The Intellihr Ltd (ASX: IHR) share price is up 8% today, after the human resources (HR) technology company announced 2 positive updates. The company reported significant new business growth in the United States in the first half of FY21, and its first contract win in the United Kingdom.

At the time of writing, the intelliHR share price is trading up 8.33% at 26 cents, a retreat from its intraday high earlier when it was up 17% at 28 cents.

What else did intelliHR say today

intelliHR says major customer acquisitions in the US have contributed to 50% of its subscriber growth in the first half.

The company pointed to the acquisition of a leading sales solutions provider OSL Retail Services as especially significant. That account has provided intelliHR with a 2- year contract with a minimum commitment of $335,000. Further subscriber growth and upgrade to premium plans are expected. 

Subscriber numbers on its platform have increased 148% year-on-year, and doubled in first 5 months of FY21 with a total of 28,779 subscribers.

As a result, the company’s contractual annual recurring revenue (ARR) increased to $2.8 million, which it expects to grow even further in this half. This represents a new record ARR acquisition for the company, which is up 159% year-on-year from H1 FY20.

A brief take on intelliHR

intelliHR is a software-as-a-service (SaaS) provider that develops and sells cloud-based HR management software. The company has active users in Australia, New Zealand, Europe, North America, Asia and Africa.

More reading

• Why the Greenland Minerals (ASX:GGG) share price rebounded today
• ASX stock of the day: Stealth Global (ASX:SGI) shares explode 32% on acquisition news
• Why the Unibail (ASX:URW) share price has fallen 3% today
• 2 ASX shares delivering explosive growth in FY 2021
• ASX 200 falls on Thursday

Motley Fool contributor Eddy Sunarto 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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The Greenland Minerals Ltd (ASX: GGG) share price finished the day up 3.9% today.

Although November hasn’t been kind to shareholders, with shares down 3.6% so far this month, the company has performed strongly this year.

Shaking off a 46% share price plummet during the wider COVID-market panic in February and March, shares are currently up 108% year-to-date.

By comparison the All Ordinaries Index (ASX: XAO) is up less than 1%.

What does Greenland Minerals do?

Although Australian based, Greenland Minerals’ main project is the development of the Kvanefjeld rare earth project in Greenland. The company has been operating in Greenland since 2007.

Once developed, the company forecasts that Kvanefjeld will be a large-scale and low-cost source of rare earth minerals to support the burgeoning clean energy revolution.

Why did Greenland Mineral’s share price gain 4% today?

Greenland Minerals emerged from a trading halt yesterday after announcing it had received firm commitment for a $30 million capital raising via a share placement to institutional, sophisticated and professional investors. The placement was priced at 24 cents per share.

Yesterday, the company’s first day of trading since Friday, this announcement saw shares sell off from Friday’s 30-cent closing price, losing 10%.

Today’s gains likely came as investors sensed value.

Although capital raisings can be dilutive (this one will see 125 million new shares issued), they can also add value if the company puts the new capital to good use.

Greenland Minerals reported it will use the new capital to finalise licencing and permitting; to convert its optimised feasibility study to a definitive feasibility study; to advance offtake and project funding discussions; and to accelerate pre-development work.

Commenting on the capital raising, Greenland Minerals’ managing director John Mair said:

The Kvanefjeld rare earth project is globally unique in terms of scale and favourable metallurgy, combined with large, low-cost output of all critical magnet rare earths, and has Greenland well-positioned to be a cornerstone to future international rare earth supply.

A strong level of international investor support in the capital raising is testament to the growing profile of Kvanefjeld… The capital raising comes on the back of important permitting milestones, and will allow us to accelerate all pre-development work program at a pivotal time with the demand for rare earths set to surge substantially through the coming years…

More reading

• ASX stock of the day: Stealth Global (ASX:SGI) shares explode 32% on acquisition news
• Why the Unibail (ASX:URW) share price has fallen 3% today
• 2 ASX shares delivering explosive growth in FY 2021
• ASX 200 falls on Thursday
• Marley Spoon (ASX:MMM) rival set to list on the ASX

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

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The Stealth Global Holdings Ltd (ASX: SGI) share price is on fire today, having surged 32.53% at the time of writing to 11 cents a share.

