The rally on the S&P/ASX 200 Index (Index:^AXJO) is picking up steam and some ASX stocks are enjoying even bigger runs as they just got upgraded by leading brokers to “buy”.

The top 200 stock benchmark jumped 1.1% to an intraday high during lunch time trade with tech stocks leading the charge.

But there’s plenty of action outside that space too.

JBH share price jumps on upgrade

Take the JB Hi-Fi Limited (ASX: JBH) share price as an example. Shares in the electronics retailer surged 3.2% to $48.25 after Macquarie Group Ltd (ASX: MQG) upgraded the stock to “outperform” as it sees upside risks to JBH’s FY21 sales and earnings.

“Redirected travel and service spend & elevated renovation activity are likely to provide a consistently higher base over FY21,” said the broker.

“Industry contacts have noted that the shift in consumer behaviour to indiscriminate buying has been prolonged, supporting higher margins.”

Christmas shopping buzz to return

What’s more, a range of new tech products is likely to reenergise the Christmas shopping season. These new tech toys include 5G handsets from the likes of Apple Inc. (NASDAQ: AAPL) and Microsoft Corporation’s (NASDAQ: MSFT) latest Xbox.

“JBH’s online offering handled the elevated demand over 2H20 better than many peers,” added Macquarie.

“Industry feedback suggests current online sales in Victoria are providing a meaningful offset to the lost sales from closed brick & mortar stores.”

The broker’s 12-month price target on the JB Hi-Fi share price is $53.70 a share.

Big discount to book value

Another outperformer is the Challenger Ltd (ASX: CGF) share price, which leapt 3% to $3.74 at the time of writing.

The annuity products company got upgraded by Credit Suisse to “outperform” from “neutral” today. The CGF share price is trading at a sharp discount to book value after tumbling around 10% since it released its disappointing profit result, but the stock is now looking too cheap.

Bargain hunters delight

“CGF is trading on 0.69x FY21E BV [book value],” said the broker.

“However, if we strip out the Funds Management business (which we apply a conservative 15x multiple to), the Life business (including allocated costs) is trading on 0.59x FY21E BV.

“This is arguably too low considering it generates an 8% ROE on this capital (0.8x might be more appropriate).”

Free kick from the government

Furthermore, the release of the government’s Retirement Income Review could give the stock another reason to rally.

Credit Suisse believes the government could provide regulatory support, in the best-case scenario. But even if the status quo is maintained, this could provide confidence to drive growth in the annuities industry.

The review findings could potentially be released in October. The broker’s 12-month price target on the stock is $4.25 a share.

More reading

• Firefly (ASX:FFR) share price tanks despite further positive drill results
• Here’s how I would spend $10,000 on ASX shares right now
• The Tabcorp (ASX:TAH) share price is flat following ASX announcement
• ASX 200 up 0.7%: Afterpay (ASX:APT) higher, QBE Insurance (ASX:QBE) lower on UK update
• Better buy: Slack Technologies vs Microsoft

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors.

Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Macquarie Group Limited. The Motley Fool Australia has recommended Apple. 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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Tabcorp Holdings Limited (ASX: TAH) is up slightly in early afternoon trading after the company announced it had completed the retail shortfall bookbuild of its entitlement offer.

The ASX released the announcement at 11.15 this morning. Since that time Tabcorp’s share price has gained 0.9%.

The gambling and entertainment company got walloped by the COVID-19 driven panic selling earlier this year, seeing its share price fall 53% from 14 February through 23 March.

Since that low, Tabcorp’s share price has come surging back, up 57%. But that hasn’t been enough to recover its earlier losses, as a 50% loss requires a 100% gain to break even.

Year-to-date Tabcorp’s share price is down 25%.

What does Tabcorp do?

Tabcorp Holdings is a diversified gambling entertainment group. The company is the largest provider of lotteries, Keno, wagering and gaming products and services in Australia.

Tabcorp’s portfolio includes numerous big brand names such as TAB, Keno, The Lott, George, Max, TGS, eBET and Sky Racing. It has four operating segments: Wagering and Media, Lotteries and Keno, Gaming Services, and Sun Bets.

Tabcorp first publicly listed in 1994. Today it has a market cap of $7.3 billion and is part of the S&P/ASX 200 Index (ASX: XJO).

What did Tabcorp announce to the ASX?

