It has been a fantastic start to the day for the Beach Energy Ltd (ASX: BPT) share price on Tuesday.

In morning trade the energy producer’s shares are up 13% to $1.41.

Why is the Beach share price racing higher?

There have been a couple of catalysts for today’s strong gain.

The first has been a sharp rise in oil prices overnight after Pfizer revealed extremely promising data from its COVID-19 vaccine study.

With early data indicating that the vaccine is 90% effective at preventing COVID-19, life could return to normal sooner than expected. This would be great news for the global economy and is likely to underpin a rebound in demand for oil and gas.

At the time of writing, the WTI crude oil price is up 7.2% to US$39.81 and the Brent crude oil price is up 6.5% to US$41.99.

What else is supporting Beach shares?

In addition to the above, this morning Beach released an update on its exploration activities.

According to the release, the company has made a gas discovery at Enterprise 1 in the nearshore Victorian Otway Basin. Enterprise 1 was spud from an onshore location, 3.5 km from Port Campbell and 8 km from the Otway Gas Plant.

Management advised that the well intersected a 146 metre gas column in the Upper Waarre Formation, including 115 metres of net gas pay with no gas-water contact identified. Sampling indicates a gas composition with 10% CO2 by volume.

And while estimates of the potential resource size are not yet defined, management appears very pleased with this discovery.

Beach Energy’s Managing Director and CEO, Matt Kay, commented: “To have our first exploration well in the Victorian Otway program deliver a successful result is an excellent outcome for the business.”

“This success enhances our plans to develop more supplies for the East Coast gas market. The Enterprise result also de-risks other nearby prospects, warranting their evaluation as potential future drilling candidates,” he added.

A volumetric estimate for the Enterprise discovery is expected to be completed before the release of the company’s FY 2021 half year results in February.

More reading

• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 finished 2% higher on Tuesday
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday

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. 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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The latest in finance news today sees multiple markets volatile following the initial US presidential election results.

Last night’s overseas trading sessions saw multiple indices and futures move higher and lower simultaneously. Fortunately, they are presenting a green flag for the ASX this morning, although the same can’t be said for other markets.

The volatile session saw two major markets move higher overnight as investor confidence began to return to the markets. Although the new US President is not yet official, the initial results seem to have brought a level of positivity with them. Other markets, such as commodities, did not fare so well.

US markets – INX, IXIC & DJI

Finance news in the United States paints a mixed picture.

The S&P 500 Index (INDEXSP: .INX) opened 1.15% higher and rose as much as 3.9% in intraday trade, before retracing a little toward the end of the session. The overall rise during the day’s session stood at 1.2%, or around 42 points. 

The NASDAQ Composite Index (INDEXNASDAQ: .IXIC) also opened higher at around 1.5%, however spent the session falling. The result was a lower close, making a loss of 1.34% for the day. Initial optimism seemed to turn late in the session.

Lastly, the Dow Jones Industrial Average (INDEXDJX: .DJI) behaved a little differently. This particular index performed very well in the last day of trade last week, rising as much as 5.3% in a single session. Last night was a different story however, with the DJI falling around 1% during trade.

Australian market – ASX

Locally in finance news, we could see a rise in the market this morning, following the positive futures session last night.

While the S&P/ASX 200 Index (ASX: XJO) closed at 6,298 points yesterday in Monday’s trade, futures indicate a higher open today. Contracts such as the Australian 200 AUD contract (OANDA: AU200AUD) rose as much as 5.5% points in intraday trade. The futures settled a little bit toward closing bell, however still resulted in a 3.77% trading day.

Overall, ASX 200 futures were up more than 230 points. This is the largest daily gain on ASX 200 futures since April this year and is a very positive sign for our local market. Although not an exact science, futures leading the open of the ASX can be an indication that we could see a rise on open today.

Cryptocurrency and commodity markets

In other finance news, cryptocurrency and commodity markets have not fared as well as the stock markets.

Bitcoin (BTC) and Ethereum (ETH) fell almost 1% and 1.8%, respectively. These 2 digital currencies are largest in value. Bitcoin holds a market capitalisation of US$284 billion and Ethereum holds US$50 billion. 

In traditional commodities, Gold (XAU) and Silver (XAG) fell heavily during the session. Gold fell 4.5% and Silver is down as much as 6% in the single session. 

Finance news takeaway

The US presidential election has been the race that has all but stopped the world. As results now look to favour a Democratic win, the financial markets have begun to react. Although the election process is not yet officially over, it seems some markets have already picked a direction to run in. 

