Are you planning to make some new additions to your portfolio in the near future? If you are, then you might want to take a look at the ones listed below.

Here’s why they have been tipped as ASX shares to buy: 

CSL Limited (ASX: CSL)

The first ASX share to look at is CSL. This biotechnology giant is is made up of two businesses, CSL Behring and Seqirus. CSL Behring is the number one player in a global plasma therapies industry worth a massive US$30 billion per year. Whereas Seqirus is the number two player in the US$6 billion global influenza vaccines industry. The CSL share price has come under pressure this year due to plasma collection headwinds. While this is likely to weigh on its growth, UBS appears to believe it is worth dealing with this short term pain for the long term gains. Earlier this week the broker retained its buy rating and $346.00 price target on its shares. 

People Infrastructure Ltd (ASX: PPE)

People Infrastructure is a leading workforce management company. It delivers a wide range of services to Australian businesses across four main sectors including healthcare, community services, industrial services, and information technology. In FY 2020, the company reported a 49.2% increase in normalised EBITDA to $26.4 million. While the new financial year is going to be harder because of the pandemic, Morgans believes the company is well-placed for long term growth. In light of this, it feels investors should be buying now while its shares trade at attractive levels. The broker has an add rating and $4.05 price target on its shares.

Pushpay Holdings Group Ltd (ASX: PPH)

Another ASX share that could be in the buy zone is Pushpay. It is a donor management and community engagement platform provider with a keen focus on the US faith sector. Pushpay has been a very strong performer over the last 12 months. It reported a 53% increase in operating revenue to US$85.6 million for the first half of FY 2021. This was driven by increasing demand for its platform thanks partly to COVID-19 tailwinds and the ongoing digitisation of the church. Analysts at Goldman Sachs are fans of the company. They have a conviction buy rating and ~$2.59 price target on its shares.

More reading

• Got cash to invest? Here are 3 ASX shares to buy
• 2 compelling ASX 200 blue chip shares to buy in February
• 2 compelling ASX shares to buy in February 2021
• Top ASX shares to buy in February 2021
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX

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. and People Infrastructure Ltd. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended People Infrastructure 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 Polarx Ltd (ASX: PXX) share price closed over 20% higher today at 4.7 cents a share.

Polarx is a mineral exploration and development company with current interests in copper and gold projects in Alaska and Nevada, USA. The company’s shares entered a trading halt today, which came at the same time that Polarx announced progress pertaining to its Zackly gold-copper-silver project.

Polarx plans scoping study following latest drilling results

The scoping study, based on the company’s Zackly Main, Zackly East and Caribou Dome projects, is being planned to determine key project economics following Polarx’s latest Alaska drilling results.

Polarx announced that its latest assays confirm mineralisation occurs over at least 2.5km of strike length, with a further 2.5km of highly prospective structures to be drilled.

Additional drilling over another 1.5km of strike-length has intersected mineralisation in most holes, but drill density is not yet sufficient for resource modelling.

The Zackly Main site comprises a JORC inferred resource of 213,000oz of gold, 41,000 tonnes of copper and 1.5 million oz silver over a 1km strike length.

The Caribou Dome site of the Zackly Project hosts a JORC resource of 86,000 tonnes of copper at an average grade of 3.1%.

Humboldt Range Project delivers high grade gold and silver results

The Polarx share price gaining ground also comes after positive results were reported from the company’s Humboldt Range Project.

Polarx reported that assay results from its due-diligence sampling at the Humboldt Range Gold-Silver Project in Nevada, USA, have verified the presence of high grades of gold and silver at several sites.

The company stated that it intends to immediately commence an evaluation to determine whether high-grade mineable widths and tonnages are present.

Polarx will also evaluate whether the altered rock between the veins contains economically viable grades of gold and silver amenable to bulk mining.

The company has a current market capitalisation of $21.1 million. The Polarx share price has risen around 51.6% over the past month.