This morning Tabcorp announced it had completed the retail shortfall bookbuild of its renounceable entitlement offer. This is the final stage of the company’s entitlement offer.

The original retail entitlement offer saw 71 million new shares issued at $3.25 per share, raising approximately $230 million. Combined with the institutional component of Tabcorp’s entitlement offer, which closed on 21 August, the company announced it has raised approximately $600 million. This will be used to pay down debt and strengthen Tabcorp’s balance sheet.

Last night after market close, 39.7 million retail entitlements were offered as part of the bookbuild, for $3.31 per retail entitlement.

Addressing the completion of the bookbuild, Tabcorp chair Paula Dwyer said: 

The completion of the retail shortfall bookbuild concludes the renounceable entitlement offer announced with our FY20 results. We are pleased that all of our retail shareholders who did not participate have realised value for their rights.

Tabcorp is currently trading at $3.41 per share.

More reading

• Firefly (ASX:FFR) share price tanks despite further positive drill results
• Here’s how I would spend $10,000 on ASX shares right now
• Brokers upgraded JB Hi-Fi (ASX:JBH) share price and this other ASX stock to “buy” today
• ASX 200 up 0.7%: Afterpay (ASX:APT) higher, QBE Insurance (ASX:QBE) lower on UK update
• Will another market crash happen?

Motley Fool contributor Bernd Struben 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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Due to the power of compounding, I believe buy and hold investing is one of the best ways to grow your wealth.

Compounding is earning interest on interest in a bank account or returns on returns with investments.

It explains why an average 10% return per annum will double an initial investment in just over 7 years and more than triple it in 12 years. After which, it takes only 3 more years to quadruple that investment.

Clearly, this demonstrates that the longer you’re invested, the greater your potential returns.

With that in mind, here are three top ASX shares which I think would be great buy and hold options:

Ramsay Health Care Limited (ASX: RHC)

I think Ramsay Health Care would be a great buy and hold option. While trading conditions remain tough in the private hospital sector, I remain very positive on its long term outlook. This is due to the ageing global population and increased chronic disease burden. I expect this to lead to a sustained increase in demand for its services over the 2020s and beyond. Combined with potential earnings accretive acquisitions, I believe Ramsay can grow at a solid rate over the long term.

Xero Limited (ASX: XRO)

This cloud-based business and accounting software provider could be a fantastic buy and hold option. Xero has been growing at a very strong rate over the last few years thanks to the increasing adoption of its software by small businesses across the globe. Pleasingly, with less than 20% of the global English-speaking target market estimated to be using cloud-based accounting software at present, it still has a very long runway for growth. Especially given the overwhelming benefits of cloud-based software over alternatives like an Excel spreadsheet. I expect this to lead to more businesses switching to the cloud in the coming years.

Zip Co Ltd (ASX: Z1P)

I think this payments company would be worth considering after a sharp pullback in its share price. Zip has been a very strong performer in 2020, delivering very impressive sales, customer, and merchant growth. I believe it is well-positioned to continue this strong form in the coming years, especially if it makes a success of its expansion into the United States with its recently acquired QuadPay business.

More reading

• Apple, Amazon, Microsoft are bigger than EVERY unicorn combined
• Forget Afterpay (ASX:APT) shares, buy these 3 growth shares
• Is value investing dead?
• BNPL shares like Afterpay (ASX:APT) and Zip (ASX:Z1P) are soaring today. Here’s why
• BrainChip (ASX:BRN) and Zip (ASX:Z1P) were among the most traded shares on the ASX last 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 Xero and ZIPCOLTD FPO. The Motley Fool Australia has recommended Ramsay Health Care 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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Early this morning, Kogan.com Ltd (ASX: KGN) provided the market with a business update in relation to its August performance. As a result, the Kogan share price surged to a high of $20.97 in the opening minutes of trade before pulling back. At the time of writing, the Kogan share price is up 8.58% to $20.88.

What does Kogan do?

Kogan operates a portfolio of retail and services businesses that includes Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Broadband, Kogan Insurance and Kogan Travel. The parent company is a leading Australian consumer brand renowned for price competitiveness through its digital offering.

Kogam.com focuses on making in-demand products and services more affordable and accessible to everyday consumers.

What’s moving the Kogan share price?

The Kogan share price has been on the rise as the online retailer announced active customers grew to 2,461,000 for the period ending 31 August. This represented an increase of 152,000, and the largest monthly increase in the history of the business.

