The Infratil Ltd (ASX: IFT) share price will be on watch today when it returns from its trading halt.

Yesterday afternoon the New Zealand-based infrastructure investment company’s shares rocketed 21% higher before being hurriedly placed into a trading halt.

This followed speculation that Infratil had received a takeover approach from AustralianSuper.

What did Infratil say?

This morning the Infratil board confirmed that it received an initial non-binding, incomplete, indicative and confidential offer from AustralianSuper to acquire the company via a scheme of arrangement.

It first received an offer on 18 October of NZ$6.40 per share, before it was revised higher on Tuesday to NZ$7.43 per share.

Although this represented a 22.2% premium to its last close price, the company rejected the approach. This was on the belief that it materially undervalues Infratil’s high quality and unique portfolio of assets on a control basis.

The board also notes that there are material conditions related to Foreign Investment Review Board and Overseas Investment Office approvals in Australia and New Zealand. It feels these conditions and other aspects of the proposal also make it unattractive to shareholders.

The company’s Chairman, Mark Tume, commented: “The Board regularly assesses portfolio construction and return expectations. We have had a long and successful track record as active managers of the Infratil platform, and recent examples include the ongoing success of CDC Data Centres, the proposed acquisition of Qscan and the strategic review of Tilt Renewables. As at 8 December 2020, Infratil had delivered total shareholder returns of 18% per annum since listing in 1994 and has a stated annual targeted return for our shareholders of 11%-15% over the long term.”

This sentiment was echoed by its Chief Executive, Marko Bogoievski.

He added: “Both proposals were unsolicited and materially undervalue our significant renewable energy and digital infrastructure platforms. We expect some of the additional value to be demonstrated in the near term with the recently announced strategic review of Tilt Renewables, which will continue, and ongoing appreciation of the value of CDC Data Centres.”

More reading

• Why the Infratil (ASX:IFT) share price rocketed 21% higher today
• ASX stock of the day: Tilt (ASX:TLT) share price rockets 17% to new all-time high

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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On Tuesday the Australian share market continued its positive run and climbed higher again. This led to the market reaching a nine-month high.

While this is a big positive, some ASX shares are performing even better.

For example, three ASX shares which have hit 52-week highs or better are listed below:

Creso Pharma Ltd (ASX: CPH)

The Creso Pharma share price rocketed to a 52-week high of 26 cents on Tuesday. When the cannabis company’s shares hit that level, it meant they were up an incredible 381% since this time last week. Investors have been buying Creso Pharma’s shares since the UN announced a landmark decision to reclassify cannabis as a less dangerous drug and the US House of Representatives voted to decriminalise cannabis. Creso believes this has the potential to create significant growth opportunities in the industry. It also advised that its Canadian subsidiary, Mernova, can scale up operations to meet potential demand from the US market.

SEEK Limited (ASX: SEK)

The SEEK share price rose to a record high of $26.79 yesterday. The job listings company’s shares have been very positive performers over the last four to five weeks for a couple of reasons. One was news that a number of potentially effective COVID-19 vaccines will be released in the near future. This sparked hopes of a quicker than expected economic recovery, which would only be good news for the job market. Also giving its shares a boost was an update by SEEK at its annual general meeting. SEEK lifted its guidance after a stronger than expected rebound in its performance across a number of markets.

Xero Limited (ASX: XRO)

The Xero share price hit a record high of $141.50 on Tuesday. The catalyst for this was a broker note out of Goldman Sachs earlier this week. Its analysts slapped a buy rating and $157.00 price target on the cloud-based business and accounting software provider’s shares. Goldman believes Xero’s long-term earnings opportunity is material. It estimates that it has a NZ$14 billion total addressable market across its key regions. It also suspects that its total addressable market could be worth a further NZ$62 billion if it can monetise its app ecosystem. This provides it with a “multi-decade runway for strong revenue growth.”

More reading

• Zip and Creso Pharma were among the most traded shares on the ASX last week
• Top ASX shares to buy in December 2020
• Top ASX shares making record all-time highs
• 2 of the best ASX tech shares you can buy today
• Why the Creso (ASX:CPH) share price is rocketing 30% today

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some compelling reasons why Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), also called Soul Patts, could be considered a great ASX dividend share.

