Telix Pharmaceuticals Ltd (ASX: TLX) shares are rocketing higher this morning after the company announced the United States Food and Drug Administration (FDA) approved its new drug application (NDA) for a prostate cancer imaging product. In early morning trade, the Telix share price is trading 8.1% higher at $3.07.

NDA approval

Investors are driving up the Telix share price today after news that the FDA has accepted the company’s NDA for TLX591-CDx (kit for the preparation of Ga-PSMA-11). The prostate cancer imaging product is a radiopharmaceutical targeting Prostate-Specific Membrane Antigen (PSMA). It uses a Positron Emission Tomography (PET) to scan for the disease.

Telix’s NDA submission for its prostate cancer imaging product included clinical data from over 600 patients. These were obtained from the studies undertaken by Telix and its research partners. Additionally, clinical evidence was reported in peer-reviewed medical literature, which was conducted from leading global academic centres. The highly reputable group includes the University of California (United States), the Peter MacCallum Cancer Centre (Australia) and Heidelberg University Hospital (Germany).

About prostate cancer

Prostate cancer is the second most common cancer in men, after skin cancer. In 2018 alone, 1.3 million men were diagnosed with prostate cancer for the first time. Despite advances in treatment, prostate cancer still accounts for a large number of deaths. That same year, over 365,000 men died from the disease. As rates of diagnosis are improving, the highest number of incidents are occurring in Europe, the United States, Australia, and New Zealand.

What did management say?

Telix CEO, Dr Christian Behrenbruch, commented on the approved NDA. He said:

We are delighted to have achieved this significant milestone with the FDA’s acceptance for filing of the first commercial NDA for PSMA imaging in the United States. This represents a major step towards our goal of providing this highly anticipated product to patients in the United States and beyond.

From acquiring ANMI4 and its advanced chemistry platform in December 2018, to successfully filing an NDA less than two years later, represents an extraordinary achievement by the Telix team. We now look forward to working with the FDA to bring TLX591-CDx to American patients living with prostate cancer as expeditiously as possible.

Furthermore, Telix Chief Medical Officer, Dr Colin Hayward, talked about the importance of the company’s product, adding:

The use of Ga-PSMA PET imaging is rapidly becoming the standard of care for prostate cancer imaging across a broad range of clinical settings. PSMA imaging is already included in the leading clinical practice guidelines in the United States and Europe, based on evidence that definitively demonstrates superiority over conventional imaging.

Telix share price summary

Telix first listed on the ASX in November 2017. With today’s rise, the Telix share price has hit a new, all-time high after notching up a previous high of $2.94 just last week. It was only at the start of November that the Telix share price jumped more than 30%. This came after news of the company’s strategic partnership with China Grand Pharmaceutical and Healthcare Holdings (CGP) set a new record for the Telix share price.

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Motley Fool contributor Aaron Teboneras 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 NEXTDC Ltd (ASX: NXT) share price is pushing higher today after the release of an announcement.

In morning trade the data centre operator’s shares are up almost 1.5% to $12.05.

What did NEXTDC announce?

This morning NEXTDC announced that it has upsized its new senior debt facilities following a strong response in syndication from a diverse set of new and existing banks and institutional investors.

According to the release, the company has lifted its new senior debt facilities by $350 million to a total of $1.85 billion.

The release explains that the senior debt facilities will remain split across three tranches, each with a tenor of five years. This comprises $800 million for a term loan facility, $400 million for a capital expenditure facility, and $650 million for a multi-currency revolving credit facility.

NEXTDC expects the financial close for the senior debt facilities to occur prior to the redemption of the $800 million in unsecured notes on 9 December 2020.

Following redemption of the notes, on a pro-forma basis, the company will have liquidity of approximately $1.95 billion. This comprises cash of $893 million and undrawn debt under the new senior debt facilities of $1.05 billion.

NEXTDC’s CEO and Managing Director, Craig Scroggie, commented: “The level of support from our existing and new lending partners has significantly exceeded expectations, with the revised debt facilities heavily oversubscribed.”

“The ability to upsize this transaction highlights the quality, maturity, and resilience of the business that NEXTDC have built over the last ten years. NEXTDC now has an enhanced funding runway to continue to invest in our best-in-class facilities to support the growth of our customers in our key markets,” he concluded.

Why is NEXTDC doing this?

When this debt deal was announced last month, management advised that the new facilities provide a significant improvement in NEXTDC’s weighted average cost of debt and duration profile. Furthermore, they come with materially improved financial covenants and flexibility.

In addition to this, it also gives the company greater funding firepower as it executes on its development pipeline in the coming years to satisfy growing customer demand.