More reading

• Why did the Lion One Metals (ASX:LLO) share price jump over 8% today?
• 2 growing small cap ASX shares to buy
• ASX 200 falls 0.9%, Nick Scali reports, Vulcan jumps
• Why the Tilt (ASX:TLT) share price just broke its record high
• GameStop effect: 3 more shorted ASX shares that could skyrocket

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The Lion One Metals Ltd (ASX: LLO) share price is trading at $1.70 a share at the time of writing. That’s close to 9% higher for the day.

Lion One is a Canadian development and exploration company. The company’s CEO, Walter Berukoff, has owned or operated over 20 mines in 7 countries.

Lion One aims to become the premier high-grade gold producer in Fiji. This is set to be achieved via its 100% owned and fully permitted Tuvatu Alkaline Gold Project. 

Let’s take a closer look at why Lion One’s share price has jumped today. 

Lion One Metals share price jumps with high-grade gold drill results at Tuvatu

Lion One recently announced positive shallow and deep high-grade gold drill results from two diamond drill holes at the Tuvatu alkaline gold project.

Result highlights include discovering high grade gold mineralisation at a shallow intercept in a previously drilled area.

Both drill holes are still progressing and recently experienced delays caused by bad weather.

The main mineralised zone at Tuvatu (Upper Ridges) is comprised of eleven principal lodes.  There is a strike length over 600m and a vertical extent of more than 300m. 

Commenting on the recent Tuvatu project discoveries, Lion One Technical Advisor, Dr. Quinton Hennigh said:

“We are starting to see a clearer picture develop around which lode structures are deep-tapping and likely prospective for high grade gold mineralisation.”

Lion One announces the arrival of two new drill rigs

The company further advised that two underground drill rigs purchased in November 2020 are expected to arrive over the approaching week.

Lion One stated that the company believes this will accelerate drill testing of the deep high grade discovery. This will also support continuous drilling throughout the wet season.

In addition to year round, continuous drilling, Lion One said that there are other  advantages of underground drilling. This includes improved access to target depths and an ability to drill at more favourable angles.

The company’s technical crew has started preparing multiple drill stations in preparation for the new rigs.

The Lion One share price has dropped approximately 17.5% over the last 12 months.

More reading

• 2 growing small cap ASX shares to buy
• ASX 200 falls 0.9%, Nick Scali reports, Vulcan jumps
• Why the Tilt (ASX:TLT) share price just broke its record high
• GameStop effect: 3 more shorted ASX shares that could skyrocket
• These central bankers aren’t worried about share market bubbles. Should you be?

Motley Fool contributor Gretchen Kennedy 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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Growing small cap ASX shares could be worth researching for potential long-term returns.

Smaller businesses may have the ability to create attractive performance for investors compared to large businesses which have already experienced a lot of growth.

These are two companies that could be worth some attention:

Healthia Ltd (ASX: HLA)

Healthia describes itself as an integrated group of health-based businesses.

It owns Australia’s largest podiatry group, called My FootDr. The clinics are equipped with advanced equipment, which the business claims makes them the most modern podiatry centres in Australia. Healthia also offers other services including physiotherapy, hand and upper limb rehabilitation, orthotic manufacturing (iOrthotics) and podiatry and foot care product distribution (DBS Medical Supplies).

The ASX share has been making acquisitions over the last few years. It recently gave an update for the period to 31 December.

On 30 November 2020, the company successfully completed the acquisition of The Optical Company (TOC) which represented 41 optical stores and eyewear frame distributor, AED.

In addition to the acquisition of TOC, and during the 12 months to 31 December 2020, the company has acquired 13 podiatry clinics, six retail footwear stores and seven physiotherapy clinics, increasing its total businesses owned from 132 to 200.

In the update to 31 December 2020, the ASX share gave some guidance for its FY21 half year result.

Underlying revenue is expected to grow by 40% to 45%, to a range of $62 million to $64 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to grow by 86% to 103% to a range of $10.7 million to $11.7 million. The EBITDA margin could improve by 425 basis points to 527 basis points, up to a range of 17.26% to 18.28%.

