The market may be sinking lower today, but that hasn’t stopped the Strategic Elements Ltd (ASX: SOR) share price from rocketing higher.

In morning trade, the technology-focused investment and development company’s shares are up a massive 39% to a record high of 23 cents.

Why is the Strategic Elements share price rocketing higher?

Investors have been buying the company’s shares this morning following the release of an announcement relating to its printable Nanocube Memory technology.

According to the release, testing has confirmed that the printable Nanocube Memory technology has potential as printable brain-inspired (neuromorphic) computing hardware.

Management explained that work at the University of New South Wales (UNSW) has confirmed that the Nanocube Memory structure and operation allows it to combine computing and memory in one place in a way similar to how biological neurons operate.

Why is this important?

The company notes that experts in the memory technology sector believe the future of computing will be about rethinking processor architecture from the ground up to emulate how a brain efficiently processes information.

The artificial synapses fabricated by UNSW using the Nanocube Memory technology provides a potential hardware solution that has combined data storage and processing abilities, a key to neuromorphic computing.

In addition, the technology has the potential to store a range of values (as resistance states), rather than just traditional ones and zeros. This allows it to mimic the way the strength of a connection between two biological synapses can vary. It notes that changing those synaptic weights (connection strength) in artificial synapses in neuromorphic computing is one way to allow the brain-based system to achieve self-learning.

How was it tested?

The release explains that “in order to test the artificial synapses fabricated using the Nanocube Memory technology for synaptic plasticity, a memristor device was fabricated and subjected to consecutive positive and negative current-voltage (I-V) sweeps which showed incremental decrease in resistance of the memristor device with positive voltage sweeps and incremental increase in resistance of the memristor device with negative voltage sweeps.“

The company advised that this shows the core synaptic function of synaptic plasticity of the memristor technology.

“Next, when electrical signals are applied to a biological synapse, the connection strength between neurons can be excited (potentiation) or inhibited (depression) which can be interpreted as the memorizing and forgetting behaviour of the human brain.”

What’s next?

Further early-stage work on features such as stability, potentiation, depression, latency, and power requirements will continue and be reported in the first quarter 2021.

The company also revealed that it is very pleased with progress of its printable self-recharging battery technology and remains on track to announce further information in January.

More reading

• Why the Strategic Elements (ASX:SOR) share price rocketed 9% higher today

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 Webjet Limited (ASX: WEB) share price has had an incredibly volatile year.

On Wednesday the online travel agent’s shares are changing hands for $5.24, which means they are down 45% since the start of the year.

However, this is a big improvement from the Webjet share price’s April low of just $2.25.

Why is the Webjet share price down 45% in 2020?

Investors were selling off Webjet and fellow travel shares such as Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN) earlier this year after the COVID-19 pandemic brought the global travel industry to a standstill.

With booking volumes dropping to previously unthinkable levels, Webjet and its peers were suddenly left with next to no income and significant costs to pay.

This led to Webjet having to raise funds to boost its balance sheet and help it navigate the crisis.

The company raised $346 million from institutional and retail investors through the issue of ~203.5 million shares at a price of $1.70 per new share. This was a sizeable 55% discount to its last close price at the time and highly dilutive to existing shareholders.

How is Webjet performing now?

With the Webjet share price more than doubling since hitting its April low, investors may have guessed that trading conditions are starting to improve.

According to Webjet’s most recent update, its Webjet OTA business recorded monthly bookings of 18,700 during September. While this is down from its pre-COVID average of 131,300 per month, this recovery is stronger than the market average.

Management advised that Webjet OTA’s bookings are 14.2% of pre-COVID levels, which compares favourably to a 7.1% recovery by the rest of the market. This side of the business will reach break-even when levels hit 23% of 2019’s levels.

The key WebBeds business is also improving, though it remains a long way from becoming breakeven. As of 7 October, its average total transaction value (TTV) stood at 12% of calendar year 2019 levels. Management advised that it needs to surpass 45% of 2019’s levels to become profitable again.