More reading

• The 5 best-performing ASX 200 shares so far this year
• ASX 200 hits 8-month high. Here’s why we could go higher from here
• ASX 200 to surge higher after Pfizer COVID-19 vaccine success
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 jumps 1.75% on Monday

Motley Fool contributor glennleese 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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The Treasury Wine Estates Ltd (ASX: TWE) share price experienced a full V-shaped recovery after its earnings report. Here’s what’s going on with the Treasury Wine share price. 

Earnings recovery in first quarter FY21

Treasury Wine has experienced two consecutive missed earnings during the first half of FY20 and FY20. The challenging business conditions resulted in its share price nose diving from almost $18 at the start of the year to its $9.01 close on Monday. 

The company’s first quarter FY21 announcement reveals a recovering business, riding positive underlying trends across its various operational geographies. 

The Asian region is experiencing strong consumption levels of wine with Q1 depletions up 14%. Depletion is defined as units sold at retail to the end customer. 

Various festivals and holiday periods in China including its mid-Autumn festival and Golden Week holiday saw sales momentum continue in Q1. Smaller Asian markets such as Southeast Asia also experienced a normalisation in consumption despite on-premise and travel retail channels being impacted. 

Australia and New Zealand markets experienced an appetite for products above the $10 price point driving retail market growth. Its masstige portfolio is also growing ahead of the market, up 21% in Q1. 

The American market has been the most challenging business division for Treasury Wine. It’s also been the region hardest hit by COVID-19 as a result of impacts to key sales channels and weak market conditions. On a more positive note, the company’s Focus 9 brand has been performing strongly in retail channels, growing 32% in Q1.

The UK market has also experienced a strong rebound in sales with its portfolio growing 17% in Q1. 

Chinese investigations to subdue sentiment 

Claims that Australian winemakers were selling bottles at below cost to crowd out local producers and claim a bigger market share resulted in China launching its anti-dumping investigation in mid-August this year. 

Last week, Treasury Wine advised that the China Alcoholic Drinks Association submitted a written request to the Chinese Ministry of Commerce that imports of Australian wine in containers of two litres or less into China should be subject to retrospective tariffs. 

Brokers mixed after share price dip 

Big brokers have mixed opinions following the Treasury Wine share price sell off last week. However, the strength in the broader market and buying support is likely the cause for its V-shaped recovery to close at $9.01 on Monday.

UBS lowered its Treasury Wine share price target from $12.50 to $8.80 but upgraded its rating from neutral to buy. Its buy rating was on the basis of weakness in share price with the belief that long-term value exists. 

Credit Suisse lowered its Treasury Wine share price target from $12.30 to $8.50 with a neutral rating. It blames the recent wine investigation and business risks due to the uncertain outlook for China sales. 

Citi raised its Treasury Wine share price target from $10.05 to $10.40 with a neutral rating. It anticipates that the trade disruptions may be less than what the market is expecting. 

More reading

• ASX 200 Weekly Wrap: US election special
• These were the worst performing ASX 200 shares last week
• Here’s what a Joe Biden victory would mean for ASX shares
• The ASX 200 shares rocketing on takeovers, upgrades and low interest rates
• Why the Treasury Wine (ASX:TWE) share price is surging higher today

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. 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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The Atomo Diagnostics Ltd (ASX: AT1) share price will be on watch today following a positive announcement from the company regarding its Australian market.

Let’s take a closer look at Atomo and what it updated the market with.

What does Atomo do?

Atomo Diagnostics is an Australian medical device company that supplies rapid diagnostics tests (RDTs) and devices to the global diagnostics market. Atomo’s devices are intended to simplify testing procedures and usability for professional and untrained users.

The company has supply agreements in place for tests targeting a range of infectious diseases. These include HIV, COVID-19, and viral versus bacterial differentiation.

Why will the Atomo share price be in focus?

The Atomo share price will be on watch after the company advised this morning it has received approval for its AtomoRapid HIV (1&2) from the Therapeutic Goods Administration (TGA). Other products that are also on the register are the AtomoRapid COVID-19 Antibody Test, the Atomo COVID-19 Antigen Test, and the Atomo HIV Self-Test.

The rapid diagnostics test will be supplied to accredited laboratories and healthcare workers to conduct HIV testing on patients. The handheld, single-use blood test is able to produce an accurate result within 15 minutes. This is a stark contrast to traditional methods whereby a patient would have to wait several days for an outcome.

