Buying cheap shares to make a passive income stream may not sound like an appealing idea to some investors. For example, they may think that today’s cheap stocks are priced at low levels because of their weak business models or poor financial outlooks.

While in some cases that may be true, in others it is far from the truth. Some low-priced shares can offer affordable dividends, growth potential and may contribute to a dependable passive income stream over the long run.

Identifying high-quality cheap shares

Assessing which cheap shares are high-quality companies may be a prudent first step in creating a long-lasting passive income. A good starting point to achieve this aim may be a company’s annual report. It provides guidance on the financial position of a business, as well as other facts and figures that may shine a light on the reliability of its dividend. For example, a company that has low debt levels and a dividend that is covered more than once by net profit may offer a robust passive income outlook.

Furthermore, a company’s latest investor updates paint a picture of its overall strategy. This may be especially relevant at the present time, when a number of industries are experiencing major changes. If company management has a flexible strategy that can adapt to what could be a very changeable period in the coming months, it may stand a better chance of delivering improving financial performance. This could mean that it has investment potential versus other cheap shares.

Dividend growth potential

Annual reports and investor updates can provide insight into the dividend growth prospects of cheap shares. For example, a business that pays out a small proportion of profit as a dividend may be able to raise shareholder payouts in future without necessarily increasing profitability. Similarly, a company with a sound strategy that is set to enter a new market may be able to produce improving financial performance that results in strong dividend growth.

Dividend growth could become increasingly important in the coming years. The scale of monetary policy stimulus enacted in recent months suggests that a period of higher global inflation would not be a major surprise. As such, cheap shares that can produce dividend growth may become more valuable in the eyes of investors. This may mean they offer capital growth prospects, as well as an attractive passive income outlook.

Diversifying to create a passive income stream

Of course, some cheap shares could deliver poor returns in the coming years. Even if they have solid financial positions, a competitive advantage and sound dividend prospects, unforeseen events may hold back their financial prospects.

As such, it is crucial to diversify across a wide range of businesses. This could lead to less risk, as well as higher returns in the long run.

More reading

• Facebook allegedly crossed a line in buying up the competition
• ASX retail shares gear up for Christmas boom
• Could this be why the Zip (ASX:Z1P) share price is underperforming?
• Fortescue (ASX:FMG) share price hits record all-time high, here’s what brokers think
• CSL (ASX:CSL) share price on watch after terminating COVID-19 vaccine trial

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This year the COVID-19 pandemic delivered a blow to many retailers across Australia. Brick-and-mortar retailers have been under pressure from lockdown restrictions, cautious consumer spending and intense competition from online retailing.

However, there are signs of a turnaround. Roy Morgan, an Australian market research company, conducted a retail sales forecast with the Australian Retailers Association (ARA) in November. They predict Australians will spend over $54.3 billion across retail stores during the Christmas period, which is an increase of 2.8% on the 2019 Christmas period.

Because of the impact of spending patterns caused by COVID-19, the Roy Morgan retail sales forecast also suggested that online retailing is predicted to grow by 6.6% compared to 2019.

Here are two ASX retail shares with both brick-and-mortar and online stores.

Myer Holdings Ltd (ASX: MYR)

The Australian Financial Review (AFR) reports that department stores are expecting the online shopping boom to stick around, post-pandemic. The AFR article quotes former Myer chief executive Richard Umbers as saying “So many people have now shopped online for the first time as a result of COVID, and they like the experience.”

Myer’s group online sales grew by 61.1% to $422.5 million in FY20, which made up 16.7% of total sales in FY20. Overall in FY20, Myer reported a total sales of $2,519.40 million, which is a decline of 15.8% from $2991.8 in FY19. It reported earnings before interest and tax (EBIT) of $78.5 million, which went up 34% from FY19.

During 2020 Myer has received COVID-related rent concessions from its landlords and is negotiating what its future store footprint might look like as it focuses growing on its online offering. The department store reduced its coverage by 14,000 square metres in 2018–19 and 26,000 square metres in 2019–20.

