The S&P/ASX 200 Index (ASX: XJO) is fighting hard to maintain its winning streak on Monday. In late morning trade the benchmark index is up slightly to 6,105.3 points.

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

The Evolution Mining Ltd (ASX: EVN) share price is up 4.5% to $6.16 following the release of its first quarter update. The gold miner delivered a result ahead of expectations, with production coming in at 170,021 ounces. This was achieved with an all-in sustaining cost of $1,198 per ounce and an all-in cost margin of $871 per ounce. As a result, Evolution generated operating mine cash flow of $272.3 million for the quarter.

The Link Administration Holdings Ltd (ASX: LNK) share price has jumped almost 25% higher to $4.97. This follows news that the administration services provider has received a takeover approach from a consortium comprising Pacific Equity Partners, Carlyle Group, and their affiliates. An offer of $5.20 cash per share has been tabled. Major shareholder Perpetual Limited (ASX: PPT) intends to vote in favour of the proposal.

The Newcrest Mining Limited (ASX: NCM) share price has risen 3% to $32.24. Investors have been buying Newcrest and other gold miners on Monday following a solid rise in the gold price on Friday night. In addition to this, analysts at Citi upgraded the company’s shares to a buy rating with a $37.00 price target this morning. This follows news that its board has approved the expansion of its Cadia operation.

The NEXTDC Ltd (ASX: NXT) share price is up 2.5% to $13.10. This morning the data centre operator announced a new $1.5 billion debt facility. This debt facility has lowered the company’s cost of debt notably and positioned it for growth. It is also worth noting that some of the facility is multi-currency. This could be a sign that NEXTDC has its eyes on expanding internationally in the near future.

More reading

• Link (ASX:LNK) share price rockets 26% higher on takeover approach
• NEXTDC (ASX:NXT) share price hits record high on debt update
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Qantas Airways Limited (ASX: QAN) share price has plummeted by around 40% year to date. On top of this, the national airline has recently announced it is terminating its 30-year sponsorship of Rugby Australia due to the deteriorating market conditions.

With all the trouble the Australian aviation industry is facing this year, namely the debt crisis, outbound travel restrictions and labor disputes, should investors consider buying Qantas shares?

Will COVID-19 permanently impact Qantas?

In Qantas’ recent FY20 Chairman’s report, Chairman Richard Goyder AO commented that “Aviation is all about connecting people and place, which is exactly what the public health response to COVID-19 is designed to avoid.”

There is no doubt that the COVID-19 pandemic is hitting the aviation industry hard, and the current crisis is worse than the problems Qantas faced in 2019 (namely, cost of fuel and a low Australian dollar). With the restrictions on international and domestic travel, the airlines are grounded, and the significant 22% drop in passenger revenue since June 2019 has hit Qantas’ balance sheet hard.

Can the business revive itself?

One of the most critical business indicators in the aviation industry is the cost of available seat kilometres (CASK). This is used to measure the unit cost expressed in cash value to operate each seat for every kilometre.

CASK has increased 11% to 8.87 since FY19 as a result of rising operational costs and less available seats due to pandemic restrictions. Qantas has a difficult time in controlling its CASK given the high revenue volatility from a range of external factors, including fluctuating exchange rate movements and higher fuel cost.

However, the Morrison Government announced a $165 million bailout plan earlier in April to keep the airline afloat. Furthermore, Qantas conducted a successful $1.9 billion capital raising via institutional investors in July, which demonstrates that investors still see equity value in Qantas. This bodes well for the airline’s future.

Three-year recovery plan to keep the iron bird alive

While the economic outlook still looks skinny, Qantas has decided to focus on cost cutting given its limited opportunity to generate income in the current environment.

It is clear to me that the coronavirus pandemic is pushing Qantas into a corner, so this cost cutting is probably the best defensive strategy the national airline can do to manage further downside risks at the moment.

While Qantas turned to the private placement market to shore up its balance sheet, the airline also launched a ‘flight to nowhere’ program in September to maintain its cash flow and keep its pilots working. The plane takes off and lands at the same airport and has proved popular – the first of these 7-hour routes around the country saw 134 seats sold out in 10 minutes.