Whilst there is no cure for HIV infection, antiretroviral drugs are known to effectively control the virus and help prevent transmission. Early diagnostics is deemed crucial in helping to manage the infection. Identification of the virus allows patients to access immediate treatment and care.

The AtomoRapid HIV (1&2) test detects the presence of HIV antibodies in a single drop of blood obtained from a fingertip. The unique design comprises an inbuilt sterile safety lancet, blood collection and delivery mechanism, and an HIV diagnostics test strip.

It can be suited for deployment in sexual health screening, drop-in clinics, and community health programs.

What did management say?

Atomo Managing Director, Mr John Kelly, commented on the upbeat news. He said:

We are very pleased to have received TGA approval for our AtomoRapid HIV (1&2) professional use diagnostic test. We already manufacture and supply the only HIV self-test to have been approved for sale in Australia, so we see this latest approval as further confirmation of our expertise in this field.

This latest good news follows our recent TGA approvals for rapid antigen and antibody tests that detect SARS- COV-2, the virus that causes COVID-19, and means we can now further expand our portfolio of best-in-class rapid diagnostic tests in our home market.

More reading

• The Atomo (ASX:AT1) share price is up today. Here’s why.
• Why the Atomo (ASX:AT1) share price is flying 9% higher today

Motley Fool contributor Aaron Teboneras 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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Australian share investors are reportedly climbing over each other to buy shares in an electric car maker that’s not Tesla Inc (NASDAQ: TSLA).

According to international trading platform eToro, Nio Inc (NYSE: NIO) was the most invested stock by Australian investors last month.

The Chinese company’s stocks saw a 35% surge in trading activity, overtaking its better-known rival Tesla.

Growth story

eToro market analyst Josh Gilbert said the Nio share price had rocketed 40% upwards in October.

“The Chinese automotive manufacturer has had significant growth in 2020, with a (share price) increase of over 722% from January 1 to October 30,” he said.

“JP Morgan analysts upgraded the price target for the stock to US$40 in the middle of October, which was close to double the price at the time of upgrade.”

Nio has pushed up even further this month, already surpassing that target. It sat at US$41.63 at market close on Friday, after starting the year at US$3.72.

The spectacular rise in investor interest was backed up by its business growth, according to Gilbert.

“The company’s sales are also soaring, with its Q3 vehicle deliveries increased by 154% from the same period last year,” he said.

“And this isn’t expected to stop any time soon, with recent guidance demonstrating that Nio Inc is looking to continuously expand its production capacity after a recent increase of 11%.”

Why is Nio so popular?

Interestingly, some Nio cars are able to have their batteries swapped out, which is an alternative to plugging in an electric vehicle (EV) for hours to get it charged up. Tesla has not gone down that route with its publicly available cars.

Nio was established in 2014, and is called Weilai in its home country.

The Motley Fool’s US motoring specialist John Rosevear said it has gone from “a near-broke startup trying to survive” to a now-stable company with plenty of cash for future growth.

“While NIO isn’t the largest maker of EVs in China – and probably won’t be – its upscale, tech-stuffed vehicles exist in a sweet spot of the market, where customers are willing to pay up for features and styling that NIO has so far been able to deliver,” he said last week.

“That upscale focus (and growing credibility with upscale consumers) means its chances of getting to profitability, and of having good margins after that, are quite strong.”

Nio will report its latest quarterly results on 17 November US time, where chief executive William Bin Li is expected to present plans for the next stage of growth.

More reading

• Don’t fall in love with a charismatic CEO, says fundie
• Tesla (NASDAQ:TSLA), Fastly (NYSE:FSLY) among most popular US shares last week
• ASX stock of the day: Strategic Elements (ASX:SOR) surges 170% on new self-charging battery
• Tesla knocks Q3 earnings out of the park
• Could Tesla deliveries surge 70% next year?

Tony Yoo 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. 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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Despite what this year has put us through, there are a number of S&P/ASX 200 Index (ASX: XJO) shares that have posted huge share price gains during 2020.

These ASX 200 shares are from a range of sectors and have managed to not only survive but to thrive in a year that began with flood, passed through a pandemic, and looks to be ending in political upheaval in the USA.

Here are the top 5 ASX 200 performers so far in 2020, based on share price growth.

5 top-performing ASX 200 shares

As you read these, bear in mind that they are exclusively ASX 200 companies, so companies like Temple & Webster Group Ltd (ASX: TPW) and Redbubble Ltd (ASX: RBL) are not included. 

