It has been another positive day of trade for the S&P/ASX 200 Index (ASX: XJO) on Thursday. In afternoon trade the benchmark index is up 0.85% to 6,736 points.

Four shares that are climbing more than most today are listed below. Here’s why they are storming higher:

Codan Limited (ASX: CDA)

The Codan share price has jumped 10% to $11.08. Investors have been buying the metal detector-focused electronics products company’s shares since it provided guidance for the first half of FY 2021 on Wednesday. Codan has been experiencing very strong demand for its metal detectors and expects this to lead to a net profit after tax of $40 million for the half. This is almost double the $22.2 million it achieved in the prior corresponding period.

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price is up 3% to $32.02 after announcing a major contract win. According to the release, Pro Medicus has signed a five-year contract with MedStar Health worth a total of A$18 million. MedStar Health is the largest health system in the Maryland and Washington, D.C. metropolitan region, comprising 10 hospitals.

Uniti Group Ltd (ASX: UWL)

The Uniti share price has rocketed 13.5% higher to $1.68. Investors have been fighting to get hold of shares after the telco announced an agreement to acquire the Telstra Velocity and South Brisbane Exchange assets from Telstra Corporation Ltd (ASX: TLS). In order to fund the acquisition, Uniti has raised $50 million at a 1.4% premium of $1.50 per new share.

Zip Co Ltd (ASX: Z1P)

The Zip share price is up 1.5% to $5.65. Investors have been buying the buy now pay later provider’s shares after it announced the completion of the institutional component of a $150 million capital raising. Zip raised $120 million from institutional investors at a 4.1% discount of $5.34 per new share. These funds will be used to support its growth in the United States, product development, and its UK expansion.

More reading

• ASX 200 up 0.7%: Zip capital raising, A2 Milk trading halt, Sydney Airport dividend update
• Here’s why the Pro Medicus (ASX:PME) share price is storming 5% higher
• Why the Uniti (ASX:UWL) share price is zooming 13% higher today
• Here’s why Zip (ASX:Z1P) launched a $150 million capital raising
• 5 things to watch on the ASX 200 on Thursday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended 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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Nutritional Growth Solutions Ltd (ASX: NGS) shares jumped by more than 9% this morning after the company released two major announcements to the market. In early trade, the Nutritional Growth share price surged as high as 30 cents before retreating to its current level of 28 cents at the time of writing.

In its first announcement, Nutritional Growth reported it has obtained a trademark for its Healthy Height brand from the Korean Intellectual Property Office (KIPO). The second release announced that the company has signed an agreement to acquire the Kidzshake brand in the United States.  

Why is this good news for the Nutritional Growth share price?

The Nutritional Growth share price has been on the move today with investors clearly pleased at the company’s latest endeavours. So what exactly was announced? 

Kidzshake

Nutritional Growth reported that it has acquired the Kidzshake brand from the US-based company, Ausmerica Wellness Services LLC, for a total consideration of US$150,000.

The agreement involves acquiring all of Kidzshake’s business and associated assets, including inventory, and intellectual property, as well as existing contracts.

Kidzshake is a nutritional shake for kids, and was founded by an Australian doctor living in the US.

Nutritional Growth says the potential market for Kidzshake is significant, with about a third of children in the US using dietary supplements. 

Kidzshake has also created a vegan, plant-based nutritional shake, targeting a growing category in US. According to Nutritional Growth, the plant-based food market in the US is growing at 18%, outpacing even the growth of organic, gluten-free, and non-GMO products. 

Korean trademark

Nutritional Growth says the trademark received from the Korean Government relates to its nutritional shake, Healthy Height.

The company reported that the new trademark will strengthen its position for potential partnership discussions in South Korea.

South Korea is said to be the biggest consumer of pediatric nutritional supplements globally, with up to 54% of children aged 1 to 6 years using these products.

About the Nutritional Growth share price in 2020

The Nutritional Growth share price has fallen by nearly 10% this year, with a 52-week high of 38 cents and a low of 25.5 cents.

The company currently commands a market capitalisation of $13 million.