But with vaccines being approved and rolled out across the world, there are hopes that travel markets could return to some form of normality mid to late next year and booking volumes could improve enough for Webjet to become profitable again.

This appears to have got investors excited and supported its share price over the last few months.

What happens in 2021, only time will tell. But one thing that is for sure, is that Webjet will be a company to watch closely.

More reading

• ASX 200 shares hardest hit by COVID-19 in 2020
• These are the 10 most shorted shares on the ASX
• ASX 200 ends slightly down
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• 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 owns shares of and has recommended Webjet Ltd. 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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The outbreak of the coronavirus pandemic earlier this year threw the ASX into a panic. The S&P/ASX 200 Index (ASX: XJO) fell 36% from its February high to its March low and is only now testing pre-pandemic levels.

But there have been winners and losers along the way. Some ASX 200 shares have boomed as pandemic related tailwinds drove customer growth (hello, Afterpay Ltd (ASX: APT)). But many others have suffered due to pandemic-related restrictions. 

For example, ongoing travel restrictions have taken their toll on ASX travel shares, which remain well down from their pre-COVID highs. With domestic borders in a state of flux, consumers are hesitant to make travel plans that may have to be hastily cancelled. International travel remains off the cards for most.

Lockdowns have also taken their toll on the retail sector, with all but essential stores shuttered across the country for parts of the year. This has impacted landlords, who have had difficulty collecting rents from tenants unable to open stores.

With this in mind, we take a look at some of the ASX 200 shares hardest hit by COVID in 2020. 

Company	Share Price (at the time of writing)	Share Price Decline in 2020
Flight Centre Travel Group Ltd (ASX: FLT)	$16.67	-58.96%
Unibail-Rodamco-Westfield (ASX: URW)	$5.26	-53.20%
Webjet Limited (ASX: WEB)	$5.27	-45.39%
Treasury Wine Estates Ltd (ASX: TWE)	$9.41	-43.31%
G8 Education Ltd (ASX: GEM)	$1.21	-37.79%
Qantas Airways Limited (ASX: QAN)	$4.95	-32.38%

ASX 200 travel shares bear the brunt 

The list reveals that ASX 200 travel shares have been among the hardest hit by the COVID-19 pandemic.

Flight Centre

Flight Centre shares started the year trading above $51 dollars, but are ending the year among the most shorted stocks on the ASX. The travel management company was dumped from the ASX 100 in the December quarterly rebalance as a result of its share price slide.

Flight Centre reacted to the pandemic by withdrawing guidance in March and cancelling its interim dividend. By April, the company was raising $700 million in emergency equity as it announced annualised cost reductions of $1.9 billion. More than 50% of stores were shuttered globally, including more than 40% of Australian outlets. 

Flight Centre has reported seeing green shoots in the travel market following the almost total shutdown of travel in April and May. Revenue for September was $25 million, about 12% of its normal level, or $38 million with government subsidies included. Recovery in some locations that would normally be material contributors to group earnings, such as Australia, the United Kingdom, and the United States, have been hampered by ongoing curbs on travel. 

Webjet

The Webjet share price has also suffered in 2020. The company announced a record half year result in February and provided full year guidance of $162 to $172 million in earnings before interest, tax, depreciation and amortisation (EBITDA). The record first half profits quickly became a memory as borders were closed in March and the gains of the first half erased.

Full year total transaction volumes were down 21% on the prior year at $3 billion and revenue was down 27% to $266.1 million. In April, Webjet conducted a $346 million capital raise to strengthen the balance sheet and reduce debtor exposure. Cost reductions have been implemented to reduce costs by 50%. 

Qantas

Qantas grounded its international fleet in March and cut domestic flights by 60%. As domestic border restrictions eased, Qantas increased flights, with domestic capacity at 68% of pre-COVID levels in December, prior to the Sydney COVID outbreak.