Underlying net profit before tax is expected to rise by between 109% to 124%, up to a range of $7 million to $7.5 million.

Finally, underlying earnings per share (EPS) is expected to increase by 69% to 88%, up to a range of 6.52 cents to 7.24 cents.  

Volpara Health Technologies Ltd (ASX: VHT)

The Volpara share price continues to rise in reaction to its acquisition of CRA Health.

A week ago the business released its quarterly update for the three months to December FY21. In that update, the company said that it generated its largest-ever third quarter sales performance, with annual recurring revenue (ARR) rising by 20% to NZ$20.7 million. It received cash receipts of NZ$4.6 million, which the company described as strong.

In the quarterly update, the average revenue per user (ARPU) went up by 5% to US$1.22 for the ASX share. It also said that client churn remains low whilst the US coverage was approximately 27%.

But that was before the CRA Health acquisition.

CRA Health was described as an industry leader in breast cancer risk assessment spun out of the Massachusetts General Hospital. Volpara said that CRA is already profitable, with ARR of over US$4 million and ARPU of US$1.70 and coverage of around 6% of US breast screenings.

A benefit of the acquisition is that CRA’s software is integrated with the major ‘electronic health record’ (EHR) and genetics companies.

The acquisition is going to cost Volpara US$18 million and a further US$4 million depending on if it reaches performance targets and staff retention targets.

After the acquisition, Volpara will have ARR of approximately US$17.5 million and at least one product in use in over 30% of US breast screenings.

More reading

• Top brokers name 3 ASX shares to buy today
• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars
• Here’s why the Healthia (ASX:HLA) share price is racing higher
• Why Afterpay, Credit Corp, Healius, & Volpara shares are storming higher
• 2 little known ASX growth shares to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended HEALTHIA 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 S&P/ASX 200 Index (ASX: XJO) fell 0.9% today to 6,766 points.

Here are some of the highlights from today:

Nick Scali Limited (ASX: NCK)

The furniture business just reported its FY21 half-year result. The Nick Scali share price went down 2% in response.

The company said that its sales revenue went up 24.4% to $171.1 million. The gross profit margin increased by 180 basis points to 64%.

Nick Scali’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 94.2% to $60.2 million and underlying earnings before interest and tax (EBIT) went up by 100.3% to $57.7 million. The underlying EBIT margin increased by 1,270 basis points to 33.6%.

The retailer reported that its operating cash flow before interest and tax rose by 222.3% to $53.5 million and underlying net profit after tax (NPAT) grew by 99.5% to $40.5 million.

The company said that sales order growth for January 2021 was 47%, representing the largest month of written sales orders in the company’s history. January is traditionally the company’s largest trading month and the sales order book at the end of January was at an all time high, which was a further increase on December 2020.

For the half-year result, the Nick Scali board decided to increase the interim dividend from 25 cents per share to 40 cents per share. 

AGL Energy Ltd (ASX: AGL)

AGL announced today that it intends to recognise post-tax charges of $2.69 billion in its result for the period ending 31 December 2020.

These charges can be broken into different parts. There’s a $1.92 billion in provisions for onerous contracts related primarily to legacy wind farm offtake agreements. Next, there’s increases to environmental restoration provisions of $1.11 billion and further impairments of $532 million across AGL’s generation fleet and natural gas assets, net of a positive tax effect of $878 million.

The ASX 200 share said these charges follow an accelerated deterioration to long-term wholesale energy market forecasts in recent months, reflecting policy measures to underwrite new build of electricity generation and lower technology costs, leading to expectations of increased supply. As a result, the long-term outlook for wholesale electricity and renewable energy certificates now indicates a sustained and material reduction in prices.

There has also been a sharp reduction in near-term wholesale energy prices because of challenging macro-economic conditions. This has reduced the valuation of its generation fleet cash generating unit after a review. The impairment of the natural gas assets is a direct result of the increase in environmental restoration provisions.

