If you’re looking to overcome the ultra low interest rates being offered with savings accounts and term deposits, then the share market could be the answer.

Two ASX dividend shares that offer investors interest rate-beating yields are listed below. Here’s what you need to know:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

The first ASX dividend share to consider is ANZ. Due to the booming housing market, Australia’s economic recovery, and the rollout of COVID-19 vaccines, this banking giant’s outlook is looking very positive now. This could make it well worth considering ANZ if you haven’t already got exposure to the sector.

One broker that is a fan is Morgans. Following ANZ’s impressive first quarter update, the broker reiterated its add rating and lifted its price target to $31.00.  

Its analysts are also forecasting a fully franked dividend of $1.45 per share in FY 2021. Which, based on the current ANZ share price, will mean a 5.1% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

Now could also be a good time to consider buying this telco giant’s shares. This is due to its improving outlook thanks to the easing NBN headwind, rational competition, lucrative 5G internet, and the probable splitting up of the company to unlock value.

Goldman Sachs is a fan of Telstra and currently has a buy rating and $4.00 price target on its shares. This compares to the current Telstra share price of $3.21.

The broker is also confident in Telstra’s growth plans and sees value in its plan to split up and monetise its assets.

Overall, it believes the company is in a position to continue paying its fully franked 16 cents per share dividend for the foreseeable future. This will mean a 5% dividend yield for income investors. Which certainly is attractive given the low interest rates on offer elsewhere.  

More reading

• Morgan Stanley bullish on the Westpac (ASX:WBC) share price
• Why the Telstra (ASX:TLS) share price has had a top week
• Spacetalk (ASX:SPA) share price surges 77% on Telstra deal
• ASX weakness could be met with $19bn “dividend bonanza”
• Revealed: 4 least profitable industries in Australia

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 two ASX shares mentioned below are delivering very useful growth right now.

The share prices of both of these businesses have gone up significantly over the last year as they recover from the effects from the COVID-19 crash.

Pro Medicus Ltd (ASX: PME)

This ASX share describes itself as a leading medical imaging IT provider that provides a full range of radiology IT software and services to hospitals, imaging centres and health care groups worldwide.

Pro Medicus might be one of the most profitable businesses on the ASX with an earnings before interest and tax (EBIT) margin of 59%, though the company doesn’t expect this to be maintained due to one-off COVID-19 impacts that lowered expenses. 

Despite a large impact of the strengthening of the Australian dollar on its predominately US-based earnings, Pro Medicus recently reported a 7.8% increase in half-year revenue, a 12.4% rise of net profit and a 25.9% increase of underlying profit before tax.

The company is expecting a stronger second half and FY22. Not only are examination levels getting back to pre-COVID levels but the ASX share has won several new large contracts such as Northwestern, NYU Langone and Medstar which will unlock more revenue at a high profit margin. The Intermountain and Californian Hospital contracts will also come online in FY22.

Each new win has the potential to unlock more deals for the company, which means Pro Medicus is more likely to benefit further from expanding data sets, the need for remote reporting and strong network effects.

However, the Pro Medicus share price has risen strongly – it has gone up 150% over the last year. UBS has a neutral rating for Pro Medicus, with a price target of $46.  

EML Payments Ltd (ASX: EML)

EML is an ASX share that has a variety of payment services. It says that it develops tailored payment solutions for businesses with options for disbursing payouts, gifts, incentives and rewards. The payments business says that it powers many of the world’s top brands and expects to process over $18 billion in GDV in FY21 across 28 countries in Australia, Europe and North America.

Some of its clients include companies like Coca Cola, Intel, Isuzu, NSW Transport, Paddy Power, Laybuy Holdings Ltd (ASX: LBY) and the UK Home Office.

The FY21 half-year result was a period of strong growth for EML with gross debit volume (GDV) growth of 54% to $10.2 billion, revenue growth of 61% to $95.3 million, earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 42% to $28.1 million, underlying net profit (NPATA) growth of 30% to $13.2 million and underlying operating cash inflows went up 68% to $35.1 million.

Its general purpose reloadable business is doing well, the existing non-PFS business growing by 25% year on year, with strong organic growth from salary packaging (up 60%) and gaming (up 42%). However, the gift and incentive division is still struggling due to lockdowns impacting physical gift cards and shopping centres.

For the full FY21 result it’s expecting revenue to grow between 48% to 56% and NPATA to increase by 25% to 40% to a range of $30 million to $33.5 million.