Foolish takeaway

It may seem attractive for short-term traders to buy Qantas as it looks like a good bargain based on its share price. However, I think it will take a substantial effort for Qantas to return to its former glory.

With the continual refusal of the Queensland and Tasmania premiers to open up state borders in the near future, I would say the negative sentiment has not been fully priced in yet, and perhaps Qantas will also need to resume its dividend payment to further restore investors’ confidence in the long run. 

More reading

• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump
• Why Costa, Qantas, Santos, & Westpac shares are storming higher today
• Leading broker upgrades Qantas (ASX:QAN) shares to buy rating
• 5 things to watch on the ASX 200 on Monday
• The ASX shares that fund managers were buying this month

Motley Fool contributor MWUaus 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

People are flocking to Netflix (NASDAQ: NFLX) as many entertainment alternatives worldwide have been temporarily suspended because of the pandemic. Demand for in-home entertainment is surging, and Netflix has been at the forefront, providing viewers with a vast library of thousands of titles and reliable service throughout the lockdowns. 

The company reports its third-quarter results on 20 October. Here are three things to look for when Netflix releases earnings.

Subscriber growth is fueling profits for Netflix

First and foremost, investors will want to look at subscriber growth in the third quarter. In the first half of 2020, Netflix added a total of 26 million paid subscribers, nearly matching the additions seen in all of 2019. This led the company to tamp down expectations in the latter half of the year and forecast sequential member growth of 2.5 million in the third quarter. However, with coronavirus cases still surging in many regions of the world, it is likely the company will exceed its guidance. As of 30 June, the company had a massive base of 193 million subscribers worldwide.

Investors should also keep an eye on revenue growth. In the second quarter, revenue increased 24.9% year over year. For the current period, Netflix expects revenue to grow 20.6%, which would be the lowest rate of growth since the second quarter of 2013. Notably, as of 30 June, Netflix offered plans from as low as $3 per month to more than $20 per month, depending on the country and the tier of service purchased. Overall, average revenue per user (ARPU) was $10.80 last quarter – up ever so slightly from the ARPU of $10.76 in the prior-year period. With most of the global economy trying to battle a pandemic, increasing prices do not appear imminent.

Lastly, look for management to discuss the state of content creation. Many productions were put on pause to help slow the spread of the coronavirus. The combination of revenue growth and low content expenses led to Netflix reporting $899 billion in free cash flow in the most recent quarter. Additionally, the company’s operating profit margin increased nearly eight percentage points year over year to 22.1%.

Netflix can benefit from continued growth and expanding profitability as long as consumers remain hesitant to travel, dine out, or do anything else that may expose them to COVID-19, making this consumer goods stock one to watch. As millions of people cut the cord and turn to streaming for their digital entertainment, the challenge for Netflix will be fighting off the new competition.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Netflix will surge 28% to $650, according to this analyst
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Parkev Tatevosian 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 Netflix. The Motley Fool Australia has recommended Netflix. 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 article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has fought back from a soft start and is edging higher. At the time of writing, the benchmark index is up 0.1% to 6,109.2 points.

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

The Event Hospitality and Entertainment Ltd (ASX: EVT) share price is down 5% to $9.10. This morning the entertainment company revealed that the sale of its German cinema business to Vue International has hit a stumbling block. Event advised that Vue is seeking to renegotiate the terms of the transaction.

The Flight Centre Travel Group Ltd (ASX: FLT) share price has fallen 1.5% to $14.06. This is despite there being no news out of the travel company. However, an uptick in COVID 19 cases in Victoria and New South Wales appears to have investors concerned that border restrictions could weigh on travel markets longer than hoped.

The Oil Search Limited (ASX: OSH) share price has dropped almost 2.5% lower to $2.82. Investors have been selling Oil Search and other energy shares on Monday after a pullback in oil prices on Friday night. The price of oil came under pressure after oil workers in Norway ended their strike. Nevertheless, oil prices still managed to rise by 9% over the week.

