The Telstra Corporation Ltd (ASX: TLS) share price is at a new 52-week low. Today, Telstra shares have fallen another 0.71% and are trading at $2.78 at the time of writing. That’s a new low for Telstra and quite a remarkable move, considering Telstra shares didn’t even fall below the $3 mark during the share market crash back in March and April. The Telstra share price hasn’t touched levels under $2.80 since December 2018.

Telstra shares are now down 22% year to date, and nearly 30% off of the current 52-week high of $3.94 that was made back in January. That doesn’t look too crash hot against the performance of the broader market.

The S&P/ASX 200 Index (ASX: XJO) is now down 12.9% year to date, meaning Telstra has significantly underperformed the ASX 200 in 2020 so far. That’s pretty astounding, considering Telstra is one of the more stable ASX blue chip shares and has been relatively unaffected by the coronavirus pandemic, at least compared with other ASX blue chips like the big four banks.

So what’s going on with the Telstra share price?

Why Telstra shares are at a new 52-week low

In my opinion, what we are seeing with the Telstra share price is an institutional (read: pension funds and fund managers) rotation of capital out of the company. Put another way, no one wants to own Telstra shares right now, or at least no one with enough money to move the markets. This often happens when an ASX share is on the nose and its outlook isn’t too exciting for at least the next year.

This all comes down to Telstra’s full-year earnings report for FY2020, in my view. In the report, Telstra hit its earnings guidance but also implied that its current dividend of 16 cents per share would come under pressure next year if the company sticks with an earnings payout ratio dividend policy. Currently, Telstra aims to pay out 70–90% of underlying earnings as dividends. Since Telstra is forecasting earnings to come in at below 16 cents per share in FY2021, many investors are assuming that this means a dividend cut is on the cards next year.

Is the market right on this one?

However, I’m not despairing. If Telstra moves to a free cash flow policy rather than using earnings, I think the company could comfortably cover the dividend in FY2021. I think investors are unnecessarily panicking with Telstra right now, and thus, we could be seeing a decent buying opportunity.

Consider this: if Telstra keeps its 16 cents per share payouts next year, the shares at today’s prices are offering a forward dividend yield of 5.76%, or 8.23% grossed-up with Telstra’s full franking. That’s not a guaranteed yield, of course. I could well be wrong on Telstra’s dividend for next year. But I’m not even considering selling my Telstra shares, for whatever that’s worth.

More reading

• Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22
• ASX 200 down 0.95%: Mesoblast crashes lower on FDA update, Afterpay surges higher
• Why WAAAX shares like Afterpay (ASX:APT) and Xero (ASX:XRO) are surging
• Why the Domain (ASX:DHG) share price is hot property today
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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 Over the Wire Holdings Ltd (ASX: OTW) share price has been a very strong performer on Friday.

In afternoon trade the telecommunications, cloud, and IT solutions provider’s shares are up 14% to $4.87.

At one point today, the Over the Wire share price was up as much as 17% to a record high of $5.00.

Why is the Over the Wire share price rocketing higher?

Investors have been buying the company’s shares after it announced a binding agreement to acquire all of the shares in Digital Sense Hosting.

According to the release, Over the Wire has agreed an upfront consideration of $27 million. This comprises $21.6 million in cash and $5.4 million in Over the Wire shares.

It is worth noting that these shares are priced at a sizeable discount of $3.64 per share. Management explained that this was the 10-day volume weighted average price when it first signed a letter of intent.

The cash component will be fully funded by an institutional placement of $20 million and a $5 million share purchase plan. These will be priced at $4.00 per share, which represents a 6.1% discount to its last close price.

In addition to this, Digital Sense is entitled to receive further deferred consideration of up to $12 million (up to $7 million in FY 2021 and up to $5 million in FY 2022) based on achieving agreed targets.

For the 12-month period to 30 June 2020, Digital Sense Hosting recorded revenue of approximately $18.3 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately $5.4 million.

This means the upfront consideration of $27 million represents a valuation of 5 times historical FY 2020 EBITDA.