Qantas has warned of a substantial statutory loss for FY21. The first half is expected to be close to break even while the second half is expected to be net cash flow positive (excluding redundancies). This will allow Qantas to start repairing its balance sheet in the second half of FY21. A recovery program is also on track to deliver at least $1 billion in annual savings from FY23.

ASX 200 retail and education shares were not unscathed

But it wasn’t just ASX 200 travel shares that suffered in 2020. Shopping malls were deserted as the pandemic gripped the globe, closing all but the most essential stores. Landlords struggled to collect rent from tenants unable to trade, resulting in the share prices of ASX listed shopping centre operators plunging.

Unibail-Rodamco-Westfield

Unibail-Rodamco-Westfield saw net rental income decline by 17.2% in the September quarter while the company’s portfolio value fell 10.7%. The shopping centre operator conducted a $2 billion bond placement in November to strengthen its liquidity position and lengthen debt maturity. Unibail is also selling parts of its portfolio via a $4.8 billion disposal program and recently entered into an agreement to sell several office buildings in France.

G8 Education

The childhood education sector has also been a victim of the pandemic, with this ASX 200 share seeing its value crushed in 2020. G8 Education is one of Australia’s largest providers of early childhood education and care with more than 470 early learning centres across the country. The company reported a 28% decline in revenue in the first half of the year, driven by the capped revenue model under the government’s ‘free’ childcare package.

Following an immediate hit to occupancy at the start of the pandemic, G8 Education has seen occupancy levels increase in the period since, with like-for-like occupancy 75.5% in December. Nonetheless, the focus remains on cost management, with 2021 expected to be a recovery year given the absence of additional government subsidies and ongoing impacts of COVID-19 on occupancy. 

Aussie-China trade tensions apply pressure

Finally, the pandemic has seen strained relations between Australia and China, resulting in the introduction of new restrictions on the import of Australian goods.

Treasury Wine Estates

This has been particularly bad news for Treasury Wine Estates. The ASX 200 share went into a trading halt in November when China announced anti-dumping measures on wine imports from Australia to China. Demand for Treasury Wine Estates’ products in China is expected to be extremely limited while the anti-dumping measures remain in place. China represents 25% of annual global Penfolds allocations.

Treasury Wine Estates plans to expand growth across other priority markets where there is unsatisfied demand, including in Australia, Europe, the US, and Asian markets outside of China. 

Foolish takeaway

2020 may have been an annus horribilis for these ASX 200 shares, but a light is on the horizon. The prospect of a widespread COVID vaccine in 2021 is bringing hope for an improvement in trading conditions for many.

There is no doubt 2020 has been a year like no other, and for these ASX 200 shares, a year they may rather forget.

More reading

• These ASX dividend shares offer investors attractive yields
• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps
• These are the 10 most shorted shares on the ASX
• 2 ASX dividend shares with big yields
• 3 of the best ASX shares to buy right now

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited and Webjet 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.

The post ASX 200 shares hardest hit by COVID-19 in 2020 appeared first on The Motley Fool Australia.

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The rocketing value of Bitcoin appears to be coming at the expense of the gold price – and that can’t be good news for ASX gold miners.

The question is whether investors should quit these outperforming ASX stocks while they are still ahead.

The price of the most popular cryptocurrency surged to a record high of US$23,000 earlier in the month before pulling back. But Bitcoin is still hovering close to these record highs.

Bitcoin eating gold’s lunch

In the meantime, gold’s rally seems to have stalled. After hitting an all-time high of US$2,075 an ounce in August, it’s fallen around 10%.

Experts believe that gold investors are starting to switch to Bitcoin as a hedge against inflation. Online payment leaders like Paypal Holdings Inc (NASDAQ: PYPL) and Square Inc (NYSE: SQ) are also legitimising the crypto by processing Bitcoin payments.

ASX gold miners facing a Bitcoin challenge?

This trend threatens ASX gold stocks after many have delivered strong returns in 2020 as COVID‐19 drove investors to safe haven assets.

