Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Sage Capital portfolio manager Kelli Meagher tells how her team steered through the COVID crash last year and which companies are set to take off in 2021.

 

Investment style

The Motley Fool: What’s your fund’s philosophy?

Kelli Meagher: We have two funds. We have the Sage Equity Plus Fund and the Sage Absolute Return Fund. The difference is the Absolute Return Fund is market-neutral, and its returns are uncorrelated to the equity market; and the Sage Equity Plus fund does give exposure to the S&P/ASX 200 Index (ASX: XJO). The overall strategy of stock selection and risk control for both of those funds is the same.

We basically are looking to invest in a broad range of stocks, both long and short. And to build a diversified portfolio that’s style-neutral, so not just value stock or growth stock. 

A unique element of our strategy is our use of our proprietary Sage Groups, which groups companies by how they tend to perform in different market conditions. This is quite different from grouping companies by GICS sectors. It allows for more of an ‘apples vs apples’ comparison of stocks and helps to control macro risks.

We end up having about 80 to 100 positions, both long and short. 

And we use a really tight risk control overlay to minimise the systemic risks in the market – the broad macro risks that are completely unpredictable, like bond yields, FX changes, sudden changes in sentiment, pushes to growth and value. 

We’re basically just focused on managing our stock selection and making sure our returns are coming from that and trying to remove all the other external risk factors. That way, we can offer investors a portfolio that can produce good returns no matter where we are in the cycle.

MF: For your long positions, what’s your investment horizon usually?

KM: We like to say 1 to 2 years, but it really does vary. Some companies are good investments for years and years and years, and the underlying fundamentals support that. Otherwise, sometimes it’s more of a short term share price move, and it’s time to move on to something more attractive.

MF: How have you performed the past year?

KM: We’ve actually had a really good year. We have outperformed our benchmark substantially and had very few months where we were down. So it’s been a really good start to our funds, particularly in the context of a global pandemic.

MF: Did you manage to buy some shares back in March or April?

KM: We take long and short positions, so what we did really well through COVID is, we were quite early in positioning the portfolio. Watching the numbers in China each day, we were getting concerned quite early about COVID, and so we managed to position ourselves before the market got smashed – by selling out of our travel stocks and buying Resmed CDI (ASX: RMD) and buying Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), the COVID winners. We also went all-out on supermarkets. 

So we were well-positioned for when the market had its big pullback. Then once that happened, we started to enter the market and started buying some of the stocks that we sold like Flight Centre Travel Group Ltd (ASX: FLT), Corporate Travel Management Ltd (ASX: CTD) and the various stocks that had been smashed. We were able to produce a pretty good return, which we’re happy with.

Buying and selling 

MF: What do you look at closely when considering buying a stock?

KM: We look at a whole range of things. We do a lot of fundamental analysis on the quality of the company, and that determines how much we’re willing to pay. We spend a lot of time looking at the structure of the industry the company operates in, how competitive the industry is, what position the company has in that industry, how hard that the barriers to entry are, what the company’s competitive advantage is, and what the regulatory risks are.

We’re always also looking ahead to see if we can spot any changes in industry structure and how that may impact the company either in a positive or negative way. 

Then we also examine the company specifics really carefully: The quality of the management and board, and long term advantage, what return on the shareholders’ capital has the company generated, is there good long term growth prospect, how much cash do they generate and getting their general trade record. 

And we then value the company either on earnings before interest, tax, depreciation and amortisation (EBITDA) or price-to-earnings (P/E) ratio, then it’s the combination of the quality and our valuation that dictates whether we take a position and how big that position is.

MF: And as you said before, you’re agnostic about growth and value?

KM: That’s right, that’s right. We very much try to make our portfolio style-neutral, so that we can produce good returns for our investors no matter what the latest [fad] stock is in the market – be it growth, value, big cash, small cash, take on, take off.

MF: What triggers you to sell a share?

KM: I would like to say because the stock went up to our evaluation. It might be there’s been a maturation of the fundamentals of the business. There might be red flags regarding major sell-downs or a lot of senior management running to the exit. That’d be a major red flag to us to dig a bit deeper. Or just any change [that] basically affects the original buy thesis. 

And because we’re active investors, it might be we just trim a position and put the money to work elsewhere where we see a better opportunity.

MF: Are you most of the time fully invested, or do you have some cash in hand?

KM: We try to be fully invested all the time. We carry very little cash.

