In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a strong gain. At the time of writing, the benchmark index is up 1% to 6,240.2 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Cleanaway Waste Management Ltd (ASX: CWY)

The Cleanaway share price is down almost 2% to $2.25. This decline could be in response to media reports over the weekend. Those reports allege that workers were transferring medical waste from bins without protective gear at the height of the COVID-19 crisis. This was believed to be part of a plan to ship waste interstate to ensure it didn’t exceed its environmental license restrictions.

Crown Resorts Ltd (ASX: CWN)

The Crown share price has sunk 10% lower to $8.08. This morning Crown revealed that it has been contacted by AUSTRAC. According to the release, AUSTRAC has identified potential non-compliance by Crown Melbourne with anti-money laundering and counter-terrorism financing rules. This includes concerns in relation to ongoing customer due diligence and adopting, maintaining, and complying with an anti-money laundering and counter-terrorism financing program.

Opthea Ltd (ASX: OPT)

The Opthea share price has crashed 13.5% lower to $2.40 after announcing the pricing of its initial public offering in the United States. The biopharmaceutical company is offering 8,563,300 American Depositary Shares (ADS), representing 68,506,400 ordinary shares, at a price of US$13.50 per ADS. The aggregate gross proceeds are expected to be approximately US$128.2 million. Based on the current exchange rate, this offer equates to a 14.4% discount of A$2.38 per share.

Zoono Group Ltd (ASX: ZNO)

The Zoono share price has dropped a further 5% to $1.36. Investors have been selling the antimicrobial solutions provider’s shares since the release of its first quarter update last week. In fact, today’s decline means the Zoono share price is down 26% since that update. Zoono, which sells antimicrobial hand sanitisers and sprays, reported first quarter sales of NZ$15 million. This was down 28.2% from the NZ$20.9 million it achieved in the fourth quarter of FY 2020.

More reading

• Why IDP Education, WiseTech, Zip, & Zoono shares are tumbling lower today
• Why the Zoono (ASX:ZNO) share price is sinking 9% lower today
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• 5 things to watch on the ASX 200 next week
• Why the SKYCITY share price jumped 23% in September

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts 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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I think that ASX tech shares would be a great place to invest $1,000 into a portfolio right now.

Technology companies have some really strong advantages compared to typical industrial businesses. They can produce high profit margins and expand very quickly because software can be replicated for very little cost. That means they can rapidly grow profit, which usually equates to good share price performance.

Here are two ASX tech shares I’d gladly buy with $1,000 today. They are actually the same two ASX shares I wrote about a year ago and continue to look like strong opportunities.

Redbubble Ltd (ASX: RBL)

Redbubble is an ASX tech share which is an online marketplace company for selling artist products including wall art, phone cases, masks and so on.

It’s the type of business that benefits strongly from network effects. It’s already built the e-commerce platform, so selling more products will strongly help cashflow and profit.

The company is growing at a fast rate. In the first quarter of FY21 the company reported marketplace revenue growth of $147.5 million which represented growth of 116%. Gross profit soared 149%.

It was two other metrics that were the most pleasing in my opinion. The ASX tech share generated $22.1 million of earnings before interest and tax (EBIT) and operating cashflow of $27.1 million (up 165% compared to the prior corresponding period).

I think the above numbers show that Redbubble has now reached a very pleasing profitability phase. The fact that gross profit grew so much faster than revenue shows that its margins can keep increasing at a solid rate.

As the one of the largest artist website businesses in the world, Redbubble can attract the most potential customers, which then attracts more potential sellers and so on. It’s a very helpful cycle.

There’s still plenty of growth potential because of the global shift to online shopping. Redbubble can steadily open new product lines as well, which will increase its potential market.

Its balance sheet looks solid with $85.4 million of cash at 30 September 2020.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is another ASX tech share that is looking like a really strong growth candidate in my opinion.

It facilitates digital giving, which is very useful in this era of COVID-19 social distancing and restrictions. Its main client base is large and medium US churches. Pushpay provides them with an app to connect with its congregation. Livestreaming functionality is particularly helpful.

The company is seeing enormous growth. In FY20 it grew revenue by 32% and its total processing volume rose by 39%. I think the company can continue to generate good double digit growth for many years to come.

