2020 has been a terrible year for a number of reasons. But we all know that, so I won’t bore you with prolonging what some would argue is becoming a cliché.

But what I personally find very interesting in 2020 is how share markets have reacted to such a terrible year. You would think, with a still-raging global pandemic and all, that the markets might be subdued, perhaps ending the year far more muted and modest than where they began.

Cast your mind back to the recession-that-wasn’t of 2007-09, and you might remember the relative insignificance compared to the recession the country, and the world, is facing today. Australia was lucky enough to escape the global financial crisis with our record-breaking run of recession-free years still intact.

That record has not survived 2020. And yet, back in the global financial crisis, the S&P/ASX 200 Index (ASX: XJO) took almost 18 months to go from its top to its bottom. It was a long, slow and painful fall of roughly 53%, spread out from October 2007 to March 2009.

A wild ride for the ASX 200

That makes the nightmare that our markets went though back in March seem like a hazy daydream. Yes, we had a nasty fall in the ASX 200. But it was so fast that if you blinked, you might have missed it. The drop from the top to the bottom took just over a month, ending on 23 March. And for the rest of the year, the markets have been nothing but incredibly kind to investors (at least those who didn’t sell everything on 23 March). Since then, the ASX 200 is up more than 47%, and is now in the green on a year-to-date basis.

Across the Pacific in the United States, things are even better. Overnight, the S&P 500 Index (SP: .INX) hit another all-time record high on the back of outgoing President Donald Trump signing an additional round of stimulus spending. That index is up more than 14% year to date, and up almost 67% since 23 March. Happy New Year indeed.

But why is all this happening? It does seem a little incongruous, to say the least…

An ‘everything’ bubble?

Well ,according to reporting in the Australian Financial Review (AFR) today, we have stimulus programs orchestrated by central banks around the world to thank. The AFR calls the near-zero interest rate environment, egged on by massive quantitative easing (QE) programs, as the fuel for ‘the everything bubble’. It’s these massive injections of liquidity and stimulus spending that are reportedly the reasons markets of all stripes are at or near record highs.

These include the share market, the bond markets, property prices, gold prices and bitcoin. It’s not historically normal to see all of these markets rise in tandem, and yet that is pretty much what we’ve seen in 2020.

“The embrace of radical monetary policy has warped the valuation yardsticks relied upon by investors for generations. Value becomes a hard notion to grasp in a world of zero interest rates”, the report tells us.

So will the music ever stop? Well, history tells us it has to at some point. But whether or not that will be in 2021, 2023 or 2031 is anyone’s guess. But what we do know is that the primary factors that have led to this ‘everything bubble’ in 2020 will likely still be at play next year.

More reading

• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps
• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX 200 shares to buy in January
• 3 reliable ASX 200 shares that keep growing
• These were the best performers on the ASX 200 last week

Motley Fool contributor Sebastian Bowen owns bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Beach Energy Ltd (ASX: BPT) share price has come under pressure on Tuesday after the release of an announcement.

In afternoon trade the energy producer’s shares are down 5% to $1.77.

Why is the Beach Energy share price sinking lower?

Investors have been selling the company’s shares this afternoon following the release of an update on its drilling activities at the Ironbark 1 exploration well.

The Ironbark 1 well in WA-359-P is located in the North Carnarvon Basin, off the North West coast of Australia. The well was testing the Triassic Mungaroo Formation with multiple sand objectives. The reservoir has previously been explored nearby at comparably shallower depths and includes discoveries at the Gorgon, Goodwyn, and North Rankin gas condensate fields.

However, unfortunately for Beach and its joint venture partners BP Developments Australia, Cue Energy Resources Limited (ASX: CUE), and New Zealand Oil & Gas Limited (ASX: NZO), drilling at the Ironbark 1 exploration well has been unsuccessful.

According to the release, the well was drilled to a total depth of 5,618 metres measured depth, intersecting the primary target of the Mungaroo Formation at 5,275 metres. But no significant hydrocarbon shows were encountered in the target sandstones.

As a result of this, the exploration well will be plugged and abandoned, in-line with pre-drill planning.

While this is certainly a disappointment for Beach, it still has plenty of other exploration activities to cushion the blow.

The same cannot necessarily be said for Cue Energy Resources. Unsurprisingly, the Cue Energy share price has crashed 60% lower on the news.

The company’s Chief Executive, Andrew Jefferies, commented on the news: “Bugger…. a very disappointing result for us all. Ironbark was a world scale prospect in a highly prospective address, and it needed drilling. We got an answer, but it was not the one we wanted.”

