At the weekend I looked at how $20,000 investments fared in a number of popular ASX shares over the last 10 years. You can read about their impressive returns here.

But that was then and this is now. Which shares should you invest $20,000 into today?

I have picked out two ASX shares that I think could be great places to invest these funds:

Appen Ltd (ASX: APX)

The first ASX share to consider investing $20,000 into is Appen. It is the leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI). Through its million-strong crowd-sourced team of experts, it prepares the data for the models of some of the world’s biggest tech companies. This includes the likes of Amazon, Apple, Microsoft, and Facebook.

Pleasingly, demand for AI services is expected to grow strongly over the next decade as companies invest heavily in the space. I believe this bodes well for Appen and expect it to underpin strong earnings growth over the next decade and beyond. In light of this, I believe the Appen share price could be a market beater over the next decade.

CSL Limited (ASX: CSL)

I think this biotherapeutics giant CSL would be a great option for a long term $20,000 investment. This is due to its very positive outlook thanks to its high quality CSL Behring and Seqirus businesses. I believe these businesses are well-placed to underpin consistently solid sales and earnings growth over the 2020s.

This is thanks to their leading products and extremely lucrative research and development (R&D) pipelines. In respect to the latter, in FY 2020 CSL invested a massive US$922 million into its R&D activities. This was an increase on US$832 million a year earlier and in line with its normal investment of ~10% to 11% of revenue. I believe these investments will allow the company to maintain its market-leading position for a long time to come. As a result, I expect the CSL share price to continue its positive run for the foreseeable future.

More reading

• Will the CSL share price return to its all-time high?
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• 3 of the best ASX tech shares to buy in September
• Top brokers name 3 ASX shares to buy next week
• These were the worst performing ASX 200 shares 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 CSL Ltd. The Motley Fool Australia owns shares of Appen 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.

The post Where to invest $20,000 into ASX shares immediately appeared first on Motley Fool Australia.

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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.

Zoom Video Communications Inc (NASDAQ: ZM) is slated to report its second quarter results for fiscal 2021 after the market close today.

Investor expectations are sky-high. Investors have driven shares of the unified-communications platform provider up 43.8% since its first quarter results were released on 2 June. The S&P 500 has returned 14.3% over this period. In 2020, Zoom stock is up 340%, while the broader market has returned 10%.

Zoom has been getting a hurricane-force tailwind from the increased number of people working – along with learning and socializing – from their homes due to the COVID-19 pandemic. 

Zoom Video’s key numbers

Here are Zoom’s results for the year-ago period and Wall Street’s estimates to use as benchmarks.

Metric	Fiscal Q2 2020 Result	Fiscal Q2 2021 Wall Street Consensus Estimate	Projected Growth YOY
Revenue	$145.8 million	$500.5 million	243%
Adjusted earnings per share (EPS)	$0.08	$0.45	463%

Data sources: Zoom Video Communications and Yahoo! Finance. YOY = year over year. 

Zoom management guided for revenue between $495 million and $500 million, representing growth of 241% growth year over year at the midpoint. It also expects adjusted earnings per share (EPS) to be between $0.44 and $0.46, representing growth of 463% year over year at the midpoint. 

It’s interesting that Wall Street is essentially “only” using Zoom’s guidance as its estimates. Companies nearly always are conservative in setting guidance, especially companies whose stock prices sport nosebleed valuations. Analysts know this, so often adjust their estimates upward of a company’s guidance, or guidance range. (That said, Wall Street did a terrible job last quarter projecting the company’s top- and bottom-line results, as we’ll get to in a moment, so perhaps this isn’t too surprising.) 

It seems highly likely that Zoom will beat the Street’s expectations on both the top and bottom lines. If it doesn’t, watch out below for its falling stock. 

For context, in the first quarter, Zoom’s revenue soared 169% year over year to $328.2 million, crushing the $202.5 million Wall Street consensus estimate. To give you an idea of the COVID-19 benefit, in the prior quarter, revenue rose 78% year over year.