The Orica Ltd (ASX: ORI) share price has dropped 3.5% to $16.06. This follows the release of a business update by the commercial explosives company. This morning Orica advised that its second half Ammonium Nitrate volumes will be at the low end of its guidance range and down 15% on the expected pre-COVID-19 volumes. In light of this, the company expects FY 2020 underlying earnings before interest and tax (EBIT) to be slightly above $600 million. This compares to EBIT of $665 million in FY 2019.

More reading

• Why it is important to diversify your ASX portfolio and how you can do it
• 5 things to watch on the ASX 200 on Thursday
• A2 Milk and Mesoblast were among the most traded shares on the ASX last week
• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher
• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Mount Gibson Iron Limited (ASX: MGX) share price has jumped higher today following the release of its first quarter results for FY21.

At the time of writing, the Mount Gibson share price is swapping hands for 74 cents, up 2.76% in early morning trade. This compares to the All Ordinaries Index (ASX: XAO) which is down 0.1% at 6,308 points.

How did Mount Gibson perform in Q1?

Mount Gibson reported a solid Q1 FY21 result for the period ending September 30. The iron ore producer reached sales of 1.4 million wet metric tonnes (mwmt). This comprised of 0.7 mwmt of high-grade ore at its Koolan Island, and 0.7 mwmt of low-grade material from Mid-West.

Total ore sales revenue equated to $129 million free on board (FOB), reflected upon a stronger Australian dollar against the greenback.

Mount Gibson recorded cash on hand for the ending period at $445 million, compared to $423 million from the prior period.

Group cash flow for the quarter came in at $32 million, mostly operating expenses from Koolan Island’s advanced waste stripping investment.

Unit cash costs stood at $56/wmt FOB, an improvement from the $66/wmt recorded prior its waste stripping project.

The company also completed a new airstrip in Koolan Island, with first flights schedule this month. The new infrastructure is expected to deliver significant efficiency and cost reduction benefits to its Koolan Island operations.

What did management say?

Mount Gibson CEO Peter Kerr welcomed the results, saying:

Mount Gibson has made a positive start to the new financial year with improved quarterly ore production and sales, completion of the new Koolan Island airstrip, ongoing low-grade ore sales in the Mid-West and, recently, declaration of Ore Reserves for the initial stage of the Shine Project.

We are also tracking to achieve first ore sales from the Shine Project in mid-2021, subject to finalising the last commercial and permitting requirements, which will extend our Mid-West business by at least two years and potentially longer should market conditions remain supportive.

Outlook

Mount Gibson advised it would focus on increased mining movements at Koolan Island to complete its planned open pit waste stripping phase. In the Mid-West, the company will look to finalise its low-grade sales from Extension Hill.

Mount Gibson expects ore sales guidance for 2020/21 of 2.8-3.3 mwmt at a group cash cost between $60-$65/wmt FOB.

In addition, the company is pushing ahead for stage 1 of the Shine Iron Ore project, targeting first sales in mid-2021.

About the Mount Gibson share price

It has been a bumpy road for Mount Gibson shareholders, with its share price swinging in the past 6 months. The company reached a 52-week high of $1.03 at the start of the year and fell to a year low of 54 cents.

More reading

• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Optiscan (ASX:OIL) share price flat on FDA update
• The Mount Gibson (ASX:MGX) share price is falling today
• What’s driving the PayGroup (ASX:PYG) share price higher today
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Link Administration Holdings Ltd (ASX: LNK) share price has been an exceptionally strong performer on Monday.

In morning trade the administration services provider’s shares are up a sizeable 26.5% to $5.05.

Why is the Link share price surging higher?

Investors have been fighting to get hold of the company’s shares on Monday after it revealed that it has received a takeover approach.

According to the release, Link has received a conditional, non-binding indicative proposal from a consortium comprising Pacific Equity Partners, Carlyle Group, and their affiliates.

The consortium has offered to acquire 100% of the shares in Link by way of a scheme of arrangement with an indicative cash price of $5.20 per share. Management advised that the proposal also includes a reference to potential scrip alternatives.