What is Digital Sense Hosting?

Digital Sense Hosting is a high-quality cloud business that provides a customisable and scalable cloud offering to Enterprise and Government customers.

Management notes that it introduces further solution capability in the areas of Infrastructure as a Service (IaaS), Desktop as a Service (DaaS), Storage as a Service (STaaS), and Data Protection as a Service (DPaaS).

Furthermore, its extensive cloud offering gives the company cross sell opportunities to existing Over the Wire customers. It also offers cross sell opportunities of its own solutions to Digital Sense customers.

In light of this, its high levels of recurring revenue, and strong margins, the acquisition is expected to be earnings accretive.

More reading

• Forget the tech boom, these ASX shares are primed for the recovery trade
• Why Beach, Fortescue, Mesoblast, & SeaLink shares are tumbling lower
• Is the Carsales (ASX:CAR) share price a good buy?
• ASX 200 down 0.95%: Mesoblast crashes lower on FDA update, Afterpay surges higher
• Why Afterpay, Genetic Signatures, Qube, & Serko shares are charging higher

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 Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire 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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Even if you only sporadically catch up on the financial news, you’ll know the headlines in 2020 have been dominated by stories of booming ASX tech share prices.

And for good reason.

The measures we’ve taken to mitigate the spread of COVID-19 — working, shopping and socialising from home — have turbocharged the adoption of new technologies. In fact, the experts tell us, developed nations like Australia have embraced 5 years’ worth of technology changes in just a matter of months.

Little wonder then that the tech-heavy Nasdaq Composite (NASDAQ: .IXIC) is up 65% since 23 March. And that the S&P/ASX All Technology Index (ASX: XTX) — which tracks 50 of Australia’s leading and emerging technology shares — is up an eye-popping 107% since 23 March.

And these gains come despite both indexes retracing some over the past month. The Nasdaq is down 6% from 2 September. And the ASX All Tech index down 4% since 25 August. Though both are again trending higher this past week.

Now despite these strong gains, well-placed tech shares almost certainly will see more share price gains over the mid to long term. And if you don’t already own some, you should strongly consider adding some to your portfolio.

But with all the focus on technology companies, many investors have been turning a blind eye towards a group of shares that I believe are well-positioned for strong gains during the recovery trade.

Romano Sala Tenna, portfolio manager at Katana Asset Management, had this to say on the rather lopsided recovery to date (as quoted by the Australian Financial Review):

I’m surprised it hasn’t been more widespread to some of the cyclical laggards – some of the REITs, some of the industrials, travel, retail… [W]e are going to see some of these laggards recover. Barring a third wave, that’s probably the big trade for next quarter: the recovery trade.

Follow the money trail

Like in most every other developed nation across the world, Australia’s government is pulling out all the stops to keep the economy afloat during the global pandemic. And to have it primed for a strong rebound once the coronavirus is vanquished, or at least brought under global control.

Spending on new infrastructure projects is high on governments’ lists. The Canadian Government, for example, just promised a new C$10 billion (AU$9.5 billion) infrastructure program. This includes C$2 billion for large-scale, energy-efficient building retrofits.

Balanced budgets be darned.

We’ll have to wait until Tuesday 6 October for confirmation on some of the finer details for Australia’s new stimulus plans. That’s when Prime Minister Scott Morrison will address the National Press Club on the upcoming budget. But between government spending packages and new private investment, there are going to be billions of new dollars flowing into fast tracking Australia’s digital economy and billions more flooding into ‘shovel ready’ infrastructure projects.

While the new funding for digital technologies is sure to offer a tailwind for ASX tech shares, it’s the lagging infrastructure shares that I believe deserve your attention today.

Two ASX shares to ride the recovery trade

There are a number of companies, exchange-trade funds (ETFs) and real estate investment trusts (REITs) you can invest in to capture the share price gains they’re likely to enjoy on the back of massive new government infrastructure spending and accommodative tax policies.

Two that I believe are particularly well positioned are James Hardie Industries plc (ASX: JHX) and Brickworks Limited (ASX: BKW).