What’s coming up?

MF: Where do you think the world is heading at the moment?

KM: Great question. We think the world’s in a pretty good place. We’ve obviously got the vaccine rolling out globally, and we’ve got huge amounts of fiscal and monetary stimulus.

There will be some bumps in the road though. [Last year] the share markets lost almost half then now it’s almost up to its pre-COVID highs, after taking in a lot of good news and recovery. 

So it’s certainly not going to be a straight line [for] the market, and we’ll be watching a bit carefully to see what the impact is. There will be the expiry of JobKeeper, and it remains to be seen how long it actually takes out to roll the vaccination programs around the world. 

But given where rates are, shares are obviously an attractive asset class – [you’re] not getting your return from your money in the bank.

Generally, I’m optimistic about the market, as long as you’re in it for the long term. 

MF: The Australian market underperformed last year compared to other regions. Do you think it’ll pick up this year?

KM: I do… we’re quite bullish on Australia I think. Obviously, we’ve managed really well through this pandemic and compared to a lot of other countries we’re in a really good place. 

With all the fiscal as well as the monetary stimulus, we’re quite bullish in areas like housing. Australians love housing. We see very strong data coming in for approvals, etc. We’re positioning the portfolio for a strong housing market in the next year.

Overrated and underrated shares

MF: What’s your most underrated stock at the moment?

KM: It’s interesting that question because with how strong the market’s been across the board, it’s hard to pick a stock that’s genuinely underrated.

MF: There aren’t many bargains left, are there?

KM: There are not many bargains out there. There’s one though that we really like that has underperformed in the last quarter or so and we think it has good long-term growth prospects – and that’s Resmed, the healthcare company.

There are two strong themes for the future of healthcare, and that’s technology and value. For a healthcare company, [Resmed is] extremely innovative and a very high amount of technology integrated to all their products and services. And you need that technology to be able to also prove to payers that you’re saving them money.

COVID has really highlighted the importance of respiratory health and the value in being able to manage and monitor patients remotely… It has fantastic long-term global growth. It generates a huge amount of cash, it’s got good management and a really good track record of allocating shareholder capital.

So we think over the long term it will continue to deliver really good growth.

MF: Is the health technology sub-sector generally pretty attractive in the long term because of the aging population?

KM: You can’t go too [wrong] on investing in that part of the market over the long term.

MF: What do you think is the most overrated stock at the moment?

KM: There are pockets of the market that are overvalued, and that’s purely a function of interest rates, plus I guess a bit of a flight to quality.

So a lot of the companies that are actually really good quality I would say are overrated at the moment – simply because they’re trading on evaluations where it’s baking in a huge amount of earnings growth that may not be able to be delivered.

MF: As a long-short manager, do you have thoughts on the recent GameStop chaos in the US?

KM: We’ve been watching the circus from afar. I think it’s a symptom of the shift to a huge amount of inexperienced retail money chasing something. And I guess a lot of people having more time on their hands.

MF: Do you think structurally such uprisings are less likely to happen in the Australian market?

KM: Yes. I do. Certainly, our options market is structured very differently, and we don’t have that same social [pressure]. Obviously, there are [Australian] chat rooms, but I just feel like there’s not that same social media. 

Looking back

MF: Which stock are you most proud of from a past purchase?

KM: The thing I’m most proud of is how we navigated COVID and being quite agile with our positions. We were early in reducing our exposure to the travel sector then positioning the portfolio with COVID winners like healthcare stocks Resmed and Fisher & Paykel, the supermarkets, and JB Hi-Fi Limited (ASX: JBH).

I know that’s probably not the answer you’re looking for. But there’s not one [stock] because there was so much volatility… I’m just proud of how agile we were.

We are active investors, and we were always incorporating incremental information into our portfolio. I think our process really helped in outperforming through that time.

MF: The travel shares that you guys sold off before the pandemic, have you bought back in anticipation of a recovery?

KM: We did buy some Flight Centre and Corporate Travel. We still own Corporate Travel. I think that’s a good long term story with its acquisition in the US. It’s got more going for it than just simply a pick up in business travel. 

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

KM:  Yes, definitely the missed opportunity of the online e-commerce stocks – the retail online stocks. 