Indeed, in FY21 alone the company is expecting to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to a range of US$50 million to US$54 million.

As I mentioned in my introduction, one of the most attractive things about ASX tech shares is how quickly their profit margins can grow. In FY20 Pushpay saw its gross profit margin improve from 60% to 65%. It also saw its EBITDAF margin grow from 17% to 22%. This will mean that more revenue falls to the bottom line in the coming years.

Pushpay is actually aiming for US$1 billion of revenue from the large and medium US church sector. If the ASX tech share achieves that goal then it would be substantially more profitable later this decade compared to FY20.

At the current Pushpay share price it’s trading at 41x FY21’s estimated earnings. But I think there’s more growth to come.

More reading

• Is the Redbubble Ltd (ASX: RBL) share price a buy after soaring 30% this week?
• 10 must-buy ASX shares to snap up before it’s too late
• Where I’d invest $10,000 in ASX shares for growth
• Brokers name 3 ASX shares to buy right now
• Why Beacon Lighting, Medibank, Redbubble, & Tyro shares are racing higher today

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. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 S&P/ASX 200 Index (ASX: XJO) has started the week in very strong form. In late morning trade the benchmark index is up 0.7% to 6,219.5 points.

Four shares that are climbing more than most today are listed below. Here’s why they are pushing higher:

Dicker Data Ltd (ASX: DDR)

The Dicker Data share price is up 5% to $8.89 following the release of its third quarter update. According to the release, the distributor of computer hardware and software has achieved revenue growth of 14.9% to $1,481.5 million for the nine months to 30 September. Things were even better on the bottom line, with net profit before tax up 28.3% to $60.8 million over the nine months.

South32 Ltd (ASX: S32)

The South32 share price is climbing almost 4% higher to $2.19. This follows the release of the mining giant’s first quarter update. South32 delivered production in line with expectations, which led to management reaffirming its full year guidance. In addition to this, its strong operating performance and financial position has allowed the company to resume its share buy-back program.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price is up 3.5% to $4.30 following the release of its weekly COVID-19 trading update. That update revealed that Tyro has processed $1.025 billion of transactions month to date. This is up 11% on the prior corresponding period. In addition to this, this morning Ord Minnett retained its accumulate rating and lifted its price target on Tyro’s shares to $5.00.

Uniti Group Ltd (ASX: UWL)

The Uniti share price has risen over 2% to $1.27 following its first quarter update. The telco reported record net operating cash flow of $10.5 million for the quarter. Management also revealed that key financial performance metrics for first three months of FY 2021 are above budgeted levels. This includes above-budget growth in new FTTP connections and activations.

More reading

• South32 (ASX:S32) share price up 3% on solid Q1 update
• 5 things to watch on the ASX 200 next week
• ASX 200 falls, Tyro (ASX:TYR) up on merchant deal
• Why Beacon Lighting, Medibank, Redbubble, & Tyro shares are racing higher today
• Tyro (ASX:TYR) share price shoots higher on Bendigo and Adelaide Bank (ASX: BEN) deal

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 Tyro Payments. The Motley Fool Australia owns shares of and has recommended Dicker Data 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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Shares in insurance software developer FINEOS Corporation Holdings plc (ASX: FCL) have soared almost 90% higher so far this year. Despite the market challenges posed by the COVID-19 pandemic, FINEOS has managed to achieve a number of impressive milestones in 2020, including signing the largest insurance company in the United States and recently acquiring software company Limelight Health, Inc.

FINEOS develops a suite of software for the life, accident and health insurance industries. Its AdminSuite platform is a centralised system that supports billing, claims and payments. Its customer-centric software automates and streamlines processes for insurance providers and can replace legacy insurance administration platforms.

In its FY20 results, Dublin-based FINEOS beat its own revenue targets, reporting growth in revenues of close to 40% year on year. Of the 87.8 million euros in total revenues in FY20, 27 million euros came from recurring subscriptions, while 58.3 million euros was services revenue from new clients and accelerated implementation and upgrades for existing clients. And despite the ongoing disruptions from COVID-19, the company is still optimistic for FY21, forecasting top line revenue growth of 20%, underpinned by 30% growth in subscription revenues.

