cimic share price summary

The Cimic share price has climbed strongly since the start of October, gaining over 38% for shareholders, although the company’s shares are still down from their pre-COVID highs.

More reading

• Why the Cimic Group (ASX:CIM) share price is on watch today
• ASX 200 Weekly Wrap: ASX hits new post-March high
• Buy Telstra (ASX:TLS) shares instead of term deposits
• Why the Uniti (ASX:UWL) share price is zooming 13% higher today
• 2 blue chip ASX dividend shares to buy today

Motley Fool contributor Aaron Teboneras owns shares of Telstra Limited. 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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Investors in ASX cannabis shares have had a bumpy ride in 2020. Share prices were impacted by global oversupply issues in late 2019 then plunged in the March 2020 market downturn.

But the Australian medical marijuana industry is building momentum, continuing its growth trajectory in 2020 despite the impacts of COVID-19. According to Freshleaf analytics, the market tripled in size over 2020 with 30,000 active patients and $95 million in annual revenue. 

As the industry matures, competition is increasing. The number of available products has doubled in the last year to 150, putting pressure on prices. Prices have trended downward, and are now on par with more mature markets such as Canada. With price decreases, patient doses have increased, while average spend remains static. 

The industry got a boost in September when the TGA down-scheduled cannabidiol (CBD). This will allow Australian patients to purchase CBD products from a pharmacist, without needing a prescription.

But in New Zealand, voters were against a proposal for greater legalisation and decriminalisation of recreational cannabis floated in October, albeit by a narrow margin. This will be a blow to the industry which may have hoped for a potential widening in customer base.

In more positive news, the UN voted to remove cannabis and cannabis-related substances from Schedule IV of the international treaty governing narcotic drugs in early December. 

ASX cannabis shares saw mixed results over 2020. While some outperformed the broader market, others lagged. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up around 1% over the year.

Let’s take a look at how 5 of the best ASX cannabis shares have performed in 2020.

Company name	1-year share price return	Share Price	Market Cap
Zelira Therapeutics Ltd (ASX: ZLD)	67%	$0.09	$113.8 million
Althea Group Holdings Ltd (ASX: AGH)	14%	$0.40	$102 million
Ecofibre Ltd (ASX: EOF)	-30%	$1.9	$287.5 million
Auscann Group Holdings Ltd (ASX: AC8)	-26%	$0.17	$55.48 million
Cann Group Ltd (ASX: CAN)	5.3%	$0.49	$136.3 million

1. Zelira Therapeutics

Small cap Zelira outperformed following its merger with US-based medicinal cannabis product developer Ilera in late 2019. The merger provided Zelira with direct access to the US market where revenue is being generated by the recently launched HOPE brand of cannabis formulations. Zelira entered into a licensing agreement in December to allow for distribution in the Washington DC market. 

Zelira has previously licenced HOPE in Pennsylvania and Louisiana and remains focused on expanding distribution across approved markets in the US. With its sights firmly set on becoming a profit generating pharma company, Zelira completed a $4.58 million capital raise earlier this year to fund the launch of multiple products into global markets. 

2. Althea Group 

Althea had a bumper year of share price growth compared to some pot sticks. The company is in the product distribution game, connecting patients and prescribers via its Althea Concierge app.

Active in Australia and the UK, and Althea recently started distributing to Germany. The company has also entered the manufacturing sector with its Peak Processing Solutions facility in Canada, which is capable of processing cannabis infused edibles and nutraceuticals. 

In December, Althea reported 11,841 Australian patients, up from 3688 a year earlier.  The aim is to have 30,000 patients by 2021. With 810 healthcare professionals prescribing Althea products in Australia, revenue is growing – it was up 48% month-on-month in November to $110,378. This has been reflected in an increase in the Althea share price over 2020. 

3. Cann Group

The Cann Group share price, on the other hand, is finishing 2020 largely flat. A July capital raise was conducted at a 50% discount to the (then) share price of 82 cents, causing the price to plummet. Key stakeholder Aurora Cannabis then sold its 11.84% shareholding in the company in October in off-market trades to undisclosed buyers. 

In more positive news, the company finally executed debt documentation in December. This will provide funding of $50 million to complete construction of the first stage of the company’s production site near Mildura.

A staged approach to construction of the facility was adopted in response to the global oversupply of cannabis late last year. Cann Group is choosing to initially focus on meeting Australian domestic demand while reducing operating expenses as it seeks to transition to profitability. 

4. Ecofibre

Ecofibre saw its share price decline over the full year as investors shied away from the hemp products producer. The company listed on the ASX in March 2019 at $1 per share and was trading above $3 in late 2019.

The share price has since, however, retraced its steps. Ecofibre’s US based Ananda Health business has been significantly impacted by COVID-19, lawlessness in key US markets, and industry changes in the US CBD market. Revenue for the first quarter of 2021 was significantly down on the prior corresponding period. Ecofibre has advised the best it can expect is a breakeven profit result in FY21. 

5. Auscann Group

The Auscann share price spent most of 2020 in the mid teens but spiked in early December following the UN’s vote on cannabis. Auscann’s CEO commented, “the change in scheduling has the potential to vitalise research into medicinal cannabis, removing some of the deterrents to activity in this space.”

Nonetheless the share price remains well down from all time highs. The company launched its hard shell capsules in 2020 and says sales have initially been slower than hoped but are building. From a low base, sales are currently increasing 50% month on month. 

The Australian medical marijuana industry has undergone a reckoning with reality over the last couple of years. This has resulted in more realistic valuations than in the early, exuberant days post legalisation.

