Last week, the share market rose as a new financial year got underway. The S&P/ASX 200 (ASX: XJO) was up 2.6% over the week to finish at 6057.9 on Friday. This represented a three week high. Gains were largely led by the technology sector, with the S&P/ASX All Technology Index (ASX: XTX) up 6.3% over the week. This following the NASDAQ which gained 3.6% last week. The All Technology Index has now risen more than 90% from its March low, while the ASX 200 is up a comparably meagre 33%.

Many share price gains are being driven by better than expected economic data. The American labour market added 4.8 million new jobs in June. This brought the country’s unemployment rate down to 11.1% from 13.3% in May. Optimism that the worst of the economic impacts of coronavirus is behind us was renewed. But some companies are still seeing economic pain. On that note, let’s take a look at last week’s worst performing shares.

Worst performing ASX shares of the week

Adbri Ltd (ASX: ABC)

The Adbri share price plummeted 26.1% last week to close at $2.35 per share. The fall was following the company’s announcement that a contract with  would not be renewed, ending an almost 50-year partnership. Adbri subsidiary, Cockburn Cement, lost its contract to supply lime to Alcoa, with the latter choosing not to renew the contract which expires in June 2021. Adbri is one of Australia’s leading construction materials producers, supplying cement, lime, concrete, and concrete products to the building industry since 1882.

The Alcoa contract is worth some $70 million in annual revenue to Adbri, so the non-renewal will have a material impact on the company’s revenue post-June 2021. Adbri CEO Nick Miller said, “we are disappointed with Alcoa’s decision to displace locally manufactured product with imports from multiple sources, particularly considering our almost 50-year uninterrupted supply relationship”. Adbri will now need to evaluate the full financial implications of the loss and take the necessary mitigating actions. 

Perenti Global Ltd (ASX: PRN)

The Perenti share price lost 8.3% last week to close Friday’s trade at $1.10. The mining services group has operations spanning 13 countries and offers both surface and underground mining solutions. Perenti recently reported that the impacts of COVID-19 on the performance of its projects to date has been limited. The Savannah Nickel Mine was suspended and a number of mine sites operated by Perenti in Egypt, Burkina Faso, and Senegal experienced temporary, short-term shutdowns.

Capital and liquidity management has been a primary focus of the company under its 2025 Group strategy. On 15 June, Perenti announced it had strengthened its liquidity position by increasing the size of its revolving credit facility by $130 million. The company withdrew its guidance in March due to uncertainty, but recently confirmed it expects FY20 underlying NPAT(A) to be in the range of $106 million to $110 million.  

Southern Cross Media Group Ltd (ASX: SXL)

The Southern Cross Media share price declined 7.9% last week to close at 17.5 cents on Friday. The radio operator has suffered greatly since the onset of coronavirus, which has further deteriorated already fragile advertising markets. Last week, Southern Cross announced it had been found eligible for funding of approximately $10 million under the Commonwealth Government’s Public Interest News Gathering program. The grant to regional media businesses will be deployed over the 12 months from 1 July 2020.

Southern Cross was eligible for funding under both the regional radio and regional television streams thanks to its 78 regional radio stations and network of regional television licenses. CEO Grant Blackley welcomed the funding, saying, “regional communities and businesses have been hit hard by COVID-19. As Australia’s largest regional media business, SCA is no exception. The funding will assist SCA’s network of radio and television stations continue to keep 8.8m Australians and their local communities in regional Australia informed…”

Reliance Worldwide Corporation Ltd (ASX: RWC)

The Reliance Worldwide share price fell 6.2% last week to end Friday’s trade at $2.87. Reliance supplies plumbing, heating, and smart home solutions for residences and specialist industries. Last week, substantial shareholder Bennelong Australian Equity Partners Ltd reduced its holding in Reliance by selling 41,005,112 shares on market. This reduced Bennelong’s voting power from 15.66% to 10.32%. In June, Paradice Investment Management Pty Ltd also reduced its holding in the company, with voting power declining to 5.97% from 7.08%.