AGL managing director and CEO Brett Redman said: “As Australia’s largest energy retailer and largest generator of electricity, we continue to see material opportunities for AGL to participate in the energy transition as customer needs, community expectations and technology evolve.”

The AGL share price dropped 3.5% in response.

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan Energy share price went up 15.7% after announcing the successful completion of its $120 million institutional placement to accelerate development of its project.

It said that it has received firm commitments to raise $120 million (before costs) for a placement at $6.50 per share, which was a 17.1% discount to the last closing price of $7.84.

Two of the investors that are involved are Hancock Prospecting (led by Gina Rinehart) and European ESG-focused institution BNP Energy Transition Fund.

The funds will be used for three areas. The first area is project development, feasibility study costs and permitting. Next is the drill site acquisition and preparation. Third and finally, the money will be used for strategic opportunities to accelerate project development.

More reading

• This chart shows why the ASX bull market can keep running
• Top brokers just upgraded these 3 ASX shares to “buy”
• 3 ASX dividend shares with large yields and consistent payouts
• Why AGL, Bubs, BWP, & Origin shares are dropping lower
• ASX 200 down 0.7%: AGL & Origin sink lower, Qantas pushes higher

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

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The Tilt Renewables Ltd (ASX: TLT) share price broke its all time record high today as the company announced that it had received non binding offers regarding its acquisition.

Shares in the renewable energy operator reached $6.5 earlier today, taking the company to its highest price since its listing in 2018.

Currently, the Tilt share price is trading 1.17% higher at a price of $6.07.

Why is the Tilt share price pushing higher?

In today’s release, Tilt advised that it has received non binding offers to acquire the company from a number of parties. This comes after its major shareholder, Infratil Ltd (ASX: IFT), recently completed a strategic review of the company. Infratil mentioned that it welcomed the proposals to acquire the company.

Moving forward, the Tilt board will provide a number of parties access to due diligence material to enable them to prepare binding proposals. However, as yet no decision has been made in relation to Infratil’s shareholding of Tilt.

Tilt advised that participation in Infratil’s strategic review process is not a prerequisite to it considering any proposals.

The board also noted that this is still early in the process and there is no certainty that Tilt will receive any binding proposal or that any proposals received will be recommended by the board.

Infratil management comments

Infratil CEO Marko Bogoievski welcomed the update, saying:

We have received strong interest in Tilt in response to our strategic review announcement in December. This is the logical next step in what is a competitive process, reflecting the strong demand globally for high quality renewable platforms like Tilt.

About the Tilt share price

Tilt is an Australian and New Zealand owner and operator of wind farms and and solar infrastructure. Most of the company’s assets are located in Australia south-east, which boasts the most favourable wind conditions in the country. Tilt also has operating assets located in New Zealand.

Shares in the company have performed well recently, gaining 81% in the last six months. 

More reading

• What a dramatic day in the US could mean for ASX shares in 2021

Motley Fool contributor Daniel Ewing 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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So we’ve now seen the GameStop Corp (NYSE: GME) share price multiply 2300% in just 2 weeks after a short squeeze attack from Reddit-driven retail investors.

The bubble has now deflated somewhat since its mad highs. But last week there was much interest when an Australian finance academic picked three heavily shorted ASX shares that could similarly explode.

Now, a fund manager has identified three more ASX shares that are highly shorted but have excellent upwards potential. 

Injustices in share markets

Shaw and Partners portfolio manager James Gerrish wrote in his Market Matters (MM) investor newsletter this week that the GameStop episode has taught him two lessons.

“Slowly but surely the playing field for retail investors is becoming more equitable, which is a great thing and something MM has always been passionate about,” he said.

“Never underestimate the power of social media, it’s here to stay and will get stronger.”

The industry reacted with the view that the GameStop short squeeze was “wrong” and that future episodes should be prevented with regulation. 

This attitude manifested in the rescue of devastated short seller Melvin Capital and trade blocks placed on retail investors by platforms like Robinhood and IG.

The idea that it’s okay for professional short sellers to make billions from the misery of others but they must be protected from losing billions is absurd, according to Garrish.