Stealth Global shares had closed at just 8.3 cents a share yesterday, but opened at 10 cents a share this morning and rocketed as high as 18 cents a share in early trading (up 80%) before settling to the current share price.

Although today’s move is a dramatic one, it actually leaves Stealth Global up just 10% year to date (YTD) – it was down 20% YTD on yesterday’s closing price. 

So who is this company? And why is Stealth Global exploding in value (and volatility) today?

An intro to Stealth

Stealth Global is a supplier and distributor of industrial and safety workplace products and essentials. The company describes itself as an Australian multinational distribution group headquartered in Perth, Western Australia. It operates across Australia, United Kingdom and Africa as its primary markets, and other select international markets.

The company’s network revolves around 3 operating brands in the workplace supplies space: Heatleys Safety and Industrial, Industrial Supply Group, and BSA Brands. Heatleys is a broad range supplier and distributor of safety and industrial products in Australia, whereas BSA Brands performs a similar function for the United Kingdom and African markets

Industrial Supply Group, however, performs a slightly different function. It is a “member-based buying group” or coalition of sorts, that collaborates with major brands in the industrial equipment space in a wholesale network. These include well-known brands like Sutton Tools and WD-40.

Overall, Stealth Global stocks more than 300,000 products from roughly 1,060 suppliers. Over 40,000 line items are stocked in the company’s distribution centres and stores.

Stealth Global has been weathering a difficult 2020 well. In its full-year results for FY2020, the group reported revenue growth of 8% to $68.1 million, and earnings (underlying EBITDA) growth of 68% to $3.2 million. The Australian market remains the crown jewel for Stealth Global though — providing 83% of FY20’s sales, which were up 36% on last year’s numbers.

Why is the Stealth Global share price rocking today?

The stellar performance of the Stealth Global share price has likely been sparked by an ASX announcement the company released to the markets today just before open. The company has reportedly reached “an agreement in principle” to acquire 100% of the shares of the Brisbane-based C&L Tool Centre Pty Ltd (a private company). 

The reported price tag is $3.83 million, a figure that Stealth Global claims represent 3x FY20’s earnings for C&L.

The $3.83 million figure will be made up of $2.45 million in cash, $480,000 in new Stealth Global shares, and $900,000 in deferred payments over the following 12 months after the acquisition is settled on 1 December.

The company had the following to say on the announcement:

C&L is very complementary to the existing Stealth business with similar customer base, suppliers and services that provide the basis in ease of integration, synergies, and expansion. It has solid long-term stakeholder relationships and high-quality products, services, and solutions. These include product sales, fulfilment, distribution, and a service department to large multi-national corporations, large domestic companies, small-to-medium business enterprises, schools and universities, and government agencies.

At the time of writing, the Stealth Global share price is up by 32.53% to 11 cents a share.

More reading

• Why the Unibail (ASX:URW) share price has fallen 3% today
• 2 ASX shares delivering explosive growth in FY 2021
• ASX 200 falls on Thursday
• Marley Spoon (ASX:MMM) rival set to list on the ASX
• Why has the Ainsworth Game (ASX:AGI) share price dropped 7% today?

Motley Fool contributor Sebastian Bowen 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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The Unibail-Rodamco-Westfield CDI (ASX: URW) share price has fallen today after the company announced an oversubscribed placement. Shares in Europe’s largest commercial real estate provider are trading 3.47% lower at a price of $5.00.

The placement comes in a month which has seen the Unibail share price rocket up 74%.

What happened?

Last night, the real estate investment trust (REIT) announced plans to raise up to 1 billion euros through 6 and 11-year bonds. The offer was set to expire on 1 December but received enormous support and consequently, the results have already been released. The two bonds on offer were:

• A 1 billion euro bond with a 6-year and 5 months maturity and a 0.625% fixed coupon
• A 1 billion euro bond with an 11-year maturity and a 1.375% fixed coupon.