Reliance scaled back manufacturing operations in Australia to 4 days per week as a result of the coronavirus pandemic. With economic forecasts predicting a decline in new housing construction over the next year, a decline in demand for Reliance’s products is to be expected. Approximately 50% of Reliance’s sales in Australia are to the residential new construction end market. In the United Kingdom, approximately 40% of workers were placed on furlough in April, with activity in the UK and Continental Europe subdued. Aggregate demand in EMEA is currently running at 35% to 40% of pre-COVID levels.  

NRW Holdings Limited (ASX: NWH)

The NRW Holdings share price dropped 6.1% to finish last week at $1.77. Another mining contractor on the list, NRW Holdings provides diversified services to the mining, energy, infrastructure and urban development sectors. In May, NRW Holdings advised it was on track to achieve its revenue guidance of $2 billion for FY20. Thanks to the continued strong performance of the business, NRW also resolved to pay the interim dividend of 2.5 cents per share that had previously been deferred.

In the 10 months to April 2020, the company reported record revenue of $1.6 billion. It also recorded a significant improvement in net debt (cash less interest bearing debt) which reached $115 million. NRW Holdings was owed $32.7 million by Gascoyne Resources Limited when the latter went into voluntary administration. Under a recapitalisation plan for Gascoyne, NRW could achieve a potential 100% return of this amount via an upfront cash payment, the issue of equity, and a contingent payment linked to ounces of gold produced and the gold price.

More reading

• Why Adbri, Domino’s, Event, & Viva Energy shares are dropping lower
• The latest ASX 200 stocks crashing on broker downgrades
• Analysis: Is the Polynovo share price good value?
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher
• These were the 5 best performing ASX shares last week

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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 late morning trade the S&P/ASX 200 Index (ASX: XJO) has followed the lead of European markets and dropped lower. At the time of writing the benchmark index is down 0.35% to 6,036.8 points.

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

The Electro Optic Systems Hldg Ltd (ASX: EOS) share price has rocketed 22% higher to $6.52. This follows an announcement by the defence-focused technology company that it has entered into contract negotiations with the Commonwealth of Australia for the acquisition of 251 Remote Weapon Stations and related materiel. This is part of the government’s $270 billion capability upgrade for the Australian Defence Force.

The Mayne Pharma Group Ltd (ASX: MYX) share price is up 6.5% to 43.7 cents. This morning the pharmaceutical company announced that it has entered into a long-term supply agreement with Novast Laboratories for 13 U.S. generic oral contraceptive products. This includes five new products not previously marketed by the company. The annual U.S. market sales for the five additional products are estimated to be US$500 million.

The Tyro Payments Ltd (ASX: TYR) share price is up 5.5% to $3.83. This follows the release of the payments company’s weekly update this morning. Tyro’s update revealed that transaction value month-to-date to 3 July was up 15% on the prior corresponding period (on a same day basis) to $198 million. This appears to demonstrate that the worst is now behind the company.

The WAM Leaders Ltd (ASX: WLE) share price is up 3% to $1.11. Investors have been buying this fund manager’s shares after the release of a portfolio update this morning. WAM Leaders delivered a 10.4% investment outperformance in FY 2020. For the 12 months, it recorded a 2.7% gain, compared to a 7.7% decline by the ASX 200. This has allowed the company to increase its full year dividend by 15% to 6.5 cents share.

More reading

• 3 innovative ASX shares to buy
• EOS share price on watch following defence spending talks
• Mayne Pharma share price on watch after announcing major Novast Laboratories agreement
• Electro Optic Systems share price on watch after winning major government defence contract
• Can ASX fintech shares withstand a falling market?

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

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The NextDC Ltd (ASX: NXT) share price jumped 3.2% higher on Friday to close the week at $11.10 per share at an all-time high. NextDC shares have dipped slightly in this morning’s trade to $11.08 at the time of writing.

The data centre operator has been surging in value this year and boasts a market capitalisation of over $5 billion. But despite the recent gains, is the Aussie tech share worth buying at its current valuation?

Why the NextDC share price continues to climb

NextDC recently moved into the S&P/ASX 100 Index with the June 2020 rebalancing alongside Saracen Mineral Holdings Limited (ASX: SAR). That comes after NextDC has outperformed the benchmark S&P/ASX 200 Index (ASX: XJO) so far this year.