In addition, the company noted that gross sales and gross profit soared by more than 117% and 165% year on year, respectively. This was underpinned by marketing costs which reflected the company’s largest monthly marketing investment

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 466% over the prior corresponding year.

Kogan advised it will provide the next monthly business update at its annual general meeting on 20 November.

Should you invest?

The Kogan share price has had an impressive run in the past 24 months. A shift in consumer behaviour towards online sales has seen the retailer’s revenues and profits soar. Since its March 2020 low, the Kogan share price is up over 500%.

With a market capitalisation of more than $2 billion, I think the Kogan share price is currently overvalued. Kogan has a price-to-earnings (P/E) ratio of 80.6 and a dividend yield of 1.01%.

Despite the current growing demand for online sales, I believe that Kogan’s phenomenal results will subside. Government support payments like JobKeeper and JobSeeker will soon be reduced and could affect online purchasing levels. In light of this, I will be searching for other opportunities in the market.

More reading

• Why Afterpay, Clinuvel, Kogan, & SEEK shares are storming higher today
• Where to invest $20,000 into ASX shares right now
• ASX shares to own now for the Santa Claus rally of all time
• Can the Harvey Norman (ASX:HVN) share price push higher in 2021?
• Buy and hold these stellar ASX growth shares for 10 years

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com 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 share prices of Australia’s major manufacturers haven’t exactly shot the lights out this year.

Like most businesses, Aussie manufacturers’ share prices were hit hard during the COVID-19 panic selling in February and March.

But even before the pandemic swept across the world, the local manufacturing industry was hobbled by some of the highest energy costs in the world.

When my family and I first moved to Australia in 2010, that came as a shock. We’re talking about a country with an abundance of coal and gas, not to mention wind and sunshine, after all.

Even after more than a decade Down Under, the quarterly electric bill is still greeted with rightful dread. Living in a large, older house with a pool and several outbuildings, our annual bill adds up to the equivalent of a second hand car, or a first-class vacation.

And that’s just a residence.

Imagine running warehouses full of electrified equipment. Or a smelter!

With gas prices in Australia running as much as three times as high as what manufacturers pay in the United States, you can see why many have shut their doors or moved overseas. And why the remaining companies are facing an uphill battle with international competitors.

And high energy costs can hit their share prices well beyond the cash they shell out to run their equipment.

Second and third order consequences

The second and third order consequences — or ripple effects, if you prefer — to Australia’s world leading high energy costs come on numerous fronts.

The most obvious is that when people pay hundreds of dollars per month just to keep the lights on in their home, they have less money to spend on other goods and services. Or to potentially save or invest in shares. And with consumption making up some 60% of Australia’s GDP, any crimp in consumer spending will ripple through the wider economy.

Adding to those consequences, when manufacturers are paying a mint to run their equipment, they logically have to up the price of their goods. Meaning households, already out thousands of dollars per year more than they potentially need be in energy costs, can afford less of the stuff they’d like to buy. Including the houses they live in.

Lindsay Partridge is the managing director of Brickworks Limited (ASX: BKW). As the name implies, his company makes bricks. Lots of them. He says that the high costs of energy Brickworks pays gets passed on into the cost of homes. Partridge said (as quoted by the Australian Financial Review), “We’ve had to survive, we pass some of it on, every homebuyer is affected.”

Gas-led recovery

Enter the Morrison government’s gas-led recovery plan.

You may have read that the Government is planning to offer taxpay support and subsidies to help usher in new gas infrastructure. And you won’t be surprised that any kind of government involvement in the markets has met with mixed reactions.

In a nutshell, the National Gas Infrastructure Plan is intended to reduce the costs of domestic gas and revive domestic manufacturing. That should both spur the post-pandemic recovery and reduce Australia’s reliance on offshore suppliers.

Unsurprisingly, the majority of gas companies and manufacturers are applauding the plan.

Santos Ltd (ASX: STO) chief executive Kevin Gallagher said (as quoted by the AFR):

The Prime Minister’s National Gas Infrastructure Plan is very welcome because there are missing pipeline links that are needed to connect new projects like Narrabri and new basins like the North Bowen, South Nicholson in Queensland and Beetaloo in the Northern Territory.