The Ramelius Resources Limited (ASX: RMS) share price jumped 42%, the Evolution Mining Ltd (ASX: EVN) share price added 35% and the Northern Star Resources Ltd (ASX: NST) share price gained 12% in the past year.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) is yet to fully recover all the losses from the COVID market meltdown.

Why you shouldn’t write-off ASX gold stocks just yet

But all may not be lost for the yellow metal. Goldman Sachs believes that gold and Bitcoin can coexist, reported Bloomberg.

While the investment bank acknowledges that Bitcoin is stealing some of gold’s thunder during times of economic stress and uncertainty, the precious metal can’t be replaced.

“Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice,” Bloomberg quoted Goldman as saying.

While there’s been some substitution, “we do not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort.”

Bitcoin vs. gold in safe haven battle

There are a few reasons driving Goldman’s view. The bank pointed out that Bitcoin suffers from transparency issues, which discourages institutions and wealthy investors from investing in the crypto – at least not in a big way.

The wildly fluctuating price of Bitcoin is another turn-off. There’s too much “hot money” in Bitcoin as traders use it to make speculative profits as opposed to an insurance policy.

This means there is a lower probability that the value of Bitcoin will hold when distressed investors need it to.

I would also point out that gold has a 3,000-year track record as a safe haven. Even if Bitcoin does evolve to be a good substitute, this won’t be happening overnight.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises 0.5%
• Key risks and rewards for ASX share investors heading into 2021
• 2020 was good for investors, will 2021 be even better?
• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps

Brendon Lau owns shares of Evolution Mining Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings and Square and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. 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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In morning trade the Immutep Ltd (ASX: IMM) share price is storming higher following the release of an announcement.

At the time of writing, the biotechnology company’s shares are up 9% to 42.5 cents.

What did Immutep announce?

This morning the developer of novel immunotherapy treatments for cancer and autoimmune disease announced that it has received a patent entitled “Combined Preparations for the Treatment of Cancer or Infection” by the United States Patent & Trade Mark Office.

According to the release, this US patent follows the grant of the corresponding European patent announced in November 2018.

The claims of the patent protect Immutep’s intellectual property relating to combined preparations comprising its lead active immunotherapy candidate eftilagimod alpha (efti) and a PD-1 pathway inhibitor.

Management advised that the expiry date of the patent is 8 January 2036.

Why is this significant?

The company believes this new patent is particularly significant as it covers the combination of active ingredients evaluated in the company’s phase II TACTI-002 and phase I TACTI-mel trials.

Management also believes it further highlights the ongoing and important steps being taken by the company to protect its lead product candidate in a range of novel and commercially relevant combination formats, in both immuno-oncology (IO) and chemo-IO settings.

Immutep’s CEO, Marc Voigt, commented: “We are very pleased that this United States patent has been granted covering our lead product candidate, efti, in combination with key anti-PD-1 therapies. This is particularly so in view of the highly encouraging data we have seen from both our TACTI (Two Active Immunotherapies) trials which evaluate efti in combination with pembrolizumab. Furthermore, this new patent and our corresponding patents and patent applications in other key markets continue to underpin our ongoing investment in clinical development.”

This sentiment was echoed by Immutep’s Chief Scientific Officer and Chief Medical Officer, Dr. Frédéric Triebel.

He said: “This United States patent grant represents another important milestone for the Company, and along with the clinical data we have seen from our trials, supports our long held view that combining efti with an anti-PD-1 checkpoint inhibitor should result in a very meaningful therapeutic benefit to cancer patients.”

More reading

• Why the Immutep (ASX:IMM) share price is on watch today
• ASX stock of the day: Immutep (ASX:IMM) shares blast up 60% on trial news

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.

The post Why the Immutep (ASX:IMM) share price jumped 9% higher today appeared first on The 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.