More reading

• 3 ASX Healthcare shares feeling a little under the weather
• Why did the Afterpay (ASX:APT) share price and 2 other BNPLs fall today?
• The Pro Medicus (ASX:PME) share price is up 23% in 2021: Can it go higher?
• Is it ok to buy ASX 200 shares at a 52-week high?
• Is the EML (ASX:EML) share price a top buy right now?

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 EML Payments and Pro Medicus Ltd. The Motley Fool Australia has recommended EML Payments and Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a few ASX shares that have delivered a lot of growth over the long-term.

Businesses or investments aren’t always going to deliver growth – COVID-19 certainly caused a wide range of impacts. But finding long-term ASX shares at the right price could be a good idea for a portfolio.

The below investments have been growing over the long-term and are delivering growth at the moment.

REA Group Limited (ASX: REA)

REA Group is the largest real estate portal business in Australia. It owns and runs realestate.com.au. Other Aussie real estate businesses it runs include realcommercial.com.au, flatmates.com.au and Spacely. The ASX share also has other Australian real estate services such as mortgage broking and property data services.

In Asia it has a number of different investments including iProperty in Malaysia, Squarefoot and SmartExpo in Hong Kong, ThinkgOfLiving in Thailand, Myfun in China, 99 in Singapore and Rumah123 in Indonesia. It has significant investments in PropTiger in India and Move Inc in the USA.

REA Group managed to generate more profit growth in the FY21 half-year result despite all of the COVID-19 impacts to the property market. Whilst revenue was down 2% to $430.4 million, net profit grew 13% to $172.1 million after a reduction of expenses by 13%.

The ASX share continues to see high levels of buyer demand, which could generate growth over the rest of FY21.

However, UBS has a neutral rating on REA Group at the moment, with a price target of $155. On UBS estimates, the REA Group share price is valued at 54x FY21’s estimated earnings.

Amcor Plc CDI (ASX: AMC)

Amcor is a global leader in flexible and rigid packaging. It produces a wide array of packaging for food, beverages, healthcare, home products, pet products and so on.

There has been a change to a focus on sustainable packaging in recent times, the ASX share is trying to fulfil that demand. For example, this week it announced it had created Australia’s first soft plastic food wrapper made with recycled content.

In the FY21 half-year result it generated 8% growth of its adjusted earnings before interest and tax (EBIT) to $743 million in constant currency terms and adjusted earnings per share (EPS) grew by 16% to 33.3 cents in constant currency terms.

Amcor is currently integrating its Bemis acquisition into the business. It achieved $35 million of synergies in the first half and now it’s expecting to achieve $70 million of savings for FY21, the top of its expectations for the whole year.

The ASX share continues to see demand from its consumer and healthcare end markets, whilst growing in emerging markets.

For the rest of FY21 it’s expecting to grow adjusted EPS by 10% to 14% in constant currency terms, up from previous guidance of 7% to 12%.

Betashares Nasdaq 100 ETF (ASX: NDQ)

This exchange-traded fund (ETF) ASX share is invested in 100 of the biggest businesses on the NASDAQ in the US.

Many of the world’s best tech shares are listed here, so the ETF is benefiting from the long-term growth of shares like Apple, Amazon, Alphabet, Facebook, Microsoft, PayPal, Netflix and NVIDIA. Many of these businesses are generating earnings growth right across the world. 

But it’s not just tech shares that are listed on the NASDAQ – it’s not a tech index. There are also businesses like PepsiCo, Costco, Starbucks, Mondelez International and Moderna in the portfolio.

Past performance is not an indicator of future performance. Over the last five years, Betashares Nasdaq 100 ETF has delivered an average return per annum of 23.7% after the management fees of 0.48% per annum.

More reading

• 3 ASX shares benefitting from a booming property market
• 2 fantastic blue chip ASX shares that could be strong buys
• How to invest in the Nasdaq Index on the ASX
• 2 blue chip ASX shares that could be strong buys
• Flight Centre and Zip were some of the most traded ASX shares last week

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 BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended Amcor Limited. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and REA 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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Are you interested in adding some more ASX shares to your portfolio?

