The values of buy now, pay later (BNPL) ASX shares have soared over the last year.

After bottoming out at $1.05 in the March 2020 COVID-19 crash, Zip Co Ltd (ASX: Z1P) shares have surged over 650% to $7.95 at the time of writing. And at one point in late August, the Zip share price even touched a record high of $10.64.

And then there’s Afterpay Ltd (ASX: APT). Since falling to a low of $8.01 in March, the Afterpay share price has skyrocketed a whopping 1730% to $146.62. With a scarcely believable market capitalisation of well over $40 billion, it is now larger than Telstra Corporation Ltd (ASX: TLS) and Transurban Group (ASX: TCL), and might soon overtake Rio Tinto Limited (ASX: RIO).

But with companies like Afterpay hogging all the media spotlight, it’s easy to forget that there are many other companies trying to carve out a niche for themselves in the buy now, pay later space.

Over the last year, Sezzle Inc (ASX: SZL) shares have also been soaring higher – even outpacing Afterpay. The Sezzle share price was trading at just 35 cents last March, but has now climbed over 2300% to $8.50. And back in August, Sezzle shares peaked at a record high price of $11.83.  

What makes Sezzle different?

Like Afterpay, Sezzle gives consumers the ability to repay their purchases over four fortnightly instalments. Provided all instalments are paid on time, there are no interest or late fees charged to the customer. Instead, Sezzle makes its money by charging a small fee to the merchant.

The reason you may not have heard as much about Sezzle as Afterpay is that it is headquartered in Minneapolis and predominantly targets the North American market. It has been growing rapidly in the United States, driven by rising rates of online shopping spurred by COVID-19 lockdowns.

Sezzle has also been targeting global expansions into the Indian and European markets. It estimates the total retail market to be worth US$882 billion in India, and US$232 billion in Europe.

Recent news out of the company

Sezzle reported record results for the December 2020 quarter. Underlying merchant sales (UMS) through the payment platform increased 40.6% quarter on quarter and 205.4% year on year to US$320.8 million. Active customers were also well up, increasing by 24.5% quarter on quarter and 143.9% year on year to over 2.2 million. Active customer repeat usage was also up 89.8%. The company collected US$17.2 million in merchant fees for the quarter, a jump of 32.6% quarter on quarter and 195.6% year on year.

In the September quarter, the company reached its 2020 target of annualised run rate for UMS of US$1 billion (A$1.4 billion).

While this is a notable achievement for a rapidly growing company, it’s worth noting that Sezzle is still significantly trailing Afterpay, which reported underlying global sales (a similar metric to Sezzle’s UMS) for the September quarter alone of $4.1 billion.

More reading

• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars
• BHP Energy and Zip were among the most traded ASX shares last week
• Why Afterpay, Credit Corp, Healius, & Volpara shares are storming higher
• ASX 200 up 0.9%: Credit Corp impresses, Afterpay jumps, bank shares rise
• GameStop chaos: Love always wins over shorting

Rhys Brock owns shares of AFTERPAY T FPO,  ZIPCOLTD FPO and Sezzle Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban Group. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some ASX shares that are generating faster growth because of demand for their products or services due to COVID-19.

Some areas of the share market are still in doldrums in terms of customer volume demand, such as travel shares like Qantas Airways Limited (ASX: QAN) and Sydney Airport Holdings Pty Ltd (ASX: SYD).

However, there are some businesses that are seeing record demand:

Sonic Healthcare Ltd (ASX: SHL)

Headquartered in Australia, Sonic is the world’s third largest pathology and laboratory healthcare business, with operations in eight countries. Some of the countries that it operates in includes Germany, the UK, Switzerland, the USA and Belgium. Sonic is also a provider of general practice, radiology, occupational medicine and corporate medical services in Australia.

Sonic is playing a key role in the fight against COVID-19 as it carries out large numbers of PCR tests.

Whilst the ASX share’s base pathology revenue was severely impacted during 2020 in March, April and May, there was a recovery starting from May 2020, with a near normal revenue run rate by the year end in most divisions. COVID-19 testing ramped up progressively from March 2020.

In the first quarter of FY21 Sonic saw revenue grow by 29% to $2.1 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) went up 71% to $580 million. In October 2020, revenue was 33% higher than October 2019.