[Meagher previously spoke of her regret at missing the rise of Temple & Webster Group Ltd (ASX: TPW)]

I regret how conservative I was with my valuation discipline, I suppose, when it came to pure online retail stocks when they first started moving last year. And they’ve gone up, doubled and tripled, I saw that I’d missed the opportunity – and they just kept going. So there’s definitely some remorse from sitting on the sidelines there.

More reading

• 3 great ASX tech shares to buy
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises 0.6%, Vocus jumps on takeover offer, Afterpay hits new record
• Why the Afterpay (ASX:APT) share price is exploding even higher today
• How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

Tony Yoo owns shares of Corporate Travel Management Limited and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited, ResMed Inc., and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s a bargain ASX share in a sea of expensive stocks appeared first on The Motley Fool Australia.

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There are some ASX dividend shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX dividend shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

Charter Hall Long WALE REIT (ASX: CLW)

This ASX dividend share is a real estate investment trust (REIT) that is managed by Charter Hall Group (ASX: CHC). It has a diversified portfolio of 459 properties, with 75% of those located on the eastern seaboard.

Those properties are spread across different sectors including agri-logistics, telco exchanges, office, industrial and logistics and long WALE retail. Its total portfolio has a valuation of $4.5 billion.

This REIT is currently liked by at least three brokers, including Morgan Stanley.

In the just-announced FY21 half-year result, the weighted average lease expiry (WALE) increased slightly to 14.1 years, which is one of the longest on the ASX. It has an occupancy rate of 97.5%.

It has large and stable tenants including Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths, Ingham’s Group Ltd (ASX: ING), Coles Group Ltd (ASX: COL) and David Jones.

In the half-year result, the ASX dividend share reported a 3.6% increase of operating earnings per share (EPS) to 14.5 cents per unit, a 3.6% increase of the distribution to 14.5 cents per unit and a 5.1% increase of the net tangible assets (NTA) per unit to $4.70.

Charter Hall Long WALE REIT reaffirmed its guidance that operating EPS will be at least 29.1 cents per unit, equating to a FY21 distribution yield of at least 6.2%.

Super Retail Group Ltd (ASX: SUL)

Super Retail is currently one of the retailers that is experiencing elevated levels of sales during these unprecedented COVID-19 times. It’s known for four businesses: Supercheap Auto, BCF, Rebel and Macpac.

This ASX dividend share is currently liked by at least four brokers, including Citi.

The company recently gave a trading update for the 26-week period ending 26 December 2020. It said that it had achieved a record result driven by large consumer demand. Group sales were up 23% and like for like sales increased by 24%. Online sales went up 87% to $237 million.

Not only did sales rise, but the profit margins increased as well. The overall gross profit margin went up by 270 basis points compared to the prior corresponding period, supporting higher earnings before interest and tax (EBIT) margins across all four core brands.

Looking at the individual businesses, Supercheap Auto total sales rose 20%, Rebel sales went up 15%, BCF sales grew 51% and Macpac sales declined 5%.

Underlying EBIT for the ASX dividend share is expected to be in a range of between $253 million to $256 million, which would represent growth of 119% to $122%. Underlying net profit after tax (NPAT) is expected to be in a range of $174 million to $177 million – this would be growth of between 135% and 139%.

At the current Super Retail share price, it has a projected (by Citi) grossed-up dividend yield for FY21 of 9.6%.  

More reading

• ASX 200 rises 0.6%, Vocus jumps on takeover offer, Afterpay hits new record
• Leading brokers name 3 ASX shares to buy today
• What’s moving the Charter Hall Long WALE (ASX:CLW) share price today?
• 2 ASX dividend shares with yields above 5%
• 2 ASX dividend shares with yields above 4.5%

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Super Retail Group Limited, and Telstra Limited. 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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You’ve probably heard by now that Amazon.com Inc (NASDAQ: AMZN) CEO Jeff Bezos is stepping back from his role running the company.

He’s been doing it for a long time, and apparently wants to focus on championing innovation in the company as its executive chair, letting incoming CEO Andy Jassy take the company’s reins.

Now, I’m an Amazon shareholder. I’ve known this day would come, at some point, but was hoping it was still a decade or so away (Bezos has run Amazon since 1996, but he’s still only 57).

See, Bezos is one out of the box. He — with help from others, of course — conceived of Amazon, then built and ran it for the last 25 years, turning it into the poster child for e-commerce, while also creating a highly valuable cloud computing business (essentially started because Amazon had spare computing capacity) and leading the charge into e-books.