Unibail also said net proceeds from the offer would be used for general corporate purposes including the funding of the concurrent tender offer as well as refinancing upcoming bond maturities.

Placement complete

As mentioned, the offer was wrapped up in record time with Unibail announcing its completion later in the day.

The REIT successfully priced its 2 billion euro two-tranche senior bond offering, strengthening its liquidity position and extending its debt maturity as a result.

The issuance was more than three times subscribed, with Unibail stating that it received more than 6.5 billion euros in demand.

What now for the Unibail share price

The Unibail share price has soared in recent weeks, marking a stark change in fortune for the company which was hard hit by the COVID-19 pandemic. However, the REIT is still a long way off its 52-week high of $11.68 earlier in the year.

More reading

• ASX 200 Weekly Wrap: ASX continues to climb, despite outage
• These were the best performing ASX 200 shares last week
• Another major shakeup for Unibail Rodamco Westfield (ASX:URW) shareholders
• Why the Unibail Rodamco Westfield (ASX:URW) share price is up 63% in 5 days
• ASX 200 up 0.35%: Moderna vaccine success, Afterpay update, Westpac upgraded

Motley Fool contributor Daniel Ewing 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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Although the pandemic is stifling the growth of a large number of companies, there are still a handful that are on course to deliver explosive growth in FY 2021.

Two ASX growth shares that look set to deliver impressive full year results next year are listed below. Here’s what you need to know:

NEXTDC Ltd (ASX: NXT)

NEXTDC is one of the ANZ region’s leading data centre operators. It has been experiencing a surge in demand for capacity at its centres this year due to the accelerating structural shift to the cloud. This led to the company delivering a 14% increase in revenue to $205.2 million and a 23% lift in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $104.6 million in FY 2020.

Pleasingly, this positive form is expected to continue in FY 2021. At its recent annual general meeting, management reaffirmed its guidance for underlying EBITDA of $125 million to $130 million. This represents year on year growth of 20% to 24%.

Management expects this to be driven by strong growth in recurring data centre services revenue, underpinned by long-term customer contracts. This is being supported by its second-generation facility performance, which is driving scale and earnings.

Pushpay Holdings Ltd (ASX: PPH)

Another company expecting to deliver strong growth in FY 2021 is Pushpay. The growing donor management and community engagement provider to the church market recently released its half year results.

For the six months ended 30 September, Pushpay delivered a 48% increase in total processing volume to US$3.2 billion and a 53% increase in operating revenue to US$85.6 million. And thanks to further operating leverage, things were even better for its earnings. Pushpay reported EBITDAF growth of 177% to US$26.7 million.

Due to this strong performance, Pushpay increased its guidance for full year. It now expects EBITDAF of between US$54 million and US$58 million, up from its previous guidance of US$50 million to US$54 million. This will be more than 115% higher than FY 2020’s EBITDAF of US$25.1 million.

More reading

• Why the NEXTDC (ASX:NXT) share price is climbing higher today
• Everything you need to know about the Pushpay (ASX:PPH) share split
• 3 compelling ASX payment shares rated as buys
• 2 great ASX shares to buy
• 5 fantastic ASX shares to buy today

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 S&P/ASX 200 Index (ASX: XJO) fell by 0.7% today to 6,636 points.

Here are some of the highlights from the ASX:

Bega Cheese Ltd (ASX: BGA)

Bega Cheese announced today that it has entered into a binding share sale and purchase agreement to acquire all of Lion Dairy and Drinks for a net acquisition price of $534 million. The deal is expected to complete at the end of January 2021.

This acquisition will be funded by a combination of debt and the proceeds of a $401 million underwritten entitlement offer and placement.

There are a number of brands that it manufactures, markets, sells and distributes. There are milk-based beverage brands including Dare, Farmers Union, Big M, Masters and Dairy Farmers. It comes with the yoghurt brands of Yoplait, Farmers Union and Dairy Farmers. There are chilled juice brands like Juice Brothers and Daily Juice. It has cream and custard brands Pura and Dairy Farmers. Finally, it has white milk brands Pura, Dairy Farmers and Masters.