Last quarter’s bottom-line results were equally impressive. Net income based on generally accepted accounting principles (GAAP) was $27 million, or $0.09 per share, compared with $0.2 million, or $00.00 per share, in the year-ago quarter. On an adjusted basis, net income came in at $58.3 million, up from $8.9 million in the year-ago period, which translated into EPS skyrocketing 567% to $0.20. This result demolished the $0.09 analysts had expected.

Indeed, Zoom has zoomed by the Street’s earnings estimates in every quarter since its April 2019 initial public offering (IPO).

Guidance, guidance, guidance

Location is of supreme importance in the real estate world. Indeed, the most important factors in a home’s value are widely phrased as “location, location, location”. 

Analogously, a company’s guidance is ultra-important in the world of the stock market. A stock’s reaction to a company’s release of its financial results will often hinge more on guidance, relative to Wall Street’s expectations, than on current results.

So investors will want to know that for the third quarter, analysts are modeling for Zoom to post adjusted EPS of $0.35 on revenue of $492.9 million, representing growth of 289% and 196%, respectively, year over year.  

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

More reading

• Zoom Video to soon appear on Amazon, Facebook, and Google smart display devices

Beth McKenna 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 Zoom Video Communications. 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.

The post Zoom earnings on Monday: Will they keep the stock’s COVID-fueled surge going? appeared first on Motley Fool Australia.

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

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The Orocobre Limited (ASX: ORE) share price has been the worst performer on the S&P/ASX 200 Index (ASX: XJO) on Monday.

In afternoon trade the lithium miner’s shares are down a disappointing 10% to $2.61.

Why is the Orocobre share price crashing lower today?

This morning Orocobre’s shares returned from a trading halt following the successful completion of the institutional component of its capital raising.

According to the release, the fully underwritten placement has raised approximately $126 million at an issue price of $2.52 per share. This represents a sizeable 13.1% discount to the last close price of $2.90 per share.

Why is Orocobre raising funds?

Orocobre is raising the funds to ensure that its Olaroz Stage 2 development plan is fully funded and to deliver on its Olaroz Stage 1 plans through a range of operating, COVID-19, and pricing environments.

Those pricing environments refer to the further collapse in lithium prices this year due to an oversupply of the battery making ingredient and subdued demand.

It was because of the collapse in prices that Orocobre posted a 50% decline in revenue to US$77.1 million and a US$67.1 million loss after tax in FY 2020. The latter compares very unfavourably to a net profit after tax of US$65.4 million a year earlier.

In addition to the above, the company intends to use the funds from the placement and an accompanying share purchase plan for future growth initiatives.

Share purchase plan.

Orocobre will now push ahead with its share purchase plan to raise a further $30 million.

Eligible shareholders will be able to acquire up to $30,000 of new shares. This will be at the lower of the placement price or a 2% discount to the five-day volume weighted average price up to the closing date.

Orocobre’s CEO, Martin Perez de Solay, was very pleased with the support shown for the placement.

Mr de Solay said: “We are very pleased with the support shown by our institutional shareholders and other institutional investors for the Placement. We see the success of the Placement as a clear endorsement of Orocobre’s decision to deliver financial flexibility to support Stage 1 and Stage 2 development through a range of operating and pricing environments.”

More reading

• ASX 200 edges higher: Fortescue sinks, NAB sells MLC Wealth, Costa jumps
• These are the 10 most shorted ASX shares
• Orocobre posts big FY 2020 loss and launches $156 million equity raising
• These are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX

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.

The post Why the Orocobre share price is the worst performer on the ASX 200 today appeared first on Motley Fool Australia.

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The Weebit Nano Ltd (ASX: WBT) share price has surged more than 165% in the past week. Here’s why shares in the company have been flying.

Why is the Weebit share price flying?