In November 2020, in the northern hemisphere, the base business is being hurt less compared to the first waves, with COVID-19 testing at record levels due to the high level of COVID-19 cases in Europe and the US. In Australia, the base revenue is in positive growth territory and COVID-19 testing was still at around 50% of half of prior peak levels.

According to Commsec, the Sonic share price is valued at 17x FY21’s estimated earnings.

Ansell Limited (ASX: ANN)

Ansell is an ASX share that is best known for its protective gloves. It also sells other items such as chemical protective clothing.

A couple of weeks ago the company gave a trading update which said that due to the level of coronavirus cases globally, it’s still seeing an elevated level of demand for products across its examination, life sciences and chemical protective clothing. That’s despite the pandemic being around for almost a year.

Ansell said that by implementing efficiencies to improve output and investing in increased production capacity at its own plants, Ansell has been able to successfully and safely meet higher demand where others in the industry have struggled.

Sonic has been able to pass through price increases to customers to offset higher costs from raw materials, which demonstrates pricing power for Ansell.

Ansell acknowledged that there remains significant uncertainties given that the ASX share’s manufacturing operations and supply chain continues to be impacted by COVID-19, such as ocean freight delays.

The company was able to provide earnings guidance for the upcoming FY21 first half result, showing double digit growth. Ansell is expecting to report organic revenue growth of more than 20%, with earnings per share (EPS) in the range of 81 cents to 84 cents, representing growth 62% to 68%. It’s now expecting its FY21 EPS to be higher than 145 cents per share, beating its previous guidance.

Ansell expects higher demand for its products to continue for the remainder of FY21.  

More reading

• 2 reliable blue chip ASX share to buy
• 3 ASX 200 shares that keep growing their dividends
• 2 fantastic blue chip ASX shares to buy
• Morgans picks February’s reporting season ASX heroes to buy now
• ASX 200 up 0.5%: BHP’s update, PolyNovo jumps, Ansell impresses

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and Sonic Healthcare 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 for growth investors, there are a good number of companies growing at a strong rate on the Australian share market.

Three ASX growth shares that you might want to get better acquainted with are listed below. Here’s what you need to know about them:

Adore Beauty Group Limited (ASX: ABY)

Adore Beauty is Australia’s number one online beauty retailer. At the last count, it had just under 600,000 active customers and was expecting to generate revenue of $158.2 million from them in calendar year 2020. This will be a big increase on the prior corresponding period and is being driven by the ongoing shift to online shopping. Morgan Stanley is a fan of the company and currently has an overweight rating and $8.35 price target on its shares.

Megaport Ltd (ASX: MP1)

Megaport is a provider of elastic interconnection services across data centres globally. Thanks to the shift to the cloud and its growing footprint in data centres, Megaport has been growing strongly over the last few years. This has continued in FY 2021, with Megaport recently reporting a 10% quarter on quarter increase in second quarter underlying monthly recurring revenue (MRR) to $6.3 million. Goldman Sachs was pleased with its update and has put a buy rating and $15.00 price target on its shares. Goldman expects Megaport to benefit from growing demand for public cloud infrastructure and the broadening of its product suite.

Nuix Limited (ASX: NXL)

Nuix is a leading provider of investigative analytics and intelligence software. Its software helps process, normalise, index, enrich, and analyse large amounts of data from different sources. This has proven invaluable during investigations including the Banking Royal Commission. Nuix delivered a 25.9% increase in total revenue to $175.9 million in FY 2020 and is expected to report further growth in the current financial year. Morgan Stanley is also a fan of Nuix. It currently has an overweight rating and $11.00 price target on the company’s shares.

More reading

• ASX stock of the day: Rent.com.au (ASX:RNT) shares explode 218%
• ASX 200 rises, Worley dumped, Mesoblast rises
• 2 ASX shares that this fundie really likes right now
• Forget GameStop and buy these fantastic ASX growth shares
• 5 of the best ASX shares to buy in February

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and Nuix Pty 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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There are some ASX dividend shares that are paying steady, and growing, income to shareholders each year.

Some businesses cut their dividends in the 2020 calendar year such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Transurban Group (ASX: TCL).

However, these two ASX dividend shares have continued increasing:

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) that owns a diversified farm portfolio.

A core aim for the management of Rural Funds is to grow the distribution by 4% per annum for investors.