Lion Dairy and Drinks also has Australia’s largest national cold chain distribution network supplying food service and convenience stores. The company has a national manufacturing footprint comprising 13 sites.

The company also has joint ventures and alliances with Sodima and Vitasoy.

Bega Cheese and Lion Dairy and Drinks combined will generate revenue of more than $3 billion. Lion generated pro forma normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $56 million for the 12 months to September 2020.

Bega expects that it can find at least $41 million of synergies per year, mostly from the milk network optimisation, indirect procurement and a corporate reorganisation.

The company expects that the deal will be accretive for earnings per share (EPS) in the double digits.

Bega will have pro forma FY20 net debt of $518 million after the deal is done.

The executive Chair of Bega, Barry Irvin, said: “We are delighted to announce this acquisition which we believe will create significant value for shareholders. The acquisition delivers important industry consolidation and value creation with synergies across the entire supply chain. The expanded product range, manufacturing and distribution infrastructure and brand portfolio realises our ambition of creating a truly great Australian food company.”

The Bega Cheese share price didn’t move today as it’s in a trading halt whilst it carries out the capital raising at a price of $4.60, which is a 9.1% discount to the last closing price.

ASX tech shares rebound

Whilst the overall ASX 200 fell today, there was a resurgence of ASX tech shares that regained some of the lost ground.

The Xero Limited (ASX: XRO) share price rose by close to 4%. E-commerce business Kogan.com Ltd’s (ASX: KGN) share price went up by around 5%. The Redbubble Ltd (ASX: RBL) share price went up 1.5%. The Afterpay Ltd (ASX: APT) share price rose by around 1%. 

WiseTech Global Ltd (ASX: WTC)

Global logistics software business WiseTech held its annual general meeting (AGM) for shareholders today.

At the meeting the company provided guidance for the FY21 result.

It said that since June, it has seen a recovery, with momentum improving and continuing in FY21. By the end of July, CargoWise user numbers were close to pre-COVID-19 levels and have seen been trending upwards and above historical averages.

WiseTech is guiding that its FY21 revenue will be up between 9% to 19%, to between $470 million to $510 million. It’s also expecting its EBITDA to grow between 22% to 42%, to a range of $155 million to $180 million.

Management said that COVID-19 has provided longer-term market disruption and has provided a tailwind for growing its market share as the need for digitalisation across the globe accelerates.

More reading

• Top brokers name 3 ASX shares to sell today
• ASX 200 flat: Bega Cheese announces major acquisition, WiseTech reaffirms guidance
• Bega Cheese (ASX:BGA) announces $534 million Lion Dairy & Drinks acquisition
• Why the WiseTech Global (ASX:WTC) share price is climbing higher today
• The real earnings growth driver for ASX bank stocks in FY21 isn’t what you think

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

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The Youfoodz Holdings Limited (ASX: YFZ) ready-to-eat meal brand is expected to list on the ASX in the second week of December. The company’s initial public offering (IPO) is currently underway, with Youfoodz looking to raise $70 million at $1.50 per share.

What does Youfoodz do?

Founded in 2015, the Brisbane-based company makes and sells fresh, pre-prepared meals and healthy snacks and drinks that are delivered to customers’ doors. In addition, the business begun selling grocery essentials and fruit and vegetable boxes for home delivery amid high demand during the COVID-19 pandemic.

Growth goals

In the Youfoodz investment prospectus, chief marketing officer Simon Jarvis highlights the company’s plan to double the size of its business.

Jarvis himself spent 10 years in the agency space before working as a business-to-consumer marketer with Telstra Corporation Ltd (ASX: TLS), TAB New Zealand and TheScore Inc. Youfoodz points to Jarvis’ extensive cross-border marketing experiences as a tool to ensure the company can rapidly drive new customer acquisition, retain existing customers more effectively and maximise returns on marketing investment.