We also know that the existing pipeline route to southern markets from Queensland is constrained and long, therefore transport is expensive, so we need more pipeline options to get Queensland gas south by the middle of this decade.

While these are long-term plans that won’t bring down the cost of domestic energy overnight, you can think of it like building highways or rail between vital cargo routes. With better infrastructure, transport prices go down.

Shorter term the government is also considering securing gas from domestic producers and possibly offering it to manufacturers at lower costs to get the economy back up to speed.

Which ASX shares look to benefit?

First, to be clear, none of these plans are locked in yet. And the benefit to companies’ share prices will play out over the long-term. But if you’re a buy to hold investor with an investment horizon of 3 to 5 years, there are a number of ASX shares that could surge with lower energy costs.

You could look into some ASX energy companies, like Santos itself, as one way to play this.

But from a manufacturing angle, I think Transurban Group (ASX: TCL) and Brickworks are two shares that are poised for solid share price gains over the mid to long-term.

Transurban Group because it not only should benefit from more cars on its tollways with lower energy costs. But also because the company’s road construction arm is energy intensive itself.

As for Brickworks, lower energy costs will greatly reduce its overhead as well as lowering the cost of its bricks, likely driving an increase in demand for those same bricks.

Transurban’s share price is down 4.5% year-to-date, and up 42.2% from its 19 March low.

Brickwork’s share price is down 2.0% since 2 January and up 49.0% from its 22 April low.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• 3 ASX dividend shares I’d buy with $3,000 today
• 5 things to watch on the ASX 200 on Tuesday
• The latest ASX stocks upgraded by brokers to “buy” today
• Where to invest $10,000 into ASX shares today

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. The Motley Fool Australia owns shares of Transurban 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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The Envirosuite Ltd (ASX: EVS) share price has surged 9.52% today to 23 cents at the time of writing. This came after the company released a presentation to be given at the Bell Potter emerging leaders conference.

Envirosuite is an SaaS company that offers solutions to help clients manage environmental outputs. These include noise, air and other types of waste and pollution. It has been listed on the ASX since 2008.

Earlier in September, Envirosuite was added to the S&P/ASX All Technology Index (ASX: XTX).

What was in the announcement?

Envirosuite reported it had pro-forma annual revenue of $58 million with 75% of revenues recurring. It also had an attrition rate of less than 2.5% of recurring revenue.

With a focus on industry sectors including airports, cities, water, mining, industry and construction, Envirosuite said its environmental intelligence enabled clients to expand operations, achieve capital savings and lower operational expenditure.

The company said it had strong fundamentals and was capable of scaling its Software as a Service (SaaS) business to a market worth up to $2.3 billion. Currently, Envirosuite has reached only $43 million of this addressable market. The company estimated that there were 38,000 addressable global waste and wastewater sites, which was 76x its current client base. In addition, there were 12,000 addressable mining, industrial and airport sites, or 24x its current client base. 

Envirosuite’s medium term growth targets include $100 million revenue in financial year 2023 with an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 15-20%. The company aims for positive EBITDA by the third quarter of financial year 2021 and compound revenue growth of 20%. It also aims to diversify its revenue across 6 sectors.

The company is targeting $100 million in revenue by June 2023 through recent acquisitions and with the use of its technology to move from environmental compliance to value driven return on investment for clients.

Lead generation in August was around 1,190 leads, up around 395.83% from July. Envirosuite has a current pipeline of $30 million of recurring revenue opportunities.

About the Envirosuite share price

Envirosuite had revenue of $23,857 in the year to 30 June 2020, up from $7,701 in the year to 30 June 2019. It had adjusted EBITDA of -$12,093.

The Envirosuite share price is up 214.29% since its 52-week low of 7 cents, and slightly higher than the start of the year at 22 cents. The Envirosuite share price is down 21.43% since this time last year.

More reading

• ASX All Technology Index swells with new additions
• The Envirosuite share price dropped 5% today. Here’s why
• Envirosuite share price flat after FY20 results

Motley Fool contributor Chris Chitty 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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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

CSL Limited (ASX: CSL)

According to a note out of Credit Suisse, its analysts have retained their outperform rating and $333.00 price target on this biotherapeutics company’s shares. Credit Suisse expects demand for flu vaccines to grow strongly over the coming years because of the pandemic. Pleasingly, it believes CSL’s Seqirus business is well-placed to increase its market share. Particularly given the upcoming launch of its Fluad QIV vaccine. I think Credit Suisse is spot on and CSL shares would be a great option for investors right now.