Five ASX shares that could be worth considering this month are listed below. Here’s what you need to know about them:

CSL Limited (ASX: CSL)

CSL is the biopharmaceutical giant behind the CSL Behring and Seqirus businesses. These two businesses have a host of lucrative therapies and vaccines that generate billions in revenue each year. CSL also invests significantly in its research and development pipeline and will be putting almost US$1 billion into these activities in FY 2021. By doing this, it ensures that the company stays ahead of the curve and has a pipeline of potentially life-saving products. One of those is Clazakizumab, which is being developed to treat kidney transplant rejection. This product alone has the potential to generate peak sales of US$5.4 billion if successful. Citi recently upgraded its shares to a buy rating with a $310 price targe

Domino’s Pizza Enterprises Ltd (ASX: DMP)

This pizza chain operator could be worth considering due to its strong market position and bold growth targets over the next decade. At the last count, Domino’s had a network of 2,800 stores. However, it is aiming to grow this organically to 5,500 stores by 2033. Management is also looking for possible acquisitions, which would increase its footprint even further. Combined with its same store sales growth target and operating leverage, Domino’s looks well-placed to deliver strong earnings growth over the 2020s. Goldman Sachs is very positive on the company. It recently put a buy rating and $112.60 price target on its shares.

Nanosonics Ltd (ASX: NAN)

Nanosonics is one of the world’s leading infection prevention companies. It is the name behind the trophon EPR disinfection system for ultrasound probes. This product is regarded as the best in its class and has been capturing market share consistently over the last decade. This has underpinned strong unit sales and even stronger recurring revenues from the consumables that the system requires. Looking ahead, the increased importance of infection prevention following the pandemic and potential new product launches look set to underpin strong growth over the long term. UBS is positive on Nanosonics and currently has a buy rating and $7.00 price target.

Nearmap Ltd (ASX: NEA)

Nearmap is a leading aerial imagery technology and location data company with operations in the ANZ and North American markets. It provides businesses with instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. While its growth has been a bit up and down over the last couple of years, management appears confident on the future. It is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term. Underpinning this growth will be the release of its next generation of the world’s leading aerial camera system – HyperCamera3, and its artificial intelligence offering. Goldman Sachs recently put a buy rating and $2.95 price target on Nearmap’s shares.

NEXTDC Ltd (ASX: NXT)

NEXTDC is a leading data centre operator. It has been benefiting greatly in recent years from the increasing amount of data being generated by consumers and businesses. This has certainly been the case during the pandemic thanks to the accelerating shift to the cloud. This led to a surge in demand for data centre capacity. In fact, NEXTDC even has a significant amount of its future capacity already contracted. This bodes well for its future growth, as does its potential expansion into Singapore and Tokyo in the near future. UBS is a fan of the company and has a buy rating and $15.40 price target on its shares.

More reading

• Why COVID-19 is launching the IDT Australia (ASX:IDT) share price 65%
• Are COVID-19 vaccine worries affecting the CSL (ASX:CSL) share price?
• 2 ASX growth shares for smart investors to buy
• 2 strong blue chip ASX shares rated as buys by brokers
• 3 stellar ASX tech shares to buy for the long term

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited and Nearmap Ltd. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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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Wilson Asset Management (WAM) is one of the highest-performing fund managers. WAM has named a number of ASX shares that could be worth taking a look at.

WAM runs a number of different funds/listed investment companies (LICs) including WAM Capital Limited (ASX: WAM) and WAM Microcap Limited (ASX: WMI). The WAM Microcap portfolio has performed particularly strongly since the bottom of the COVID-19 crash.

Lead portfolio manager Oscar Oberg spoke to Livewire about the market and some of the ASX shares and themes that WAM is looking at:

COVID-19 recovery

One of the main areas where WAM is finding opportunities at the moment is looking at companies, sectors and countries that have been particularly hit hard by COVID-19 but may soon go through a recovery phase. He was referencing the UK and US in-particular.

Some of the ASX shares that he mentioned were: Pendal Group Ltd (ASX: PDL), Virgin Money UK CDI (ASX: VUK), Reliance Worldwide Corporation Ltd (ASX: RWC), Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT).

One of the main ones he talked about was the UK bank Virgin Money which is/was trading at a 30% discount to its book value and could be well placed to rebound. The ASX banking recovery could prove to be a template with what might happen with Virgin Money over time.

Changing business models

WAM is also looking for ASX shares that are emerging from this COVID-19 period with a stronger competitive position or a better offering. Virtus Health Ltd (ASX: VRT) was one example that he talked about, suggesting that the IVF business may license its technology to IVF providers around the world.

Doing it this way wouldn’t take up much capital and wouldn’t be expensive, and could bring in some good earnings for the company over time.