More reading

• Disney+ to hit $4 billion in revenue by 2022
• Why Blackmores, Service Stream, Sydney Airport, & Webjet shares are dropping lower
• Some things ASX investors should watch out for in 2021
• Here are the best 5 ASX financials shares of 2020
• PlaySide Studios (ASX:PLY) share price doubles on ASX debut

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

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

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

So sweeping has been consumer acceptance of Walt Disney Co‘s (NYSE: DIS) streaming service in its first year of operation that Disney+ is now expected to generate over $4 billion in revenue in the next two years.

The industry watchers at eMarketer say the service’s revenue will hit $1.94 billion by the end of 2020, but with the $1 price increase coming next year, that will catapult Disney+’s contribution to the entertainment giant.

House of Mouse powerhouse

Ever since launching in November 2019, Disney+ has been a commercial success, racking up an astounding 86.6 million subscribers in its first year of operation.

While it got a big assist from Verizon Communications, which offered various customers free one-year subscriptions, which Disney is now beginning to lap, then-CEO Bob Iger said they amounted to only 20% of the first quarter’s total subscriptions.

There are other promotions still out there that will slightly artificially inflate the numbers, but it’s clear Disney+ has been an unmitigated success that even eMarketer sees as soon being able to challenge Netflix Inc (NASDAQ: NFLX).

It forecasts that by the end of 2022, the combined streaming services of Disney+, Hulu, and ESPN+ will generate some $12.36 billion in revenue for Disney compared to $12.95 billion for Netflix.

Certainly, Disney+ got a tremendous boost from the pandemic as families with young children eagerly signed up for the library of Disney programming. It might not be able to keep reporting such meteoric growth, but analysts still see it expanding its subscriber base, potentially hitting 194 million by 2025.

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

More reading

• Better Buy: Starbucks vs. Netflix
• 10 most searched shares in Australia
• Will Netflix stock crash in 2021?
• I have too many tech shares: Do I sell, buy or hold?

Rich Duprey 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 Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Verizon Communications and recommends the following options: short January 2021 $135 calls on Walt Disney and long January 2021 $60 calls on Walt Disney. The Motley Fool Australia has recommended Netflix and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record another strong gain. At the time of writing, the benchmark index is up 0.85% to 6,736.6 points.

Four shares that have not been able to follow the market higher today are listed below. Here’s why they are dropping lower:

Blackmores Limited (ASX: BKL)

The Blackmores share price is down over 4% to $77.31. Investors appear to have been selling the health supplements company’s shares amid speculation that A2 Milk Company Ltd (ASX: A2M) is about to downgrade its guidance for FY 2021. Given the similar channels they sell in, investors may be worried that Blackmores could be underperforming.

Service Stream Limited (ASX: SSM)

The Service Stream share price has crashed a further 15% lower to $1.79. The network services company’s shares have fallen materially over the last couple of days since the release of an announcement. That announcement revealed that it has been awarded a multi-year contract with the NBN but will be sharing the work with three other providers. This means it will be generating notably less revenue that the market was expecting.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price is down 1.5% to $6.54. Investors have been selling the airport operator’s shares today after it announced that it will not be paying a final dividend this year. This will be the first time in its history that it has not paid shareholders a dividend in a financial year. COVID-19 impacts are of course to blame.

Webjet Limited (ASX: WEB)

The Webjet share price has fallen 2.5% to $5.14. A number of travel shares have taken a tumble on Thursday. This may be down to concerns over a spike in COVID-19 cases in New South Wales. If the situation isn’t brought under control quickly, domestic borders could start to close to Australia’s most populous state.

More reading

• ASX 200 up 0.7%: Zip capital raising, A2 Milk trading halt, Sydney Airport dividend update
• Sydney Airport (ASX:SYD) share price lower on dividend and traffic update
• ASX 200 rises 0.7% on Wednesday
• Service Stream (ASX:SSM) share price falls despite NBN agreement
• ASX 200 up 1.1%: ANZ AGM, Resolute jumps, travel shares soar

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, Blackmores Limited, and Webjet Ltd. The Motley Fool Australia has recommended Service Stream Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are no shortage of commentators predicting a healthy 2021 for ASX markets and the global economy. The S&P/ASX 200 Index (ASX: XJO) has just emerged from one of its best months in history. 

December is proving to be a good month so far as well, given the ASX 200 is already up around 3.2% since the start of the month. In fact, as of today (at the time of writing anyway), the ASX 200 is now also in the green year to date, and up almost 48% from the lows of 23 March.