Oh, and Amazon is now a US$1.7 trillion company, doing around US$1 billion of sales a day.

If that’s not enough, it’s still growing at almost 40%.

You can see why I’m a shareholder.

You can probably also see why I’m a little nervous that Bezos is stepping aside.

Frankly, I was very surprised that shares didn’t fall meaningfully on the news.

I guess he’s still staying at the company, and will still be executive chair, meaning his hand won’t be far from the tiller, if it’s needed.

Still, it’s hard not to see this as the first step away from Amazon. Maybe the second one never comes, or perhaps it comes sooner than we think.

Either way, Amazon is a stronger company, the more Bezos has to do with it, and a weaker one to the extent he loosens his grip.

That doesn’t mean it’s worth a lot less. Or even that we should be unduly worried.

But it’s fair to say that, given the choice, I would have preferred him to stay in the big chair.

Is that a logical view, though?

Is a company really worth that much less when its founder leaves?

The answer is, unfortunately, far from clear.

A prime example is Amazon’s FAANG counterpart, Apple Inc (NASDAQ: AAPL).

There aren’t many people who wouldn’t have preferred to see what Steve Jobs would be doing with Apple in 2021, if he was still alive. 

We can only imagine the innovations that might have come from his creative brilliance had he not been taken from us too early, nearly a decade ago.

That said, his successor, Tim Cook, has been hard to fault. He might not have Jobs’ instinctive ability to imagine, design and, famously, create a ‘reality distortion field’ that had his staff run through walls, but Cook has brought new products to market, supported innovation, and dealt deftly with consumers, competitors and regulators.

We’ll never know where Apple would be, today, under Jobs, but Cook has done a great job at the helm — there’s certainly no sign that Apple has been hurt by his leadership.

Staying in the US, though, we have another high profile consumer products brand, Starbucks Corporation (NASDAQ: SBUX), where the leadership baton seems to have been dropped after it was passed on.

At least, that seems to be the view taken by the board in 2008, when they reappointed long-time chair Howard Schultz back to the CEO role he held for 12 years before vacating it in 2000. 

(Schultz again stepped down in 2016, and shares have since doubled.)

There are plenty of other examples, too, and with mixed results. Moreover, even including the cases, above, it’s hard to know the ‘counterfactual’ — what might have happened if the changes hadn’t taken place.

Maybe Schultz would have done a terrible job between 2000 and 2008, anyway?

What if Steve Jobs had bet the company on a new technology, or, unlike Cook’s pragmatic decision to offer different phone sizes and use styluses on the iPad, had stuck to his guns on those issues?

We’ll never know. 

It’s fair to say that I much prefer founder-CEOs where I can get them. Or, as a close second, members of the founding family.

Among the companies I own, I’m glad Ruslan Kogan continues to run the eponymous retail juggernaut, Kogan.com Ltd (ASX: KGN), Jamie Pherous retains the reins at Corporate Travel Management Ltd (ASX: CTD), and Robert Millner is the fourth generation managing director of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

(Kogan and Soul Patts are current Motley Fool Buy recommendations, by the way — and shares we reckon you can buy today! — while CTM remains on Hold, as COVID works its way through the tourism industry, but we’re very impressed with how Pherous steered the company before and during the worst of the pandemic.)

I don’t own the shares, but I think (despite people taking potshots) Gerry Harvey has done a great job at Harvey Norman Holdings Limited (ASX: HVN). And I wouldn’t have wanted anyone else at the helm of Flight Centre Travel Group Ltd (ASX: FLT) during the COVID pandemic, other than its founder-CEO Graham ‘Skroo’ Turner.

Still, that’s not all that matters.

After all, Apple’s compound returns since Cook took over have been nothing short of phenomenal. Microsoft Corporation (NASDAQ: MSFT)’s stunning third act, under Satya Nadella has been astonishing.

Here at home, the Xero Limited (ASX: XRO) share price has gone through the roof after founder Rod Drury stepped back to a non-executive role, while few of the largest ASX companies are still run by the people who started them.

Which kinda brings me back to where I started.

All else being equal, you have to reckon that someone running a company that is her life’s work, and that the vast bulk of her wealth is tied up in, might just work that little bit harder and care just a little bit more than someone else who could run the company. Not to mention they had the insight, energy and passion for actually getting the thing off the ground in the first place. I sleep just a little easier with founder-CEOs.

So, yes, I’m going to be keeping a closer eye on Amazon than I had in the past.