James Hardie develops, manufactures and distributes fibre reinforced cement building products. The company pioneered the modern fibre cement product that today is used throughout the global building industry. Its wide range of products are used across new housing constructions, renovations, manufactured housing and many industrial applications.

The James Hardie share price took a sharp fall on 11 February, from what was then an all-time high. The share price plunged 52% by 19 March. But the rebound has been even more remarkable. Since that low the share price is up 118%, at the time of writing. And year to date, the share price is well into the green, up 21% and trading just below yesterday’s new record highs.

With a likely boom coming in residential and commercial construction over the mid term, I believe the James Hardie share price could run much higher from here.

Brickworks finds itself in a similar sweet spot. The company specialises in property, investments, and building products for the residential and commercial markets here in Australia as well as in the United States. It also has a major holding in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which in turn has a significant stake in Brickworks. Brickworks also owns 50% of an industrial property trust with Goodman Group (ASX: GMG).

The Brickworks share price has been trending higher for decades, hitting an all-time high on 24 January. From there, it plunged 41% through to 22 April before rebounding 59% from that low. While still below its record high, year to date the Brickworks share price is up 4.5% at the time of writing. The company also pays an annualised dividend yield of 3.0%, fully franked.

The Motley Fool’s own Scott Phillips has been keen on Brickworks since May 2015, when he first recommended it to members of his Share Advisor service. Since then, the share price is up 78%. Scott again recommended Brickworks shares in May 2019. The share price is up 18% since that second recommendation.

And, in case you’re wondering, Scott maintains an active buy recommendation at the current Brickworks share price.

More reading

• 2 ASX shares to buy for rock solid retirement income
• 3 strong and reliable ASX dividend shares for October
• 5 ASX shares held by leading fund managers
• These are the ASX blue chip shares I’d buy today
• 2 outstanding ASX shares to add to your retirement portfolio

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a disappointing note. At the time of writing the benchmark index is down 0.9% to 5,819 points.

Four shares that are falling more than most today are listed below. Here’s why these shares are tumbling lower:

The Beach Energy Ltd (ASX: BPT) share price is down 4% to $1.28. Investors have been selling Beach and other energy shares on Friday after a sharp pullback in oil prices overnight. Concerns that rising coronavirus cases could impact demand has been weighing heavily on oil prices. In addition to this, news that OPEC’s production was stronger than expected added to the selling pressure.

The Fortescue Metals Group Limited (ASX: FMG) share price has fallen over 2% to $16.33. This iron ore producer’s shares have come under pressure today after the price of the steel making ingredient weakened overnight. According to CommSec, the spot iron ore price dropped just over 2% to US$123.98 a tonne.

The Mesoblast limited (ASX: MSB) share price has crashed 34.5% lower to $3.33. This follows an announcement which reveals that the US FDA has not approved its remestemcel-L (RYONCIL) product for paediatric patients with steroid-refractory acute graft versus host disease (SR-aGVHD). Instead, the FDA has requested that Mesoblast undertake at least one additional randomised, controlled study in adults and/or children. This is to provide further evidence of the effectiveness of remestemcel-L for SR-aGVHD.

The SeaLink Travel Group Ltd (ASX: SLK) share price has dropped 2.5% lower to $5.72. The catalyst for this decline appears to be a broker note out of Macquarie this morning. According to the note, the broker has downgraded its shares to a neutral rating with a $5.37 price target. It made the move on valuation grounds after a strong gain recently.

More reading

• ASX 200 down 0.95%: Mesoblast crashes lower on FDA update, Afterpay surges higher
• Mesoblast (ASX:MSB) share price tumbles 32% lower on update
• 5 things to watch on the ASX 200 on Friday
• Why the Mesoblast (ASX:MSB) share price is in a trading halt
• ASX 200 up 1.6%: CBA higher on COVID-19 loan deferrals update, Reliance rockets

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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Carsales.Com Ltd (ASX: CAR) is easily the premier platform for selling both used and new cars. In fact, over the past year, it has increased its lead over its competitors in several key metrics, which I believe, has helped make the Carsales share price a good buy right now. For example, according to the company’s FY20 report, Carsales has 2.15 times more daily unique visitors than its nearest competitor. Furthermore, the monthly average time on site is twice that of its nearest competitor. 