Environmental, Social, and Corporate Governance (ESG)

ESG is becoming a bigger factor for investors as time goes on. One ASX share he mentioned was Pact Group Holdings Ltd (ASX: PGH).

Mr Oberg thinks that Pact is going through a recovery phase and the strategy of increasing exposure to recycling plants makes sense.

Left-field pick

One interest pick that the WAM portfolio manager talked about was Link Administration Holdings Ltd (ASX: LNK). WAM believes it actually has a lot of growth potential because of its 44% holding of PEXA, which is an online electronic conveyancing ASX share – it has a market share of 75% in Australia.

Mr Oberg thinks that PEXA could be a global growth story and the UK could be one of the first places that it attempts an expansion.

Small cap

WAM Microcap’s entire purpose is to find small cap ASX shares and Enero Group Ltd (ASX: EGG) is one that he mentioned that has really turned itself around over the last decade. A sizeable amount of its earnings comes from US tech companies. WAM really likes the OB Media business for its growth potential, balance sheet, potential to make acquisitions and cheap valuation.

He revealed that Enero is the biggest position in the WAM Microcap portfolio.

Aged care

Aged care is another sector that makes up quite a sizeable position in the WAM portfolios. Estia Health Ltd (ASX: EHE) is one of the larger ASX share positions in WAM Microcap and WAM Capital.

WAM thinks the sector has bottomed and will benefit from the ramifications of the royal commission if the upcoming federal budget is favourable for the sector. Regis Healthcare Ltd (ASX: REG) is another pick within the sector. The aged care players also benefit from higher property prices.

More reading

• These were the best performers on the ASX 200 last week
• Why Corporate Travel Management, Silver Lake, Volpara, & Vulcan are pushing higher
• Where is the Flight Centre (ASX:FLT) share price going in 2021?
• Why Corp Travel Management, IGO, Limeade, & ResApp are tumbling lower
• Corporate Travel Management (ASX:CTD) shares sink after CEO’s $31.5m share sale

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd and Reliance Worldwide Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited, Link Administration Holdings Ltd, Reliance Worldwide Limited, and Virtus Health 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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Warren Buffett has a long track record of buying undervalued shares. In doing so, he has been able to use the market cycle to his advantage. Over time, this has contributed to him outperforming the wider stock market over the long term.

Even after the recent stock market rally, there could be opportunities to buy undervalued stocks. They may offer greater scope for capital growth in a stock market rise, as well as more stable performance should there be another stock market crash in future.

Warren Buffett’s focus on undervalued shares

As a value investor, Warren Buffett has always sought to buy undervalued shares. This does not necessarily mean that he purchases companies trading at cheap prices. Instead, he aims to buy a high-quality business for less than he believes it is worth. Sometimes, this can mean paying a higher price than sector peers are currently trading at. However, should the company in question have attributes such as a wide economic moat, Buffett has often purchased it in the past.

The result of this strategy has been very successful for Buffett. He has outperformed the wider stock market over a period of many years. Following a similar strategy could be worthwhile, since it may allow an investor to generate relatively high returns. After all, a stock that is priced for less than it is worth may be able to deliver stronger capital gains versus fairly priced or overpriced shares.

The potential for a stock market crash

Warren Buffett’s strategy of buying undervalued shares could also be appealing due to the potential for a stock market crash. Predicting when this will occur may be challenging. However, through buying companies that do not trade on excessively high valuations, it may be possible to outperform the wider market in a downturn.

Clearly, this does not mean that losses will be avoided. After all, no stock is guaranteed to produce positive returns over any time period – even if it seems to be undervalued when bought. However, it can mean that an investor’s portfolio which is focused on undervalued shares is less negatively impacted by weak investor sentiment and falling stock prices. Such companies may already trade at discounts to their intrinsic values, while overpriced shares decline to their real worth.

Opportunities to buy undervalued shares today

There may be opportunities to follow Warren Buffett’s strategy in today’s stock market. A number of stocks and sectors are yet to fully recover from the 2020 stock market crash.

Certainly, some industries are trading at high prices and global stock markets have hit record highs of late. However, sectors such as retail and consumer goods could contain undervalued shares that represent buying opportunities. Through capitalising on them, it may be possible to earn attractive total returns in the coming years.