“While the operations are not over yet, I’d like to acknowledge the Operator BP for their safe and professional operations throughout the drilling of the well, as well as our JV partners and our shareholders for their continuing support,” he concluded.

More reading

• What’s moving the Beach Energy (ASX:BPT) share price today?
• Why the Woodside (ASX:WPL) share price is edging higher today
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Thursday

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Rhythm Biosciences Ltd (ASX:RHY) share price has rocketed over 640% for the past twelve-month period. From the beginning of November alone, the share price has soared over 355%. 

For the past few weeks, we’ve been watching Rhythm Biosciences’ share price pop amid recent company achievements that might help explain the climbing share price. 

So how did Rhythm Biosciences slap over six hundred percent on its share price this year?

A one product focused company

Unlike other research and development (R&D) companies, Rhythm Biosciences is focused on one project only, ColoSTAT. According to the company’s latest investor presentation, the purpose of ColoSTAT is the early detection of colorectal cancer using a simple, accurate and low-cost blood test, designed for global mass-market screening.

The ‘global mass-market’ part here is important when assessing the ambitions of the company. The presentation further notes that across the company’s markets which include the US, Europe, Australia, China and Japan — the colorectal cancer screening market for the 50 – 74 year old population is worth roughly $38 billion. 

Bringing new technology into this space could be a real game changer for Rhythm Biosciences and a significant R&D breakthrough for the industry as a whole. 

So who’s in charge?

Rhythm Biosciences’ board and management team offer a mix of experience across the R&D and pharmaceutical spaces. The current CEO previously led up Medical Developments International Ltd (ASX: MVP). Other members of the board have worked senior roles in companies including Sonic Healthcare Ltd (ASX: SHL) and Imugene Ltd (ASX: IMU).

Notably, the board and management team also offer a breadth of global experience and international achievements. This is of specific relevance considering the company’s intention to make ColoSTAT available in so many parts of the world. 

What does 2021 look like for the Rhythm Biosciences share price?

I’m sure if many investors would have guessed that the Rhythm Biosciences share price was going to soar over 600% this year, the company would have sold a lot more shares twelve months back. Unfortunately, not even a crystal ball can predict what markets will do.

What we do know is that Rhythm Biosciences has noted its intentions for FY21 and FY22. According to current estimates by the company, the ‘final product make up’ is expected during FY21 and a clinical trial study targeting a ‘real-world population’ is scheduled for FY22.

As we make our way into 2021, we’ll just have to buckle up and see how these activities pan out for the company and what that will mean for its share price.

The Rhythm Biosciences share price opened today at 82 cents per share. 

More reading

• The Rhythm (ASX:RHY) share price is surging 5% higher today. Here’s why.
• Why the Rhythm Biosciences (ASX:RHY) share price rocketed 28% to a record high
• These small cap ASX shares delivered more than 100% returns in November

Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International Limited and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Seek Limited (ASX: SEK) shares have been on fire over the last six months, gaining around 35%. In fact, the Seek share price has had an unforgettable year – tumbling to a 52-week low in March of $11.23, before rising to an all-time high of $29.04 earlier this month. 

Adding to this volatility was the short-seller attack back in October, when Seek shares plunged 10% over several days as news of the attack circulated.

Let’s take a closer look at what’s happened to the Seek share price in 2020, and what might be in store for 2021.

Seek share price under attack

In late October, a Texas-based short seller named Blue Orca Capital said Zhaopin, Seek’s Chinese job platform, was full of bogus job listings to make it appear as though there was user growth.

In a 39-page document released to the public, the short seller claimed that Zhaopin pays people to put their resumes onto the portal. 

Blue Orca also claimed Zhaopin isn’t generating any organic growth, and is only relying on acquisitions for growth.

Seek owns a 63% stake in Zhaopin, which makes up 22% of the company’s total earnings before interest, tax, depreciation and amortisation (EBITDA).

The Seek share price dropped by 10% over several days following the accusation, as the company desperately tried to calm investors.

Seek requested the ASX temporarily put its shares in trading halt at the time and the company’s share price has subsequently recovered.

Seek’s results and 2021 guidance

Seek posted a net loss of $111.7 million for the year ending 30 June 2020, as the coronavirus pandemic gripped the Australian and overseas job markets.

In its annual general meeting (AGM) in November, management said that forecasting an outlook remained challenging given the ongoing uncertainty in all markets caused by COVID-19 restrictions.

Nevertheless, the company provided guidance for FY21, saying it expected revenue to be in the order of $1,600 million in FY21, and EBITDA to be in the order of $400 million.