As the sector moves toward maturity, 2021 could mark a turning point in discovering what a healthy medical marijuana industry looks like in Australia.

More reading

• Why the Althea (ASX:AGH) share price is sinking 6% lower today
• Althea (ASX:AGH) share price drops lower despite major announcement
• Cannabis share Althea (ASX:AGH) sinks 11% on capital raising and Aphria selldown
• Why Althea, Altium, Fortescue, & Retail Food Group are dropping lower
• Here’s why the Zelira (ASX:ZLD) share price just rocketed to a new high

Motley Fool contributor Kate O’Brien 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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ASX share City Chic Collective Ltd (ASX: CCX) is an attractive business according to one particular fund manager.

What does City Chic do?

City Chic describes itself as a global omni-channel retailer that specialises in plus-size women’s apparel, footwear and accessories. It has a number of brands including City Chic, Avenue, CCX, Hips & Curves and Fox & Royal. It has a network of 96 stores across Australia and New Zealand, websites operating in Australia, New Zealand and the US, marketplace and wholesale partnerships with major US retailers such as Macys and Nordstrom, and a wholesale business with European and UK partners such as ASOS and Zalando.

Avenue targets value-conscious women with a long history and significant online customer following in the US. Hips & Curves and Fox & Royal are online intimates brands in the US and ANZ respectively.

A recent acquisition

Before I get to the fund manager’s views, City Chic announced an acquisition today.

City Chic is going to acquire UK plus-size brand Evans from the Arcadia group. Evans has a long history, having operated for 90 years as a high street retailer.

The ASX share is buying Evans’ e-commerce and wholesale businesses, which generated £26 million (A$46 million) of sales for the financial year to August 2020. The Evans website had 19 million visits in that time.

However, this acquisition doesn’t include the store network of more than 100 locations in the UK. The administrators are entitled to trade from the existing Evans stores until the end of March 2021, in order to liquidate existing stock in the stores. The franchise business, based primarily in Middle East, is also excluded from the acquisition.

The Evans group (online, wholesale, stores and franchise) generated over £60 million of annual sales prior to COVID-19. City Chic said that Evans has high online penetration with almost half of direct-to-consumer sales (stores and website) being through the digital channel.

The store portfolio has been shrinking for a number of years with customers changing to the digital channel, which City Chic thinks will minimise any e-commerce sales leakage as a result of the administration-led store liquidation. The acquisition will be funded from City Chic’s existing cash balance, which was A$121 million before the acquisition. Its $40 million debt facility will remain undrawn.

City Chic said that this acquisition will give it a platform to launch into a new market worth £5 billion annually in the UK, or $9 billion in Australian dollar terms.

What makes City Chic an interesting option?

Fund manager Chris Prunty from QVG Capital thinks that the e-commerce theme will continue to grow after COVID-19 has passed. For a business like City Chic, the fashion ASX share’s ability to sell products online underlines its ability to build itself into a market-leading position.

Mr Prunty also said that City Chic’s management is a great example of what can be done in a crisis, not worrying about failure and instead focusing on innovating, leading to outperformance.

In FY20, City Chic’s online penetration of total sales was 65%, compared to 44% in FY19. Online website sales growth was 113.5% in the last financial year.

After today’s movement where the City Chic share price went up 11%, it’s now valued at 24x FY23’s estimated earnings.

More reading

• Why City Chic, Kogan, Next Science, & NIB shares are charging higher
• Why the City Chic (ASX:CCX) share price is rocketing 15% higher

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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Weebit Nano Ltd (ASX: WBT) shares were on the rise today. This came after the company announced it will file two new patents with its strategic partner, Leti. By the market’s close, the Weebit Nano share price was up 11.54% to $2.03. In comparison, the S&P ASX All Technology Index (ASX: XTX) was down 1.3% to 2,843 points.

Quick take on Weebit Nano

Weebit Nano develops next generation computer memory technology. The company addresses the growing need for data storage and embedded non-volatile memory (NVM) technology with its new, resistive random-access-memory (ReRAM) technology.

According to the company, “Weebit Nano’s technology enables a quantum leap, allowing semiconductor memory elements to be significantly cheaper, faster, more reliable and more energy efficient than the existing Flash technology”.

What’s driving the Weebit Nano share price higher?

The Weebit Nano share price was rocketing higher today after the company advised it has recently filed two new patents related to its to Silicon Oxide (SiOx) ReRAM technology. 

The first of the patents outlines a process improvement that enables high memory yield and high uniformity across memory cells. The goal is to maximise production efficiency during fabrication which will ultimately lead to best-in-industry class memory chips.

The second patent filed relates to the selector development utilising a very fast read speed. This, in turn, allows less power to be required and reduces stress during the read operation of a memory chip.

Management commentary

Weebit Nano CEO Mr Coby Hanoch said:

Weebit is continuing to build its IP portfolio as it moves closer to first commercialisation, filing two new patents to protect our technology and enhance the IP value for our licensees. Together with our strategic partner Leti, we have filed eight patents over the past two years.

The recent capital raisings support accelerated research and development that is expected to generate additional patents as we progress towards production.

Weebit share price summary

The Weebit Nano share price has shot up higher over the past 6 months, reflecting a gain of more than 600%.

Weebit Nano shares reached a high of $2.47 last month after the company provided investors with an activities update for the first quarter of FY21.

Weebit has a current market capitalisation of $207 million.

More reading

• Why is the Weebit Nano (ASX:WBT) share price dropping 7% today?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Weebit Nano (ASX:WBT) share price surged 12% today appeared first on The Motley Fool Australia.

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