Afterpay Ltd (ASX: APT)

Unsurprisingly, Afterpay is the leading ASX 200 share so far in 2020. This company has seen its share price grow by 262.7%, year to date. However, if it was purchased it on 23 March, when the ASX bottomed out, the investment would have grown 1074.49%.

Afterpay recently reported that by the end of the first quarter of FY21 it has secured 11.2 million active users. It also recently announced a strategic partnership with Westpac Banking Corp (ASX: WBC). It is available on Apple Pay and Google Pay platforms, and has 68,300 merchants. 

Kogan.com Ltd (ASX: KGN)

Kogan is another unsurprising entrant on this list. This ASX 200 company saw its share price grow by 220.65% from the beginning of the year. Again, had an investor purchased Kogan on 23 March, they would have earned 482.9% by now. As an online retailer Kogan has been a great beneficiary of the pandemic, which sent consumers online in droves. Kogan announced an increase in online sales by 100% in an update midway through the fourth quarter of FY20. The company’s profit for the same period also grew by 130%.

Netwealth Group Ltd (ASX: NWL)

This company saw its share price grow by 134% over the year. Netwealth provides a platform for managing superannuation, self managed super funds, and access to advisors. The company also has its own funds. In fact, during August it rolled out two specialist funds on the Netwealth platform managed by Magellan Financial Group Ltd (ASX: MFG).

Listed in November of 2017, Netwealth is now valued at $4.1 billion. In its first quarter FY21 report, the company announced $34 billion in funds under administration (FUA) and $1.9 billion net FUA inflows.

NextDC Ltd (ASX: NXT)

This data centre operator has seen its share price rise by 119.29% this year so far. It has been in the news recently offering to help Tabcorp Holdings Limited (ASX: TAH) recover from its systems failure on Sunday.

The company is fundamentally an ASX 200 infrastructure company, albeit with a mix of physical assets and digital services. In FY20, NextDC’s total revenues rose by 14%, customers rose by 15%. Moreover, underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 23%. In FY21, the company has advised it expects to see EBITDA rise by 20–24%.

Saracen Mineral Holdings Limited (ASX: SAR)

The Saracen share price has risen by 95.75% this year. At present the gold price is sitting at $2,543 per ounce. With all of the crises during the year investors have rushed, several times, to gold. This includes gold mining companies, and Saracen has benefitted greatly.

The company purchased the Barrick Gold Corp (NYSE: GOLD) stake in the Kalgoorlie Consolidated Gold mines, or the super pit, in November 2019. A month later, Northern Star Resources Ltd (ASX: NST) purchased the other 51%. Less than a year later the two giants of the goldfields have announced a $16 billion merger.

More reading

• Why ResMed (ASX:RMD) and these ASX shares just hit record highs
• ASX 200 hits 8-month high. Here’s why we could go higher from here
• ASX 200 to surge higher after Pfizer COVID-19 vaccine success
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 jumps 1.75% on Monday

Daryl Mather 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 Temple & Webster Group Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Netwealth. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. 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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The Fletcher Building Limited (ASX: FBU) share price looks set to take off on Tuesday following the release of a trading update.

Over in New Zealand, the company’s NZX-listed shares are currently up a sizeable 13%.

What was in Fletcher Building’s trading update?

The building products company has started FY 2021 in a positive fashion and delivered growth on both the top and bottom lines.

According to the release, for the four months ended 31 October, Fletcher Building’s group revenue was up 1% on the prior corresponding period.

This was supported by resilient trading conditions in both New Zealand and Australia, particularly in the residential sector. The company notes that demand for new houses has been robust, with 342 units taken to profit in the Residential business, consistent with its objective of achieving 700-800 house sales for the full year.

Things were even better for its earnings, with group earnings before interest and tax (EBIT) before significant items up NZ$80 million or 54.4% to NZ$227 million.

This was driven by a 2.9 percentage point increase in its EBIT margin to 8.4%. Management advised that this margin expansion reflects the operational performance and efficiency programs implemented over the last two years.

At the end of the period the company’s cash flow and balance sheet remained strong, with net debt at NZ$388 million and liquidity of NZ$1.4 billion.

Management commentary.

Fletcher Building’s CEO, Ross Taylor, commented: “Through all the disruption and uncertainty of the past year, our people have adapted and responded superbly, maintaining a focus on delivering for our customers. We were heavily impacted in FY20 by the COVID-19 restrictions, resulting in a significant earnings loss for the Group of NZ$196 million, so we are pleased to have begun the new year well.”