In the prospectus, the company outlined it is focused on executing five key growth initiatives:

• capturing underlying market and category growth
• growing segment market share and Average Order Value through new offerings
• customer retention with a subscription model and loyalty program
• manufacturing automation and other efficiencies from a new purpose-built manufacturing facility
• selectively targeting new geographies.

Youfoodz is also working to understand customer segments through data-driven customer relationship management communications.

In a recent interview, Jarvis highlighted that Youfoodz has an audience profile that skews 70% female and around 25 years of age who are single or live with a partner, adding “[b]ecause our product is about convenience, time saving and healthy meals made easy, it tends to appeal to… people commuting to work with less time to cook and prepare meals.” 

He commented that data shows that 4.9 million of Australia’s 14.8 million main grocery buyers fit into this time-poor category.

Details of the offer

According to Youfoodz management, the IPO proceeds will be used for the following purposes:

• 21% to help fund new manufacturing facilities
• 35% for general corporate purposes
• 36% for repaying shareholder loan to a major shareholder RGT Capital (which provided debt financing of $25 million, pre-IPO).

Youfoodz shares are expected to start trading on 8 December.

More reading

• Why Redbubble, Kogan, Marley Spoon and 1 other ASX share are surging
• Temple & Webster (ASX:TPW) share price barnstorms back with 11% rise

Motley Fool contributor Miles Wu 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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The Ainsworth Game Technology Limited (ASX: AGI) share price is down 7.1% at 32.5 cents today, on news the company expects to make a loss of $15 million in the first half of FY21. The slot machine manufacturer projects that depressed market conditions as a result of COVID-19 will continue to impact its business throughout the first half.

A more positive outlook for the second-half

Despite forecasting challenging market conditions for the first half, Ainsworth is optimistic that its business will improve in the second-half. 

The company says that based on the current landscape in North America, it anticipates improved performance as FY21 progresses. This improvement will be built on on the success of its HHR (Historical Horse Racing) products, as well as on its recent acquisition of MTD Gaming. Ainsworth purchased the United States-based MTD Gaming for US$26 million back in March this year. 

In Australia, the company says it sees encouraging initial market response to its new A-Star cabinet slot machine products.

Ainsworth did not release additional details when it announced earlier today that it expected to make a $15 million loss in the first half of FY21 but said this would be a year of two distinct halves. The first half would be about safety and security through the reopening phase. The second half about recuperation and development as the world entered the “new normal” phase.

The company will provide an update on its progress at half year results in February 2021.

How did Ainsworth Game fare in 2020?

Ainsworth’s FY20 results reflected the impacts of COVID-19. For full-year FY20, sales revenue was A$149 million, a decline of 36% compared to FY19. It reported a loss after tax for the year of $43 million. 

The company attributed these disappointing numbers to the suspension of some of its clients from mid-March, as a result of Government-ordered shutdowns of casinos and bars around the world, including in Australia. Since that time, some of its customer’s facilities have reopened. However, venues have reduced capital expenditure made by its customers due to patron numbers being well below pre-pandemic levels. 

The Ainsworth Game share price has lost more than half its value this year. The share price began the year trading at 80 cents, its highest level for the year. The Ainsworth Game share price reached its all-time high in 2017, when it was trading at $2.65. At today’s price of 32.5 cents, the company currently commands a market cap of $110 million. 

More reading

• Here’s why the Ainsworth Game (ASX:AGI) share price gained today

Motley Fool contributor Eddy Sunarto 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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The Pointerra Ltd (ASX: 3DP) share price fell lower today despite announcing a positive annual contact value update. By the market’s close, the Pointerra share price was down 6.48% to 50.5 cents. This compares to the All Ordinaries Index (ASX: XAO) which closed 0.78% lower at 6,641.80 points.

Let’s take a look at what Pointerra does and what it reported today.

What’s driving the Pointerra share price lower?

The Pointerra share price dropped lower today as shareholders digested the company’s latest set of results.