One catalyst for the Weebit share price surge was the company’s release last week of its annual report for FY20.

Weebit achieved significant commercial and technical progress in FY20. Highlights include 2 signed letters of intent with Chinese companies and establishment of a new developmental program.

Weebit also introduced the world’s first neuromorphic demo and strengthened its IP and patent portfolio with 8 new patents registered in the year. The company was also able to raise $9.1 million earlier this year, enabling it to accelerate its development and commercialisation initiatives.

Another catalyst for the Weebit share price jump was the announcement of a new patent filing last week. The new patent – filed by Weebit and its development partner Leti – will help the company further protect the intellectual property of its silicon oxide (SiOx) ReRam technology.

It will allow Weebit to implement multi-level storage in its flagship Resistive Random-Access Memory (ReRam) technology. This will enable the company to boost memory storage capacity without increasing the number of memory cells, making memory more cost-efficient.

The company’s management said the new patent would significantly improve the company’s cost competitiveness.

What does Weebit do?

Weebit develops next-generation memory technology for the global semiconductor industry. The company’s flagship ReRam technology is based on silicon oxide, which allows semiconductor memory elements to be cheaper, faster and more energy-efficient.

Weebit says the company’s ReRam is 1000 times faster and uses 1000 times less power than current flash memory. In addition, the technology has been designed to provide memory solutions for computers, laptops and smartphones.

Shares in Weebit have continued to climb today. At the time of writing, the Weebit share price is trading more than 24% higher for the day, slightly below its intra-day high of 78 cents. The Weebit share price has more than doubled in the past week, currently trading more than 106% higher since last Monday.

More reading

• The Mosaic Brands share price surges 21% on lease deal
• Are ASX banks or miners buys for dividends?
• Where to invest $20,000 into ASX shares immediately
• Zoom earnings on Monday: Will they keep the stock’s COVID-fueled surge going?
• Why the Orocobre share price is the worst performer on the ASX 200 today

Motley Fool contributor Nikhil Gangaram 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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ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) have long been favourites of the typical ASX share portfolio. Loved for both their fat, fully franked dividends and perceived ‘safety’, you used to be hard-pressed to find an Aussie investor that didn’t have at least one (if not more) ASX bank shares in their portfolios.

But the coronavirus pandemic has turned this on its head – and now bank shares are more like the fallen angels of the ASX. All four of the major ASX banks’ share prices are still well below what they were in mid-February this year. And all except CBA are still down around 40-50%.

But even so, many ASX investors haven’t given up on the banks. National Australia Bank Ltd (ASX: NAB) had a huge level of interest in its capital raising back in April, which ended up being oversubscribed.

Banks off a ski slope?

But one banking analyst thinks that investing in bank shares in 2020 is akin to attempting to ski a ‘double-black diamond run’. According to reporting from the ABC, banking analyst Brian Johnson, of Jefferies Group, likens the banks to Corbet’s Couloir — one of the most dangerous ski runs in North America. Like all double-black diamonds, according to the ABC this run involves “uncontrollable falls along a steep, continuous pitch, route complexity, and high-consequence terrain”.

So what has this alpine metaphor got to do with ASX banks shares?

Well, Mr Johnson views the banks as proxies for the entire economy – meaning that if the economy does well, so will the banks, and vice versa. He commented, “If you believe there is an 18-month U recovery, which is my scenario, then you wouldn’t be buying but if you were, it would probably be NAB…If you think there is an L-shape recession risk, and that seems to be the growing risk by the day, without more government stimulus, you would not be buying Australian banks stocks yet”.

Mr Johnson has a keen eye on the ongoing deployment of government stimulus programs like JobKeeper and the coronavirus supplement, which he notes are scheduled to begin tapering off from the beginning of October. Likewise will other safety nets, such as the moratorium on loan and mortgage repayments and rental evictions. “We won’t know how bad things are until sometime after September”, Mr Johnson was quoted as stating. “[With] all of these economic risks, it wouldn’t surprise me if you saw [ASX bank shares] track back down to the lows that they were in March.” 