The Limelight acquisition could help to rapidly accelerate the company’s growth forecasts. Silicon Valley-based Limelight Health is a leading provider of software for the United States insurance industry. The acquisition helps boost FINEOS’ presence in the US market, and it means that FINEOS can now leverage Limelight’s experienced US-based sales and marketing team to increase market penetration and brand recognition.

This also comes on the heels of FINEOS’ February announcement that it had signed the Prudential Insurance Company of America, the largest insurance company in the US. FINEOS is clearly sending the signal to the market that it views a US expansion as a key priority over the next 12 months.

Should you invest?

Along with other up-and-coming tech companies like Nitro Software Ltd (ASX: NTO), Bigtincan Holdings Ltd (ASX: BTH) and Megaport Ltd (ASX: MP1), I believe FINEOS Corporation is cementing itself as part of a new generation of young companies that could become the next WAAAX shares. Despite the upheaval caused by the pandemic, these junior companies have all found ways to thrive.

With a market capitalisation of a little over $1.5 billion, FINEOS has grown into a solid mid-cap stock. It is generating consistent subscription revenues and has a portfolio of top tier insurance companies as clients. It is taking on additional risk through a US expansion, however this is already showing results through key client wins. Plus, it has shown an appetite for strategic acquisitions that could complement its business model.

Despite challenging market conditions, I believe this company has laid a solid foundation for future growth. The FINEOS share price will be an exciting one to watch over the next 12 months.

More reading

• South32 (ASX:S32) share price up 3% on solid Q1 update
• Ampol (ASX:ALD) share price drops lower after Q3 update
• CIMIC (ASX:CIM) share price 5% higher after agreeing to sell 50% of Thiess
• 1 ASX share to buy for the WA housing boom
• What happened to the Mesoblast Limited (ASX:MSB) share price?

Rhys Brock owns shares of FINEOS Holdings plc, BIGTINCAN FPO, MEGAPORT FPO, and Nitro Software Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends FINEOS Holdings plc. The Motley Fool Australia has recommended BIGTINCAN FPO, FINEOS Holdings plc, MEGAPORT FPO, and Nitro Software 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 South32 Ltd (ASX: S32) share price has started the week in a positive fashion.

In morning trade the mining giant’s shares are up almost 3% to $2.17.

Why is the South32 share price pushing higher?

Investors have been buying South32’s shares on Monday following the release of its first quarter update this morning.

For the quarter, the company achieved alumina production of 1,315kt, aluminium production of 248kt, manganese ore production of 1,461kt, and metallurgical coal production of 1,651kt.

As a comparison, a note out of Goldman Sachs reveals that it was expecting production of 1,328kt, 248kt, 1,302kt, and 1,650kt, respectively. While this means it alumina production fell slightly short of expectations, its manganese made up for this with significantly better than forecast production.

This ultimately led to South32 delivering a US$70 million increase in its net cash position over the three months to US$368 million. This was despite a build in working capital as commodity markets improved.

Share buy-back to resume.

Pleasingly for shareholders, this strong operating performance and the further strengthening of its financial position, has allowed South32 to lift its on-market share buy-back suspension.

Its US$1.43 billion capital management program is 92% complete with US$121 million remaining to be returned to shareholders.

South32’s CEO, Graham Kerr, was very pleased with the quarter, particularly given the challenges it faces from operating in the current environment.

He commented: “Despite the health crisis, we have maintained annual production guidance at all operations. We delivered a 19 per cent increase in manganese ore production and a 22 per cent increase in metallurgical coal production.”

“With another quarter of strong operating performance behind us and the further strengthening of our financial position, we have lifted the suspension of our on-market share buy-back. Our capital management program has US$121 million remaining and recommencing our buy-back will deliver immediate value to our shareholders,” Mr Kerr concluded.

More reading

• 5 things to watch on the ASX 200 next week
• 2 ASX shares looking dirt-cheap today
• New Chinese government threat leaves these ASX mining stocks on tenterhooks
• ASX shares Tesla (NASDAQ:TSLA) needs to survive
• EcoGraf (ASX:EGR) shares up 72% in a week

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 Ampol Ltd (ASX: ALD) share price is trading lower following the release of its unaudited third quarter result this morning.