More reading

• How to turn $20,000 into $650,000 in 5 years with ASX shares
• Why it’s a great time for ASX investors to buy US shares
• These were the best performers on the ASX 200 last week
• 2 exciting small cap ASX shares with huge growth potential
• These were the worst performers on the ASX 200 last week

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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I’m a big fan of buy and hold investing and believe it is the best way for investors to grow their wealth.

To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

However, on this occasion I’m going to do things a little differently and change the time scale to just five years. This allows me to look at companies that have not been listed as long as normal.

With that in mind, here’s how you would have fared if you had invested in these ASX shares five years ago:

Appen Ltd (ASX: APX)

The Appen share price may be trading significantly lower than its 52-week high, but that won’t be bothering longer term shareholders. Since this time in 2016, Appen’s shares have thoroughly smashed the market. The catalyst for this has been increasing demand for the artificial intelligence data service company’s services from some of the largest tech companies in the world. This includes the likes of Apple, Facebook, and Microsoft, and is being driven by the increasing importance of AI for businesses. Over the last five years, Appen’s shares have generated a total return of 62.7% per annum. This would have turned a $20,000 investment into $230,000.

Temple & Webster Group Ltd (ASX: TPW)

Thanks to the shift to online shopping, which has accelerated during the pandemic, this furniture and homewares focused ecommerce company has been growing its sales at an explosive rate. This has led to Temple & Webster’s shares surging higher since their IPO in 2016. In fact, anyone lucky enough to have invested in its shares five years ago, would have generated an average total return of 101.5% per annum. This means that a $20,000 investment in its shares at that point would be now worth a staggering $665,000.

Xero Limited (ASX: XRO)

Finally, this cloud-based business and accounting platform provider has been a great place to invest over the last five years. Thanks to its strong recurring revenue, which has been underpinned by its rapidly growing customer base globally, Xero’s shares have generated mouth-watering returns for investors. Since this time in 2016, its shares have provided a total return of 53.7% per annum. This would have turned a $20,000 investment into almost $172,000.

More reading

• When dividends can be a bad thing for an ASX share
• ASX tech shares: A once-in-a-lifetime buying opportunity?
• 2 quality ASX shares to buy for the long-term
• 5 things to watch on the ASX 200 on Friday
• A2 Milk (ASX:A2M) share price tumbles on NZ recession fears

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 Appen Ltd and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Temple & Webster Group 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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We Fools have long touted the benefits of buying US shares to add to a portfolio of diversified ASX shares.

There are diversification benefits alone of owning companies that are domiciled in another country. Not to mention the benefits of owning assets that are priced in a different currency.

But the US is also home to some of, if not most of, the best businesses in the world. We do have some fine companies on the ASX, don’t get me wrong. But companies of the calibre of Apple Inc (NASDAQ: APPL), of Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)? That’s a harder bow to string.

That brings us to the question at hand. Why is now a great time to buy US shares?

I’ll preface this by saying no one knows when the best time to buy anything is. The US markets could tank next week and provide even better deals than the present.

But that’s a fool’s game to play (and not the good kind of Fool). I prefer to think of that old proverb of ‘the best time to plant a tree was 20 years ago, the next best time is right now’ in this situation.

US-Australia relations warm

But right now is certainly shaping up to be an attractive time to hop across the Pacific for a few reasons.

The first is our dollar. Currency movements tend to work out over time and thus shouldn’t be an issue of major concern for any longterm investor. But even so, there’s no hiding that our dollar has appreciated significantly against the US dollar over the past year or so.

Exactly a year ago, one Aussie dollar was buying around 57 US cents. Today, it is buying 77 cents. That means we can buy 35% more US assets with the same Aussie dollar today than this time 12 months ago.

The second reason is that many US companies have seen their share prices cool over the past month or two. Look at Apple.

It’s more than 15% cheaper at the time of writing than it was in late January. Amazon.com Inc (NASDAQ: AMZN) is more than 10% lower over the same period. It hasn’t been too often in the past when we have seen these kinds of companies sell off like that.

Foolish takeaway

Buying quality US shares to add to your ASX portfolio is a great move from several angles. So if you agree, but have been holding back in recent months, now might be a good time to revisit this idea, if for the above reasons and nothing else.

As that other saying goes, if the iron is hot…

More reading

• When dividends can be a bad thing for an ASX share
• Amazon expands road testing of Rivian electric delivery vans
• 2 ETFs to buy today for future-proof ASX diversification
• ASX tech shares: A once-in-a-lifetime buying opportunity?
• 3 reasons Amazon stock could underperform in 2021

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, and Apple and recommends the following options: short March 2023 $130 calls on Apple, long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, and Apple. 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) was out of form last week and dropped 0.9% over the period to end at 6,708.2 points.