This compares to FY20’s revenue of $1,577.4 million and EBITDA of $414.9 million.

More about the Seek business

Seek’s Australian job platform receives 30 million visits per month, and captures 90% of total time spent online searching for jobs, dominating the Australian market. 

The company has 7 times as many paid advertisements as its closest competitor, and a 22% share of national job placements.

Social media networks like LinkedIn are encroaching on Seek’s market. LinkedIn currently has around 1% of the Australian job placements market. 

Seek has said it’s addressing the LinkedIn threat by increasing the amount of data it retains on job searches, and using data analytics to increase the value proposition to advertisers.

The company has also made inroads overseas. In addition to Zhaopin, Seek has acquired online job sites in Brazil, Mexico, Indonesia, Thailand, Malaysia, and the Philippines.

What’s in store in 2021?

Seek’s business is highly cyclical and reacts to economic events that might undermine the job market.

This was evident when the Seek share price jumped as news of a successful vaccine was released in early November, giving a boost to the economy.

After average revenue growth of 15% for the past three years, it remains to be seen where the Seek share price might be headed in 2021, especially as Australia is arguably nearing the end of the resources boom.

Having said that, an internet service aggregator requires comparatively little capital to operate, which means that when revenue builds, the company should be able to generate higher operating margins than traditional industrial companies.

The Seek share price is currently trading at $28.64, up by 0.46% for the day so far. Based on today’s prices, the company commands a market capitalisation of around $10 billion.

More reading

• The most crazy ASX chart of 2020
• 10 highly rated ASX shares to buy in 2021
• 2 blue chip ASX shares Warren Buffett would love
• Why Creso Pharma and these ASX shares just hit 52-week highs or better

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

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With many brokers taking a well-earned break over the holiday period, broker notes are few and far between right now.

In light of this, I thought I would take a look at a few that have been released over the last few weeks that remain very relevant today.

Three buy ratings that you might want to pay attention to are listed below:

Adore Beauty Group Ltd (ASX: ABY)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $8.35 price target on this online beauty retailer’s shares. The broker notes that Adore Beauty’s trading update reveals that trading has been strong and management has upgraded its guidance for the first half. And while it is keen to see whether this was at the expense of margin, it appears supportive of giving away margin to win market share at this stage in its growth. The Adore Beauty share price is trading at $5.65 this afternoon.

Altium Limited (ASX: ALU)

Another note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $40.00 price target on this electronic design software provider’s shares. According to the note, the broker was pleased to see that Altium recently reaffirmed its FY 2021 guidance despite the tough operating environment. Morgan Stanley also notes that management spoke positively about the launch of its new Altium 365 platform. This is a big positive as the broker sees this cloud-based platform as the key driver of growth in the future. The Altium share price is trading at $34.33 this afternoon.

Metcash Limited (ASX: MTS)

Analysts at Citi have retained their buy rating and lifted the price target on this wholesale distributor’s shares to $4.00. The broker made the move following the release of a stronger than expected first half result earlier this month. Pleasingly, the broker believes more of the same is coming in the medium term thanks largely to its Hardware business. And while it acknowledges that Food sales will inevitably moderate post-pandemic, this hasn’t stopped the broker from upgrading its earnings forecasts for the next couple of years. The Metcash share price is trading at $3.45 on Tuesday.

More reading

• 2 ASX 200 shares to buy in January
• 5 fantastic ASX shares to buy in 2021
• 2 ASX growth shares to buy
• 2 top ASX shares to buy according to WAM
• 2 exciting mid cap ASX shares to buy for the long term

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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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.

The payment processing company Mastercard Inc (NYSE: MA) had a turbulent year in 2020, like most other stocks in the financial sector.

But the stock has rebounded since, and overall there seems to be a lot of excitement about the company’s future. It began the year trading at $303.39 per share and recently hit $337.36, representing a gain of about 11.2%. So if you had invested $1,000 in Mastercard stock at the beginning of the year, you would now have about $1,112. You are not going to retire with that money, but you should still feel good about the gain, considering the numerous obstacles from the coronavirus pandemic.

The S&P 500 Index (SP: .INX) is up about 14.4% year to date, so while the stock came up short of that benchmark, it fared much better than a lot of companies in the financial sector. Additionally, I think Mastercard will likely benefit long term from the digital trends that will develop as a result of the pandemic.

Although you may think of Mastercard as a credit card company that makes loans, it does not actually extend credit, but makes money by charging fees on payment transactions made on its branded cards. The company suffered earlier in the year from reduced payment volume brought on by limited physical interaction and lockdowns all over the world.