A quick overview of Soul Patts

Soul Patts is an investment conglomerate that has been listed since 1903.

The company has many long-serving employees. More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families. Soul Patts itself takes a long-term investment approach into businesses.

The management team like to take a contrarian approach when taking positions into some sectors. For example, it recently invested into agriculture during the course of one of Australia’s worst droughts.

It is currently invested across numerous industries such as telecommunications, building products, resources, pharmacies, listed investment companies (LICs) and financial services.

Here are some of the reasons why Soul Patts could be considered a great ASX dividend share:

Diversification

Soul Patts’ investments essentially provide shareholders with a diversified portfolio, somewhat like an exchange-traded fund (ETF).

Being invested across many businesses is usually seen as a safer idea than one particular company.

Some of the ASX shares that Soul Patts currently owns in its portfolio are: TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), New Hope Corporation Limited (ASX: NHC), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI), Palla Pharma Ltd (ASX: PAL), Clover Corporation Limited (ASX: CLV) and Pengana Capital Group Ltd (ASX: PCG).

It also owns unlisted businesses. Soul Patts has agriculture investments, as I’ve already mentioned. It also has investments in private businesses including cleaning, resources, swimming schools, financial services and a business called Ampcontrol.

Dividend funding

Soul Patts funds its dividend to shareholders from the cash flow from its investments in the form of dividends, distributions and interest. The company takes its total investment income, pays for the operating expenses, tax and so on – what’s left is called its regular operating cashflow.

TPG, Brickworks and New Hope normally make up a large proportion of the funding because those three stakes make up a significant part of Soul Patts’ asset value.

In FY20 Soul Patts paid out 56.93% of its regular operating cash flow as a dividend. This doesn’t include $28.53 million of a TPG dividend which was escrowed for FY21 because the old TPG would have paid that dividend in November.

Dividend growth streak record

Soul Patts has the longest consecutive dividend growth streak on the ASX. It has grown its dividend every year since 2000. Ramsay Health Care Limited (ASX: RHC) also had a streak going back that far, but the COVID-19 pandemic impacts ended that run.

There are businesses overseas with much longer dividend runs, but on the ASX it’s the longest streak. And it comes with franking credits attached as well which overseas shares do not. Franking credits boosts the prospective yield for Aussie investors.

What’s the Soul Patts dividend yield now?

At the current pre-open Soul Patts share price of around $29, it has a trailing grossed-up dividend yield of 3%. The prospective yield has been declining as the share price has risen over the year. However, the grossed-up yield is still materially higher than the official Reserve Bank of Australia (RBA) interest rate.

More reading

• How to get a passive income of $50,000 per year from ASX dividend shares
• Got money to invest? Here are 3 ASX dividend shares to buy
• Got cash to invest? Here’s 3 ASX shares to buy
• 3 reasons why Brickworks (ASX:BKW) shares are a buy for dividends
• 3 ASX dividend shares to buy in December

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At present, Westpac Banking Corp (ASX: WBC) is offering investors interest rates of just 0.35% per annum on five-year term deposits. This is broadly in line with what the rest of the banks are offering.

This means that even if you put $100,000 into them, you would earn interest of just $350 each year.

The good news is that there are a great number of dividend shares on the Australian share market that offer significantly better yields. Two such examples are listed below:

Accent Group Ltd (ASX: AX1)

Accent is the leading footwear retailer behind a number of popular store brands. This includes HYPE DC, Platypus, The Athlete’s Foot, and Sneaker Lab. It has also recently launched two new store brands despite the pandemic – Australian Stylerunner and Pivot. The good news is that these new stores have been materially outperforming expectations since opening. This bodes well for its bold expansion plans over the coming years.