Carsales share price tailwinds

Carsales.com markets and sells both new and used cars, with used cars being the larger segment. Right now, used car prices are approximately 25% higher than they were at this time last year. Meanwhile, new car sales are dwindling. This appears to be part of a global phenomenon stemming from a reluctance to take public transport due to the coronavirus. This trend may slow, but I do not expect it will reverse any time soon. 

While online real estate marketing company REA Group Limited (ASX: REA) has to compete with a growing field of top flight competitors, including Domain Holdings Australia Ltd (ASX: DHG), Carsales has no such competition. Moreover, the company saw international revenues increase by 13% in FY20, raising it to more than 24% of revenues. 

Lastly, and I think very importantly, car classifieds is an area likely to be impacted by responsible lending laws. Specifically because expanding a housing loan to include the purchase of a new or used car is not uncommon. 

So is this a good share to buy now?

Carsales has local dominance, growing international sales, and is operating in a market of growing demand for used cars. However, this alone doesn’t necessarily make the Carsales share price a good buy right now. The company has, however, delivered increases in its operating margin from 52% to 55% and, over the past decade managed to achieve an average return on equity of 46%.

Carsales is also not willing to rest on its laurels. In FY20, it has improved its technology platform considerably. For example, it is seeing strong take up of new video products. In addition, it has allowed dealers to integrate finance offerings with their car listings. 

Foolish takeaway

Although the current Carsales share price is selling at a reasonably high price-to-earnings (P/E) ratio of around 43, I believe this is a good share to buy now. COVID-19 is the main cause of high P/E values due to low FY20 earnings. Between the company’s performance and the future outlook, I think Carsales is a very good share to buy and hold for years to come. 

More reading

• 3 profitable October ASX 200 trends
• ASX 200 jumps 2.4% higher, numerous shares rise
• New $280 million ASX tech share listing Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• Why the Carsales (ASX:CAR) share price could boom in 2021

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

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a day in the red. The benchmark index is currently down 0.95% to 5,816.3 points.

Here’s what is happening on the market today:

Mesoblast share price crashes lower.

The Mesoblast limited (ASX: MSB) share price has returned from its trading halt and crashed lower on Friday. This follows the earlier than expected announcement relating to its quest to have remestemcel-L (RYONCIL) approved for paediatric patients with steroid-refractory acute graft versus host disease by the US FDA. As you might have guessed from the share price weakness, Mesoblast wasn’t given approval. Instead, it will have to undertake another trial and prove it is worthy of FDA approval.

Tech shares storm higher.

One area of the market which is on form on Friday is the tech sector. The likes of Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) are charging higher following a positive night of trade on Wall Street’s technology-focused Nasdaq index. At lunch, the S&P/ASX All Technology Index (ASX: XTX) is defying the market weakness and is up a sizeable 1.3%. This is roughly in line with the gains made by the Nasdaq index overnight.

Breville acquisition.

The Breville Group Ltd (ASX: BRG) share price is pushing higher today after the appliance manufacturer announced an acquisition. According to the release, Breville has completed the acquisition of Seattle-based coffee grinding company Baratza for approximately US$60 million. This comprises US$43 million of cash and US$17 million of shares. These shares will be subject to a three-year trading lock. Management notes this acquisition brings together two of the world’s leading companies in the design and global distribution of coffee products.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday is the Janus Henderson Group (ASX: JHG) share price with a 10% gain. This follows reports that activist investor Trian Fund Management has taken a big stake in the company. The worst performer is unsurprisingly the Mesoblast share price. It is down 34% at lunch following its FDA update.