“The rules feel inequitable in markets at times,” he said.

“Why can hedge funds freely trade in stocks when retail traders are blocked?”

Gerrish reckons locally three ASX shares have the potential to be short squeeze targets.

“While we won’t be buying stocks due to their short position, in a similar fashion to a potential takeover target it does add some nice icing on the cake when we balance the risk-reward.”

InvoCare Limited (ASX: IVC)

Funeral industry heavyweight InvoCare has 8% of its shares shorted, according to Gerrish.

A new chief executive has started at the company, which could mean fortunes could go either way. But the volume of trading in InvoCare shares should have short sellers very concerned.

“To put this short position into perspective it will take around 30 days to cover at the current average daily volume,” Gerrish said.

“That would make me very concerned as a trader, especially after the shares have already declined ~40% due to concerns around increasing competition.”

Gerrish deemed InvoCare a “potential recovery story”.

“MM didn’t consider buying yesterday but I definitely wouldn’t be short.”

The InvoCare share price was down 2.37% to $11.54 by Thursday’s close.

Tassal Group Limited (ASX: TGR)

Tassal, short for Tasmanian Salmon, is a fish farming company with a 12.4% short position.

This percentage is very high by ASX standards. GameStop had 140% of its shares shorted, but that is very rarely seen in Australia.

The market is anxious about how Chinese trade difficulties could impact the seafood producer, according to Gerrish.

“The combination of insider buying in December and a 5% part-franked yield are the main reasons we wouldn’t be short[ing] this stock,” 

“In fact, we would be more inclined to accumulate into current weakness as opposed to short.”

Tassal shares closed flat at $3.40 on Thursday.

AVITA Medical Inc (ASX: AVH)

The medical technology company Avita is carrying a significant 8.4% short position, said Gerrish.

“[Short] traders believe COVID will hinder the companies [sic] growth prospects this year following a tough 2020.” 

But in the middle of last month Avita delivered financial results boasting more than 50% growth in quarterly revenue.

“The risk/reward looks attractive for traders with stops under $6.”

Avita shares closed 0.42% higher on Thursday afternoon, going for $7.20.

More reading

• These central bankers aren’t worried about share market bubbles. Should you be?
• GameStop (NYSE:GME) appoints 3 new Vice Presidents from Amazon and Chewy
• The worst isn’t over for GameStop: Here’s why
• GameStop chaos: How Aussie fund doubled money in 2 days
• COVID, US stimulus, Gamestop and a retreating Reddit army: The battles continue

Tony Yoo owns shares of Avita Medical Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical Limited and InvoCare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With interest rates around the developed world close to zero, and central banks pumping trillions of dollars into global financial systems in quantitative easing (QE) programs, share market and housing prices have been remarkably resilient in the face of the pandemic.

In fact, in Australia, our house prices have now edged above the level they were at before the pandemic struck.

The S&P/ASX 200 Index (ASX: XJO), slipping today, is only 5% below its all time February 2020 highs.

It’s a similar story in China, where speculators are snapping up prime properties. And China’s benchmark CSI 300 Index (SHA: 000300) is just 3% below its own record high which was set last week on 25 January.

25 January is the same date that the United States benchmark S&P 500 (INDEXSP: .INX) closed at new all time highs as well. It’s down a slender 0.7% since then.

With asset prices soaring amid economies still hamstrung by COVID-19 and an uncertain vaccine outlook, should you be worried about the potential for bursting bubbles?

Not particularly. At least, not according to the leaders of some of the world’s top central banks.

US Fed buying $1.9 trillion of bonds per year

If you thought the Reserve Bank of Australia’s (RBA) QE program was impressive, have a gander at the US Federal Reserve.

The Fed has been buying US$120 billion of bonds per month. That’s US$1.44 trillion (AU$1.9 trillion) per year.  The bank has said it will maintain the purchases until “substantial further progress” is made towards its employment and inflation goals. The Fed has also indicated its target interest rate is unlike to increasing for the current 0.00–0.25% range any time soon.