Analysts at Morgan Stanley believe the company is well-placed to reward shareholders with dividends in FY 2021. The broker is forecasting a fully franked dividend of 9.4 cents per share. Based on the latest Accent share price, this represents a 4.3% dividend yield.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural property-focused real estate investment trust (REIT) which owns a diversified portfolio of high quality assets. These assets are leased to experienced agricultural operators such as wine giant Treasury Wine Estates Ltd (ASX: TWE) on very long leases.

At the end of FY 2020, the company owned 61 properties with a combined value of $1 billion and a weighted average lease expiry (WALE) of 10.9 years. From this, it was generating adjusted funds from operations (AFFO) of 11.7 cents per share.

Thanks to fixed rental increases, the company intends to grow its distribution by its 4% per annum target rate in FY 2021. This will mean an 11.28 cents per share distribution for shareholders. Based on the current Rural Funds share price, this works out to be a 4.6% yield.

More reading

• 2 highly rated ASX dividend shares to buy
• Here’s why income investors may love Rural Funds (ASX:RFF)
• 2 ASX dividend shares with generous 4%+ yields
• 2 high yield ASX dividend shares to buy
• 2 defensive ASX dividend shares for income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates Limited. 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought hard to carve out a small gain. The benchmark index rose 0.2% to a nine-month high of 6,687.7 points.

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

ASX 200 expected to rise.

The Australian share market looks set to push higher again on Wednesday. According to the latest SPI futures, the ASX 200 is poised to open the day 29 points or 0.4% higher this morning. This follows a positive night of trade on Wall Street, which in late trade sees the Dow Jones up 0.5%, the S&P 500 up 0.35%, and the Nasdaq up 0.5%.

UK COVID-19 vaccine rollout begins.

The UK became the first country to start the official rollout of a COVID-19 vaccine on Tuesday. According to the BBC, a 90-year-old grandmother became the first person in the world to be given the Pfizer vaccine. That was the first of 800,000 doses of the vaccine that will be distributed in the near term, with up to four million more expected by the end of the month.

Oil prices mixed.

Energy producers including Oil Search Ltd (ASX: OSH) and Santos Ltd (ASX: STO) will be on watch today after a mixed night for oil prices. According to Bloomberg, the WTI crude oil price is down 0.25% to US$45.64 a barrel and the Brent crude oil price is flat at US$48.88 a barrel. Rising COVID cases and lockdowns offset the vaccine news.

Gold price rises again.

It could be a good day for gold miners such as Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) today after the gold price pushed higher again. According to CNBC, the spot gold price is up 0.6% to US$1,877.3 an ounce. The precious metal hit a two-week high after traders bet on US fiscal support.

Westpac rated as a buy.

The Westpac Banking Corp (ASX: WBC) share price is in the buy zone according to analysts at Goldman Sachs. This morning the broker retained its buy rating and $20.34 price target on its shares. Goldman believes mortgage credit growth will rise towards 5% in FY 2021 and the major banks are well-placed to get towards system growth. It is also forecasting a 97 cents per share dividend for Westpac in FY 2021.

More reading

• ASX 200 up on Tuesday
• Vocus (ASX:VOC) founder: ASX is in ‘bubble territory’
• Leading brokers name 3 ASX shares to sell today
• Woodside (ASX:WPL) share price flat on CEO retirement
• ASX 200 up 0.1%: Bank of Queensland update, Link jumps, Woodside CEO to retire

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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The S&P/ASX 200 Index (ASX: XJO) went up by 0.20% to 6,688 points today.

Here are some of the highlights from the ASX:

Link Administration Holdings Ltd (ASX: LNK)

The Link share price went up 14% today after the company revealed there was another takeover offer.

This one is a conditional, non-binding indicative proposal from SS&C Technology Holdings to buy the whole business. SS&C is a NASDAQ-listed global provider of investment and financial software services and healthcare software. It’s headquartered in Connecticut and has 150 offices in 35 countries.

The cash offer price from SS&C is $5.65 per share.

Adairs Ltd (ASX: ADH)

The Adairs share price went up almost 3% today after the home furnishings business released a trading update and earnings guidance.

Adairs said that after 23 weeks in the first half of FY21, total Adairs sales were up 23.4%.