More reading

• Why Afterpay, Genetic Signatures, Qube, & Serko shares are charging higher
• Why WAAAX shares like Afterpay (ASX:APT) and Xero (ASX:XRO) are surging
• Mesoblast (ASX:MSB) share price tumbles 32% lower on update
• Why the Domain (ASX:DHG) share price is hot property today
• Breville (ASX:BRG) share price higher on US$60m Baratza acquisition

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a disappointing note. At the time of writing the benchmark index is down 0.9% to 5,819.5 points.

Four shares that have not let that hold them back are listed below. Here’s why they are charging higher:

The Afterpay Ltd (ASX: APT) share price is up 3% to $82.92. Investors have been buying Afterpay and other ASX tech shares on Friday following a positive night of trade on Wall Street’s technology-focused Nasdaq index. This has helped drive the S&P/ASX All Technology Index (ASX: XTX) 1.5% higher at the time of writing.

The Genetic Signatures Ltd (ASX: GSS) share price has jumped 12% higher to $1.91. This follows the release of the molecular diagnostics company’s first quarter sales update. According to the release, Genetic Signatures’ preliminary sales for the quarter ended 30 September 2020 are approximately $10.5 million. This is 50% higher than the previous quarter which ended 30 June 2020.

The Qube Holdings Ltd (ASX: QUB) share price is up 2.5% to $2.63. Investors have been buying Qube’s shares after the release of an update on its Moorebank Logistics Park. According to the release, Qube is partnering with Woolworths Group Ltd (ASX: WOW) on two new state-of-the-art facilities in the park. This partnership will see Woolworths become a major tenant at the site in a deal worth $1 billion.

The Serko Ltd (ASX: SKO) share price has jumped almost 7% higher to $4.46. This follows the completion of its upsized institutional placement this morning. According to the release, Serko’s NZ$45 million placement was oversubscribed at NZ$4.55 per new share. This resulted in the company deciding to increase the size of the placement to NZ$47.5 million. The placement price is a small premium to its last close price.

More reading

• ASX 200 down 0.95%: Mesoblast crashes lower on FDA update, Afterpay surges higher
• Why WAAAX shares like Afterpay (ASX:APT) and Xero (ASX:XRO) are surging
• Why the Serko (ASX:SKO) share price is zooming higher today
• Qube (ASX:QUB) share price jumps as Woolworths logistics park gets backing
• Is the Altium (ASX:ALU) share price a buy after slumping?

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 Serko Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Serko 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 fall in oil price futures overnight has added to the range of issues setting the ASX trends for next week. In addition, the federal government will unveil its budget next week. Consequently, I expect several market forces to buffet the share market. These include changes to Australian government subsidies, relaxed responsible lending laws, uncertainty surrounding the United States and loosening COVID-19 restrictions.

ASX trends in defence spending

Much of the defence spending over the next decade has already been announced. However, it will highlight recent discussions with Electro Optic Systems Holdings Ltd (ASX: EOS), and Orbital Corporation Ltd. (ASX: OEC). Meanwhile, aside from domestic spending, purchases continue to roll in from overseas. Just yesterday, DroneShield Ltd (ASX: DRO) announced an additional contract with one of the ‘Five Eyes’ nations.

I think all of these companies are potential options to buy early next week. They are well priced and I believe the ASX trend of high global defence spending is going to be with us for a long time to come. 

Formalised responsible lending changes

The proposed changes to the responsible lending laws are likely to be a game changer for the nation in our battle against the economic impacts of COVID-19. This ASX trend is likely to impact the share price of companies in lending or building residential houses. On the development side, I expect to see a big impact to blue chip companies like Stockland Corporation Ltd (ASX: SGP) and Mirvac Group (ASX: MGR).

In the area of mortgages, I tend to shy away from the banks. These companies continue to face headwinds from loan defaults and regulator imposed constraints to dividend payout ratios. However, mortgage brokers like Mortgage Choice Limited (ASX: MOC) are likely to see increased interest from this ASX trend. So too non-bank lenders like Resimac Group Ltd (ASX: RMC).