It has grown the distribution by that 4% per annum since it listed several years ago. In increased its distribution during the COVID-19-affected 2020 year like clockwork. In FY21 it’s expecting to grow the distribution to 11.28 cents per unit.

The ASX dividend share is invested across different sectors like cattle, almonds and vineyards. The business is regularly looking for other investments to diversify the portfolio further. It used to own poultry assets, but it sold those as there wasn’t much capital growth potential.

Rural Funds has rental indexation built into all of its contracts. That rental growth is linked either to a fixed 2.5% annual increase, or it’s linked to CPI inflation, plus occasional market reviews.

The farmland REIT is on the lookout for assets that it can invest in and improve the productivity. For example, with some cattle properties it has improved them with water points and pasture improvements, while at its cropping properties it has added water storage and irrigated cropping.

One of the features of this ASX dividend share is that it has a long weighted average lease expiry (WALE). At the last update its WALE was approximately 11 years.

At the current Rural Funds share price it has a FY21 distribution yield of 4.5%

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Also known as Soul Patts, this ASX share has the longest consecutive dividend growth streak on the ASX. It has grown its dividend every year since 2000.

It has been increasing its dividend each year by 2 cents per share for almost a decade. Another increase of 2 cents per share in FY21 would represent an increase of 3.3% to 62 cents per share.

These dividend increases by Soul Patts are funded by the dividends paid to it from its investment portfolio.

There are some key businesses in the portfolio that pay most of the dividend income such as TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI) and Australian Pharmaceutical Industries Ltd (ASX: API).

Aside from the above names, the ASX dividend share also has other listed businesses which make up a sizeable portion of the portfolio like Apex Healthcare, Tuas Ltd (ASX: TUA) and Clover Corporation Limited (ASX: CLV).

Soul Patts also has a portfolio of unlisted businesses in different sectors like agriculture, financial services, resources, swimming schools and electrical engineering and control systems (Ampcontrol).

The ASX dividend share has long-term employees. More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.

At the current Soul Patts share price, a FY21 dividend of 62 cents per share would equate to a dividend yield of 3.1%.

More reading

• These ASX dividend shares offer attractive yields
• 3 ASX 200 shares that keep growing their dividends
• 3 reasons why Rural Funds (ASX:RFF) is a strong ASX dividend share
• 3 ASX dividend shares with yields above 4%
• 2 strong blue chip ASX shares rated as buys by brokers

Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Carsales.Com Ltd (ASX: CAR) share price will be one to watch on Wednesday.

This morning the auto listings company’s shares were upgraded by a leading broker.

Is the Carsales share price in the buy zone?

According to a note out of Goldman Sachs, it believes recent weakness in the Carsales share price has created a buying opportunity for investors.

The note reveals that the broker has upgraded the company’s shares to a buy rating with an improved price target of $22.60.

Based on the latest Carsales share price, this price target implies potential upside of 13% over the next 12 months excluding dividends. Including dividends, the potential return stretches to over 15%.

Why is Goldman Sachs bullish on Carsales?

The broker made the move largely on valuation grounds, noting that the Carsales share price has come under pressure since COVID-19 vaccine trial results were announced. Its shares are down 14% from their October high.

It believes that the market is concerned that the rollout of vaccines will impact demand for used cars and stifle its growth. Consumers have been buying used cars during the pandemic to avoid public transport.

However, Goldman doesn’t believe investors should be worried and is forecasting strong earnings growth over the coming years.

It commented: “Although the sustainability of used car volume is a key investor focus, we remain optimistic on the outlook, believing CAR can deliver a relatively assured FY20-23E EBITDA / EPS CAGR of +11% / +14%.”

This is expected to be driven largely by its dominant ANZ business and online migration driving growth in its international segment.

Domestic growth

In respect to the former, Goldman commented: “We forecast +11% 3Y EBITDA CAGR for the core ANZ Online Advertising business. Although the recent strength in the used car market presents some headwinds, we believe CAR can continue to deliver strong earnings growth.”

“Driven by: (1) Return to (some) growth in Display revenues, given improving New Car sales in Australia (i.e. Dec +13%); (2) The non-repeat of the covid related dealer concessions made across FY20-21 ($40mn revenue in total); (3) ongoing c.5%+ yield growth, supported by dealer profitability and CAR strong domestic franchise (which is increasing share); (4) Increasing contribution from new revenue streams (i.e. Instant Offers); and (5) ongoing cost discipline, supporting margins,” it added.