Should investors offload ASX bank shares?

I think Mr Johnson showcases several important points. Bank shares used to be attractive due to their unusually large dividend yields. Most other ASX dividend shares never offered the fully franked yields of 5, 6 or even 7% that the banks routinely did.

But those days are gone, and I think it will be a while until they return, if ever. In the meantime, I don’t think there is market-beating potential from any ASX banking share right now, and there are other, more reliable dividend shares out there instead. As such, I would avoid the ASX banks until at least the economic outlook is a little clearer and certainly more positive.

In the meantime, an ASX exchange-traded fund (ETF) might be a better option for ASX bank exposure if you are still keen for a slice of the banking pie.

More reading

• Are ASX banks or miners buys for dividends?
• ASX 200 edges higher: Fortescue sinks, NAB sells MLC Wealth, Costa jumps
• NAB share price pushes higher on $1.44 billion MLC Wealth sales to IOOF
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• Unlikely ASX stock winners from the change in the Fed’s inflation policy

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

The post Bank analyst tells investors to ‘stay away’ from ASX bank shares appeared first on Motley Fool Australia.

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Costa Group Holdings Ltd (ASX: CGC)

According to a note out of Morgans, its analysts have retained their add rating and lifted the price target on this horticulture company’s shares to $3.70. This follows the release of its half year results last week, which were in line with the broker’s estimates. This was driven by a better than expected performance from its International segment, which offset a weaker than forecast performance from its Produce segment. Morgans was also pleased with management’s commentary and expects a strong second half. I think Costa could be worth a closer look.

Flight Centre Travel Group Ltd (ASX: FLT)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating but trimmed the price target on this travel company’s shares to $15.00. According to the note, the broker is pleased with its liquidity levels and the material reduction in its cost base. And while it expects total transaction value to fall significantly in FY 2021, it still sees value in its shares at the current level. I’m not as positive on Flight Centre and intend to stay clear of it until travel markets return to normal.

NEXTDC Ltd (ASX: NXT)

Analysts at Goldman Sachs have retained their buy rating and lifted the price target on this data centre operator’s shares to $13.20. This follows the release of its full year results last week, which were slightly ahead of the broker’s expectations. The broker was pleased with its revenue outlook and has upgraded its forecasts accordingly. I agree with Goldman Sachs and believe NEXTDC would be a great long term investment option.

More reading

• ASX 200 edges higher: Fortescue sinks, NAB sells MLC Wealth, Costa jumps
• Why Costa, Harvey Norman, NEXTDC, & Splitit shares are charging higher today
• Why the Nextdc share price gains could be just beginning
• How to invest in ASX shares in uncertain times?
• ASX reporting season heroes to buy for FY21

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The largest company on the ASX by market capitalisation, CSL Limited (ASX: CSL) has seen some tailwinds over recent years. The global biotech giant’s share price has soared 20% in the past 12 months, however it is still down 18.9% on its all-time high of $342.75 achieved in February.

At the time of writing, the CSL share price is trading at $288.25.

While COVID-19 continues to wreak havoc on the world economy, investors may be wondering if this former market darling will regain its shine and break new highs again in the near future.

COVID-19 negotiations

In the coming weeks, the Australian Government is expected to sign a multi-million-dollar deal with British pharmaceutical giant AstraZeneca to purchase and produce up to 30 million doses of its potential COVID-19 vaccine.

The supply-pact will allow CSL to produce the vaccine under a strict licensing agreement, which in turn could see an easing of Australia’s lockdown laws.

In addition, CSL has partnered with the University of Queensland and the Coalition for Epidemic Preparedness Innovations to advance its own development of a COVID-19 vaccine candidate. The deal is being hailed as a major step forward in the race for developing a reliable vaccine.