The Myer share price is currently trading at 30 cents, down 37% from 49 cents in January.

Accent Group Ltd (ASX: AX1)

Accent Group is a leading retail and distribution footwear company, with brands including the Athlete’s Foot, Hype DC, Platypus Shoes, Vans, Dr. Martens, Timberland and Palladium etc. It operates across Australia and New Zealand.

With sales growing by 15.70% in the past five months (excluding the impact of Victoria and Auckland’s lockdowns), Inside Retail reports that CEO Daniel Agostinelli is pleased with Accent Group’s strong trade to date and with the performance of the company’s new stores. 

Accent Group has an integrated omni-channel business model, which is a marketing strategy to unite user experiences from brick-and-mortar to mobile/digital shopping. According to the company, the model allowed it to grow its online orders from an average of $200,000 per day to $800,000–$1 million per day from April to June 2020.

Additionally, in the fourth quarter of FY20, more than 50% of digital shoppers were new customers to Accent Group.

This company has a market capitalisation of $1.20 billion, trading at $2.18 per share, which is above its pre-COVID price level.

More reading

• Forget term deposits and buy these ASX dividend shares
• These are the 10 most shorted shares on the ASX
• 2 highly rated ASX dividend shares to buy
• 2 high yield ASX dividend shares to buy
• 2 growing ASX dividend shares to buy this month

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

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The Zip Co Ltd (ASX: Z1P) share price has more than halved since its August record highs and struggled to hold its ground in recent days. At Thursday’s closing price of $5.15, the Zip share price is now lower than levels seen after the company announced its QuadPay acquisition back in June!

Between June and November, Zip has increased its monthly transaction volume from $189.3 million to $577.1 million and increased its customer base from 2.1 million to 5.3 million. With its metrics more than doubling in just six months, could this hold the key as to why the Zip share price has struggled in recent weeks? 

Cash burn threatens capital raising

Citigroup lowered its Zip share price target from $6.70 to $6.40 with a neutral rating on Thursday. The broker cites the risk of an equity raise to strengthen Zip’s balance sheet. And Citi believes this may occur sooner rather than later as cash burn continues and growth plans expand. 

Zip’s latest update regarding its funding facilities can be found in its FY21 first quarter update. The company has a number of funding warehouses in place to support its customer receivables portfolio. It had undrawn facilities of $463.6 million to fund its Australian consumer receivables.

For its United States business, Zip had secured a revolving line of credit up to US$200 million from Goldman Sachs and Oaktree Capital to fund growth. It also finalised a new $100 million debt facility from Victory Park Capital Advisors to fund growth in Zip Business for SME receivables.

In terms of cash and cash equivalents, the latest figures come from Zip’s FY20 results where it had $32.7 million. Zip is, however, still a cash burning and loss making business that had a net loss of $20 million in FY20. 

Weakness across the BNPL sector 

While Citi brings to our attention the potential capital raising risk in the near-term, Zip isn’t alone in its recent underperformance. Buy now, pay later (BNPL) shares across the board have slumped to 6-month lows with Afterpay Ltd (ASX: APT) being the only exception. 

In recent months, the sectors that had previously benefitted from lockdown such as information technology and consumer staples have struggled, while beaten down sectors such as energy, financials and real estate have bounced back strongly. This rotation effect adds further insult to injury for the Zip share price. 

More reading

• What’s wrong with the Zip (ASX:Z1P) share price?
• Zip and Creso Pharma were among the most traded shares on the ASX last week
• Why G8 Education, Metcash, Woodside, & Zip shares are dropping lower
• These were the worst performing ASX 200 shares last week
• Why BetMakers, Medical Development International, Qantas, & Zip are dropping lower

Lina Lim 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 owns shares of AFTERPAY T FPO. 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 Fortescue Metals Group Limited (ASX: FMG) share price hit a record all-time high of $22.64 on Thursday. This was on the back of the iron ore spot price going from strength to strength in recent days to hit a 7-year high of US$146 per tonne. Here’s what big brokers are thinking about the Fortescue share price after its market leading performance. 