Fortunately, not all shares dropped lower with the index. Here’s why these were the best performers on the ASX 200 last week:

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price was the best performer on the ASX 200 last week with a sizeable 19.1% gain. This was despite there being no news out of the quick service restaurant operator. However, with its shares trading at a significant discount to rival Domino’s Pizza Enterprises Ltd (ASX: DMP), some investors may believe a rerating was due. Even after this strong gain, the Collins Foods share price is trading at 28x estimated FY 2021 earnings. This compares to 44x FY 2021 earnings for Domino’s.

Clinuvel Pharmaceuticals Limited (ASX: CUV)

The Clinuvel share price was some way behind as the next best performer with a gain of 11.8%. Once again, this was despite there being no news out of the biopharmaceutical company last week. However, earlier this month analysts at Moelis put a buy rating and $27.77 price target on the company’s shares. The Clinuvel share price ended the week a touch higher than this at $28.29.

Harvey Norman Holdings Limited (ASX: HVN)

The Harvey Norman share price was on form last week with a 9.7% gain. This gain appears to have been driven by a couple of recent broker notes which spoke positively about the retailer. A week earlier both Macquarie and Citi put the equivalent of buy ratings and $6.00 price targets on the company’s shares. The Harvey Norman share price ended the week at this level having touched on a multi-year high of $6.06 briefly on Friday.

Link Administration Holdings Ltd (ASX: LNK)

The Link share price was a strong performer and recorded a gain of 9.3% last week. This appears to have been driven by speculation that the administration services company could be the subject of a new takeover approach in the near future. This follows the breakdown in takeover talks with SS&C Technologies earlier this year.

More reading

• These were the worst performers on the ASX 200 last week
• ASX 200 dips, Sydney Airport falls, AGL rises
• Why the Collins Foods (ASX:CKF) share price just hit a record high
• ASX stock of the day: Audio Pixels (ASX:AKP) shares shoot up 8%
• ASX 200 down 0.3%: Afterpay & Zip lower, AGL signs Portland Smelter deal

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Collins Foods Limited, Dominos Pizza Enterprises Limited, and Link Administration Holdings 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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If your risk profile allows for it, then having a little exposure to the small side of the market could be a good thing for a balanced portfolio.

After all, if you can identify the next blue chip while it is still in its infancy, the potential returns could be staggering.

There are a lot of small cap options for investors to choose from, but two that are highly rated are listed below. Here’s what you need to know about them:

Damstra Holdings Ltd (ASX: DTC)

Damstra is a $210 million integrated workplace management solutions provider. The company’s cloud-based workplace management platform is used by businesses across numerous industries to track, manage, and protect their workers and assets.

Among its customer base are the likes of Boeing, Boral Limited (ASX: BLD), NBN, Thiess, and WaterNSW.

During the first half of FY 2021, Damstra reported a 29.6% increase in revenue to $13.3 million. Pleasingly, this is still only a small fraction of an addressable market which is expected to be worth US$20 billion by 2022.

Shaw and Partners is a fan of the company. It currently has a buy rating and $1.93 price target on its shares. This compares to the current Damstra share price of $1.06.

Whispir (ASX: WSP)

Whispir is another small cap share to watch. It is a $350 million software-as-a-service communications workflow platform provider which automates communications between businesses and their workers and customers.

Like Damstra, it has been growing at a quick rate. This led to the company reporting a 29.2% increase in its annualised recurring revenue to $47.4 million at the end of the first half. Pleasingly, more of the same is expected in the second half, which should be supported by its recent $45.3 million placement. These funds will be used to accelerate its growth strategy.

Whispir is another company with a large addressable market. Management currently estimates that the Workflow Communications platform as a Service market will be worth US$8 billion per year by 2024. This gives it a very long runway for growth.

Ord Minnett is positive on the company’s future. It has a buy rating and $4.25 price target on its shares. This compares to the latest Whispir share price of $3.69.

More reading

• Brokers name 2 exciting small cap ASX shares to buy
• 2 small cap ASX shares to watch closely in 2021
• ASX tech correction? 10 of the worst-hit shares
• 2 small cap ASX tech shares trading at a big discount
• Why Limeade, Oil Search, Platinum, & Whispir shares are sinking

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Damstra Holdings Ltd and Whispir Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd and Whispir 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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