Adairs stores sales were up 5.2%. When only including open stores like for like sales were up 17.3% (which excludes Melbourne stores when they were closed). Online sales were 99.7% higher and Mocka sells went up by 45.1%. Online sales represented 39% of total sales.

Adairs said that its gross profit margin was well above FY20 after a consistent focus on that side of things.

The company gave some guidance for the first half result. It’s expecting group sales to be between $235 million to $245 million, up from $179 million.

It’s also expecting total underlying earnings before interest and tax (EBIT) to be between $62 million to $66 million, up from $23.2 million.

G8 Education Ltd (ASX: GEM)

The G8 Education share price fell by 6.6% today after the childcare operator gave a trading update.

The company said that occupancy and attendance is recovering well with current like for like occupancy at 75.5%.

Management said that costs are being well managed, supporting selective investments in resources, as well as repairs and maintenance, in the fourth quarter of 2020. Revenue and costs are underpinned by government support.

Calendar year to date (to 30 November 2020) underlying earnings before interest and tax (EBIT) was $98 million, including current year wage costs relating to the employee payment remediation program.

Total one off costs of the employee remediation program is currently estimated to be $50 million to $80 million, pre-tax.

It’s still working on an improvement program covering around 100 centres. The divestment plan for previously impaired centres is progressing to plan and the sale of the Singapore business has completed.

G8 said it has a strong balance sheet and it’s now broadly cash neutral.

Bank of Queensland Limited (ASX: BOQ)

The Bank of Queensland share price fell 1% after providing a business update for its performance and COVID-19 relief.

The CEO and managing director of BOQ George Frazis said: “BOQ continues to execute on its transformation program with the family and friends phase 1 launch of the Virgin Money digital bank going live this week. We reconfirm the FY21 outlook for BOQ to deliver broadly neutral jaws.”

As at 30 November 2020, BOQ has 2,500 housing loans remaining in deferral with balances of $889 million. This balance represents 3% of BOQ’s housing loan portfolio. BOQ has 3,300 SME loans remaining on deferral with balances of $390 million. This balance also represents 3% of BOQ’s total SME lending.

Mr Frazis said: “It is really pleasing to see the vast majority of our customers who accessed the banking relief package resuming repayments. We will continue to work with the remaining 3% of customers still accessing our banking relief packages to support them in their recovery.”

More reading

• Vocus (ASX:VOC) founder: ASX is in ‘bubble territory’
• Woodside (ASX:WPL) share price flat on CEO retirement
• ASX 200 up 0.1%: Bank of Queensland update, Link jumps, Woodside CEO to retire
• Why Adairs, Link, Nuix, & Tyro shares are charging higher
• Why G8 Education, Metcash, Woodside, & Zip shares are dropping lower

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 Link Administration Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO 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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The Metcash Limited (ASX: MTS) share price dropped lower today despite an upgrade by analysts at Morgan Stanley. In the latest broker report, Morgan Stanley increased the price target on Metcash from $3.80 to $4.15.

The Metcash share price closed today at $3.46, down 2.5% for the day.

Why the broker upgrade?

According to Morgan Stanley, Metcash’s second half trading to date showed “ongoing tailwinds with its food and liquor division, and increased upside with its hardware pillar”.

The broker said the strong sales was complemented by operating leverage, with hardware sales 5% ahead of expectations, complemented by a 1.40% margin expansion. This reflected a higher contribution from the company’s DIY hardware segments from both company-owned and joint-venture stores.

Morgan Stanley equity analyst, Niraj Shah, noted Metcash’s strong start to the second-half, and believes that the company’s share price is trading at a significant discount to most of its peers. 

“Despite persistent category and company specific tailwinds, further diversification and an improved balance sheet means that Metcash trades at a 40% discount to the ASX 200 Industrials ex-Financials index. This compares with its long-term historical average discount of 35%.”

The broker maintained its overweight rating on Metcash’s shares, and lifted its price target from $3.80 to $4.15.

A brief take on Metcash

Metcash dominates the Australian wholesale distribution of packaged groceries to the independent retailer.