Scorching growth in advertising revenue appears poised to propel retail titan Amazon (NASDAQ: AMZN) over $100 billion in quarterly revenue for the first time in its history, according to reporting by PYMNTS.com and The Financial Times. Considering the year as a whole, $21 billion of the company’s revenue is expected to come from ads, skyrocketing 47% year over year, FactSet data indicates.

The Financial Times also says Amazon’s swift advertising growth is outpacing all of its other major segments, including its Amazon Prime subscription service and its retail sales. While these areas may still be making more money, their growth is much slower. Amazon has posted powerful gains this year as lockdowns related to COVID-19 devastated America’s small businesses, which were typically not deemed “essential,” while Amazon was allowed to operate unhindered, gaining immensely from the switch to e-commerce.

Amazon’s advertising growth has been enough for it to start taking market share from Alphabet‘s Google, formerly the undisputed monarch of online product searches and advertising. According to The Financial Times, eMarketer analyst Andrew Lipsman asserts there is a lack of general “recognition for just how big of an advertising business Amazon is on the way to creating.”

According to Amazon’s head of investor relations David Fildes during the company’s third-quarter conference call, Amazon is looking to streamline registration, setup, and use of its advertising in the future. He also noted Amazon is in “a unique position to be able to provide measurement services that help all these brands sort of understand the impact” of their advertising with direct data, rather than advertisers needing to tease information out of obliquely related web searches as with Google and other search engines.

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

More reading

• FAANG stocks make their case to lead the Nasdaq in 2021
• Why Amazon’s stock is so expensive
• In a record-breaking year, here are some of the world’s most popular shares
• US “mum and pop” investors leaving the pros in the dust in 2020 stock rally
• How to invest in US shares in 2021

Rhian Hunt has no position in any of the stocks mentioned. 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. 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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The Integrated Research Limited (ASX: IRI) share price has come under pressure today following the release of an update.

At the time of writing, the performance management solutions provider’s shares are down 9% to $2.75.

What did Integrated Research announce?

Investors have been selling the company’s shares this morning after it provided an update on its guidance for the first half of FY 2021.

Just 12 days ago, Integrated Research revealed that it was expecting revenue for the first half to be in the range of $41 million to $47 million. This would be down 11.6% to 23% on the prior corresponding period.

An even greater decline was expected on the bottom line, with profit for the first half expected in the range of $5 million to $8 million. This represents a 32.2% to 57.6% decline on the prior corresponding period’s profit of $11.8 million.

At the time, management warned that the range of estimates for revenue and profit remain wide due to the unpredictability of business closures in the remaining weeks of December.

Well, unfortunately for shareholders, it seems that these guidance ranges were not wide enough.

This morning, less than two weeks after giving this guidance, Integrated Research has announced that it expects to fall short of it.

According to the release, its trading performance since 18 December has been below expectations with a continuation of customers deferring purchasing decisions.

As a result, the company now expects revenue for the first half to be in the range of $34 million to $37 million and profit for the first half to be in the range of breakeven to $2 million.

On the top line, this will mean a decline of 30.5% to 36% compared to the first half of FY 2020. And on the bottom line, this will be an 83% to 100% decline on the prior corresponding period.

More reading

• Why is the Integrated Research (ASX:IRI) share price sliding 6%?

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 Integrated Research Limited. 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 iron ore spot price has exceeded the expectations of brokers and economists alike, running to a 7-year high of US$155 per tonne. This has seen the value of ASX iron ore shares perform well in 2020.

BHP Group Ltd (ASX: BHP) shares have delivered 10% year-to-date returns. Currently trading at around $43, the BHP share price is now eyeing off its previous all-time high record of almost $50 seen back in 2008.

In a similar fashion, the Rio Tinto Ltd (ASX: RIO) share price is currently trading around 14% higher year to date and is within an arm’s reach of its pre-global financial crisis record of $125. Fortescue Metals Group Limited (ASX: FMG) has been the most spectacular performer of the ASX iron ore shares, doubling in value this year to a record all-time high of nearly $24. 