But Mastercard is well positioned to take advantage of the shift by merchants and customers to a world that is more reliant on digital payments.

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

More reading

• 3 reasons Mastercard is a buy

Bram Berkowitz 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 Mastercard. The Motley Fool Australia has recommended Mastercard. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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ResApp Health Ltd (ASX: RAP) shares are climbing higher today after the company announced it has launched its SleepCheck app on select Android devices. At the time of writing, the ResApp share price is up 6.25% to 8.5 cents.

Quick take on ResApp

ResApp is a digital health company that specialises in developing smartphone applications for the diagnostics and management of respiratory diseases. Machine learning algorithms use sound to detect and measure a variety of breathing conditions, such as breathing, snoring and coughing.

What’s driving the ResApp share price?

The ResApp share price is on the rise today following news the SleepCheck app is now available on the Google Play store for most Android smartphones. With the latest inclusion, the SleepCheck app is now available in 36 countries, and covers almost all smartphone devices.

SleepCheck is a direct-to-consumer mobile application that assesses a person’s risk of obstructive sleep apnoea. The app works using the smartphone’s microphone to pick up sounds and analyse a person’s breathing and snoring patterns. Once the user has finished sleeping, the algorithms then determine if the patient is at risk of suffering from sleep apnoea.

It requires no accessories or hardware other than the user’s smartphone to make an assessment.

It’s estimated that 936 million people suffer from sleep apnoea globally, with 80% of undiagnosed patients enduring moderate to severe breathing difficultly.

ResApp recently signed a 12-month marketing agreement with Australia’s largest consumer healthcare network, HealthEngine. The strategic partnership allows HealthEngine to integrate its booking network into the SleepCheck application.

For example, if SleepCheck identifies a person is at risk of obstructive sleep apnoea, the application will direct them to see a doctor. HealthEngine allows patients to find and connect with healthcare service providers through a dedicated landing page.

Comments from management

ResApp CEO and managing director Dr Tony Keating spoke about the launch, stating:

The Android device market is large and well- established, with over 2.5 billion devices globally and we are very pleased to have launched SleepCheck to cater for these users. SleepCheck is now available on Google Play in 36 countries, including large markets like Europe, Hong Kong and Singapore.

Uptake on iOS continues, and we expect Android download rates to add to our growing user base. The launch will also coincide with a marketing campaign in Australia and the UK to drive product awareness, which will allow ResApp to grow its market share and engage with other potential industry partners.

How did the ResApp share price perform in 2020?

The ResApp share price has fallen over 60% in the past 12 months. In comparison, the All Ordinaries Index (ASX: XAO) is trading relatively flat over the same period, down by 0.55%.

Based on the current ResApp share price, the company commands a market capitalisation of around $60 million.

More reading

• 2 growing small cap ASX shares to watch in 2021
• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps
• This ASX share was the best IPO of 2020: fundie
• Why a2 Milk, Adacel, Dusk, & Nuheara shares are charging higher
• Why AVITA, IDP Education, Over the Wire, & Viva Energy shares are dropping lower

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At the small side of the market there are a good number of companies with the potential to grow materially in the future.

Two that have been tipped as future stars are listed below. Here’s what you need to know about them:

Mach7 Technologies Ltd (ASX: M7T)

The first small cap share to look at is Mach7. It is a growing developer of enterprise imaging and informatics solutions for image viewing, storage, and workflow management. These solutions can be implemented individually or as a comprehensive end-to-end image management and diagnostic viewing platform.

The company has been experiencing strong demand for its solutions this year despite the pandemic. In fact, one of the largest healthcare Integrated Delivery Networks (IDN) has just become a customer.

Trinity Health has signed a seven-year contract for the license and associated support services for its eUnity enterprise viewer. Trinity Health is the fifth largest healthcare IDN in the United States and will be installing it across multiple facilities within its 92 hospitals.

This caught the eye of analysts at Morgans, who have reiterated their add rating and $1.49 price target on the company’s shares. Morgans suspects this contract could be the first of many due to its growing tender pipeline.

MyDeal.com.au Limited (ASX: MYD)

MyDeal.com.au is a $310 million online retail marketplace provider with a focus on furniture, homewares, appliances, technology, baby products, and hardware.

Thanks to the shift to online shopping this year because of the pandemic, MyDeal has been a very strong performer. This has continued in FY 2021, with the retailer recently reporting a 317% increase in first quarter gross sales to $56.67 million. This was driven by the aforementioned shift online and a 268% increase in active customers to 669,897.