At the time of writing the fuel retailer’s shares are down 0.5% to $24.99.

How did Ampol perform in the third quarter?

The three months ended 30 September were once again tough for Ampol, which was formerly known as Caltex.

According to the release, on a replacement cost of sales operating profit (RCOP) basis, Ampol delivered third quarter RCOP earnings before interest and tax (EBIT) of $58 million. This was down 26.5% from the second quarter and 62.3% on the prior corresponding period.

RCOP excludes the unintended impact of the fall or rise in oil and product prices. The company believes this presents a clearer picture of its underlying business performance.

Things weren’t any better on the bottom line, with RCOP net profit after tax coming in at $24 million. This was down 40% from the second quarter and 74.4% from a year earlier.

What was dragging on Ampol’s performance?

The company’s Lytton refinery was the key reason for Ampol’s weaker profits during the third quarter.

Lytton posted an $82 million loss before interest and tax, which led to its Fuels & Infrastructure segment posting a $19 million loss.

This took the gloss off a strong performance by its Convenience Retail business, which delivered EBIT of $87 million. This was more than double what it achieved in the prior corresponding period ($41 million) and over triple its third quarter EBIT of $23 million.

Management advised that this was reflective of favourable industry retail fuel margins, strong shop performance, and solid management of controllable costs.

Ampol’s Managing Director and CEO, Matt Halliday, commented: “The resilient performance of our integrated business in the third quarter, particularly in Convenience Retail, was pleasing considering weak economic conditions and the continued impacts of COVID-19 on hydrocarbon demand. Our focus remains on optimising value across our integrated supply chain against prevailing market conditions to maximise value for shareholders.”

More reading

• Why ASX oil stock laggards are well placed to bounce in the COVID recovery trade
• Ignore EBITDA and P/E ratios? This fund manager does
• Why the Ampol (ASX:ALD) share price is on the rise today
• Macquarie says ASX value shares will outperform growth stocks from here

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 CIMC Group Ltd (ASX: CIM) share price is pushing notably higher on Monday morning.

In early trade the engineering company’s shares are up a sizeable 5% to $21.90.

Why is the CIMIC share price charging higher?

Investors have been buying the company’s shares after it announced that it has entered into an agreement with Elliott Advisors regarding the sale of a 50% equity interest in Thiess, the world’s largest mining services provider.

According to the release, Elliott Advisors is one of the oldest fund managers of its kind and manages more than US$40 billion in assets. This includes equity positions in private and listed companies in Australia and globally.

Thiess is a mining services provider that delivers open cut and underground mining in Australia, Asia, Africa, and the Americas. It provides services to 25 projects across a range of commodities.

The business has a diverse fleet of plant and equipment of more than 2,200 assets, a team of around 14,000 employees, and generates annual revenues in excess of $4.1 billion.

Transaction details.

The release explains that the price for Elliott’s 50% equity interest in Thiess implies an enterprise valuation of approximately $4.3 billion (based on 100% of Thiess). This is subject to certain adjustments.

The transaction is expected to generate a pre-tax gain of around A$2.2 billion for CIMIC, and a post-tax gain of around $1.4 billion.

Management notes that it will strengthen its balance sheet, reduce its factoring balance by approximately A$700 million, and its lease liability balance by approximately $500 million.

The transaction also includes customary future share transfer options. These include a potential initial public offering or sale to a third party, and an option for Elliott to sell its interest in Thiess to CIMIC between three and six years from completion.

CIMIC’s Group Executive Chairman, Marcelino Fernández Verdes, commented: “The sale agreement reflects Thiess’ ongoing strategic importance as a core activity for CIMIC. It capitalises on the robust outlook for the mining sector and, together with Elliott, we will pursue market opportunities in line with Thiess’ growth and diversification strategy.”

More reading

• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• These were the best performing shares on the ASX 200 last week
• ASX 200 rises, Cimic (ASX:CIM) share price climbs
• ASX 200 down 0.2%: Big four banks drop, CIMIC jumps, CSL slides lower
• Why ARB, CIMIC, Janus Henderson, & Netwealth shares are charging higher

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 national housing market is more fractured than it has probably ever been. Sydney rents have recently endured their steepest decline, although this likely won’t last. Meanwhile, the Perth rental market is again booming. In fact, the number of homes and units for rent has fallen to the lowest figure since the peak of the resources boom in 2012. Moreover, the Real Estate Institute of WA has revealed a housing boom with properties selling in less than a fortnight despite the pandemic. 