This could include an international expansion. At its annual general meeting this month, NEXTDC revealed that it now has offices in Singapore and Tokyo and is working with key customers and talking to respective governments about a potential expansion in the region.

At the event it also reconfirmed its guidance for FY 2021. The company’s underlying EBITDA guidance remains $125 million to $130 million. This represents year on year growth of 20% to 24%.

More reading

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

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The TechnologyOne Ltd (ASX: TNE) share price is pushing higher this morning following the release of its full year results.

In morning trade, the enterprise software company’s shares are up 1.5% to $9.14.

How did TechnologyOne perform in FY 2020?

In FY 2020, TechnologyOne delivered a 4% increase in total revenue to $299 million. This was driven largely by its software-as-a-service (SaaS) business, which continues to growth strongly.

During the 12 months, the company reported SaaS Annual Recurring Revenue (ARR) of $134.6 million. This was a 32% increase on the prior corresponding period and up 22.1% from $110.2 million in the first half.

This was driven by the addition of 104 enterprise customers to its Global SaaS ERP solution, bringing the total to 539 large scale enterprise customers, with hundreds of thousands of users. Management notes that this makes it the largest single instance SaaS ERP offering in Australia.

On the bottom line, thanks to a combination of its SaaS growth and good cost control, the company’s underlying profit before tax came in at $82.5 million. This was up 13% year on year and compares favourably to its guidance range of 8% to 12% growth for FY 2020.

Also growing was TechnologyOne’s reported cash flows. It generated cash flow of $66.4 million, up 49% year on year. This led to its cash and cash equivalents increasing by 19% to $125.2 million.

In light of its positive performance and strong balance sheet, the TechnologyOne board declared a full year dividend of 12.88 cents per share. This is an increase of 8% year on year.

Outlook.

Management is expecting to see strong continuing growth in SaaS ARR and profit in FY 2021. Though, it stopped short of providing any firm guidance.

It also spoke very positively about its long term growth potential.

It commented: “As our SaaS business continues to grow quickly, the quality of this revenue stream is exceptionally high, given its recurring contractual nature, combined with our very low churn rate of <1%. Today our Total Annual Recurring Revenue (ARR) has hit $222m and is set to exceed $500m in the coming years.”

Management was equally positive on its earnings growth prospects.

“Underlying Profit Before Tax margin increased to 29%, compared to 27% pcp. We see margins continuing to improve to 35%+ in the coming years driven by the significant economies of scale from our single instance multi-tenanted Global SaaS ERP solution. We are on track to double the size of our business once again in the next five years,” it concluded.

More reading

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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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Qantas Airways Limited (ASX: QAN) will make COVID-19 vaccination compulsory for international passengers, according to its chief executive.

Qantas boss, Alan Joyce, told A Current Affair on Monday night that the airline is currently looking at adding a clause to its terms and conditions to “ask people to have a vaccination before they can get on the aircraft”.

“Certainly, for international visitors coming out and people leaving the country, we think that’s a necessity.”

Whether the rule would apply to domestic flights would depend on how the coronavirus situation evolves within the country.

Joyce expected Qantas wouldn’t be alone in requiring proof of vaccination as a condition of carriage.

“Talking to my colleagues in other airlines around the globe, I think it’s going to be a common theme,” he said.

“What we’re looking at is how you can have a vaccination passport, an electronic version of it, that certifies what the vaccine is. Is it acceptable to the country that you’re travelling to?”

International travel will return next year

With 3 different vaccines now showing promise, Joyce was excited to think international travel might be making a big comeback.

“We’re optimistic we could see the borders opening up significantly throughout 2021.”

While Australia’s international border has been shut, Qantas has been making government-organised repatriation flights to bring Australians home.

And these operations have allowed it to implement anti-virus measures, such as COVID testing passengers before and after they board.

“We’re testing the wastewater on the plane as well,” Joyce said.

The airline’s executive spoke as the usually busy Sydney-Melbourne route reopened on Monday.

He is hoping that, by Christmas, 60% of pre-COVID business will have returned.

“If we can get Melbourne and Sydney back to where it was pre-COVID that will be 3000 people that didn’t have a role… that are working for the airline again.”

The news came as the Transport Workers’ Union has made a last-minute pitch to save 2,400 ground crew jobs from being outsourced.

Qantas’ relationship with the union requires the latter to have a chance to bid for the work alongside outsourcing companies. The Australian Financial Review reported Tuesday that the TWU had finally made its submission last week.

The Qantas share price closed Monday’s session 1.71% higher at $5.36.

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

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Earlier this month, payments platform company Pushpay Holdings Ltd (ASX: PPH) announced it will undertake a four-for-one share split. This means that each share held in the company before the share split will turn into four shares after the split takes place.