“As we look ahead, our customers are pointing to volumes remaining at current levels through to the start of the new calendar year. However, there is uncertainty in the second half of the financial year, with the impact of broader macro-economic factors on our markets in New Zealand and Australia not yet clear.”

“Also, December and January are always lower trading and earnings months for the Group. At our Annual Shareholders Meeting on 25 November 2020, we intend to provide earnings guidance for 1H21. We will update further on trading conditions at our half-year results announcement on 17 February 2021 and at an investor day planned for May 2021,” he concluded.

More reading

• Why ResMed (ASX:RMD) and these ASX shares just hit record highs
• ASX 200 hits 8-month high. Here’s why we could go higher from here
• News Corp-backed $319m tech company lists on ASX
• 2 ASX dividend shares with above-average yields
• ASX 200 to surge higher after Pfizer COVID-19 vaccine success

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. 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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On Monday the S&P/ASX 200 Index (ASX: XJO) was on form again and stormed to an eight-month high.

While this is a big positive, some shares have been performing even better than the index. So much so, they have just hit record highs.

Here are three high-flying ASX shares:

Ansell Limited (ASX: ANN)

The Ansell share price continued its positive run and hit a record high of $43.17 on Monday. Investors have been buying the health and safety products company’s shares this year due to its strong performance during the pandemic. This has been driven by increasing demand for personal protective equipment. Demand has been so strong that Ansell recently upgraded its guidance for FY 2021. It is now expecting organic growth to be in the double digits and earnings per share to be in the range of 135 cents to 145 cents. The latter is an increase of 7.1% from the low end and 5% from the high end of its previous guidance range of 126 cents to 138 cents.

NEXTDC Ltd (ASX: NXT)

The NEXTDC share price was on form again and hit a new record high of $14.10 yesterday. The data centre operator’s shares have been on fire this year after it experienced a surge in demand for its services. This was driven by the accelerating shift to the cloud caused by the pandemic. Also giving its shares a lift recently was the announcement of a new $1.5 billion debt facility. As well as lowering its cost of debt notably, it has positioned NEXTDC for growth. The latter potentially includes an expansion overseas, given that some of the facility is multi-currency. NEXTDC holds its annual general meeting later this week.

ResMed Inc. (ASX: RMD)

The ResMed share price stormed to an all-time high of $29.92 yesterday. This stretched its year to date gain to an impressive 35%. The catalyst for this latest gain has been the recent release of a first quarter update which smashed expectations. The sleep treatment-focused medical device company reported a 10% increase in revenue to US$751.9 million and a 37% lift in earnings per share to US$1.27. Management advised that it experienced strong demand for ventilators because of the COVID-19 pandemic.

More reading

• Top brokers name 3 ASX shares to sell next week
• Which 5 ASX shares hit 52-week highs on Friday?
• Ansell (ASX:ANN) share price climbs after upbeat AGM update
• These were the best performing ASX 200 healthcare shares in October
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has recommended Ansell Ltd. and ResMed Inc. 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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Yesterday, the S&P/ASX 200 Index (ASX: XJO) hit a new 8-month high, closing at 6,298 points after going as high as 6,301 points during the trading day. It’s the highest level ASX 200 shares have been at since early March. And that was when the ASX 200 was in the midst of a coronavirus-induced freefall.

Blue chip shares like BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL) and Fortescue Metals Group Limited (ASX: FMG) helped this happen with huge swings upward. Other ASX 200 shares like REA Group Ltd (ASX: REA) and Domain Holdings Australia Ltd (ASX: DHG) also hit new all-time highs yesterday, pushing the index higher. That follows the ASX 200 having one of its best weeks of the year last week, which saw the index surge by more than 4%.

So whilst these developments are no doubt pleasing for any investor holding ASX shares, there are a few reasons we could see it go higher from here.

Why the ASX 200 could push to new highs

The first is interest rates. Last week, the Reserve Bank of Australia (RBA) slashed the cash rate yet again to yet another all-time low of 0.1% (down from 0.25%). Conventional economic theory tells us that interest rates are directly correlated to higher share prices. That’s because they lower the attractiveness of ‘safer’ investments like cash and fixed-interest assets compared with ASX shares, while simultaneously increasing the availability of credit.