The consortium’s offer implies a 30% premium to the company’s last close price and assumes no further dividends, distributions, or reductions in capital being paid.

What now?

The consortium’s proposal is subject to a number of conditions. These include due diligence, negotiation and execution of transaction documentation, securing debt financing, final investment committee approval, and certain regulatory and other approvals. The latter includes the Foreign Investment Review Board.

Major shareholder Perpetual Limited (ASX: PPT), which holds a 9.65% stake, is happy with the proposal. It has stated that it intends to vote its shares in favour of the proposal at a price of no less than $5.20, should one proceed.

Though, it notes that this statement is subject to the absence of a superior proposal and Perpetual continuing to hold its shares on the date of any meeting.

The Link board hasn’t yet made a decision on whether to support the proposal. It is considering the offer and is obtaining advice from its financial and legal advisers.

As a result, it has advised shareholders that they do not need to take any action in relation to the proposal at this point. It also warned that there is no certainty that the discussions with the consortium will result in any transaction.

In the meantime, Link will inform shareholders of any meaningful developments when they happen, as required under its continuous disclosure obligations.

More reading

• 5 things to watch on the ASX 200 next week

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 Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last month, US tech megastocks spearheaded a global market sell-off, following the US Federal Reserve’s promise that interest rates will stay low through to 2023.

The ASX followed Wall Street’s volatile technology sell-off in mid-September. But, while many technology shares were plummeting, the Nearmap Ltd (ASX: NEA) share price has increased by more than 4% in the few weeks after the news.

Let’s look at how this company adds value to its clients in the Australia and New Zealand (ANZ) and North American markets, and whether the Nearmap share price could be a buy.

Unique intelligence product

This Australian-based aerial imagery technology and location data company owns highly sensitive data relating to location intelligence with customers across Australia, the US, Canada and New Zealand. Nearmap operates a subscription as a service (SaaS) business model, which means it is able to grow globally and replicate at scale.

North American market as the next growth driver

Despite the Nearmap share price reaching a 2-year low at $1.01 per share in March this year, the resilience of the company’s share price was demonstrated when it rebounded to between $2.30 and $3 per share, driven in part by it reaching an annual contract value (ACV) milestone of $102 million in May.

Unfortunately, the COVID-19 pandemic and the downgrade in value of 3 Nearmap’s contracts in FY20 caused a revision to its total contract value down to $102 million–$110 million, lower than its forecasted range of $116 million–$120 million. This resulted in a slowdown in Nearmap’s ANZ market growth, compared to the improving North American market.

After a revamp of its sales strategy against the backdrop of macroeconomic uncertainty, Nearmap has enjoyed the tailwind of increasing roofing, insurance and government business contracts in the US – which make up 40% of its group ACV portfolio.

There are more opportunities for the business to leverage its existing licensed technology to serve roofing geometry to partners in the roofing and insurance industries in the US. This is a huge market as there is an increase in frequency of severe weather, which drives the demand of such services.

Fundraising to support growth

To support the expansion plan mentioned above, in September Nearmap completed an institutional placement and further share purchase plan to raise $72.1 million and $20 million, respectively.

While the economic outlook in 2020 looks different from 2016 – when Nearmap banked $20 million after placing 28.6 million new shares to sophisticated, professional and institutional investors at the price of $0.70 per share – Nearmap is trying to replicate its success through entering the North American markets and develop more advanced technology.

In the past, Nearmap focused on creating not only high resolution 2D and oblique imagery but also natural colour point clouds and textured 3D meshes. Now in 2020, Nearmap has a plan to accelerate growth and roll out its Hyper Camera3 System to capture more accurate vertical imagery in adverse conditions.

Is the Nearmap share price a buy?

In my view, Nearmap is still doing well in keeping a positive growth rate of 11% in average revenue per subscriber in FY20 amid COVID-19.

The business is also growing very quickly and has a competitive advantage of being able to cover not just the metropolitan areas, but also the remote suburbs for commercial usage, as opposed to Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)’s Google Earth.