The company effectively acts as a co-operative for the small corner shop and the local independent supermarket. By funnelling sales volume through a single channel, Metcash derives buying power to negotiate volume discounts with manufacturers.

In addition, the company owns national retailers such as Mitre 10, Home Timber & Hardware, and Cellarbrations, as well as the IGA supermarket chain. Note that Metcash owns the IGA brand, but the individual IGA stores are owned independently.

Metcash is often called the “4th force” in the supermarket and liquor industry, with 11% market share from its IGA stores competing with Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) which account for 65%, and Aldi at 9%.

For the six months ended 31 October, the company reported a 12.2% increase in group revenue to $7.1 billion. This led to Metcash reporting a 30.4% increase in underlying group earnings before interest and tax (EBIT) to $203 million, and a 43% lift in underlying profit after tax to $129.6 million.

About the Metcash share price

The Metcash share price has gained 35% in 2020, after dropping by 10% in May. At the current share price, the company has a market value of $3.6 billion.

More reading

• Why G8 Education, Metcash, Woodside, & Zip shares are dropping lower
• ASX 200 rises on Monday
• ASX 200 up 0.7%: Metcash impresses, BHP & Fortescue storm higher, Xero given buy rating
• Why Fortescue, Metcash, Nuix, & Xero shares are storming higher
• Metcash (ASX:MTS) share price jumps 8% after strong first half growth

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

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It is worth remembering that all companies start somewhere and don’t become blue chips overnight.

Two ASX shares that are at the start of their journeys are listed below. Here’s what has investors watching them closely:

Audinate Group Limited (ASX: AD8)

Audinate is a $545 million digital audio-visual networking technologies provider. It is best known for its industry-leading Dante audio over IP networking solution. This product is used widely across a number of industries and has begun to dominate its market.

Management recently revealed that the number of Dante enabled products manufactured by its customers has grown to 2,804. This is a massive eight times greater than its nearest rival.

And while 2020 has been tough for Audinate because of the pandemic, its performance has started to improve now and 2021 looks set to be a much stronger year.

It was partly because of this that analysts at UBS currently have a buy rating and $8.00 price target on its shares. This compares to the current Audinate share price of $7.18.

Whispir (ASX: WSP)

Whispir is a $330 million software-as-a-service communications workflow platform provider. Its platform automates communications between businesses and their workers and customers.

This allows users to improve their communications through automated workflows that ensure stakeholders receive accurate, timely, useful, and actionable insights. An example of this was the government’s use of its platform to distribute COVID-19 updates during the pandemic.

Whispir was a very strong performer in FY 2020. For the 12 months ended 30 June 2020, it posted a 25.5% increase in revenue to $39.1 million and ARR growth of 34% to $42.2 million. Pleasingly, its positive form has continued in FY 2021, with the company’s ARR lifting to $43.7 million at the end of September.

This is still only a very small slice of a Workflow Communications platform as a Service market which management estimates could reach US$8 billion per year by 2024.

More reading

• 2 exciting small cap ASX shares to watch in 2021
• 3 exciting small cap ASX shares rated as buys
• 2 exciting small cap ASX shares to buy
• The Nitro (ASX:NTO) share price is down 20% in a month. Time to invest?
• Why the Whispir (ASX:WSP) share price is 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 and recommends Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia has recommended AUDINATEGL FPO 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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The S&P/ASX 200 Index (ASX: XJO) and ASX shares are unquestionably making most investors very happy right now. The ASX 200 Index just had its best month since the 1980s in November and, on today’s gains, is up almost 13% since 30 October.

The ASX 200 has also pretty much seen off the losses that the coronavirus-induced market crash brought us for the year, and is now up more than 47% since the lows of 23 March.

But the higher shares climb, the more investors have to lose, and so the more nervous they tend to get.

According to reporting in the Australian Financial Review (AFR), one investor is especially so, calling the current share market “overvalued”. That investor is James Spenceley, a founder of the ASX-listed telco Vocus Group Ltd (ASX: VOC).