That’s good news for investors who have already ridden the NextDC share price higher in 2020. With continued strong demand for the company’s services, there are a few factors that I think could support NextDC shares climbing higher.

The recent announcement by prime minister Scott Morrison regarding a sophisticated cyber attack has put Aussie governments and businesses on high-alert.

NextDC has received advanced information security certifications for its data sites, which leaves it well-placed to handle sensitive information and drive future growth.

Despite its share price being near an all-time high, it seems like there are still some strong tailwinds for the ASX 200 tech share. On top of the need for upgrading cyber infrastructure, more Aussies working from home has forced a re-think of remote data security.

What are NextDC’s financials like?

In my view, the company’s strong standing in the Aussie market and its $672 million equity boost could be good news for the NextDC share price.

NextDC’s half-year results in February gave investors even more reason to be optimistic about long-term growth. Half-year revenue jumped 8% to $97.7 million through to 28 February, while underlying earnings before interest, tax, depreciation and amortisation rocketed 21% higher to $50.9 million.

The tech company reported a 6% increase in utilisation to 53.3 megawatts while customer numbers surged 16% to 1,264.

The company recorded cash and equivalents of $197 million at year-end with liquidity of $497 million. Particularly amid the coronavirus pandemic, a strong balance sheet is a vital factor for a company’s ability to ride out any economic turbulence.

Foolish takeaway

The NextDC share price may have hit a new record high, but in my view that doesn’t mean it can’t climb higher. The combination of supply–demand tailwinds, a strong balance sheet and demonstrated growth bode well for the tech share in 2020.

More reading

• The latest ASX 200 stocks crashing on broker downgrades
• Analysis: Is the Polynovo share price good value?
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher
• These were the 5 best performing ASX shares last week
• These were the 5 worst performing ASX shares last week

Motley Fool contributor Ken Hall 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 Friday, the Structural Monitoring Systems Plc (ASX: SMN) share price shot up by 12% to $0.56 cents following an annual performance summary. The Structural Monitoring Systems share price has opened strongly again this morning, with shares up another 6.25% to 0.60 per share at the time of writing.

What were the results

The announcement by Structural Monitoring Systems included information about the unaudited financial performance of wholly owned subsidiary, AEM. It also included an update about the approval process underway for the company’s new technologies.

AEM’s full year 2020 normalised earnings before interest tax depreciation and amortisation were approximately $4.4 million. This represents a 24.6% increase on financial year 2019. 

Full year sales for the 2020 financial year were $18.96 million, which is a 10.7% increase on the 2019 financial year.

Structural Monitoring Systems, the parent entity, reported a cash balance of $2.113 million at the end of the financial year.

The announcement stated: “The 2020 revenue and profitability achieved by AEM is a remarkable accomplishment particularly in light of the unprecedented challenges present in the global aviation market together with the operating impact imposed by COVID-19 on holistic commercial platforms.”

Structural Monitoring Systems reported that AEM will continue to work on developing new generation product solutions that are primarily focused on rotorcraft markets, with R&D spending increasing from 10% of sales to 13% of sales. According to the announcement, AEM will continue to add to its pipeline of new products under development and will target several of the largest global original equipment manufacturers around the world.

The company reported that AEM’s sales for the first quarter of the new financial year were already strong and higher than the same time last year.

The company’s CVM technology, which involves sensors placed at strategic locations on an aircraft to detect cracks, moved closer to commercialisation with testing commencing in the coming month. This supervised testing will move the technology closer to gaining approval from the American Federal Aviation Administration.

Structural Monitoring Systems also reported that its 2ku wifi program, which allows flight passengers access to internet much faster than usual in flight internet speeds, is also on schedule toward gaining approval from the Federal Aviation Administration.

About the Structural Monitoring Systems share price

Structural Monitoring Systems develops and manufactures aviation-related technology that has seen demand from airlines around the world. Recent announcements suggest that the process of gaining government approval for the company’s new technologies has been tracking according to schedule.

The Structural Monitoring Systems share price is up 155% from its 52 week low of $0.235 cents, however, it is down 40% since the beginning of the year. The Structural Monitoring Systems share price is down 9.77% since this time last year.