However, the Fed has distanced itself from being the cause of asset bubbles or the recent share market volatility fuelled by speculative retail trading frenzies around likes of GameStop Corp. (NYSE: GME).

Asked about the concerns, St. Louis regional Fed President James Bullard said (quoted by Bloomberg):

I’m not really seeing that right now. Fed policy has been appropriate given the crisis that we are in. I think it has helped to stabilize the economy and put the economy on a recovery path since May of 2020, and that recovery looks poised to continue, possibly very strongly.

People’s Bank of China injects $56 billion in 3 days

Moving closer to home, the People’s Bank of China (PBoC) is no stranger to market intervention.

As the Australian Financial Review reports, the PBoC injected174 billion yuan (AU$55.7 billion) into the financial system to bring down the soaring overnight lending rate. That’s the rate banks tend to charge each other for short-term loans. The overnight rate has now fallen from 3.33% to a more palatable 1.85%.

While some analysts fear that volatility in the overnight rate could lead to tighter monetary policy, Haitong International Securities chief economist Sun Mingchun dismisses those concerns. Speaking at VanEck’s China investor symposium, Sun said:

A lot of the investors are quite worried about a tightening in China’s monetary policy. We have seen some slight changes over the past few months but I think it’s not a change in direction. It’s more about trying to be practical and flexible. I don’t worry about monetary tightening. I think the People’s Bank of China is very smart. They are very flexible in determining their monetary policy.

RBA’s Lowe “not essentially” worried

Bringing it back home, the RBA on Tuesday left the official cash rate at a rock bottom 0.1%. The central bank also committed to another $100 billion of government bond purchases once the first $100 billion program runs its course in April.

How long can we expect this to continue?

According to Governor Philip Lowe:

The Board remains committed to maintaining highly supportive monetary conditions until its goals are achieved. Given the current outlook for inflation and jobs, this is still some way off.

I see.

So should ASX investors and property owners and investors be worried about the possibility of deflating bubbles?

Not essentially so.

According to Lowe (quoted by the AFR):

Am I worried about asset prices rising too quickly? At the moment, not essentially so. At the moment, I don’t see anything that’s unsustainable. I find it hard to express concerns about either of these developments in asset prices to date…

There’s a lot of focus at the moment on the fact that housing prices are rising again and the stock market has been strong. Well, the national house price index today is where it was four years ago… and the equity market, we’re back to where we were at the beginning of last year.

Lowe did point out that the RBA will be keeping a sharp eye on lending standards. Lowe stated “we would be concerned if there were to be a deterioration in these standards”. Adding “but there are few signs of this at the moment.”

So there you have it.

To date, the world’s most powerful central banks have worked alongside their governments to help keep housing prices and share markets from crumbling under the pressure of viral mitigation measures and the devastating impact of the virus itself.

And to date, the leaders of those banks appear confident they can manage any bubbles that may arise.

More reading

• GameStop (NYSE:GME) appoints 3 new Vice Presidents from Amazon and Chewy
• The worst isn’t over for GameStop: Here’s why
• GameStop chaos: How Aussie fund doubled money in 2 days
• COVID, US stimulus, Gamestop and a retreating Reddit army: The battles continue
• Millionaire maker! Rent.com.au (ASX:RNT) share price now up 300% in a week

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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The Senetas Corporation Limited (ASX: SEN) share price is on the run today following the release of its preliminary results and an update on its Votiro investment.

At the time of writing, shares in the developer of encryption security solutions are up 12.2% to 6.4 cents.

Senetas performance update

In today’s release, the company delivered a robust result for the first half of the 2021 financial calendar.

For the period ending 31 December, subject to auditor review, Senetas achieved revenue growth of $12.5 million to $12.8 million. This reflects an increase of more than 30% on the prior corresponding period (pcp). The company highlighted strong sales of its 100Gbps encryptors, and growing market presence in the Middle East and Europe as key drivers of the result.