These days, Mr Spenceley describes himself as a ‘venture capitalist’, but still isn’t afraid to call out what he calls “outsized valuations”. He notes that if he took Vocus to IPO right now, he’d probably manage a price-to-earnings (P/E) ratio of 25 if the company hit the boards today, rather than the P/E ratio of 5 that Vocus managed upon its ASX debut:

Everything is overvalued, there’s absolutely no question, we’re into bubble territory. I think the important differentiator is bubbles can keep going for a very long while.

He also told the AFR that, “people could draw down from their mortgage at 2.5 per cent and put money into the stockmarket making 15, 20 per cent a day, a month… He concludes by stating “we’re not necessarily commenting on value… the heart of the problem is complete obliviousness to risk”.

The ASX 200 party rages on

The AFR also quotes another venture capitalist with concerns over the current market. Mark McConnell is CEO of Citadel Group Ltd (ASX: CGL) and also reckons there are danger signs in the current market. He told the AFR that young investors were “after an instant golden goose”.

Mr McConnell singles out the red hot buy now, pay later (BNPL) sector as an example:

When I read some of the reports around some of the fintech and buy now, pay later [stocks], I get uncomfortable with statements such as, ‘it will eventually grow into its valuation’. For a value investor that doesn’t really work for my paradigm.

He goes on to blame young and speculative investors for not putting in the time and research to navigate risk on the market:

I’m continually amazed at how many people buy on the strength of the bouncing ball moving up and down on the screen but yet they never read an annual report, they never turn up to an annual general meeting, they’ve got no idea what the company does.

It’s a similar sentiment to the one Warren Buffett made 20 years ago. Food for thought!

More reading

• Woodside (ASX:WPL) share price flat on CEO retirement
• ASX 200 up 0.1%: Bank of Queensland update, Link jumps, Woodside CEO to retire
• ASX small caps could get a boost with the Aussie dollar hitting 28-month highs
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises on Monday

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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The Talga Group Ltd (ASX: TLG) share price rocketed higher today after the company released news of a successful study. Shares in the battery anode producer closed 5.29% higher at a price of $1.89.

It has been a wildly successful year for the company as its shares have risen by an astounding 301%. These gains come amid the electric vehicle (EV) revolution that has seen companies such as Tesla Inc (NASDAQ: TSLA) and Nio Inc – ADR (NYSE: NIO) perform well this year.

Talga’s fortunes are closely aligned with EV companies, as it makes battery anodes for lithium-ion batteries. Earlier in the year Talga made waves on this front as it partnered with battery giant Farasis.

What happened

This morning Talga announced the completion of a scoping study on its graphite resources (the Niska project) in Northern Sweden. The results sent the Talga share price soaring higher.

The study suggests there is strong evidence to support a stand-alone mine and anode refinery at the site, with robust economics being driven by high graphite resources, high anode product yields and the company’s vertical integration.

Talga sees the study as an important step towards increasing anode production. To this point, the company’s Niska project, when combined with its existing Vittangi Project, would form the largest natural graphite producer in the world.

What did the study say?

The Niska scoping study aims to utilise 5.1 megatonnes of carbon graphite at 28.7%. The study also states that the carbon will be mined at a rate of 400,000 tonnes a year.

Based on these numbers, Talga estimates its average annual pre tax cashflow would be approximately US$690 million per annum. This would be over a total of 14 years of operation and assuming US$2380/tonne of coated product.

The study also outlined some clear benefits for the project. For example, the mine would be favourably located in a tier 1 investment jurisdiction in Sweden and would have access to low cost 100% renewable energy supply and proximity to European battery markets.

Furthermore, the project would have a likely net present value of US$2.4 to $4.6 billion.

Investors have clearly been excited by the prospect, pushing the Talga share price up by more than 5% today.  

More reading

• Cimic (ASX:CIM) share price inches up on $112 million contract wins
• President Trump to sign bill that could kick Chinese stocks off U.S. exchanges
• Here’s how world’s 10 richest made $1.5 trillion from COVID-19
• Elon Musk wants to steer Tesla towards higher profits
• 10 most searched shares in Australia

Daniel Ewing 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 Tesla. 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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