But just as it would have been a mistake to sell Apple and Microsoft just because they had new CEOs, I’m not intending to part ways with Amazon any time soon.

It’s yet another example of why investing can be difficult. Rules of thumb are useful starting points, but rarely, if ever, do they provide absolute answers.

Remember, Alan Bond’s Bond Corp and Christopher Skase’s Qintex also failed…

Fool on!

More reading

• Amazon introduces new electric delivery trucks in Los Angeles
• 4 most trusted ASX companies (and the 4 least trusted)
• Report: Kia to build Apple’s electric car in Georgia in 2024
• GameStop (NYSE:GME) appoints 3 new Vice Presidents from Amazon and Chewy
• Amazon (NASDAQ: AMZN) shares rise despite Bezos resignation

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Scott Phillips owns shares of Amazon, Corporate Travel Management Limited, Kogan.com ltd, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Microsoft, and Starbucks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Amazon, Apple, Flight Centre Travel Group Limited, Kogan.com ltd, and Starbucks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Are you wanting to bolster your portfolio with a few new additions? Then you might want to take a look at the ones listed below.

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

Goodman Group (ASX: GMG)

The first ASX share to look at is Goodman Group. It is an integrated commercial and industrial property group that owns, develops, and manages industrial real estate across a total of 17 countries. Goodman counts a large number of blue chips as customers such as Amazon, Coles Group Ltd (ASX: COL), DHL, and Walmart.

Thanks partly to its exposure to growing markets such as ecommerce, Goodman has been performing very positively during the pandemic. In fact, at the end of the first quarter of FY 2021, the company reported 2.9% like-for-like net property income growth across its managed partnerships.

It also revealed a sky high occupancy rate of 97.8% across its partnerships and a whopping $7.3 billion of development work in progress. The latter was ahead of management’s guidance.

Morgan Stanley is positive on the company and has an overweight rating and $20.90 price target on its shares.

Xero Limited (ASX: XRO)

Another ASX share to look at is Xero. This New Zealand-based cloud-based business and accounting software provider is quickly becoming an invaluable resource for small businesses across the world.

At the end of the first half of FY 2021, Xero had grown its subscriber numbers to a sizeable 2.45 million and was generating half year operating revenue of NZ$409.8 million from them. While the latter might sound like a large number, even when annualised it is still only a fraction of its addressable market.

According to a recent note out of Goldman Sachs, it estimates that Xero currently has a total addressable market (TAM) of NZ$14 billion per annum across its key markets. This means it has penetrated less than 6% of its market based on annualised figures.

However, it is worth noting that Goldman believes Xero’s TAM can grow by a further NZ$62 billion in the future if it can successfully broaden and monetise its app ecosystem and expand into new geographies.

Because of this, the broker believes Xero has a multi-decade runway for strong revenue growth. Its analysts have put a buy rating and $157.00 price target on its shares.

More reading

• 2 reliable ASX dividend shares to buy
• ASX 200 Weekly Wrap: RBA unleashes ASX’s inner animal
• 3 ASX dividend shares to own for retirement income
• Why the Wesfarmers (ASX:WES) share price has soared 24% in a year
• Goldman Sachs names 2 growing ASX dividend shares to buy

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 Xero. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 fantastic ASX shares to buy right now appeared first on The Motley Fool Australia.

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There are some strong ASX tech shares available to Aussie investors that could be worth considering.

The following businesses are growing revenue and profit quickly:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is one of Australia’s leading online retailers of furniture and homewares. It runs a ‘drop-shipping’ model where products are sent directly to customers by suppliers, enabling faster delivery times and reducing the need to hold inventory, allowing for a larger product range. The company also has a private label range which is sourced from overseas suppliers.

The ASX tech share recently announced its FY21 half-year result where it said that revenue for the six months to 31 December 2020 went up by 118% year on year on year to $161.6 million. Its earnings before interest, tax, depreciation and amortisation (EBITDA) went up 556% to $14.8 million and it was cashflow positive for the half, ending with a cash balance of $85.7 million. Its active customers increased by 102% to 687,000.

As the company grows, it has more operating leverage to invest into parts of the business to help further growth such as data, technology, private label and marketing.

For January 2021, it said that revenue had increased by more than 100%. Management believe there are still strong tailwinds including: the ongoing adoption of online shopping due to structural and demographic shifts, an acceleration of these trends due to COVID-19, an increase in discretionary income due to travel restrictions and the continued recovery of the housing market and unemployment levels.