Investor and media day presentation 

A fresh round of broker and share price rating updates have come after Fortescue’s investor and media day presentation held on Wednesday. The company provided the market with FY21 guidance which included:

• 175-180 million tonnes of iron ore shipments.
• Costs of US$13.00 – US$13.50 per wet metric tonnes (wmt) on an assumed exchange rate of AUD/USD 70 cents.
• US$3.0 – US$3.4 billion in capital expenditure.

This compares to its FY20 performance of:

• 178.2 million wmt of iron ore shipments. 
• Cost of US$12.94 per wmt.
• Realised price of US$78.62 per dry metric tonne (dmt).
• Total capital expenditure of US$2.0 billion. 

Iron ore prices were below US$100 per tonne for most of FY20 after hitting a near-term peak of US$120. In FY21, iron ore prices had already passed the US$100 mark by June and US$120 mark by August. Conversely, the Australian dollar/US dollar has hit a 2-year high of 74.6 cents. A higher Australian dollar does have a negative impact on companies that generate earnings from foreign currency. 

What brokers think of the Fortescue share price 

Brokers across the board did not change their ratings or Fortescue share price targets after reviewing the company’s investor day presentation.

Citigroup retained its neutral rating with a $21.00 price target. Similarly, Credit Suisse had a neutral rating with $16.50 price target.

Macquarie Group Ltd (ASX: MQG) also kept its neutral rating with a $23.00 price target but notes that earnings momentum remains strong.

UBS Group also had a neutral rating with a $19.00 price target. The broker is weary of the strong Australian dollar and is watching for the possible adverse impact it might have on earnings. 

More reading

• 5 things to watch on the ASX 200 on Friday
• Why Asaleo Care, Fortescue, Perpetual, & Starpharma shares are storming higher
• ASX 200 down 0.4%: Appen downgrades guidance, Fortescue hits a record high
• Inquiry calls moratorium on mining projects after Rio Tinto (ASX:RIO) Juukan debacle
• The Fortescue (ASX:FMG) share price has doubled in 2020: Too late to invest?

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie 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 CSL Limited (ASX: CSL) share price will be one to watch on Friday after the release of an update on its COVID-19 vaccine candidate.

What did CSL announce?

This morning CSL and the University of Queensland (UQ) announced results from the Phase 1 trial of the UQ-CSL v451 COVID-19 vaccine.

According to the release, the vaccine has shown that it elicits a robust response towards the virus and has a strong safety profile.

And while there were no serious adverse events or safety concerns reported, following agreement with the Australian Government, CSL will not progress the vaccine candidate to Phase 2/3 clinical trials.

Why is it not going any further?

The release explains that the Phase 1 data showed the generation of antibodies directed towards the “molecular clamp” component of the vaccine. These antibodies interfere with certain HIV diagnostic assays.

The potential for this cross-reaction had been anticipated prior to the commencement of the trial and participants were fully informed prior to their involvement.

Blood samples from participants were tested after vaccination and it was found that these molecular clamp antibodies did cause a false positive on a range of HIV assays.

Thankfully, follow up tests confirmed that there is no HIV virus present and that it was just a false positive on certain HIV tests. It stressed that there is no possibility the vaccine causes infection.

Nevertheless, following advice from experts, CSL and UQ have worked through the implications that this issue presents to rolling out the vaccine into broad populations and generally agreed that significant changes would need to be made to well-established HIV testing procedures in the healthcare setting to accommodate rollout of this vaccine.

Therefore, CSL and the Australian Government have agreed the vaccine development will not proceed to Phase 2/3 trials.

CSL’s Chief Scientific Officer, Dr Andrew Nash, commented: “This outcome highlights the risk of failure associated with early vaccine development, and the rigorous assessment involved in making decisions as to what discoveries advance.”

“This project has only been made possible by the innovative science developed by world-class scientists at The University of Queensland and the strong collaboration between our organisations, and many others, over the last 10 months. CSL and Seqirus are committed to continuing our work to protect the Australian population against COVID-19.”