The opening borders

Queensland opened its borders to New South Wales again yesterday, sparking a flurry of activities across the borders. Furthermore, today there is talk of re-admitting students, and opening flights to New Zealand. I think the obvious implications for the ASX surrounding this trend will be for travel and tourism shares. For example, companies like Alliance Aviation Services Ltd (ASX: AQZ), or Event Hospitality and Entertainment Ltd (ASX: EVT) are likely to see an immediate impact. 

More reading

• ASX shares to buy, watch or sell today
• Why EOS, Jumbo, Nearmap, & OceanaGold shares are dropping lower today
• Why the Droneshield (ASX:DRO) share price has rocketed higher
• Why Mirvac (ASX:MGR) and these ASX REITs could boom in 2020
• ASX 200 sinks 2%, Corporate Travel (ASX:CTD) soars 8%

Daryl Mather owns shares of DroneShield Ltd and Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited and Orbital Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings 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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WAAAX shares have rocketed higher in early trade. WiseTech Global Ltd (ASX: WTC), Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) shares are amongst the biggest gainers today.

Here’s why our favourite ASX tech shares on the move despite the S&P/ASX 200 Index (ASX: XJO) slumping at the open.

Why WAAAX shares like Afterpay are surging

I think the big factor was strong gains in offshore markets overnight. Wall Street ended the day higher despite volatility throughout the session. That was largely powered by tech-related stocks that rocketed higher.

As tends to be the case, the WAAAX shares have followed suit. These ASX tech shares have started the day strongly – at the time of writing the WiseTech share price is up 4.1% with Xero (+1.5%) and Afterpay (+3.1%) not far behind.

It looks like these Aussie tech shares will extend their gains after already being amongst the biggest winners in 2020.

ASX tech shares were hit hard in the March bear market as investors feared an economic downturn that would wipe out potential growth. It’s almost proved to be the opposite, with tech shares shining while other areas of the economy have faltered.

Is now a good time to buy?

ASX tech shares are expensive on a relative value basis right now. Some, like Afterpay, are trading on astronomical price-to-sales ratios. Many are yet to even turn a profit which could worry value-based investors.

However, there is still plenty to like about the WAAAX shares right now. Tech is one of those sectors that continues to operate given a strong reliance on online channels like cloud-based software or online retail.

I’m not bullish on ASX tech shares but I’m not willing to bet against further gains in 2020. 

More reading

• Why the Domain (ASX:DHG) share price is hot property today
• Is the Altium (ASX:ALU) share price a buy after slumping?
• Where to invest $10,000 into ASX shares immediately
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 1%, Reliance Worldwide (ASX:RWC) climbs 11%

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. 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 Serko Ltd (ASX: SKO) share price has returned from its trading halt and is zooming higher on Friday.

At the time of writing the travel and expense technology solution provider’s shares are up 6.5% to $4.44.

Why is the Serko share price zooming higher?

Investors have been buying Serko’s shares today after it announced the successful completion of an upsized institutional placement.

According to the release, Serko’s NZ$45 million placement was oversubscribed at NZ$4.55 per new share. This resulted in the company deciding to increase the size of the placement to NZ$47.5 million.

Interestingly, demand was so strong for the placement that Serko was able to command a premium for the shares. The placement price of NZ$4.55 was actually a 0.9% premium to its last close price of NZ$4.51.

The company will now push ahead with its share purchase plan, which is aiming to raise an additional NZ$10 million from retail investors.

Why is Serko raising funds?

Serko is raising the funds to to accelerate the development and rollout of its technology to support its Travel Management Company and reseller partners. The funds will also be used to progressively scale up and bring the power of Zeno to the global market.

Serko’s CEO, Darrin Grafton, commented: “In recent months, we have received inbound demand from these organisations as they consider, plan and request accelerated timetables to onboard new customers, deliver new features and expand existing partnerships. This demand has exceeded our expectations and is highlighting increased opportunities from a changing travel industry.”

“Serko’s priority is to ensure it has the resource and capacity to execute on its strategic priorities, positioning the company for growth when business travel normalises and to capitalise on opportunities arising from changes to the travel industry,” he added.

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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 Serko Ltd. The Motley Fool Australia has recommended Serko 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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