I believe the current Nearmap share price of $2.48 (at the time of writing) looks attractive, particularly given the company’s growth prospects and plans to further commercialise its high tech products in the North American regions.

More reading

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• Is this 1000% runner the next Nearmap (ASX:NEA) share price?
• Will ASX media stocks get a $1.4 bn Google boost?
• Why EOS, Jumbo, Nearmap, & OceanaGold shares are dropping lower today
• ASX investors were buying Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) shares last week

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Miles Wu 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 Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The NEXTDC Ltd (ASX: NXT) share price is on the move on Monday following the release of an update.

At the time of writing, the data centre operator’s shares are up almost 3% to a new record high of $13.10.

What did NEXTDC announce?

This morning NEXTDC provided the market with an update on its debt facilities.

According to the release, the company has entered into a new Syndicated Facility Agreement with the likes of Credit Suisse, HSBC, National Australia Bank Ltd (ASX: NAB) and Natixis to arrange and underwrite $1.5 billion in senior debt facilities.

These senior debt facilities will be split across three tranches, each with a tenor of five years. They comprise an $800 million term loan facility, a $400 million capital expenditure facility, and a $300 million revolving multi-currency credit facility.

Management notes that the new facilities provide a significant improvement in NEXTDC’s weighted average cost of debt and duration profile. They also come with materially improved financial covenants and flexibility.

NEXTDC intends to utilise the term loan facility to redeem all of its unsecured notes on issue at the next interest payment date of 9 December 2020.

The company’s CEO and Managing Director, Craig Scroggie, commented: “We are very pleased and encouraged by the support from our existing and new lending partners to the NEXTDC growth story. The new debt facilities provide NEXTDC with greater funding firepower as we continue to execute on our development pipeline in the coming years to satisfy growing customer demand.”

“We are grateful for the support provided by our fixed income investors to the Company through what was a critical phase of our growth. Our ability to achieve A$1.5 billion in Senior Debt Facilities is a testament to the maturity of the Company today,” Mr Scroggie added.

More reading

• Why NEXTDC (ASX:NXT) and these ASX shares are hitting new highs
• Top ASX growth shares to buy in October 2020
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• Where to invest $10,000 into ASX shares next week
• Where to invest $20,000 into ASX shares immediately

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. 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 S&P/ASX 200 Index (ASX: XJO) is on the verge of breaking out of its 5725 to 6200 point trading range. The job centric federal budget, recovery of United States president Donald Trump and additional stimulus packages, not just in the US but globally, could push the markets even higher. Here are 2 ASX 200 tech shares that I wouldn’t want to miss if the market rallies. 

2 ASX 200 tech shares I’m keeping a close eye on

1. Pointsbet Holdings Ltd (ASX: PBH) 

The PointsBet share price jumped an eye watering 80% following the announcement of its partnership with NBCUniversal last month. The company’s share price has held its ground amidst a volatile market in September and in light of a significant A$303 million capital raising at $6.50 per share to fund its NBCUniversal partnership.

The US sports betting landscape continues to evolve in favour of the PointsBet business. Illinois, for example, with its six retail sportsbooks and three online platforms generated a combined handle of nearly US$140 million, according to the Illinois Gaming Board. This US$140 million more than doubled the combined US$61.7 million handle it reported in the months of March, June and July. 

The PointsBet business continues to stay on its feet with the announcement of a sportsbook content deal with Genius Sports Group, becoming the first sports betting operator in the US to adopt streaming on its app. PointsBet will add thousands of live streams across a variety of sports and geographies, complete with official data-powered in-game pricing for every match. This type of innovation in a young market and the company’s first mover advantage could better position PointsBet against larger US bookmakers such as Draft Kings and Fan Duel. 

Morgan Stanley and JP Morgan estimate that the US sports betting and iGaming market will balloon to a potential combined 2025 market of US$12 billion. This is a significant revenue opportunity and PointsBet is positioned front and centre to take its bite. 