The Temple & Webster share price has fallen by almost 20% since 25 January 2021.  

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is another ASX tech share that is reporting high levels of growth. It’s an electronic donation business mostly servicing large and medium US churches. In its FY21 half-year result it reported that its operating revenue increased by 53%. This led to even faster growth of other profit measures, all showing triple digit increases.

The FY21 half-year earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) went up by 177% to US$26.7 million, the operating cashflow went up 203% to US$27 million and the net profit after tax (NPAT) grew 107% to US$13.4 million.

Pushpay is demonstrating operating leverage with each result. Its EBITDAF margin almost doubled from 17% to 31% in the FY21 half-year result.

The company is seeing elevated levels of donations through its systems as the COVID-19 pandemic continues to heavily affect the US.

Pushpay recently upgraded its FY21 EBITDAF guidance again to a range of US$56 million to US$60 million, up from previous guidance of US$54 million to US$58 million.

The ASX tech share continues to invest for growth and is now looking to grow in the Catholic sector of the US faith sector.

At the current Pushpay share price it’s trading at 23x FY23’s estimated earnings.

Redbubble Ltd (ASX: RBL)

Redbubble is the final ASX tech share in the article. It’s an artist-produced product e-commerce business with two websites, Redbubble.com and TeePublic.com.

Joseph Kim from Montgomery Investment Management said about Redbubble: “While Redbubble has clearly been a “stay-at-home” trade, we believe the business has the opportunity to emerge a longer-term structural winner from COVID-19 should it capitalise in the recent spike in user and customer interest as a result of recent lockdown measures.”

In Redbubble’s most recent update, for the first quarter of FY21, it said that marketplace revenue had grown by 116% to $147.5 million, gross profit was up 149% to $64.5 million, it made $22.1 million of earnings before interest and tax (EBIT) and $27.1 million of operating cashflow.

At the time of the FY21 first quarter update, Redbubble CEO Martin Hosking said: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and margin structure to ensure it can do so while remaining profitable.”

More reading

• How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?
• Got money to invest? Here are 2 ASX shares to buy
• ASX stock of the day: Temple & Webster (ASX:TPW) goes from strength to strength
• Why Magellan, News Corp, REA Group, & Temple & Webster shares are racing higher
• 2 fast-growth ASX tech shares that are being sold off

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 PUSHPAY FPO NZX and Temple & Webster Group Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 great ASX tech shares to buy appeared first on The Motley Fool Australia.

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If you’re looking for a source of income from the share market, then you might want to take a look at the reliable ASX dividend shares listed below.

Here’s what you need to know about them:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to look at is Coles. Since spinning out of Wesfarmers Ltd (ASX: WES) in 2018, this supermarket operator has been a very positive performer. This was particularly the case in 2020 when Coles’ defensive qualities were on display for all to see.

Pleasingly, Coles has carried its strong form over into FY 2021, putting the company in a position to deliver a strong full year result in August.

And looking further ahead, thanks to its refreshed strategy, its focus on automation, and home brand growth, Coles appears well-positioned to build on this over the remainder of the 2020s.

Analysts at Citi are fans of the company and are expecting it to deliver a strong full year result in FY 2021. In light of this, the broker has a buy rating and $21.20 price target on its shares.

Citi is forecasting a 63.5 cents per share fully franked dividend this year. Based on the latest Coles share price, this equates to an attractive 3.5% dividend yield.

Rural Funds Group (ASX: RFF)

Rural Funds could be a dividend share to look closer at. It is a real estate investment trust which owns a diversified portfolio of high quality Australian agricultural assets.

These assets are leased to experienced agricultural operators such as Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE) on long term leases. And when I say long, I mean long. At the last count, Rural Funds reported a weighted average lease expiry of almost 11 years.

Within its leases, the company has rental increases built in. It is thanks partly to this that the company has an aim of delivering distribution growth of 4% per annum.

In line with this, Rural Funds intends to increase its distribution by this margin to 11.28 cents per share in FY 2021. Based on the latest Rural Funds share price, this works out to be a generous 4.6% yield.

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• Why the Wesfarmers (ASX:WES) share price has soared 24% in a year
• Goldman Sachs names 2 growing ASX dividend shares to buy

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 owns shares of COLESGROUP DEF SET. 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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Brokers regularly update their estimates and recommendations about many ASX shares. The two in this article have been rated as buys by at least three brokers. 