Australian Government sees prices easing by 2022 

The Australian Government commodity forecaster, the Office of the Chief Economist (OCE), published its latest quarterly report for the medium-term outlook for Australia’s major resource and energy commodity exports in December 2020. 

The report said that prices are expected to remain strong for the next six months, driven by strong government stimulus measures in China and constrained Brazilian supply. 

It notes that iron ore prices have proven highly sensitive to movements in demand over the course of 2020. Prior to 2020, many large iron ore miners cut back on investment, closed mines and attempted to retire debt. This has left the industry without substantial spare capacity, magnifying the impact of today’s supply disruptions and recent growth in Chinese demand.

With China continuing to direct substantial spending towards infrastructure and property, and domestic steel stockpiles being run down, this is likely to keep pressure on prices over the short term, the OCE said in its report.  

Medium-term supply and demand risks brewing 

The OCE sees risks split evenly in both directions. From a demand perspective, any easing in Chinese stimulus measures will lead to a fairly rapid downward shift in iron ore prices from the current forecast level. It also sees that current elevated prices could render many Chinese steel makers unprofitable, which could see a modest reduction in production. 

From a supply perspective, most Chinese imports come from three large companies, BHP, Rio Tinto and Brazilian miner, Vale.

Output from Vale remains under pressure. In November, the company announced that 33 of its 104 Brazilian dam structures had failed stability assessments, with nearly all the affected dams connected to iron ore facilities. The company remains subject to a range of legal actions, added regulatory processes and other requirements in the wake of the Brumadinho Dam collapse in 2019.

The COVID-19 pandemic also led to significant disruptions of port and rail facilities in the south of Brazil, adding further logistical difficulty. Vale did achieve significant milestones across its southern operations in the second half of 2020, with shipments rising from 64 million tonnes in the June quarter to 82 million tonnes in the September quarter. However, this has not been sufficient to enable the company to meet its initial production guidance for 2020. 

Taking into consideration Vale’s situation, the OCE expects iron ore prices to remain above US$100 per tonne until mid-2021, before easing gradually to around US$75 by the end of 2022 as Brazilian supply recovers and Chinese stimulus eases back.

Foolish takeaway

With a number of both headwinds and tailwinds facing Australian iron ore miners over the coming year, it will be interesting to watch how these factors are reflected in the movements of ASX iron ore shares.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• 4 ASX shares with sturdy balance sheets
• 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 buy-rated ASX dividend shares for income investors to snap up

Motley Fool contributor Lina Lim 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.

The post Will ASX iron ore shares continue running in 2021?  appeared first on The Motley Fool Australia.

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Respected fund manager Wilson Asset Management (WAM) has recently identified two small cap ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

There’s also one called WAM Microcap Limited (ASX: WMI) which targets small cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets the most exciting undervalued growth opportunities in the Australian microcap market.

The WAM Microcap portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 23.5% per annum since inception in June 2017, which is superior to the S&P/ASX Small Ordinaries Accumulation Index average return of 10%.

These are the two small cap ASX shares that WAM outlined in its most recent monthly update:

Evolve Education Group Ltd (ASX: EVO)

According to the ASX, Evolve Education has a market capitalisation of $185 million.

WAM explained that Evolve Education operates 120 childcare centres for pre-schoolers across New Zealand and Australia.

In November, the small cap ASX share announced its interim result for the six months ending 30 September 2020 showing net profit after tax (NPAT) of NZ$6.2 million, which was up 533.2% compared to the prior corresponding period.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was within the guidance range of NZ$14.4 million to NZ$14.8 million.

The fund manager said that the childcare industry has been significantly impacted throughout the coronavirus pandemic, and WAM believe the government will continue to support the industry as individuals return to the office and the expected need for childcare services increases.

WAM also sees the ability for the small cap ASX share to make accretive acquisitions with its strong balance sheet. Evolve was one of WAM Microcap’s biggest 20 positions at the end of November 2020.