My Fool colleague Brendon Lau covered some of the reasons commentators are bullish on 2021 this morning, which you can (and should) look at. These include a bullish outlook for cyclical shares (such as banks) due to an expected global rollout of coronavirus vaccines, as well as strong economic growth overall.

But I’m here to take the punchbowl away from the party as it were.

We all hope for a great year in 2021, don’t get me wrong. But let’s look at some reasons why 2021 might not go as planned on that front.

ASX in frothy territory?

According to reporting in the Australian Financial Review (AFR) this week, Liz Ann Sonders, chief investment officer at the giant US broker Charles Schwab, says that investors need to be wary in 2021:

The success of the market this year has bred what I believe is its most significant risk at present — elevated optimistic sentiment… that nearly all behavioural and attitudinal measures of sentiment show at best complacency, and at worst speculative froth. There have been a myriad of comparisons between today’s markets and the 2000 tech bubble era; but perhaps a better comparison would be to 2009-2010 as we look ahead to 2021.

Ms. Sonders points out that it took a “brutal” 17-month bear market back in 2008-09 before the market finally found a bottom. By comparison, the ‘coronavirus crash’ that 2020 saw early in the year lasted just over a month. That doesn’t sit well with Ms. Sonders, who states that corrections (sometimes heavy) often come after periods of market exuberance.

Keep an eye on monetary policy

Separate reporting in the AFR today outlines some additional risks for 2021. This report posits that the largest risks facing the market next year come from (in ascending order of likelihood) monetary policy reversal (rising global interest rates), a “market accident” due to excessive risk taking, and mounting corporate bankruptcies.

This report notes that “while investors will continue to surf a highly profitable liquidity wave for now, things are likely to get trickier as we get further into 2021″. It also states that, “central banks’ deepening distortion of markets will be harder to defend in a recovering economy amid rising inflationary expectations”. It concludes by telling investors who want to navigate through these uncharted waters, they need “a willingness to re-examine some conventional wisdom” when it comes to investing. Not an easy ask!

Foolish takeaway

We all want a prosperous 2021. But what we want and what the share market delivers are, of course, very different things. Judging by what these commentators are saying, we should all keep a very close eye on monetary policy next year.

More reading

• ASX 200 up 0.7%: Zip capital raising, A2 Milk trading halt, Sydney Airport dividend update
• Citigroup picks the best ASX retail stocks to own for 2021
• Why the Bapcor (ASX:BAP) share price is rocketing 9% higher today
• Why 2021 may be an even better year for ASX investors
• What today’s economic outlook means for the BHP (ASX:BHP) share price

Motley Fool contributor Sebastian Bowen 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, we’re looking at some of the best performing ASX financials shares of 2020. Financials shares have been some of the hardest-hit shares in 2020, thanks in large part to the coronavirus-induced recession.

Although sub-sectors within financials (ie. banking, insurance, asset management) are all affected in different ways by the prevailing economic conditions of the day, financials as a whole are viewed as a rather cyclical sector – meaning they tend to rise and fall in line with broader economic growth.

We won’t be looking at ASX bank shares, or those involved with buy now, pay later (BNPL) today. Even though these companies are technically financials, we will examine them separately to get a better grip on their individual eccentricities.

So, here are the top 5 ASX financials shares for 2020 so far:

ASX Financial Share	YTD share price gain (as of 16 December)	Market Capitalisation
Netwealth Group Ltd (ASX: NWL)	101.91%	$3.78 billion
Hub24 Ltd (ASX: HUB)	80.54%	$1.34 billion
AUB Group Ltd  (ASX: AUB)	41.73%	$1.27 billion
Pinnacle Investment Management Group Ltd (ASX: PNI)	34%	$1.18 billion
Janus Henderson Group plc (ASX: JHG)	21.17%	$8.83 billion*

Wealth platforms top ASX financials sector

One theme that stands out from this list is the success of ‘investment services’ providers, namely Netwealth and Hub24.

These 2 companies both offer investment platforms for money management. Individuals and financial advisers can use these platforms to access all of their investments in one place, as well as providing other tools like superannuation and insurance management.

These companies have arguably benefitted from the 2018 banking royal commission, the aftermath of which saw many of the big four banks face criticism over questionable practises in relation to ‘vertically integrated’ wealth products. This likely damaged broader consumer confidence over having a big four bank managing customers’ wealth. Since then, many of the banks have divested their wealth management arms.