“Manufacture of approximately 30 million doses of the Oxford/AstraZeneca vaccine candidate is underway, with first doses planned for release to Australia early next year. In addition, CSL has agreed at the request of the Australian Government to manufacture an additional 20 million doses,” he concluded.

CSL advised that it doesn’t expect this development to have any impact on previously provided financial guidance for FY 2021.

More reading

• The two ASX stocks most impacted by the dangerous rise of the Aussie dollar
• Why has the CSL (ASX:CSL) share price seemingly gone nowhere this year?
• 2 fantastic ASX healthcare shares to buy for 2021
• CSL (ASX:CSL) share price on watch after hints of ‘far more robust’ vaccine
• Brokers name 3 ASX shares to buy right now

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 CSL Ltd. 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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Retail investors continued to pile onto exchange-traded funds (ETFs) last month, trying not to miss out on a soaring share market.

According to BetaShares, the ETF industry broke multiple records in November including total funds under management, largest dollar growth in funds under management, highest monthly net inwards flow and highest annual growth.

The industry reached an all-time high market capitalisation of $78.7 billion in November, which was further boosted to $92.3 billion after Magellan Global Fund (ASX: MGF) joined the sector on its conversion to an “open class” structure.

Excluding the Magellan aberration, funds under management grew $4.9 billion, which smashed the previous monthly record of $4.1 billion set in January.

About half of that growth came from asset appreciation and the other half from inward flows, which set a new monthly record of $2.5 billion.

“Including the Magellan conversion, industry growth over the last 12 months has been 52%, representing absolute growth of $31.6 billion over this period,” reported BetaShares.

Best performing Aussie ETFs right now

The five ETFs with the biggest returns in November were dominated by US shares and commodities.

The share market generally had a fantastic month, with the S&P/ASX 200 Index (ASX: XJO) rising 10% and S&P 500 Index (INDEXSP: .INX) jumping 11%.

ETF	November performance
BetaShares Geared US Equity Fund Currency Hedged (ASX: GGUS)	27.8%
ETFS Ultra Long NASDAQ 100 Hedge Fund (ASX: LNAS)	26.1%
BetaShares Crude Oil Idx ETF-Currency Hgd(Synth) (ASX: OOO)	25.4%
Betashares Global Energy Cos ETF-Currency Hedged (ASX: FUEL)	25.3%
BetaShares Geared Australian Equity (Hedge Fund) (ASX: GEAR)	22.9%
Source: BetaShares; Table created by author

The top two ETFs were hedge funds.

BetaShares Geared US Equity Fund Currency Hedged came out on top with a remarkable 27.8% performance. ETFS Ultra Long NASDAQ 100 Hedge Fund wasn’t far behind on 26.1%.

Who are the most popular ETF providers?

Vanguard and BetaShares continue their dominance of the ETF market, attracting the largest amount of inward flows this year.

Magellan with its fund conversion has moved up to 7th with $422.7 million coming in to it so far in 2020.

Platinum retains its crown as the least popular provider with more than $48 million taken out, with ACBC storming into second place in November.

Top 5 ETF providers: most money in

ETF provider	In-flow year-to-date	% of Australian industry
Vanguard	$5.1 billion	28.2%
BetaShares	$4.8 billion	26.6%
iShares	$2.8 billion	15.7%
VanEck	$1.9 billion	10.7%
ETF Securities	$1.2 billion	6.7%
Source: BetaShares; Table created by author

Bottom 5 ETF providers: most money out

ETF provider	In-flow year-to-date	% of Australian industry
Platinum	($48.3 million)	(0.3%)
ACBC	($23.5 million)	(0.1%)
K2 Global	($5.2 million)	0.0%
Schroder	($1.5 million)	0.0%
Antipodes	($0.5 million)	0.0%
Source: BetaShares; Table created by author

 

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops on Thursday
• Brokers just upgraded these two ASX stocks to “buy”
• The two ASX stocks most impacted by the dangerous rise of the Aussie dollar
• ASX 200 down 0.4%: Appen downgrades guidance, Fortescue hits a record high

Motley Fool contributor Tony Yoo 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 tech sector has underperformed recently because of a rotation out of growth and into value stocks.