This process kicks off today, Tuesday 24 November, so here’s what you need to know.

Why is Pushpay splitting its shares?

Traditionally, share splits have been a way to make share ownership more accessible for smaller investors like you and me. That’s because companies with high share prices can be out of reach for investors if they can only purchase whole shares.

Imagine trying to buy a whole share (or more!) in Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B). The Berkshire Hathaway share price was a phenomenal US$341,000 per share in November 2020. The CSL Limited (ASX: CSL) share price of around $317 per share is certainly more accessible, but even that could be a challenge if you only had $300 to invest.

This is less of a problem with newer investing platforms that offer fractional share investing, where you can invest fixed dollar amounts and buy part-shares. Still, the additional quantity of shares means there are more shares available to change hands as Pushpay noted in its announcement: “The Pushpay Board considers that the share split will assist to enhance liquidity in the market for Pushpay’s ordinary shares.”

Has Pushpay split its shares before?

Yes, this isn’t the first time Pushpay has split its shares. Pushpay previously completed a four-for-one share split in February 2016.

At that time, Pushpay was only listed on the New Zealand stock exchange, but the company says it saw a positive impact from the split. In its most recent November announcement, Pushpay noted that the previous split resulted in “a meaningful increase in both the shareholder base and liquidity that was partly attributable to the share split.”

The other part, of course, is likely to do with the company’s impressive growth profile. Pushpay revenue has rocketed from NZ$15 million in the 2016 financial year to NZ$187 million (US$129.8 million) in the 2020 financial year.

When is the Pushpay share split happening?

Today, Tuesday 24 November, is the last date for trading in Pushpay shares on a pre-share split basis.

What happens then? Well from the start of trading on 25 November until market close on Friday 27 November, Pushpay shares will trade as if the share split has occurred. This means that, all else being equal, the Pushpay share price will drop to around one quarter of the previous day’s closing price.  

However, it’s worth noting that over this period, Pushpay shares will trade on the ASX under the temporary ticker ‘PPHDA’ and trades will be made on a deferred settlement basis, so settlement will occur on Wednesday 2 December 2020.

From Monday 30 November 2020, things will return to normal and the Pushpay share price will be found under the ‘PPH’ ticker with regular settlement times.

Do share splits increase a company’s value?

Share splits have no impact on a company’s fundamental valuation, but when the share price is high, a split can make it easier for individual investors to buy shares in the company.

This was a factor behind big name share splits in the United States this year, with both Apple Inc (NASDAQ: AAPL) shares and Tesla Inc (NASDAQ: TSLA) shares splitting into smaller slices. However, with the Pushpay share price trading around $7.64 at the time of the announcement, it’s likely that having more shares outstanding available to buy and sell was a larger driver for Pushpay’s split. 

More reading

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• Down 22% in 3 weeks, is the Pushpay (ASX:PPH) share price a buy?

Regan Pearson has no position in any of the stocks mentioned. You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and PUSHPAY FPO NZX and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Apple, Berkshire Hathaway (B shares), and 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.

Regan Pearson has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and PUSHPAY FPO NZX and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Apple, Berkshire Hathaway (B shares), and 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 Brickworks Limited (ASX: BKW) share price will be on watch this morning after the release of a trading update ahead of its annual general meeting.

How is Brickworks performing in FY 2021?

According to the release, the Building Products Australia business has started FY 2021 strongly and has delivered first quarter earnings well ahead of the prior corresponding period.

Brickworks’ Managing Director, Mr. Lindsay Partridge, commented: “Our home builder customers have a solid pipeline of work for the remainder of the financial year, underpinned by the various government stimulus measures currently in place in each state.”

Mr Partridge revealed that the company was pro-active throughout the pandemic and worked hard to accelerate several important growth initiatives. This includes the introduction of a range of innovative new bricks, roof tiles, and masonry products.

The managing director also provided an update on its significant capital program. He expects this to strengthen its competitive position in a number of key markets. Part of this is the construction of its $75 million Austral Masonry plant in Sydney, which is well on track for commissioning in 2021.

North America.

Over in North America things are not quite as positive due to the pandemic. Management notes that there is short term uncertainty in the region, with the recent surge in infections causing ongoing disruptions to sales activity and manufacturing operations.

However, it is pleased with the underlying performance of the business and the progress achieved against its strategic priorities. Management notes that in August, it opened its new design studio in central Philadelphia. It believes this will further enhance its strong position in the high value architectural segment.

Looking ahead, management is confident that once conditions normalise, its North American operations will deliver improved earnings and growth for many years to come.

Property Trust.

One area which is performing particularly strongly is its Property Trust business with Goodman Group (ASX: GMG).