More reading

• Why I would buy a2 Milk and this ASX growth share right now
• Should you buy the beaten down shares of Aristocrat Leisure and Flight Centre?
• My ASX share of the week
• EOS share price on watch following defence spending talks
• Mayne Pharma share price on watch after announcing major Novast Laboratories agreement

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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Because I have a high tolerance for risk, I’m a big fan of investing in growth shares.

Luckily for me, there are a large number of companies listed on the Australian share market that have strong long-term growth prospects.

Two which I think are among the best on the local market right now are listed below. Here’s why I like them:

A2 Milk Company Ltd (ASX: A2M)

I think A2 Milk Company is one of the best growth shares on the local market. The leading dairy and infant formula company has been an impressive performer over the last few years thanks largely to the strong sales growth of its a2 Platinum infant formula. The main catalyst for this has been demand in China and from daigou shoppers in Australia.

The good news is that this strong demand doesn’t appear to be waning and a2 Milk Company’s market share in the lucrative market is still a reasonably modest 6.6%. I believe this gives it a long runway for growth over the coming years. And although the a2 Milk share price is trading at 35x estimated FY 2021 earnings, I feel this is a fair multiple given its very positive long term outlook.

ResMed Inc (ASX: RMD)

Another top growth share which I think investors ought to consider buying is ResMed. It is a sleep treatment-focused medical device company which has a portfolio of leading masks and software solutions treating obstructive sleep apnoea.

ResMed has consistently delivered solid earnings growth over the last decade and I expect this positive trend to continue for the foreseeable future. This is thanks to the expected growth of the sleep treatment market, strong demand for ventilators, and its investment in research and development. And while the ResMed share price has just hit an all-time high, I would still be a buyer of its shares if you’re planning to make a long term investment.

More reading

• Why Domino’s and these ASX 200 shares have just hit new highs
• Where to invest $10,000 into ASX shares in July
• Here’s how to play China’s V-shaped growth story
• Diversify your portfolio with BHP, ResMed, and Wesfarmers shares
• Why I would buy Appen and this ASX growth share right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended ResMed Inc. 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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Earlier today I highlighted three shares on the S&P/ASX 200 Index (ASX: XJO) that have recently reached new highs.

While those ASX 200 shares have recovered strongly from the market selloff earlier this year, not all shares on the index have done so.

Two ASX 200 shares that are still trading notably lower than their 52-week highs are listed below. Are they in the buy zone?

Aristocrat Leisure Limited (ASX: ALL)

The Aristocrat Leisure share price is down over 30% from its 52-week high of $38.23. The gaming technology company’s shares have come under significant pressure this year after the pandemic forced the closure of casinos. This impacted land-based unit sales and revenues generated from its daily fee model. The good news is that the company’s Digital segment have helped cushion the blow. Thanks to lockdowns, closures, and the growing popularity of mobile gaming, Aristocrat’s digital operations have been thriving and generating significant recurring revenues.

For example, during the first half of FY 2020, group revenue increased 7% to $2.25 billion. This reflects a 6% decrease in Land-based revenues and 19% growth in Digital revenue. Given the favourable tailwinds, I’m confident there will be more of the same in the second half and beyond. Which should lead to stellar earnings growth once trading conditions return to normal for its Land-based operations. As a result, I think the weakness in the Aristocrat Leisure share price is a buying opportunity for long-term focused investors.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is down a whopping 77% from its 52-week high of $49.14. Investors have of course been selling the travel agent’s shares due to the negative impact the coronavirus pandemic is having on bookings. With travel markets coming to a standstill, Flight Centre was left generating next to no revenue and still had considerable operating costs to pay. This led to the company having to undertake a material capital raising (which diluted shareholders greatly) to give it sufficient liquidity to survive the crisis.

Positively, Flight Centre appears to have raised enough funds now to see it through the crisis. It has also cut its operating costs materially, which should mean it operates a leaner business when travel markets return to normal. However, I’m not convinced the company will be profitable for a little while to come. In light of this, I wouldn’t be in a rush to invest right now.

More reading

• Altium and 2 more ASX 200 shares to watch this week
• Why Domino’s and these ASX 200 shares have just hit new highs
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000
• 5 things to watch on the ASX 200 on Monday
• 5 ASX shares rated as strong buys by brokers

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

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