Interestingly, the last global pandemic was the swine flu back in 2009. CSL used all its efforts to develop a vaccine and carry out human trials, receiving new drug approval later that year. This lead to its immunisation program for Australians and partner countries. CSL was the first company in the world for both clinical trial and mass production of an inoculation for the swine flu.

Many of the steps from 2009 are being applied to today’s approach for finding a coronavirus vaccine, with CSL safely fast-tracking its progress. It is anticipated that the company is around 12–18 months away from producing a vaccine for COVID-19. This compares to the average of 8 years to find a vaccine for such a disease. Should the company succeed in vaccine development and mass commercialisation, the potential revenue could be enormous.

Plasma collections

Another catalyst for the weakness in the CSL share price was the knock-on effect the coronavirus had on plasma collections. Investors were concerned that due to the restrictions around foot traffic movement from city-wide shutdowns, the company would see a substantial drop of blood donations. This would ultimately disrupt production of medical therapies, while putting some clinical trials on hold.

However, CSL has turned to social media influencers in the US to encourage people attend its facilities and donate the life-saving resource. The company is hoping to see the 5% drop in plasma collections reported in its FY20 results come back to normal levels.

These marketing initiatives are projected to support the company’s key revenue driver, CSL Behring, which posted US$7.8 billion from earnings in 2020.

The company has also rolled out new plasma collection centres, coupled with an increased cash incentive for donating blood in the US. In the midst of the current economic climate, this should have a positive effect on stocking up supply for future months.

Foolish takeaway

I think that the CSL share price is a great buy-and-hold option for any long-term investor. The blue-chip company is still growing at an impressive rate, despite the challenging conditions COVID-19 has caused.

CSL is actively developing a coronavirus vaccine and addressing its plasma collection disruptions. Thus, it is only a matter of time before the CSL share price reaches new highs, in my view.

More reading

• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• My top 5 ASX shares to buy in 2020
• These ASX 200 shares could help you grow your wealth
• Hydrix and Zip were among the most traded shares on the ASX last week
• 3 big surprises from the CSL full year results

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

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

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

Stock splits have become all the rage lately. Apple (NASDAQ: AAPL) jump started the trend with its unexpected decision to split its stock. Tesla (NASDAQ: TSLA) followed shortly thereafter with a split of its own.

With both Apple and Tesla having pulled the trigger, some investors expect that many other companies will do stock splits soon. Among the best candidates for a stock split would be Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Below you’ll find several reasons why Alphabet should be the next to follow in Apple’s and Tesla’s footsteps.

1. Splitting one of Alphabet’s share classes could draw a clearer distinction between the two

Alphabet has only done one stock split in its time as a publicly traded company, and it wasn’t a typical split. In 2014, the search engine giant distributed one share of nonvoting stock for every share of voting stock that shareholders owned. That was equivalent to a 2-for-1 stock split in terms of economic impact, but the move was controversial. Many investors didn’t like the idea of Alphabet’s dual share classes, with one class of stock not getting any voting rights. Since then, the dual class structure has become almost commonplace, especially in the tech industry.

Doing a stock split with Alphabet’s non-voting shares could bring their price down significantly while also making it easier to distinguish the voting and non-voting stock. That would make Alphabet similar to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), whose Class A shares are 1,500 times more valuable and have disproportionately greater voting rights than the cheaper Class B shares.

2. Alphabet should be part of the Dow

The Dow Jones Industrials (DJINDICES: ^DJI) just made the decision to switch out three of its components, so it’s unlikely to make further moves anytime soon. Yet in many ways, Alphabet would make a better Dow member than the companies the average chose this time around. A stock split of around 10-for-1 would make including Alphabet in the price-weighted index much more feasible.

When the Dow kicked AT&T out of the average, it left Verizon as the sole company in the communication services business. Admitting Alphabet as a second such business would recognize the importance of the internet in communication services, and it would represent a much purer play than Amazon.com (NASDAQ: AMZN) and its consumer-facing e-commerce marketplace. Without a stock split, there’s absolutely no chance of Alphabet ever joining the Dow Jones Industrials.