Some ASX shares are well liked by many brokers, whilst others get mixed reviews. 

These two ASX shares are ones rated as buys by brokers:

Charter Hall Group (ASX: CHC)

Charter Hall is an ASX share that’s liked by at least four brokers right now.

This is a property investment and funds management business that has been operating for around three decades. It says that it uses its property expertise to access, deploy, manage and invest equity across core real estate sectors – office, retail, industrial and logistics and social infrastructure.

Across its various underlying investments, it has a portfolio of over 1,300 properties. It runs various listed real estate investment trusts (REITs) including Charter Hall Long Wale REIT (ASX: CLW), Charter Hall Social Infrastructure REIT (ASX: CQE) and Charter Hall Retail REIT (ASX: CQE).

Charter Hall is regularly making new deals to acquire high-quality properties. One of the most recent acquisitions that it made was the David Jones flagship store in Sydney for $510 million. The lease is for 20 years with a minimum 2.5% per annum annual rent increase supplemented by an agreed turnover rent linked to sales performance. Charter Hall will retain 25% of the property.

It has also been a part of a partnership to buy six Bunnings assets for $353 million which had a weighted average lease expiry of 10 years, 2.5% annual rent reviews and a yield of 4.63%.

In a market update in November 2020, the ASX share said that its funds under management (FUM) had grown to $43.4 billion and it upgraded its FY21 post-tax operating earnings per unit to 53 cents. The distribution per unit is expected to grow by 6%.

Morgan Stanley is one of the brokers that likes Charter Hall with the property investor and manager expected to benefit from more inflows of funds, particularly because of the low interest rate environment. However, office and retail assets do come with some risks.

Based on the guidance of 53 cents, the Charter Hall share price is valued at 28x the estimated operating earnings for FY21.

Perseus Mining Limited (ASX: PRU)

Perseus Mining describes itself as a rapidly growing, West African gold producer, developer and explorer. Perseus now operates three gold mines in West Africa, with its third mine, Yaouré, pouring its first gold in December 2020. Annual gold production is projected to increase to more than 500,000 ounces per year by 2022.

This gold miner ASX share is currently liked by at least three brokers.

One of the brokers, Citi, thought that the quarter for the three months to 31 December 2020 was good operationally, and the production was about what the broker was expecting.

The next six months should reveal an update about the expected ramp-up of the Yaouré gold mine as well as the feasibility study for the Bagoé basin near the Sissingue. This is expected to deliver organic growth opportunities and deliver incremental growth in the mineral resources and ore reserves.

In the latest quarterly update, for the three months to December 2020, Perseus said that half-year production was up 12% to 137,386 and close to the top end of its production guidance range. At US$1,000 per ounce, the all-in site cost (AISC) was slightly lower than the June half-year and within the guidance range of US$940 to US$1,025.

Quarterly gold sales increased 10% and the average realised gold price increased 6% to US$1,687. This generated quarterly and half year notional cashflows from operations of US$44.6 million and US$88.3 million respectively.

More reading

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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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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on a positive note. The benchmark index rose 0.6% to 6,880.7 points.

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

ASX 200 expected to fall

The Australian share market looks set to end its positive run on Tuesday. According to the latest SPI futures, the benchmark index is poised to fall 21 points or 0.3% at the open. This is despite stocks on Wall Street performing positively overnight. In late the Dow Jones is up 0.45%, the S&P 500 is up 0.35%, and the Nasdaq is trading 0.5% higher.

Macquarie third quarter update

The Macquarie Group Ltd (ASX: MQG) share price will be on watch this morning when it releases its third quarter update. According to a note out of Morgan Stanley, it is expecting the investment bank to reveal a result broadly in line with the prior corresponding period. Looking ahead, the broker believes the company is well-positioned to deliver a full year result ahead of the market consensus.

Oil prices push higher

It could be another positive day for energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) after oil prices pushed higher again. According to Bloomberg, the WTI crude oil price is up 1.6% to US$57.73 a barrel and the Brent crude oil price is up 1.6% to US$60.27 a barrel. Oil prices pushed higher on supply cuts and stimulus hopes.

Gold price climbs higher

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could be on the rise today after the gold price pushed higher again. According to CNBC, the spot gold price is up 1.1% to US$1,832.50 an ounce. This was driven by hopes of a large US stimulus package being announced.