2. Tyro Payments Ltd (ASX: TYR) 

Tyro is Australia’s largest EFTPOS provider outside of the big four banks, providing tailored EFTPOS, business loans and banking solutions that support over 32,000 Australian businesses. Beyond credit, debit and EFTPOS card acquiring, it also offers Medicare and private health fund claiming and rebating services. 

I believe Tyro represents a comeback story following a very challenging year, particularly for its merchants with the impact of COVID-19 and bushfires. For the first half of the year, transaction values were up 30% over 1H19. This momentum continued into January and February 2020 with year-to-date transaction value growth up to February 2020 lifting 29% over the comparable period. However, the introduction of mandatory lockdowns across Australia from mid-March, saw its overall transaction value growth rate moderate back to 15% for the full year. This translated to an 11% increase in revenue to $210.7 million. 

The anticipated relaxation of lockdown measures in Victoria could be a catalyst for an improvement in the Tyro share price and its transaction volumes. Furthermore, this ASX tech share has made significant strides into additional fintech enabled business solutions. These include the release of new banking products such as a merchant cash advance as a loan offering for all Tyro merchants, a pilot of a new term deposit account for Tyro merchants, a payment and rebating solution for health practitioners and least cost routing to reduce costs for merchants.

More reading

• “Incredible surge” in Pointsbet (ASX:PBH) share price appears justified according to one of the country’s best performing funds
• 2 ASX tech shares I’d buy with $10,000
• Why Flight Centre, OneVue, Paradigm, & PointsBet shares are charging higher
• PointsBet (ASX:PBH) share price in focus after U.S. update
• Is it too late to buy the PointsBet (ASX:PBH) share price? 

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd and Tyro Payments. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Bapcor Ltd (ASX: BAP) share price has stormed to a record high on Monday after the release of its first quarter update.

At the time of writing the automotive aftermarket parts distributor’s shares are up 6% to $8.08.

How did Bapcor perform in the first quarter?

According to the release, Bapcor has started FY 2021 strongly despite the negative impact of Government-imposed restrictions in Victoria and Auckland.

In fact, all of Bapcor’s businesses have continued to perform extremely well and delivered solid growth during the first quarter in comparison to the prior corresponding period.

For the three months ended 30 September, Bapcor’s revenue was up 27% compared to the first quarter of FY 2021. The key drivers of this growth have been its Retail and Specialist Wholesale businesses.

The Retail business has delivered a 47% increase in revenue thanks to Autobarn same store sales growth of 36% and AB Company same store sales growth of 50%.

The Specialist Wholesale business reported a 45% increase in revenue. This was partly due to acquisitions, with revenue up 18% excluding them.

This growth was supported by a 6% increase in New Zealand revenue and a 10% lift in Burson Trade revenue. The latter was driven by a 7.7% increase in same store sales. Excluding its Victorian stores, Burson Trade same store sales were up 17%.

Bapcor’s Chief Executive Officer and Managing Director, Darryl Abotomey, commented: “We are very pleased with the start to the FY21 financial year, despite the impact of the government imposed restrictions. Our talented team members have worked hard under challenging circumstances and delivered an exceptional result for the quarter.”

What is driving Bapcor’s strong growth?

Management notes that the automotive aftermarket is a resilient industry and historically has performed strongly in difficult economic circumstances.

It feels that recent trading is another example of its resilience, which has been assisted by the increase in sales of second hand cars, reduction in use of public and shared transport modes, and government stimulus.

Outlook.

Pleasingly, the company expects the impacts of COVID-19, including the expected increase in domestic tourism and increased use of vehicles, to continue to drive its businesses.

In light of this, Bapcor is continuing to invest in its various businesses. This includes through information technology, marketing, process and system upgrades, and capital investment in facilities to increase its footprint and drive improved efficiencies.

And while these investments will increase its cost base, management expects it help underpin further profit growth in the future.

Looking ahead, it advised that it is expecting to report a strong first half result in February. However, it has warned that the second half remains unclear due to the current economic uncertainties and any potential government restrictions. As a result, it is not in a position to provide earnings guidance for the full year at this stage.

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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 Bapcor. 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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