3. Alphabet shouldn’t stick its neck out to regulators

Finally, highly successful companies like Alphabet have become lightning rods for lawmakers and regulators. Their arguments suggest that Alphabet and its peers have used their size unfairly. It’s easy to point to the big gains in share price as a clear indicator of past success and current wealth.

One benefit that Apple and Tesla will get from their stock splits is that they’ll no longer be so visible in the ascent of their share prices. Amazon thus far has chosen not to split its stock, and so it’s a line of defense against Alphabet and its current price of about half of Amazon’s. However, if Amazon were to do a stock split, it could leave Alphabet exposed. It’d be better for Alphabet to jump at the chance now and fall in line with its tech giant peers.

Anything could happen

Alphabet investors had almost no chance of seeing a stock split until Apple and Tesla decided to break the ice and make moves of their own. Now, it’s much more likely that the FAANG stock  would consider splitting its shares. That wouldn’t necessarily be important from a fundamental standpoint, but it could push Alphabet back into the limelight once again.

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

More reading

• 2 Warren Buffett quotes you need to read this week
• Apple shares will surge 20% after its stock split, according to this analyst. Is he right?
• 2 Advantages of Stock Splits for Apple and Tesla Investors
• Netflix stock hits all-time highs as subscribers plan to stay post-pandemic
• Tesla stock split: Should you buy now or wait?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dan Caplinger owns shares of Alphabet (A shares), Apple, and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), and Tesla and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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I usually write to you about investing.

Companies, earnings, markets.

Often, it’s investing psychology.

My passion is helping Australians (and anyone from any other countries who want to read my scribblings!) improve their financial leaves.

It’s why I do this job.

It’s why The Motley Fool exists.

It’s why I write these articles.

And I want to highlight part of an article I wrote on March 23, this year.

As it happens (it was a pure fluke, trust me!), that very day was the low point of the coronavirus bear market.

And so much has happened since, that the first few paragraphs kinda shocked me. Here’s how I started that article:

“As I write this, my wife is in the dining room at home, helping our 7 year old son through his first day of learning from home.

“Earlier, I’d been to the supermarket. It must have been my lucky day, because there was toilet paper on the shelves for the first time in a week and a half. I’d bought some a couple of weeks ago on special, so we weren’t in dire straits yet… but I wasn’t sure how long it’d be until regular supply was restored, so I grabbed a pack.

“This is, of course, our new normal. At least for now.

“Thankfully, so far, we don’t have any family or friends infected with Coronavirus. And we’re not the exceptions. There are still a remarkably small percentage of the population diagnosed as having the virus. And even more thankfully, a very low fatality rate.

“Which I’m thankful for. But I’m thinking of those who haven’t been so lucky.”

I mean we all remember all of that. And Victorians are still struggling through their second lockdown. 

None of us are out of the woods, yet. But March feels like a long time ago.

I went on in that article to acknowledge I was late in seeing the health and economic impacts of COVID-19.

And that none of us could predict the future.

But that I expected the future to be bright, even if it might be a bumpy and uncertain path to get there.

Then I finished like this:

“Yes, maybe it’s different this time. I can’t rule it out.

“All I can do is look at more than a century of market data — through wars, panics, a depression and a GFC — as a guide.

“The health news will get worse. The economic news will get worse. We will have a recession. Some small and large businesses will fail.

“Here’s the thing, though — I fully expect that those that survive will likely go on to thrive, as a group.

“So if those same businesses are selling for cheap prices, today, and you have both a diversified portfolio and the stomach to ride out the storm… Doesn’t it seem likely that current prices might be a buying opportunity (or, at least, that quality shares are worth holding rather than selling)?

“I’m still investing. Not because it’s guaranteed, but because history suggests that, done well, it’s a wonderful way to build wealth, despite the volatility.