Uniti Group Ltd (ASX: UWL)

Analysts at Ord Minnett have retained their buy rating but trimmed the price target on this telco’s shares to $1.94. This follows Uniti’s announcement of an improved takeover offer for fellow telco Opticomm Ltd (ASX: OPC). The broker believes that the takeover will still be highly accretive to earnings despite the revised offer. In light of this, it continues with its buy rating and sees meaningful upside from here for the Uniti share price. While it isn’t my top pick in the sector, I think it could be worth a closer look.

Wesfarmers Ltd (ASX: WES)

Another note out of Credit Suisse reveals that its analysts have upgraded this conglomerate’s shares to an outperform rating with an improved price target to $51.59. The broker made the move on the belief that demand for household goods will be stronger for longer. In addition to this, Credit Suisse notes that Wesfarmers has the option to add value through acquisitions in the near term. I agree with Credit Suisse and would be a buyer of Wesfarmers shares.

More reading

• 5 ASX shares to avoid in October
• Why OZ Minerals (ASX:OZL) and these ASX shares are hitting new highs
• The best ASX blue chip shares to buy after the market selloff
• BrainChip (ASX:BRN) and Zip (ASX:Z1P) were among the most traded shares on the ASX last week
• Why Afterpay, Clinuvel, Mesoblast, & Uniti shares are storming 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 CSL Ltd. The Motley Fool Australia owns shares of Wesfarmers 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 afternoon trade on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on form and on course to record a strong gain. The benchmark index is currently up 0.75% to 5,938.6 points.

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

The Northern Star Resources Ltd (ASX: NST) share price is down 1.5% to $14.70. Investors have been selling the gold miner’s shares amid softness in the gold price overnight. The price of the precious metal pulled back after the U.S. dollar strengthened. The S&P/ASX All Ordinaries Gold index is down 0.25% on Wednesday.

The Sealink Travel Group Ltd (ASX: SLK) share price is down 2% to $5.08. This appears to have been driven by news that one of the travel and transport company’s non-executive directors has been selling shares. According to a change of director’s interest notice, Christopher Smerdon sold 100,000 shares through a series of on-market trades last week. Mr Smerdon received a total of $500,000 for the shares.

The THC Global Group Ltd (ASX: THC) share price has crashed 11% lower to 24.5 cents. This morning the cannabis company responded to a request from the ASX relating to its accounts. This follows comments by its auditor which revealed that it disagreed with THC Global’s management over the application of Australian Accounting Standards and particularly is use of fair value measurements and asset impairments. THC defended its accounting practices.

The Whitehaven Coal Ltd (ASX: WHC) share price is down 3% to 94 cents. I suspect that this decline is due to profit taking after some strong gains by the coal miner’s shares over the last three trading periods. Prior to today, Whitehaven Coal’s shares were up over 14% since closing at 84 cents on Thursday afternoon. At the start of the month UBS put a buy rating and $2.00 price target on its shares.

More reading

• ASX 200 up 0.7%: Afterpay (ASX:APT) higher, QBE Insurance (ASX:QBE) lower on UK update
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls slightly, miners surge higher
• ASX shares to own now for the Santa Claus rally of all time
• The best ASX stocks to buy for the COVID-19 recovery play

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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On Tuesday Pinnacle Investment Management Group Ltd (ASX: PNI) held its Pinnacle 2020 Virtual Summit, with a number of leading fund managers sharing their views on the small cap sector.

Four small cap ASX shares that were picked out by fund managers are listed below. Here’s why they are positive on them:

A2B Australia Ltd (ASX: A2B)

The Portfolio Manager of Spheria Asset Management, Marcus Burns, is a fan of A2B Australia. He doesn’t believe the company, formerly known as Cabcharge, is being disrupted by UBER and DiDi as much as people think.

Burns commented: “Many people think that they’ve been disrupted by ridesharing apps like DiDi and Uber but the data shows this hasn’t actually affected the amount of cab rides, while A2B is also becoming a leading technology player in the payments space.”

In addition to this, the fund manager believes A2B Australia’s shares are very cheap, particularly given its evolution into a technology company. He added: “The long term rate of cash conversion at A2B has been 84% which is a good conversion rate. If you look at the balance sheet it has net cash of around $24m and trades on an EV of three to four times. It’s a very cheap business, with good cashflows that is essentially becoming a technology stock.”