Suncorp half year results

The Suncorp Group Ltd (ASX: SUN) share price will be one to watch when it reports its half year results this morning. According to a note out of Morgans, it is expecting the banking and insurance giant to report a 4% decline in first half cash profit to $350 million. The broker is forecasting a 17 cents per share fully franked interim dividend.

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

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Fortunately in this low interest rate environment, the ASX is home to a number of shares that are expected to provide attractive yields to investors in 2021. 

If you’re interested in blue chip dividend shares, then you may want to look at the ones listed below. Here’s why they could be dividend shares to buy:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

The first blue chip ASX dividend share to look at is ANZ Bank. Thanks to mortgage loan growth, a reduction in COVID-19 loan deferrals, and the relaxing of responsible lending rules, this banking giant’s outlook has improved greatly over the last six months.

And while this has been reflected in its strong share price gain (the ANZ share price is up ~44% in six months), it may not be too late to make an investment. 

Last week Morgans put an add rating and $28.50 price target on the bank’s shares. It is also forecasting ANZ to pay shareholders a dividend of $1.27 per share in FY 2021. Based on the latest ANZ share price, this represents a 5% dividend yield.

Woolworths Limited (ASX: WOW)

Another option for investors to consider is Woolworths. It could be a good option for income investors due to the quality of the retail giant’s numerous brands. While best known for its eponymous supermarkets, Woolworths also owns Dan Murphy’s, BWS, and BIG W.

As a whole, the company appears to be well-positioned for growth over the long term thanks to its defensive qualities, strong market position, and a favourable redirection in consumer spending.

Analysts at Macquarie are positive on the company. They have just retained their outperform rating and lifted the price target on the company’s shares to $44.50. Macquarie is also forecasting a $1.01 per share fully franked dividend in FY 2021. Based on the latest Woolworths share price, the equates to a 2.5% dividend yield.

While this is not the most generous yield you will find, it is still materially better than savings accounts and term deposits.

More reading

• Leading brokers name 3 ASX shares to buy today
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• Top brokers name 3 ASX shares to buy next week
• CBA (ASX:CBA) share price rises as bank cuts savings rate

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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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The Optiscan Imaging Limited (ASX: OIL) share price took flight today as the company announced the start of an important study. Shares in the innovative health researcher were swapping hands for 12.5 cents, up 13.6%, at the close of trade today.

It comes off the back of a phenomenal past 12 months for the Optiscan share price, which has gained more than 300% in that time. The company currently has a market capitalisation of $74.6 million.

Why is the Optiscan share price flying?

Shares in research company Optiscan were flying today as the company announced the next stage of its breast cancer study.

Optiscan will begin stage three of its study at 3 Melbourne hospitals. Conducted by leading breast cancer surgeon, Professor Bruce Mann, the study will involve 20 breast cancer patients at Royal Melbourne Hospital, Frances Perry House and Epworth Hospital.

It will use Optiscan’s specialised endomicroscope, which enables real-time, 3D, ‘in vivo’ imaging of human tissue at the cellular level. This results in instant ‘virtual biopsies’ for cancer screening, enabling faster diagnosis and treatment.

The handheld instrument allows users to view tissue at 1,000 times magnification instantly and enables them to identify cancerous tissue on the surface of a specimen in real-time. This reduces or eliminates the need to have specimens sent to a laboratory for processing which can take two to three days.

Researcher comments

Commenting on the upcoming tests, Professor Mann said:

We want to trial the use of this technology to be able to see tumour cells, helping us to assess the adequacy of excision there and then.

Being able to have this sort of real-time information during surgery is critical to allow more accurate surgery, which is beneficial to the physical and mental wellbeing of breast cancer patients. By ensuring that we achieve ‘clear’ or ‘negative’ margins at initial surgery, we expect to reduce the requirement for a second surgery, which currently occurs in over 20 per cent of lumpectomy cases.

About the Optiscan share price

Optiscan is involved in developing microscopic imaging and related technologies for screening, surgery and medical research. Based in Melbourne, the company has developed and patented its technology, enabling real-time, 3D imaging of human tissue at the cellular level. The ‘virtual biopsies which it produces are critical in improving patient welfare, reducing accuracy and reducing the need for multiple procedures.

Over the last month, the Optiscan share price is up 13.6%, outpacing the All Ordinaries Index (ASX: XAO) by 9%.

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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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