Valuation

Overall, in light of its outlook and the recent share price weakness, the broker believes Carsales’ valuation is compelling.

It explained: “We believe valuation is now compelling, given: (1) CAR multiples have compressed since the vaccine announcement, despite consensus earnings upgrades; (2) Relative to AU classified peers, CAR trades at a -21% 12mf EV/EBITDA discount, the greatest level in recent history.”

Carsales will release its half year results 17 February.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why the Eagers Automotive (ASX:APE) share price is on watch today
• Aussies ready to splash on travel, entertainment, cars
• Think you saw growth in 2020? Just wait for 2021: fundie
• Why these leading ASX gold and tech shares could rally on through 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com 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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On Tuesday the Reserve Bank met for the first time in 2021 to decide on the cash rate.

Although the central bank decided against cutting rates at this meeting, that doesn’t mean a rate hike is coming any time soon.

Unfortunately for income investors, the Reserve Bank reiterated that it doesn’t believe conditions will allow for a rate increase until 2024 at the earliest. This is likely to mean that low interest rates are here to stay for some time to come.

The good news is that the Australian share market continues to offer income investors plenty of ways to avoid these low rates.

Two ASX dividend shares, for example, that have generous dividend yields are listed below. Here’s why you need to know about them:

Accent Group Ltd (ASX: AX1)

Accent is the leading leisure footwear-focused retailer responsible for a number of retail brands including HYPEDC, Platypus, and The Athlete’s Foot. It has been a strong performer in FY 2020, delivering like-for-like sales growth of 12.3% for the first half.

Citi was pleased with its performance and has recently put a buy rating and $2.60 price target on its shares. It is also expecting the company to pay an 11 cents per share dividend this year. Based on the current Accent share price, this represents a fully franked 4.7% dividend yield.

Westpac Banking Corp (ASX: WBC)

Australia’s oldest bank may have seen its shares rally hard over the last few months, but thankfully it may not be too late to invest. Due to the improving outlook in the banking sector thanks partly to COVID-19 loan deferral reductions and mortgage growth, analysts at Citi are recommending the bank as a buy.

The broker has a buy rating and $26.00 price target on its shares and is forecasting a $1.30 per share fully franked dividend this year. Based on the latest Westpac share price, this represents a generous fully franked 6% yield.

More reading

• The ASX small cap with the best global expansion potential may not be tech
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX
• 2 on form ASX dividend shares to buy
• Is the Westpac (ASX:WBC) share price a buy?
• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a few different reasons why the Temple & Webster Group Ltd (ASX: TPW) share price could be worth considering.

What’s Temple & Webster?

The company describes itself as Australia’s leading online retailer of furniture and homewares.

It has over 200,000 products on sale from hundreds of suppliers. The business has a drop-shipping model where they products are sent directly to customers by suppliers, which enables faster delivery times and reduces the need to hold inventory, allowing for a larger product range.

The drop ship range is complemented by a private label range which is sourced directly by Temple & Webster from overseas suppliers.

FY21 half year result

Temple & Webster revealed its half-year result yesterday for the six-month period to 31 December 2020.

The company’s revenue increased by 118% year on year to $161.6 million. The online retailer said that it achieved its first day of around $3 million of checkout revenue in November.

It generated $14.8 million of earnings before interest, tax, depreciation and amortisation (EBITDA), which was growth of 556%.

The business said that its active customers increased by 102% and in the trade and commercial division it saw growth of 89% year on year.

In terms of cashflow and the balance sheet, it ended with a cash balance of $85.7 million (including proceeds from the $40 million placement) and it was cashflow positive.

Temple & Webster CEO Mark Coulter said: “While 2020 remained a challenge for the country, we are proud that many Australians continued to turn to Temple & Webster for their furniture and homewares needs. It is great to see our revenue growth translating into operating leverage and significant profit growth. This allows us to accelerate our investment into areas such as data, technology, private label and brand awareness to further differentiate our proposition.”

3 Reasons why the Temple & Webster share price could be interesting

1: Fast growth

Businesses that grow the most have a good chance of producing outsized shareholder returns.