This is largely due to the number of West Australian expats who have returned home during the lockdowns. This is another area where WA differs from the rest of Australia. The very high mining content of its economy creates an international pull for WA business professionals across the world. Therefore the market was caught off guard when everyone came home at once and decided to stay.

Moreover, in the west, there is plenty of room, so people tend to want houses more than apartments. So the demand for properties to rent or buy is focused largely on detached or semi detached housing.

How big is the housing boom?

Despite all of the factors contributing to the WA housing boom, it is still a small market. I believe the boom is likely to have an impact on housing developers like Stockland Corporation Ltd (ASX: SGP), and Mirvac Group (ASX: MGR). However, these companies only have a portion of their portfolios in WA. Another housing company Ingenia Communities Group (ASX: INA) also holds a lot of rental stock in WA.

On the financial side, non-bank lender Resimac Group Ltd (ASX: RMC) has a corporate office in Perth. In addition, this company’s West Australian loan book stood at just under $1 billion in its FY20 annual report.

An effortless way to profit?

Peet Limited (ASX: PPC) develops properties nationally, but has 37.3% of its ongoing projects in Perth. Of all ASX shares, I believe Peet is probably the best positioned to capitalise on the WA housing boom. In addition, this small cap ASX share is also the largest, pure-play residential developer in Australia. The company had a difficult year due to COVID-19, yet still managed to increase sales by 43%. Along with a high 42% growth in the number of contracts in hand, the company also stands to gain from changes to lending laws. 

In a sign of increased productivity, Peet has approximately 70% of its entire land bank currently in development. Moreover, there is a continued focus on overhead management and other operational efficiencies.

More reading

• Look through short-term unpredictability for long-term ASX share price gains
• Why you may not need ASX REITs for dividends
• Why this Federal Budget is good for many ASX shares
• Own a slice of this fast-changing lending market
• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action

Motley Fool contributor Daryl Mather 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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After surging to a 52-week high of $5.70 by late September, shares in ASX biotechnology company Mesoblast Limited (ASX: MSB) have come crashing back down to earth this month. The company has shed close to 45% of its market cap in the last few weeks, after receiving an underwhelming response from the US Federal Drugs Administration (FDA) concerning its flagship treatment, remestemcel-L, marketed under the brand name RYONCIL. As of Friday afternoon, Mesoblast shares were trading at just $3.11.

The funny thing is that this has all happened before. Back in August, the Mesoblast share price plunged almost 40% after nervous investors sparked a sell-off, fearing a negative outcome from a meeting between Mesoblast and the Oncologic Drugs Advisory Committee (ODAC), an independent panel that advises the FDA. In that instance, the committee voted overwhelmingly that the available data supported the efficacy of RYONCIL in paediatric patients. Once the market learned of the positive outcome, the Mesoblast share price rebounded just as swiftly.

This time around, things haven’t worked out so well for Mesoblast. So, what is actually happening here?

Despite the advice from ODAC, the FDA stated that it would like Mesoblast to conduct at least one more study to prove the effectiveness of RYONCIL. This comes as a pretty heavy blow to Mesoblast, as the company had already been making preparations to launch RYONCIL in the US. These plans will now all need to be put on hold while Mesoblast conducts the additional study – this means potentially significant delays and possibly significant investment.

No wonder the market reacted with shock and investors decided to dump their shares.

But it’s also bad news for patients. RYONCIL is designed to treat various inflammatory diseases including chronic heart failure and graft versus host disease (GvHD). GvHD is a potentially life-threatening complication that can occur in up to 50% of cancer patients who have received a bone marrow transplant. Currently, there is no approved treatment in the US for GvHD in children under 12.

Mesoblast is now applying for an accelerated approval with the FDA, which could mean RYONCIL would be approved, but under the condition that a further study is conducted. And meanwhile, it is conducting a phase 3 trial using RYONCIL as a treatment for sufferers of acute respiratory distress syndrome (ARDS) brought on by coronavirus.