Mach7 Technologies Ltd (ASX: M7T)

According to the ASX, Mach7 has a market capitalisation of $291 million.

The fund manager explained that this company develops data management solutions for healthcare providers to own, access and share patient data.

In the first quarter of FY21, Mach7 said that it generated $3.3 million (total contract value) of new sales orders for the quarter and recurring revenue grew by $0.9 million per annum. Nine new customers were added with two customers going live on the Mach7 platform. During the quarter, Boston Scientific Corporation licensed the Mach7 enterprise imaging platform to implement and utilise the platform, and plans to extend and enhance their imaging and research capabilities across the enterprise.

Early on in the quarter, Mach7 acquired Client Outlook and it had already achieved $1.5 million of cost synergies at the time of the update.

Mach7 has been investing in marketing after the acquisition and its eUnity viewing and integration platform, to raise global brand awareness and loyalty.

In November, Mach7 signed a seven-year contract with Trinity Health, the fifth largest integrated delivery network in the United States, valued at $5.3 million. The contract will see Mach7’s eUnity enterprise viewer, a diagnostic imaging platform, installed in 92 hospitals across 22 states.

WAM is positive about Mach7’s opportunity to expand its operations in coronavirus impacted regions such as the United States.

More reading

• 2 growing small cap ASX shares to watch in 2021
• 2 small cap ASX healthcare shares to watch
• 2 exciting small cap ASX shares to watch closely in 2021
• 2 turnaround ASX shares to buy

Tristan Harrison owns shares of WAM MICRO FPO. 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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Despite the 2020 stock market rally, finding cheap shares to buy now is still an achievable goal for all investors.

A good starting point could be unloved sectors that face challenging near-term outlooks. Investor sentiment could improve significantly over the long run, as operating conditions for financially-sound businesses gradually improve.

Over time, this could lead to impressive capital returns that make a positive impact on an investor’s financial situation.

Finding cheap shares to buy in unpopular sectors

Unloved sectors are an obvious starting point to find cheap shares to buy right now. Since they are unpopular among investors, they are likely to contain companies that trade on low valuations. This may provide significant scope for capital gains over the long run, as the world economy’s performance improves and investor sentiment does likewise.

Of course, for any sector to be unpopular among investors it usually must face a difficult near-term outlook. This can mean that cheap stocks face volatile periods over the coming months, as a weak global economic performance likely continues.

However, history shows that buying unpopular stocks while they trade at low prices can provide generous capital returns over the long run. Valuations have often reverted to their long-term averages, thereby providing investors in today’s cheap shares with high return prospects.

Buying financially-sound stocks

Clearly, not all cheap shares may be worth buying today. Some could be priced at low levels for good reason. For example, they may have weak financial positions or could lack a competitive advantage versus their peers.

As such, it is crucial for an investor to check their quality alongside their price. In other words, buying high-quality companies at cheap prices can be a far more profitable move. They could provide greater stability and less risk during a weak economic period.

Meanwhile, their recovery potential in a likely long-term stock market rally could be greater than their weaker peers. Their wide economic moats may mean they can deliver greater profit growth.

Assessing which cheap shares are also high-quality companies is subjective. However, as mentioned, they are likely to include companies with solid financial positions, wide economic moats and the right strategies through which to navigate what could be a rapidly-changing global economy in the coming years.

Taking a long-term view

Even once cheap shares to buy right now have been found, it can take many years for them to deliver on their potential. As such, it is important to take a long-term view of any purchases made in today’s volatile stock market.

They could realistically decline in value in the short run depending on how political and economic risks unfold. But the past performance of the stock market suggests that a sustained bull market will take place, and today’s undervalued stocks could be among the biggest beneficiaries.

More reading

• Wilson Asset Management thinks these 2 small cap ASX shares are a buy
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• Why the REA Group (ASX:REA) share price has stormed 43% higher in 2020
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Motley Fool contributor Peter Stephens 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.

The post How I’d find cheap shares to buy right now appeared first on The Motley Fool Australia.

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