In fact, Hub24 pointed this out during its recent annual general meeting. The company’s chair Bruce Higgins stated the following on that matter:

This disruption [of the financial services industry], including the incumbents divesting of their wealth businesses, continues to create a significant opportunity for HUB24 to continue to grow.

That comment came after Hub24 reported revenue growth of 14% for FY2020, and earnings growth of 60%.

Likewise, back in August we saw Netwealth report earnings growth of 24.8% for FY2020. Both Netwealth and Hub24 have clearly been sitting in a healthy tailwind in 2020.

Fund managers close behind

We also see 2 fund managers in this list, Janus Henderson and Pinnacle.

Janus Henderson is an interesting one. This dual-listed company (hence the star on the table above) has had a solid, if not spectacular year. For the second quarter of 2020 (ending 30 June), the company reported revenues were down 7% compared to the first quarter (ending 31 March). However, the company also reported earnings per share (EPS) growth of 12% over the same period.

The company has been going on a buying spree over its own stock. It has been executing a US$200 million share buyback program over the course of 2020 . We covered how this program is likely behind much of the Janus share price gains in 2020 here.

Similarly, Pinnacle has been benefitting this year as well. Back in July, the company reported that it had raked in $25.8 million in performance fees for FY2020, which prompted its share price to surge more than 10% that day. It also reported EPS growth of 4.7% for FY2020 in August, as well as a 5.6% rise in net profits after tax.

Finally, we have financial insurance company AUB Group. AUB reported its strongest year on year growth results in 7 years back in August. The company experienced a 9.2% increase in revenue for FY2020, which helped push net profits after tax up by 15.2% for the year.

The company also managed to jack up its final dividend by 9.2% compared with FY19. It even upped its guidance for FY2021 on these numbers. No wonder investors were chasing this company’s shares up this year.

More reading

• Easton Investments (ASX:EAS) share price up 8%, hits 52-week high
• ASX stock of the day: Janus Henderson (ASX:JHG) opens at new 52-week high
• ASX 200 up 0.3%: Premier Investments update, big four banks rise, gold miners tumble
• Kelly Partners (ASX:KPG) share price surges up on deal with Austbrokers
• IOOF (ASX:IFL) share price lifts after investor briefing

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd and Netwealth. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The PlaySide Studios Limited (ASX: PLY) share price has landed on the Australian share market with a bang following the completion of its initial public offering (IPO).

At one stage today, the video game developer’s shares were changing hands for as much as 41 cents.

This was more than double the IPO listing price of 20 cents.

At the time of writing, the PlaySide share price is up 65% from its listing price to 33 cents.

What is PlaySide?

Melbourne-based PlaySide is one of Australia’s largest independent video game developers with over 52 titles developed.

This includes games based on original intellectual property (IP) and games developed with Hollywood studios such as Disney, Warner Bros, and Nickelodeon.

It operates in a mobile games market which is estimated to be worth $77.2 billion after growing at 13.3% year on year.

The PlaySide IPO.

PlaySide commenced trading on the Australian share market today following the completion of an IPO that raised $15 million from investors at 20 cents per share.

The company revealed that the IPO received strong support from a broad range of institutional and retail investors.

Upon listing, Playside will have approximately 366.5 million shares on issue, giving it a market capitalisation of $73 million based on the IPO price.

Where will it spend the IPO proceeds?

Management intends to use the funds raised from the IPO to secure the rights to develop mobile games from select media brands within its Brands & Licensing Division and expand its development team to support new original titles.

PlaySide will also invest additional resources in its data analytics team, sales and marketing teams, and user acquisition. In addition, it plans to open a business development office in Los Angeles when the risk from the COVID-19 can be appropriately managed.

Managing Director, CEO, and Co-Founder, Gerry Sakkas, commented: “PlaySide has in the past few years proven its ability to make games that millions of people love to play while sustainably building a profitable business on a global stage and, having now listed on the ASX, we believe we’ll be able to scale our skills, science and art to unlock significant value for PlaySide shareholders.”

“As a close team we are excited and motivated for the next phase of our journey and, as you can see from the business update today, we’ve continued our growth momentum through the IPO period and I look forward to updating you regularly on the rewards of our hard work,” he concluded.