The company reported a lot of numbers in this report that demonstrated growth. Revenue rose 118%, active customers grew 102% and so on.

Temple & Webster believes that demographic and structural changes will drive strong market growth for years to come. For example, millennials are starting to enter the core spending age of 35 to 65.

The company pointed to several structural changes in its favour: physical store closures, new consumer habits being formed during lockdowns, faster internet and mobile speeds like 5G, new market entrants like Amazon are accelerating online shopping take-up and new technologies are improving the experience for shoppers (eg augmented reality).

In January the company saw revenue growth of more than 100% with the continuing growth of online shopping.

2: Rising margins

Stronger profit margins mean that more of the revenue falls to the profit line of the accounts.

Temple & Webster’s fixed cost as a percentage of sales decreased from 11.6% to 7.5%, showing the economies of scale of the business.

The company showed that its EBITDA margin increased from 3.1% to 9.2% as EBITDA jumped from $2.3 million to $14.8 million.

Its contribution margin of 17% is tracking above the short to mid-term target of 15% as a result of its delivered margin improvement.

The company reported that it had a cashflow positive half during the first six months of FY21.

3: Growing market position

Temple & Webster said that it will continue its reinvestment strategy, investing into growth areas of the business to cement its online market leadership and drive market share.

Marketing as a percentage of revenue increased from 11.1% to 12.8%, primarily driven by investment into brand building channels such as TV.

The company said that its revenue per active customer increased by 6% to $401 due to a higher repeat rate.

Valuation

At the current Temple & Webster share price, it’s valued at 36x FY22’s estimated earnings.

More reading

• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars
• Why Bubs, Huon, Temple & Webster, & Unibail-Rodamco-Westfield are dropping lower
• Why the Temple & Webster (ASX:TPW) share price is sinking 5% lower today
• Why Afterpay, ResMed, Temple & Webster, & Worley shares are dropping lower
• Top ASX shares to buy in February 2021

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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended 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.

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On Tuesday the S&P/ASX 200 Index (ASX: XJO) was on form again and recorded another impressive gain. The benchmark index raced 1.5% higher to 6,762.6 points.

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

ASX 200 futures pointing higher

It looks set to be another positive day of trade for the ASX 200 on Wednesday. According to the latest SPI futures, the ASX 200 is poised to open the day 57 points or 0.85% higher this morning. This follows another strong night of trade on Wall Street. In late trade the Dow Jones is up 1.9%, the S&P 500 is 1.7% higher, and the Nasdaq is also trading 1.7% higher. Markets appear to be moving on from the GameStop mania.

Oil prices push higher

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after another positive night for oil prices. According to Bloomberg, the WTI crude oil price is up 2.3% to US$54.78 a barrel and the Brent crude oil price has climbed 2.1% to US$57.51 a barrel. Oil prices pushed higher after producers committed to their output caps.

Amcor results

The Amcor CDI (ASX: AMC) share price will be on watch today when it released its half year results. According to a note out of Morgans, it is expecting the packaging giant to deliver a strong result. Particularly given its strong start to the financial year, which saw the company deliver a 20% increase in earnings per share during the first quarter. Amcor’s services were recognised as an essential service during the pandemic.

Gold (and silver) price sinks

Gold miners including Newcrest Mining Ltd (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) could come under pressure today after the gold price sank lower. According to CNBC, the spot gold price is down 1.5% to US$1,833.20 an ounce. Elsewhere, the silver price came crashing back down to earth and dropped 9% during overnight trade after the Reddit trade fizzled out.

Carsales upgraded to buy rating

The Carsales.Com Ltd (ASX: CAR) share price is in the buy zone according to analysts at Goldman Sachs. This morning the broker upgraded the auto listings company’s shares to a buy rating with a $22.60 price target. It commented: “Despite consensus earnings upgrades since vaccines emerged, CAR multiples have compressed to the extent it now trades at a 21% 12mf EV/EBITDA discount to AU classified peers, its greatest level in recent history.”

More reading

• Supreme Court approves Northern Star and Saracen mega merger
• 2 ASX 200 shares to buy for dividends
• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars
• These 3 ASX stocks are the latest “buy” ideas from top brokers
• How the ASX 200 moved following the RBA’s first cash rate decision of 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited. The Motley Fool Australia has recommended carsales.com 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 a new month here, I’m sure many readers will be considering a few changes to their portfolio in the near future.