But as far as some experts are concerned, this rotation has only dragged the shares of some quality companies down to more attractive levels. Which could make now an opportune time to invest in the tech sector with a long term view.

Three ASX tech shares which are highly rated are listed below:

Altium Limited (ASX: ALU)

Altium is an award-winning printed circuit board (PCB) design software provider. Over the last decade it has carved out a leading position in this growing market. Which is a big positive given the proliferation of electronic devices. This is likely to lead to increasing demand for its software over the next decade. Analysts at Credit Suisse are positive on its prospects. They have an outperform rating and $42.00 price target on its shares.

Audinate Group Limited (ASX: AD8)

At the smaller end of the market is Audinate. It is a digital audio-visual networking technologies provider which has been delivering impressive sales growth over the last few years. This is thanks to its Dante product, which is the clear market leader. And while FY 2020 was a tough year because of the pandemic, the company looks well-placed to bounce back strongly when the pandemic passes. UBS has been pleased with its recovery and particularly its strong performance in the first quarter. It put a buy rating and $8.00 price target on its shares.

Xero Limited (ASX: XRO)

Xero is a leading cloud-based business and accounting software provider. Thanks to its evolution into a full service small business solution over the last few years, the company has been growing its customer numbers and recurring revenues at a rapid rate. The good news is that due to the quality of its offering, the shift to the cloud, its global market opportunity, and burgeoning app ecosystem, Xero has been tipped for more of the same in the future. Goldman Sachs is very positive on its prospects and recently put a buy rating and $157.00 price target on its shares.

More reading

• Why the ASX tech share rally can run well into 2021
• 3 quality SaaS ASX shares to buy
• 3 reasons why Xero (ASX:XRO) shares are doing so well
• Why Creso Pharma and these ASX shares just hit 52-week highs or better
• 2 exciting small cap ASX shares to watch

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 Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO and Xero. The Motley Fool Australia has recommended AUDINATEGL FPO. 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 fed up with the low interest rates on savings accounts? You’re not alone, if you are.

The good news is that the Australian share market hosts a large number of shares with generous dividend yields.

For example, two dividend shares that provide investors with yields that smash savings accounts are listed below:

National Storage REIT (ASX: NSR)

National Storage is one of the ANZ region’s leading self-storage operators. It has been growing at a solid rate over the last few years thanks to its strong position in a fragmented market and its growth through acquisition strategy.

Pleasingly, its performance has remained solid this year despite the pandemic. So much so, at its annual general meeting, management revealed that it expects to report underlying earnings per share of 7.7 cents to 8.3 cents in FY 2021. It also advised that it intends to payout 90% to 100% of its earnings to shareholders as distributions.

Based on the middle of both guidance ranges and the current National Storage share price, this equates to a 3.7% yield.

Westpac Banking Corp (ASX: WBC)

It certainly has been a tough couple of years for Westpac and the rest of the banking sector. And while trading conditions will not be buoyant for some time, the overall industry outlook is improving greatly. Especially with the end of the pandemic in sight, the economic damage appearing not as bad as first feared, and housing prices tipped to hit record highs next year.

One broker that is positive on the company’s prospects in FY 2021 is Citi. Last month it responded to its full year results release by putting a buy rating and $23.50 price target on its shares.

It is also forecasting a 90 cents per share fully franked dividend. Based on the Westpac share price, this represents a 4.5% dividend yield.

More reading

• 5 things to watch on the ASX 200 on Friday
• Morgans picks the best ASX stocks to buy for 2021
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises on Monday
• Westpac (ASX:WBC) makes $420 million sale

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) ended its winning streak and tumbled lower. The benchmark index fell 0.7% to 6,683.1 points.

Will the market be able to bounce back from this on Friday? Here are five things to watch:

ASX 200 expected to drop again.