Fast forward 5 months and 8 days.

Since March 23, the All Ordinaries Index (ASX: XAO) has gained 37.2%.

With dividends, the market is up 38.2%.

No, I didn’t know the future.

I had no idea the recovery would be that fast, or go that far.

I have no crystal ball.

I take no victory laps.

I have no idea what happens next… in the short term, at least. 

I just wanted to remind you that pessimism can cost you a lot of money.

As I’m wont to say: It’s far more profitable to be optimistic and occasionally wrong, than to be pessimistic and occasionally right.

Fool on!

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Motley Fool contributor Scott Phillips 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.

The post Optimists 1, Pessimists 0 appeared first on Motley Fool Australia.

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The Amaysim Australia Ltd (ASX: AYS) share price is down 2.1% today following the release of the company’s full year FY20 results this morning. This comes after the Amaysim share price initially soared more than 11% in morning trade.

Amaysim is a subscription mobile service provider with no lock-in contracts, currently working via Optus as its wholesale provider. The company also provided subscription energy plans, but this morning announced the sale of its energy business.

This may have had something to do with the delay in releasing its full year 2020 financial results.

On 19 August, Amaysim announced it was delaying its FY20 results report until today. The Amaysim share price surged to close up 24% following that announcement. Investors likely took note of the positive language contained in the note, including that, “Management expects to deliver a good set of results which will be in line with prior guidance.”

I had the opportunity to chat with Amaysim’s Chief Strategy Officer, Alex Feldman, earlier today. We’ll get to a few excerpts from that chat below.

But first let’s look at those results and Amaysim’s announcement on the sale of its energy business.

What’s moving the Amaysim share price?

The Amaysim share price has been on a rollercoaster ride today after the company announced it has entered into a binding share sale agreement for its energy business to AGL Energy Limited (ASX: AGL) for an all-cash consideration of $115 million. AGL will buy all of Amaysim’s issued share capital in Click Energy Group Pty Ltd.

Luminis Partners assisted the company in providing options to unlock shareholder value.

Amaysim noted that the sale streamlines its focus and operations to a pure-play mobile business while providing significant capital for investment and growth of its core mobile business.

Commenting on the sale, Chief Executive Officer and Founder, Peter O’Connell, said:

Our investment in Amaysim Energy has delivered solid returns since acquisition in 2017, however, we believe that going forward the business will be best suited in the hands of AGL…

Looking ahead, we believe transitioning to a pure-play mobile business will deliver long-term shareholder value. We will now be solely focused on delivering on the growth of mobile as we progress the tender for our wholesale mobile network provider.

Amaysim will use some of the proceeds of the sale to repay $53 million of debt. Its cash position is expected to increase by at least $50 million.

The company also announced it has launched a competitive tender for wholesale mobile network services. Its current agreement with Optus expires on 30 June 2022.

What did Amaysim’s full year 2020 results reveal?

Amaysim reported underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $40.1 million. This exceeded its FY20 guidance of $33 million to $39 million. EBITDA was 15.2% lower than the previous financial year, largely due to $9.1 million of marketing investment in line with the company’s growth strategy

Mobile gross profit increased 11.9% to $77.8 million while its energy gross profit fell 11.3% to $73.3 million.

In addition, net revenue of $490.5 million was down 3.5% on FY19, due to lower average revenue per user (ARPU) across its mobile and energy businesses.

Net profit after tax (NPAT) came in at $0.6 million. That compares to an NPAT loss of $6.5 million the previous year, which was impacted by a non-cash impairment in energy.

The Amaysim share price is flat despite the company reporting strong subscriber growth figures for its mobile business. As at 30 June, total mobile subscribers were 1.18 million. Of those, 830,000 are recurring subscribers. Amaysim achieved organic growth of 91,000 mobile subscribers, while acquisitions of Jeenee Mobile and OVO Mobile subscribers added 115,000 recurring mobile subscribers.