But which shares should you buy? To help narrow things down for you, I have picked out two ASX shares that are highly rated. They are as follows:

Altium Limited (ASX: ALU)

Altium is an award-winning printed circuit board (PCB) design software platform provider.

Over the last few years, Altium has become a leader in this growing market. But it isn’t settling for that. It has now set its sights on dominating it.

Management is aiming to achieve this by growing its subscribers to 100,000 by 2025/26.

A key part of this plan is its cloud-based Altium 365 product, which was released in 2020. This allows designers to work collaboratively from anywhere in the world and appears to have cemented its industry leadership position.

Furthermore, as well as giving it an edge over the competition, management notes that it provides opportunities for significant total addressable market expansion in the future.

All in all, this appears to have positioned the company for strong growth over the long term once the pandemic passes.

One broker that is a fan is Credit Suisse. Its analysts have an outperform rating and $35.00 price target on the company’s shares. The Altium share price closed at $31.02 on Tuesday.

Collins Foods Ltd (ASX: CKF)

Another ASX share to look at is quick service restaurant operator Collins Foods.

It is one of the largest operators of KFC restaurants in Australia and has a presence in the European market as well. It also has a smaller but growing number of Taco Bell restaurants across Australia.

Late last year its released its half year results and revealed an 11.3% increase in revenue to $499.6 million and a 15.1% lift in underlying net profit after tax to $27.5 million.

The good news is that management still sees plenty of room for growth in both the Australian and European markets. This should underpin solid growth in the future if Collins Foods can continue its positive trend of same store sales growth.

Analysts at UBS expect this to be the case. They believe the company is well-placed to continue this positive form over the medium term. In light of this, UBS has a buy rating and $11.65 price target on the company’s shares. This compares favourably to the latest Collins Foods share price of $9.63.

More reading

• 2 quality SaaS ASX shares to buy in February 2021
• 5 of the best ASX shares to buy in February
• 2 ASX growth shares to buy
• These ASX 200 shares have been smashed in 2021
• 2 ASX 200 growth shares to buy

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Collins Foods 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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Telstra Corporation Ltd (ASX: TLS) has stopped live streaming of NRL and AFL games, in a major change to its sports and entertainment strategy.

For the last 9 years, the telco had owned the mobile streaming rights to the two most popular football codes in Australia. It was used as a major lure to attract customers to the telco. 

But now that responsibility will shift to Kayo, where Telstra clients will be offered a discounted subscription.

The move also means Telstra will no longer bid for sports broadcast rights.

“While Live Pass has provided a great sporting experience over the years, we are replacing it with Kayo, which has quickly become the premium sports streaming service in Australia, and we’re excited to provide an exclusive offer for you to watch a wider range of sports on your choice of screen,” said a company spokesperson on a blog post.

The Kayo streaming service is owned and operated by pay television company Foxtel, which itself is jointly owned by Telstra and News Corporation (ASX: NWS).

Telstra shares were up 0.32% at close of trade on Tuesday afternoon. News Corporation dipped 0.4% on the ASX.

Is the new way better or worse for Telstra customers?

Telstra customers who already have NRL and AFL Live Pass access will be offered the basic Kayo plan for $5 per month, which is a $20 discount. The telco’s customers who don’t currently have footy streaming will be offered the subscription for $15 per month.

The two big changes for Telstra customers will be that:

• They’ll now be able to watch more than 50 sports through Kayo, rather than just 2 
• They can stream the sports on the television, rather than just mobile devices

The shift was somewhat inevitable, with the NRL last year blocking Telstra from bidding on digital streaming rights from 2023.

The telco is a long-time major sponsor for rugby league, with the competition officially named the NRL Telstra Premiership for many years.

Also, this month Kayo faced a major new rival in live sports streaming as Nine Entertainment Co Holdings Ltd (ASX: NEC) launched Stan Sport. That service starts this year with rugby union as its premium sport.

Telco competitor Optus also owns some sports streaming rights, with the English soccer as its jewel in the crown.

Telstra also possesses live streaming for netball and A-League soccer, but they will also be shifted to Kayo if it wins the broadcast rights.

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

The post Telstra (ASX:TLS) dumps NRL, AFL streaming appeared first on The Motley Fool Australia.

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