More reading

• Embattled Freedom Foods (ASX:FNP) sells business segment
• Why investors are pushing the Carnarvon Petroleum (ASX:CVN) share price higher
• Why this broker thinks the Wesfarmers (ASX:WES) share price can go higher
• ASX 200 up 0.7%: Zip capital raising, A2 Milk trading halt, Sydney Airport dividend update
• WPP AUNZ (ASX:WPP) share price skyrockets 22% after 2 major announcements

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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The Freedom Foods Group Ltd (ASX: FNP) share price won’t be going anywhere today, despite the company announcing it’s offloading its cereal and snacks business. Freedom Foods shares have remained suspended from trading on the ASX since 25 June this year.

The Freedom Food share price last closed at $3.01.

What did Freedom Foods announce?

Freedom Foods has today announced the sale of its cereal and snacks operations to The Arnott’s Group.

According to Freedom Foods, the divestment follows an ongoing program to create a leaner and simpler business model. The company is seeking to cut its product range in order to improve profitability, while focusing on growth.

The decision follows a previous announcement on 30 November, in which Freedom Foods advised it was reviewing its cereal and snacks segment. Although the company had considered a ‘fix and retain’ option, it came to the conclusion the best strategic option was to offload the business.

Terms of the sale

Under the agreement, Freedom Foods will sell certain assets and liabilities of the cereal and snacks business for $20 million. The cash payment is expected to provide a net amount of $11 million after transaction costs and equipment leases.

The sale will include manufacturing facilities in Leeton and Darlington Point in New South Wales, and Dandenong in Victoria. The transfer of brands comprises Freedom Foods, Messy Monkeys, Heritage Mill, Arnold’s Farm, and Barley Plus.

The transaction is expected to be completed on 1 March 2021 pending customary conditions.

Furthermore, the sale of the Freedom Foods cereals brand will see the company change its corporate name. Management said more information will be provided to shareholders on this subject at a later stage.

What did management say?

Freedom Foods Group interim CEO Mr Michael Perich spoke about the sale. He said:

We believe the Cereal and Snacks business will thrive under an owner such as The Arnott’s Group, which is committed to investing in the business and employees to ensure a sustainable and successful future.

This decision is consistent with the new executive team’s strategy of simplifying both our business structure and product range to ensure we are maximising growth opportunities in Dairy and Nutritionals and Plant-based Beverages.

Adding to his comments, Arnott’s Group CEO Mr George Zoghbi went on to say:

This purchase of manufacturing sites and leading consumer brands from Freedom Foods Group will accelerate our strategy of entering new product categories and unlock innovation to benefit customers and consumers.

This will add three Australian manufacturing sites to our already well-invested domestic supply chain. Once the purchase is finalised, our domestic manufacturing network will extend across eastern Australia from Virginia in Queensland, Huntingwood, Leeton and Darlington Point in NSW to Shepparton and Dandenong in Victoria and Marleston in South Australia.

More reading

• Freedom Foods (ASX:FNP) faces class action lawsuit
• Freedom Foods (ASX:FNP) reveals $174.5m loss and $280m capital raising plan
• Freedom Foods (ASX:FNP) prepares for return to trading

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Freedom Foods 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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The Carnarvon Petroleum Limited (ASX: CVN) share price is moving higher today, up 3.5% at the time of writing.

This comes after the company released a progress report on its Buffalo oil field, located offshore Timor-Leste in the Bonaparte Basin.

What did Carnarvon announce today?

In this morning’s update to the ASX, Carnarvon reported that it is progressing with plans to drill its Buffalo-10 well. Carnarvon plans to commence drilling in late 2021. The company has entered into a binding agreement with Advance Energy to support the redevelopment.

In the newly formed joint venture, Advance will fund the drilling of the well up to US$20 million (A$26.6 million) on a free carry basis. In return it will acquire up to a 50% interest in the Buffalo project. If additional funding is needed from third party lenders, Advance has agreed to provide that as an interest free loan.

Carnarvon will continue as the operator. The agreement remains subject to fulfilling the customary conditions, including obtaining government approvals.

Commenting on the partnership, Carnarvon’s CEO, Adrian Cook, said:

Carnarvon is excited to welcome Advance Energy into the Buffalo joint venture and together we look forward to drilling the Buffalo-10 well next year and moving forward with the redevelopment of the Buffalo oil field.