Mr Peter O’Connell, Chief Executive Officer and Founder said:

FY20 was a year of solid execution against our strategic pillars. We achieved exceptional growth of the mobile business, improved our brand awareness and energy delivered a strong result amid another year of unprecedented regulatory change…

Given the challenges faced by our people and the economy in the second half of the financial year, I am delighted to report that we exceeded our underlying EBITDA guidance range and that we were not reliant on any government COVID assistance schemes to deliver this result.

Mobile subscriber growth has continued in July and August, with the recurring subscriber base totalling 836,000 as at 27 August 2020.

Amaysim, like the majority of companies during this reporting season, did not provide forward guidance citing “the unprecedented level of economic uncertainty” over the coming months.

My chat with Amaysim’s Chief Strategy Officer, Alex Feldman

This morning I had the chance to speak with Amaysim’s Chief Strategy Officer, Alex Feldman.

I asked him what plans Amaysim has for the proceeds from the sale of its energy business. He explained it will enable the company to focus on its core business and put itself in an optimal position to renegotiate with Optus.

As Alex said:

Our mobile business has well and truly turned the corner. Revenue is growing and our annualised recurring revenue by month has been growing for a number of months now.

We’ll continue to focus on our recurring customers to be as big and beautiful as we can be to our next wholesale partner. Obviously, Optus is in the box seat as the incumbent, that would be fantastic. But if not Optus I think we’ll bring incredible value to the next wholesale partner, whoever that may be.

Alex continued:

The sale of energy allows us to have an incredible balance sheet to focus on growth, whether that’s organic growth or inorganic growth. We’ll also look at distribution of capital to shareholders. It’s a little early to make that call yet. (The transaction is set to complete at the end of September).  After we hand the energy business over to AGL in fantastic form, I think the capital deployment will almost make itself obvious as things play out.

Like most businesses in Australia, and indeed across the globe, COVID-19 is seen as a potential short-term threat, though Amaysim’s business model helps keep that in check.

Alex said there have been disruptions to the company’s retail supply chains, where it often makes its first sales. But he adds:

Our business has been very mobile and online focused. After that first sale occurs (in a retail outlet) the majority of our customers interact with us online.

The big issue is the uncertainty of what COVID brings to the retail channels. We’ve never been through one of these events before, we don’t know what it’s like. We don’t know how things will play out.

The company is addressing the uncertainties by “maintaining our agility and ensuring our funds go a long way to bring customers through the door. We bring in customers incredibly efficiently and consistently. And we serve them well.”

Alex pointed out that it is Amaysim’s customer service, acquisition and business model that really sets it apart from the competition:

No one in the market brings in customers as efficiently as us. And we’ve been the lowest complained about telco for more than 5 years now. Even during COVID disruption we maintained a score of less than 1 per 10,000 customer complaints. That’s a badge of honour for us.

Many telcos depend on customers exceeding their planned usage. We only want our customers to pay what they’re expecting to be billed every month. We don’t want them going over their allowance. We want them to have that consistent experience with us.

We made a very conscious decision to ween ourselves off that type of revenue.

As for the coming rollout of 5G, Alex said:

It will be a net positive over time. I think in the short term there will be virtually no impact for us. There are very few devices in the market which are 5G enabled, even if the networks were built, which they’re not.

When those handsets do come in and start to dominate, 5G will become very important. Our customer base typically isn’t one of the fast followers, who are happy to spend $2,000 on a new device. Our customer base tend not to do that.

The result is that in the short term we are completely relaxed about 5G. In the medium to long term we absolutely want to be part of that. And I think 5G will bring new services and opportunities. It will also bring lots of new connected devices onto the networks.

With the company’s shares up 70% year to date, the Amaysim share price is one to keep your eye on.

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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.

The post Amaysim share price down following FY20 results and divestment announcement appeared first on Motley Fool Australia.

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