Senatas forecasts total group revenue to come in around $14 million to $14.4 million. This includes its interest in Israeli cybersecurity firm, Votiro, and represents a lift more than 30% on the first half FY20 period.

The company projects underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of $3.8 million to $4 million, up more than 170% on the same time last year.

Total group EBITDA, including Votiro, is predicted to stand at $1.3 million to $1.4 million. Consolidated group net profit after tax (NPAT) for H1 FY21 is estimated to be $0.2 million.

The company will release its final half-year results along with an update on its outlook on 26 February.

How is Votiro tracking?

After investing $8 million in Votiro during late 2018, Senetas is starting to reap the benefits.

Currently, the Israeli firm is conducting trials with a number of large north American organisations to supply its cybersecurity technology. The global leader is well-recognised for protecting government and businesses from malware and ransomware attacks.

In addition, a Fortune 500 company has selected Votiro’s secure file gateway to be deployed. The unnamed customer will use the technology to protect its 50,000 users from malware intrusions. It’s estimated that the contract is valued roughly US$250,000 per year over a 3-year term.

Management commentary

Senetas chair Francis Galbally welcomed the update, saying:

The demand for software protection against such threats is now only starting to emerge and Senetas believes this growth will be considerable and will translate into an opportunity to grow a substantial annuity business

The board is pleased that Votiro is achieving the expected results and growth that it targeted when we made our initial investment.

Senetas share price summary

The Senetas share price has stayed relatively flat over the course of the past 12 months, down 4%. Its shares have been up and down through the year, falling to a multi-year low of 3.8 cents, and rising to 7.9 cents.

Based on the current share price, Senetas has a market capitalisation of $67 million.

More reading

• What to expect from the Commonwealth Bank (ASX:CBA) half year result
• This chart shows why the ASX bull market can keep running
• Looking for diversification? Try this ASX ETF
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Earnings season will be heating up next week with the release of results from some of Australia’s biggest companies.

Chief among them will be the half year results release of Commonwealth Bank of Australia (ASX: CBA) on Wednesday.

Ahead of the release, I thought I would take a look to see what the market is expecting from Australia’s largest bank.

What is expected from Commonwealth Bank in the first half?

According to a note out of Goldman Sachs, it is expecting the bank to report cash earnings from continuing operations (pre-one offs) of $3,692 million. This will be down 15% on the prior corresponding period.

It is also notably lower than the market consensus cash earnings estimate of $3,954 million.

Goldman is also forecasting a dividend that is well short of consensus estimates. It has pencilled in an interim dividend of $1.25 per share, compared to the market’s expectation for a $1.45 per share dividend.

Both will be down from the $2.00 per share dividend it paid to shareholders in the prior corresponding period.

What else should you look out for?

The broker is expecting Commonwealth Bank to report a 4 basis point half on half decline in its net interest margin (NIM). This is expected to be driven by the impact of lower cash rates, mortgage competition, and its asset mix.

Though, Goldman does see potential for upside risk to its NIM forecast in the short term given recent and relatively aggressive downward repricing of deposit rates.

Its analysts are also expecting the bank to report a normalisation in its bad debts, which could ultimately lead to a reversal in some of the provisions it has made.

It explained: “To date, CBA’s performance on loan deferrals looks promising with the most recent data point showing another improvement (in Dec-20, deferrals sat at c.2% of total loans, down from its May-20 10% peak). We forecast BDD/TLs to fall to 30bp (from 54bp in 2H20) and see scope for potential provision releases; a key focal point of ours in the upcoming result being any indications made around this timing.”

Is the Commonwealth Bank share price a buy?

Given that Goldman Sachs is forecasting much weaker earnings and dividends than the market consensus, it may not come as a surprise to learn that the broker isn’t buying its shares right now.

The broker currently has a sell rating and $65.49 price target on its shares. This compares to the latest Commonwealth Bank share price of $87.06.

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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.

The post What to expect from the Commonwealth Bank (ASX:CBA) half year result appeared first on The Motley Fool Australia.

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