The Buffalo redevelopment opportunity is well placed to succeed given its known production capability and low development cost and will be greatly enhanced as oil prices continue their recovery.

We look forward to Advance completing their capital raise activities and the joint venture is eager to get started, with drilling planning already underway. Carnarvon is incredibly well placed for an exciting 2021 as we add drilling at the Buffalo Project to our Dorado FEED activities and the Bedout exploration drilling campaign.

Carnarvon share price and company snapshot

Carnarvon Petroleum is an Australian-based company primarily engaged in oil and gas exploration, development, and production. Its exploration projects include Phoenix, Labyrinth, Condor and Eagle, Outtrim and Maracas, and the Buffalo oil field.

Like most ASX energy shares, Carnarvon’s share price fell of cliff as COVID-19 saw oil and gas prices plummet. Its shares fell 69% from 6 January through to 23 March. Since that low shares have rebounded 143%, compared to a 52% rebound of the broader All Ordinaries Index (ASX: XAO) over that same time.

Year-to-date the Carnarvon share price remains down 19%.

More reading

• PlaySide Studios (ASX:PLY) share price doubles on ASX debut
• Embattled Freedom Foods (ASX:FNP) sells business segment
• Why this broker thinks the Wesfarmers (ASX:WES) share price can go higher
• ASX 200 up 0.7%: Zip capital raising, A2 Milk trading halt, Sydney Airport dividend update
• WPP AUNZ (ASX:WPP) share price skyrockets 22% after 2 major announcements

Motley Fool contributor Bernd Struben 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 has been an extraordinary year for the Wesfarmers Ltd (ASX: WES) share price after it hit a record, all-time high of $51.64 this week. This brings its year-to-date returns to over 23%, with a dividend yield of approximately 3%. While the Wesfarmers share price might be sitting at record all-time highs, this broker thinks it can push higher. 

Broker raises Wesfarmers share price target 

Credit Suisse Group has this week raised its price target for Wesfarmers shares from $51.59 to $55.83 while retaining its outperform rating. The broker believes the Officeworks business stands to benefit from the work from home trend continuing and feels Bunnings also remains in a solid position. 

Economic data to support retail spending 

In the minutes of the Reserve Bank of Australia’s (RBA) December monetary policy meeting, the board noted that the domestic economic recovery had established reasonable momentum, aided by the lifting of restrictions in Victoria. Expectations for GDP growth in the September and December quarters had been upgraded over the preceding month, and employment had also recovered faster than anticipated. 

In reviewing recent data, the members noted that household consumption had rebounded strongly, and was assisted by a bounce-back in spending in Victoria. Indicators such as retail trade, new car sales and payments information indicated that the recovery in consumption would continue in the December quarter, supported by high household savings. 

Wesfarmers trading update 

The Wesfarmers trading update released last month reiterates the continued strength of the retail sector. The company experienced continued significant demand for its Bunnings, Officeworks and Catch businesses following the strong results reported in the second half of 2020. Wesfarmers Managing Director Rob Scott said the trading restrictions in Melbourne caused significant pent up demand, resulting in very strong trading performance across stores in Melbourne when they re-opened on 28 October. 

For Bunnings, strong sales growth has continued for both consumer and commercial segments. Excluding metropolitan Melbourne sales, total sales growth of 29.3% was recorded year to date. In the company’s FY20 results, Bunnings contributed 48.8% to the group’s revenue. 

Excluding metropolitan Melbourne stores, Kmart and Target have achieved total sales growth of 12.1% and 6.7% respectively for the year to date. The Kmart group contributed 29.8% of the group’s revenue for FY20. 

For Officeworks, sales growth has been supported by the strong demand for technology and home office furniture products. Excluding metropolitan Melbourne stores, total sales growth of 27.3% was recorded for the year to date. Officeworks contributes a lessor amount to the group’s earnings, sitting at just 9% for FY20. 

At the time of writing, the Wesfarmers share price is trading at $51.31, up 0.37% for the day so far. 

More reading

• Wesfarmers and these ASX shares just hit 52-week highs or better
• Wesfarmers (ASX:WES) share price is on fire, up 3% to reach all-time high
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Motley Fool contributor Lina Lim 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.

The post Why this broker thinks the Wesfarmers (ASX:WES) share price can go higher appeared first on The Motley Fool Australia.

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