Aroa Biosurgery Ltd (ASX: ARX)

Firetrail Portfolio Manager, Matthew Fist, believes this New Zealand-based soft tissue regeneration company could be a top option for investors. Mr Fist has a high conviction view on its technology and medium term earnings potential.

He commented: “Incredibly Aroa’s product itself is manufactured from the fourth stomach of a sheep. The digestion system of any animal that has four stomachs is unique and consequently products that are derived from them are too. Our conversations with surgeons and a review of the scientific evidence confirm the superior technology of the Aroa products. Aroa offers its products at comparatively low prices to its peers and generates gross margins in excess of 75%”

Gold Road Resources Ltd (ASX: GOR)

Mr Fist is also positive on this gold miner due to its high quality ore body. He believes that it is a materially undervalued option in a sector filled with stretched valuations.

He commented: “Gold is one of the hottest sectors in the market right now, valuations across the board are stretched, however there are opportunities. Based on some bottom-up work we’ve undertaken on the Gold Road plant… we expect processing capacity to increase to ten million tonnes over the next two years, some 30 per cent. Gold Road is a long-life, low-cost and materially undervalued company and it is materially misunderstood by the market.”

Monadelphous Group Limited (ASX: MND)

Finally, Spheria’s Marcus Burns also believes that this engineering and maintenance company would be a top pick for investors. It appears to be the maintenance side of the business which gets the fund manager most excited. This business has been growing strongly in recent years and now accounts for almost two-thirds of its earnings.

Burns said: “What’s important about this company is that it has two divisions, one is an engineering division where it builds something once-off, the second is a maintenance division.”

He added: “This stock trades on around 11x EBIT, it has around $200m of cash on the balance sheet and we think it presents incredibly good value especially now that the business mix has improved over time.”

More reading

• ASX 200 rises by 0.7%, Cleanaway (ASX:CWY) shares dumped
• Monadelphous (ASX:MND) share price on watch after winning new BHP (ASX:BHP) contracts
• ASX 200 rises 0.5%, gold miners glitter
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 down 2.4%: Afterpay (ASX:APT) and Oil Search (ASX:OSH) sinking lower

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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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. The benchmark index is currently up 0.7% to 5,937.3 points.

Here’s what is happening on the market today:

QBE’s UK update.

The QBE Insurance Group Ltd (ASX: QBE) share price is trading lower today. This morning the insurance giant revealed that the High Court of England and Wales has ruled in favour of policyholders in respect to one of QBE’s notifiable disease policy wordings. This means some of the company’s policyholders are entitled to claim an insurance payout for business losses suffered when the UK went into lockdown between March and June because of COVID-19. QBE is considering its options to appeal that decision.

Tech shares rebound.

The likes of Afterpay Ltd (ASX: APT) and Nearmap Ltd (ASX: NEA) are helping to drive the ASX 200 higher today. This follows another very positive night of trade on the technology focused Nasdaq index. It rose a solid 1.2% during overnight trade. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is up 2.5%.

Big four banks drag on ASX 200.

The big four banks are acting as a drag on the ASX 200 again on Wednesday. At lunch, three of the big four banks are in the red. The only bank in positive territory at the time of writing is Commonwealth Bank of Australia (ASX: CBA). The CBA share price is currently up 0.2% to $65.18.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the SEEK Limited (ASX: SEK) share price with a 9% gain. This appears to have been driven by positive economic data out of China today. The worst performer has been the Whitehaven Coal Ltd (ASX: WHC) share price with a 3% decline. This may be down to profit taking after a solid gain over the last few trading days.

More reading

• Why Northern Star, SeaLink, THC Global, & Whitehaven Coal shares are dropping lower
• Why Afterpay, Clinuvel, Kogan, & SEEK shares are storming higher today
• Apple, Amazon, Microsoft are bigger than EVERY unicorn combined
• QBE Insurance (ASX:QBE) share price on watch following UK COVID-19 court ruling
• Are biotech shares like Polynovo (ASX:PNV) a better buy than Afterpay?

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nearmap Ltd. and SEEK 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.

The post ASX 200 up 0.7%: Afterpay (ASX:APT) higher, QBE Insurance (ASX:QBE) lower on UK update appeared first on Motley Fool Australia.

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