In a press release, Mesoblast CEO Dr Silviu Itescu said that the company is “working tirelessly to bring remestemcel-L to patients with life-threatening inflammatory conditions, including SR-aGVHD [steroid-refractory acute graft versus host disease] and COVID-19 ARDS.”

Where to from here?

I have to admit to being quite bullish on Mesoblast, so it’s disappointing that they haven’t come away from their meeting with the FDA with a better outcome, particularly after ODAC voted so resoundingly in their favour. However, this does show the extreme volatility that can occur in the share prices of companies like Mesoblast, where a great deal of their commercial viability is dependent on a single event.

That being said, I think Mesoblast is still definitely worth keeping on your watch list as a possible future growth stock. Their technology is cutting edge and they still have significant cash on hand after a capital raise back in May. However, in the meantime, perhaps your money would be better invested in more mature and diversified healthcare companies like ResMed CDI (ASX: RMD) or CSL Limited (ASX: CSL).

More reading

• Got a spare $10,000 to invest? Smart investors should buy these ASX shares
• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• 3 ASX shares to hold forever
• These are the 10 most shorted shares on the ASX
• 3 core holdings for a $100,000 ASX portfolio

Rhys Brock 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 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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This year will be a Christmas like no other. The year when “all of the ships come back to the shore“, as we sing in I Still Call Australia Home. A report from Credit Suisse Group analyst, Grant Saligari, predicts the nation’s population will swell by 4% at Christmas due to travel restrictions and the COVID-19 pandemic. In other words, an extra million people will be in Australia this Christmas, a phenomenon that I believe is very important for anyone considering which ASX shares to buy now. 

Not only have scores of us returned home from expat jobs and international lives, many more simply cannot travel over Christmas. In my home state of Western Australia, we are already feeling the impact of this as rents rise back to boom time prices. For investors, I believe the Christmas period presents a range of opportunities, but in particular, in the food and gift sectors.

Retail staples shares to buy

The first thing that comes to mind with more Australians within our borders is, of course, food. In this space, I think Coles Group Ltd (ASX: COL) is one of the better opportunities. Personally, I remain skeptical of Woolworths Group Ltd (ASX: WOW) shares after the company’s absurd decision to build the Masters franchise, and compete head to head with Bunnings. The Coles share price also has a lower price-to-earnings (P/E) ratio and higher trailing 12-month dividend yield than Woolies. Personally, I think Coles is the best choice of supermarket ASX shares to buy now. 

Having said that, I feel another good share to buy in the supermarket space is Metcash Limited (ASX: MTS). This retail conglomerate owns the franchised chain IGA, as well as other brands in liquor sales, hardware, and tool sales. However, the distributed ownership model makes campaigning and marketing difficult. Moreover, IGA in particular hasn’t nailed home delivery. However, it is still a respectable third force in supermarket retail, particularly in convenience shopping. 

Consumer discretionary shares

I think that one of the major discretionary shares to consider buying for the Christmas period is Super Retail Group Ltd (ASX: SUL). This company has a great collection of brands encompassing outdoor equipment, personal sports equipment and clothing, as well as the car service company – SuperCheap Auto. All good Christmas gift ideas for a swollen population. 

Some other consumer discretionary companies to watch include jewellery chain Michael Hill International Ltd (ASX: MHJ), fast fashion store Lovisa Holdings Ltd (ASX: LOV), and women’s retail clothing outlets City Chic Collective Ltd (ASX: CCX). All of these are likely to see increased sales volumes over the Christmas period resulting from both gift buying and personal shopping.

For me however, I have long been a fan of Accent Group Ltd (ASX: AX1), and I think this is a great discretionary retail ASX share to buy for Christmas. As a father of two teenage kids, let me assure you that kids love sneakers. Also, price doesn’t seem to faze them when it comes to writing up their Christmas lists. From the market low point on 23 March, the Accent Group share price has risen by 226.7%. It is currently selling at a P/E ratio of 18.4, and has a trailing 12-month dividend yield of 5.05%.

More reading

• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• Is it time to go all in on ASX shares?
• 3 core holdings for a $100,000 ASX portfolio
• These ASX dividend shares could be strong buys for income investors
• Where I’d invest $10,000 in ASX shares for growth

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Accent Group. 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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