According to the release, Pointerra advised that, during the months of October and November, its annual contract value (ACV) has increased. The company revealed a surge in spending from its existing customers in addition to the onboarding of new customers. Pointerra experienced growth across its Australian and United States markets whereby its ACV run-rate has eclipsed the second quarter of FY21.

For the period from 15 October to 25 November, the company achieved ACV at US$5.82 million. This represents an 18% increase from when ACV was last reported 40 days ago.

The company stated that its software-as-a-service (SaaS) solutions increased ACV by US$0.89 million. This included its data-as-a-service (DaaS), analytics-as-a-service (AaaS), and data-processing-as-a-service (DPaaS) solutions.

Management said that it will update the market on further ACV growth when available. In addition, contract awards within the company’s suite of services will be announced during FY21.

What does Pointerra do?

Based in Australia, Pointerra provides 3D geospatial data technology. Its online platform processes massive 3D dataset and stores the information on the cloud. This negates the need for expensive and time-consuming high-performance computing. The company’s platform can be accessed instantaneously around the world on any device.

About the Pointerra share price

The Pointerra share price has had a stellar performance over the last six months, rising by 1,163%. No doubt shareholders who invested back in May and held onto their Pointerra shares, would be smiling with these incredible gains.

Reaching an all-time high of 67.5 cents in September, Pointerra has experienced a rapid acceleration of interest in its cloud-based platforms recently. At the start of this month, the Ponterra share price was sitting at 31 cents before increasing to today’s level, highlighting its volatility.

The company has a current market capitalisation of around $355 million today.

More reading

• Is the CBA (ASX:CBA) share price overvalued?
• The Ioneer (ASX:INR) share price has rocketed up 11% today and 61% in November
• HUB24 (ASX:HUB) share price edges lower following AGM update
• Monash IVF (ASX:MVF) share price lower despite forecasting strong earnings growth
• Which of these ASX bank shares offers the highest dividend?

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia has recommended Pointerra 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 Commonwealth Bank of Australia (ASX: CBA) share price has been a very strong performer in November.

Since the start of the month, the CBA share price has climbed an impressive 18% to $81.33.

Is it too late to buy CBA shares?

According to a note out of Goldman Sachs, investors might be better off looking at other investment options in the banking sector.

Its analysts have recently retained their sell rating but lifted the price target on the bank’s shares slightly to $65.84.

This price target implies potential downside of 19% for its shares over the next 12 months excluding dividends.

Why is Goldman Sachs bearish on the banking giant?

Goldman Sachs has issues over the bank’s valuation and the premium its shares trade at in comparison to the rest of the big four.

Following the release of its first quarter update this month, the broker said: “While CBA’s balance sheet is strong, with a sector leading capital and provisioning position, CBA’s operational performance in 1Q21, particularly as it relates to costs, does not justify the 24% premium it is currently trading on versus peers (versus 15% 15-yr average).”

Which bank does the broker like?

Goldman Sachs’ top pick in the sector is National Australia Bank Ltd (ASX: NAB).

It explained: “NAB remains our preferred major bank exposure, based on i) our view that it will deliver better than peer revenue growth, supported by its superior management of the volume/margin trade-off, ii) its investment spend which appears further progressed relative to peers allowing it to be more selective towards where resources are directed, contributing to its broadly flat FY21 cost target (c.0-2%), and iii) when combined, drives our forecast for NAB to deliver top of peer PPOP per share growth over the next three years.”

However, it is worth noting that the broker put a price target of $22.96 on NAB’s shares last week. But due to its strong share price gain, it is actually now trading above this at $23.60.

I suspect that Goldman Sachs will revisit its recommendation following NAB’s annual general meeting in the coming weeks. So stay tuned for that.

More reading

• Which of these ASX bank shares offers the highest dividend?
• The real earnings growth driver for ASX bank stocks in FY21 isn’t what you think
• Why the Cann Group (ASX:CAN) share price is up 76% this week
• CBA and Zip were among the most traded shares on the ASX last week
• Is the CBA (ASX:CBA) share price a buy?

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

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