One broker that is positive on its prospects is RBC Capital Markets. It recently initiated coverage on MyDeal with a buy rating and $1.60 price target. The broker thinks the company is at an inflection point as annualised gross transaction value exceeds $200 million and customer numbers approach 700,000.

More reading

• 2 exciting small cap ASX tech shares to buy
• 2 small cap ASX healthcare shares to watch
• Here’s how Nuix (ASX:NXL) and these recent IPOs are performing since listing
• 2 exciting small cap ASX shares to watch closely in 2021
• Top brokers name 3 ASX shares to buy 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 and recommends MACH7 FPO. The Motley Fool Australia has recommended MACH7 FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on course to start the week strongly. At the time of writing, the benchmark index is up 0.65% to 6,708.2 points.

Here’s what has been happening on the market today:

Bank shares higher.

The big four banks are all on form today and helping to drive the ASX 200 index higher. While all the big four are recording solid gains, the best performer in the group has been the Commonwealth Bank of Australia (ASX: CBA) share price. At the time of writing, the shares of Australia’s largest bank are up a decent 1.3%.

Tech shares on the charge.

It has been a positive start to the week for the Australian tech sector. Thanks to gains by tech stars such as Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX), the S&P ASX All Technology Index (ASX: XTX) is up 0.8% at lunch. This follows a positive night of trade on the technology-focused Nasdaq index. Overnight it recorded a 0.75% gain after traders cheered the US COVID-19 stimulus bill signing.

Mining shares push higher.

BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) shares are on the rise today despite a pullback in the iron ore price. According to CommSec, the spot iron ore price eased by US$2.25 or 1.4% to US$164.25 a tonne. This was driven by a downtrend in steel prices over the weekend and cold-weather concerns in China. 

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Tuesday has been the Flight Centre Travel Group Ltd (ASX: FLT) share price with a 4% gain. Investors may be optimistic that New South Wales has its COVID outbreak under control now. The worst performer has been the GUD Holdings Limited (ASX: GUD) share price with a 2% decline. This is despite there being no news out of the products company.Best and worst ASX 200 performers.

More reading

• 2 star stocks for your ASX retirement portfolio
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• 5 things to watch on the ASX 200 on Tuesday
• Why these ASX shares have smashed the market in 2020
• 2 buy-rated ASX dividend shares for income investors to snap up

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 Appen Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Initial public offerings (IPOs) were all the rage in the second half of this year.

But when every dog and his master are getting on the bandwagon, you’re bound to see a wide variety in substance.

“There was very high variability in the quality of new listings this year,” Prime Value portfolio manager Richard Ivers told The Motley Fool.

Some companies were clearly taking advantage of “a short-term boost” to the bottom line from the COVID-19 pandemic, he said.

“With the market placing high valuation multiples on some of these sectors, they got the double benefit of high valuation multiples on cyclically high profits.

“Others were high quality businesses with a solid long term outlook.”

So what was the best out of a motley crew?

The best of the good ones

Pengana Capital portfolio manager Chris Tan told The Motley Fool that Liberty Financial Group Pty Ltd (ASX: LFG) was the best new ASX listing in 2020.

The loan provider’s long track record as a private company gives Tan much confidence that it knows what it’s doing.

“LFG is a well-established company with a consistent history of profitability, unlike a lot of the latest IPOs. It was established in 1997 and has become a top 10 home lender in Australia,” he said.

“Surviving the GFC of 2008 is testament to its credentials in credit risk management. Its proprietary, tech-driven risk-based pricing model allows it to profitably write new business that larger players (eg the big 4 commercial banks) are often not able to.”

The Liberty IPO share price was not excessive, making it even more attractive.

“The IPO pricing was favourable at a P/E [ratio] of 11 times financial year 2021 earnings and a forecast 4% dividend yield.”

Liberty shares sold for $6 during the IPO and have bumped up to $7.90 in just two weeks since listing.

Aside from its already-strong residential loan business, Liberty still has plenty of untapped potential in other areas.

“It has growth opportunities in large addressable markets such as commercial, personal and motor loans,” said Tan.

To round out the case for Liberty shares, insider shareholdings have remained very high after the listing.

“The size of the IPO was limited with the founder group maintaining almost 80% of the shares on listing,” Tan said. 

“The main founder and shareholder [and executive director], Sherman Ma, is keeping his entire shareholding. As the most knowledgeable of insiders, when founders maintain large stakes a new investor can justifiably derive more confidence in a company’s future prospects than with a normal IPO.”

More reading

• Liberty Financial (ASX:LFG) share price jumps 12% on IPO debut

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

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