This view is expressed by asset manager Fidelity’s Anthony Doyle, as quoted by the Australian Financial Review (AFR):

In an environment of historic-low bond yields and ultra-easy monetary policy, investors are being encouraged into riskier asset classes to reach for returns…International experience with quantitative easing suggests that the appetite for riskier financial assets will be maintained. This will likely support Australian equity valuations…

Second, the US election last week has produced an outcome that investors have found very favourable. Separate reporting in the AFR quotes Hamish Douglass of Magellan Financial Group Ltd (ASX: MFG), who stated that the outcome from the election represents ‘nirvana’ for investors due to a Democratic president combined with divided party control of congress. The AFR quoted Mr. Douglass as stating “almost the perfect outcome from an investment perspective has been the outcome of this election”.

So we have interest rates at new lows, encouraging borrowing and discouraging alternative investments to ASX shares. Combine that with an outcome from the US election that a top ASX fundie has described as ‘nirvana’ for investors. No wonder the ASX is pushing higher.

More reading

• ASX 200 to surge higher after Pfizer COVID-19 vaccine success
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 jumps 1.75% on Monday
• CSL (ASX:CSL) share price higher after starting COVID-19 vaccine manufacturing
• Leading brokers name 3 ASX shares to buy today

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended REA Group Limited. 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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A new technology share is listing Thursday on the ASX for a company that you’ve probably used sometime in the last 17 years.

Australian tradesperson matching site Hipages Group Holdings Limited (ASX: HPG) is floating this week with a market capitalisation of $318.5 million. The company has raised more than $100 million in the initial public offer (IPO), at $2.45 per share.

Hipages is a website and mobile app where any Australian can post a task to be done, and tradies will bid to do the work.

Despite its evolution over 2 decades, the original intent for the site remains remarkably intact.

In the early 2000s, co-founder and chief executive Roby Sharon-Zipser and his wife bought a flat just after they married. It required extensive renovations and Sharon-Zipser was intimidated by what they had got themselves into.

“I didn’t know how to project manage, I didn’t know if I could trust the tradies, I didn’t know where to get the tradies, I didn’t know how to pay the tradies,” he told The Motley Fool.

“It was really complicated and we were unhappy. I thought there had to be a business opportunity there.”

He then started to research a business case, which led to a surprising finding.

“Interestingly enough, when I spoke to tradies they were really unhappy as well,” he said.

“They didn’t really understand how to market themselves online. A lot of the technologies and search engines were just getting started. They found it really frustrating – they had a lot of people trying to sell them really expensive products.”

Why the IPO now?

Institutional investors have asked Sharon-Zipser many times about the timing of going public.

Rather than third party factors like the market’s current thirst for tech, public perception of the company and industry maturation were key.

“We’ve started to get the right level of brand awareness. People are now familiar with the technology,” he said.

“We’re at the cusp of technology adoption for what was relatively an unsophisticated category, now wanting to take on technology. And we’ve seen an acceleration of that with COVID-19.”

The Hipages name has also been boosted by its commercial relationship with the hit television renovation show The Block.

What’s Hipages’ moat?

The competitive advantage for Hipages, Sharon-Zipser believes, is that it has few rivals.

“We’re the only platform in Australia totally dedicated to home improvements and home services – and at scale.”

Hipages does have younger rivals such as ServiceSeeking. But Sharon-Zipser said there are no shortcuts in building a substantial directory business, so its first-mover advantage is invaluable.

“We’re talking 10 to 20 years… it takes a huge amount of time to build up a network of trades across the country. And we’ve done that.”

Media giant News Corporation (ASX: NWS) evidently agreed, buying a reported $40 million stake back in December 2015.

Just before the IPO, that piece was worth 30%. Upon the ASX listing on Thursday, News Corp will own 25.7% of all Hipages shares, now worth $81.8 million.

Hipages’ revenue comes from monthly subscription fees from tradies. There is no cost for consumers.

In financial year 2020, the company raked in $46.9 million in revenue, with a net loss of $4.16 million. Pro forma forecast for the current year is $53.9 million revenue and a $1.75 million net loss. 

Hipages’ growth prospects

Sharon-Zipser told The Motley Fool the company has no immediate plans to expand outside Australia.

Apparently his team has a full plate already.

“There are 257,000 trade businesses in Australia. We have 36,000 of them purchasing product off us. We see massive opportunity still in the domestic market.”

As icing on the cake, COVID-19 pandemic’s impact on the home improvements industry was a complete surprise.

“To be fair, I didn’t expect the surge that we’re seeing,” said Sharon-Zipser.

“We all saw a little bit of a wobble in March… But the recovery and turnaround within weeks was a little unexpected.”

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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. 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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