The Australian share market looks set to end the week on a disappointing note. According to the latest SPI futures, the ASX 200 is poised to open the day 32 points or 0.5% lower this morning. This follows a mixed night of trade on Wall Street, which in late trade sees the Dow Jones down 0.45%, the S&P 500 down 0.3%, but the Nasdaq up 0.25%. The Airbnb share price doubled after its IPO on the Nasdaq.

Iron ore price climbs further.

BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) shares could be on the rise again on Friday after the iron ore price continued its incredible ascent. The price of the steel-making ingredient is now fetching a massive US$156.58 a tonne.

Oil prices jump.

Energy producers including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could finish the week strongly after oil prices jumped. According to Bloomberg, the WTI crude oil price is up 2.8% to US$46.80 a barrel and the Brent crude oil price is up 2.8% to US$50.22 a barrel. The latter was the first time its price has gone beyond US$50 since March. An oilfield attack in Iraq was behind the rise.

Gold price softens.

Gold miners such as Newcrest Mining Ltd (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) will be on watch after the gold price softened. According to CNBC, the spot gold price is down 0.1% to US$1,836.20 an ounce. Improving investor sentiment was weighing on the precious metal.

Westpac annual general meeting.

The Westpac Banking Corp (ASX: WBC) share price will be on watch today when it holds its annual general meeting. The banking giant is likely to provide investors with an update on current trading and also its COVID loan deferrals.

More reading

• ASX 200 drops on Thursday
• Brokers just upgraded these two ASX stocks to “buy”
• Why the Adbri (ASX:ABC) share price has dipped in trading today
• Why Asaleo Care, Fortescue, Perpetual, & Starpharma shares are storming higher
• The two ASX stocks most impacted by the dangerous rise of the Aussie dollar

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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If you’re currently searching for a few shares to add to your portfolio in 2021, then you could do a lot worse than the ones listed below.

Here’s why these ASX shares come highly rated right now:

Afterpay Ltd (ASX: APT)

Afterpay is a payments company that has been growing at a rapid rate over the last few years. This has been driven by the growing popularity of the buy now pay later payment method with consumers and retailers and its successful international expansion.

Pleasingly, this strong growth has not only continued in 2020, but accelerated thanks to the shift to online shopping because of the pandemic.

One broker that appears confident its strong growth can continue is Credit Suisse. Last week it initiated coverage on the company with an outperform rating and $124.00 price target.

Kogan.com Ltd (ASX: KGN)

Kogan is one of Australia’s leading ecommerce companies. Like Afterpay, it has been a big winner from the shift to online shopping. This has seen Kogan record a significant jump in active customers and an even greater lift in sales and earnings.

And with more and more spending expected to shift online in the future, Kogan looks well-positioned to benefit. It is also looking to boost its growth with earnings accretive acquisitions. One of these was announced recently with the acquisition of New Zealand-based Mighty Ape.

Analysts at Credit Suisse were pleased with this acquisition and upgraded Kogan’s shares to an outperform rating with a $20.60 price target.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is a fast-growing donor management platform provider. It has been growing its share of the massive United States market at a rapid rate over the last few years. This has underpinned stellar revenue and operating earnings growth.

The good news is this has continued in 2020, with Pushpay recently reporting explosive growth in the first half of FY 2021. Its half year results revealed a 53% increase in operating revenue to US$85.6 million and an even more impressive 177% jump in EBITDAF to US$26.7 million.

Looking ahead, the company has a significant market opportunity to grow into and is targeting US$1 billion in revenue later this decade. Goldman Sachs believes it is well-positioned for growth and has a conviction buy rating and $10.35 price target (now $2.59 after its 4-1 share split) on its shares.

More reading

• Why the ASX tech share rally can run well into 2021
• 3 compelling ASX payment shares to buy
• 5 things to watch on the ASX 200 on Thursday
• Top brokers name 3 ASX shares to buy today
• Why Afterpay, Creso Pharma, Healius, & Resonance Health shares are storming higher

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 Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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