Since the end of the financial year, the construction of the state-of-the-art Amazon facility at Oakdale West is advancing and due to be complete in September 2021. Major infrastructure works are also proceeding to schedule and will allow construction of the Coles Group Ltd (ASX: COL) distribution warehouse to commence early in calendar 2021.

Following the completion of these two facilities, net rental distributions will increase by over 25%, and gross assets held within the Property Trust is expected to exceed $3 billion. There is also sufficient remaining land to provide at least a further five-year development pipeline.

Outlook.

Management believes that Brickworks is in a strong position, with a conservative debt level and a diversified portfolio of attractive assets.

Mr Partridge commented: “Within Building Products Australia, we have made an encouraging start to the year and our customers are reporting a strong pipeline of work in place. However, in North America conditions are more challenging, due to the ongoing impact of COVID-19. Of course, until a vaccine becomes widely available, there remains considerable uncertainty in both markets.”

“Another strong half is expected for Property, and WHSP is expected to deliver a stable and growing stream of earnings and dividends over the long term,” he concluded.

More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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Bitcoin and other cryptocurrencies have not enjoyed a solid reputation as a ‘stable’ asset class, or even as an asset at all. Warren Buffett’s right-hand man Charlie Munger even famously referred to bitcoin as worthless, artificial gold, rat poison and, er.. excrement.

Even though cryptocurrencies have been around for more than a decade (with the past few years pushing them into the mainstream), they remain outside the realm of conventional ASX investing vehicles like managed and exchange-traded funds (ETFs). Possibly hindering this elevation is the infamous volatility of the cryptocurrency scene, as well as controversy arising from the decentralised, stateless nature of the assets themselves.

However, we could be seeing a turning point in this orthodoxy.

Bitconnect?

According to reporting in the Australian Financial Review (AFR), the head of bond, income and defensive strategies at ASX fund manager Pendal Group Ltd (ASX: PDL), Vimal Gor, is increasingly bullish on cryptos and bitcoin in particular.

The AFR reports that Mr. Gor now has active positions in bitcoin futures on the Chicago Mercantile Exchange, quoting Mr. Gor on the reasons for this move:

There are over 7000 cryptocurrencies in the world. We are only looking at one, which is bitcoin… It has a futures contract so even though it’s a new asset, the way it trades is like any other asset. To buy bitcoin, you don’t have to be part of the tinfoil hat brigade… All the big hitters in the hedge fund world are coming out to endorse bitcoin now; it is entering the realm of the mainstream.

Bitcoin comes out of the woodwork

But Mr. Gor is not the only fund manager coming out in support of the cryptocurrency. The AFR quotes 2 other fund managers, Stan Druckenmiller and Paul Tudor Jones, on the matter.

Mr. Druckenmiller stated: “I have warmed up to the fact that bitcoin could be an asset class that has a lot of attraction as a store of value to Millennials.”

Mr. Tudor Jones agrees: “I’m not a bitcoin flag bearer but bitcoin has this enormous contingent of really smart, sophisticated people who believe in it. You have a crowd of people who are dedicated to seeing bitcoin succeed in it becoming a store of value”.

But it’s not just the ‘mainstreaming’ of cryptocurrency as a separate asset class that’s attracting Pendal to bitcoin, it’s also the shrinking effectiveness of alternative asset classes thanks to quantitative easing. Mr Gor told the AFR as much:

We think ultimately that government bonds will turn into a dead asset class, so we now have to imagine what it will be like for other assets classes when bonds are no longer relevant to hold in a portfolio… obviously commodities and cryptocurrencies have a part to play in the answer… Bitcoin is a cockroach that exists. They can’t ban it out of existence.

More reading

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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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Yesterday, shares of Myer Holdings Ltd (ASX: MYR) surged 10.45% to 37 cents a share, giving the embattled but iconic Aussie retailer a market capitalisation of just over $300 million. You have to go back to early March to find the last time the Myer share price was at this level. Additionally, Myer shares are now up more than 76% since 21 October, when they were asking just 21 cents. So what’s going on here?

What’s driving the Myer share price?

Apart from regular appearances on the ASX’s most shorted stock list (including this week), there has only been one major piece of news out of Myer recently. That was the announcement late last month that Myer’s chair, Gary Hounsell, will be walking the plank.

Mr Hounsell had been under some pressure for some time. It has been well known that Solomon Lew, CEO of Premier Investments Limited (ASX: PMV), had been pushing for Mr Hounsell’s resignation for a while. Mr. Lew’s Premier is a large investor in Myer, owning a 10.8% stake in the company. And, as we reported at the time last month, Lew got what he came for after fellow major shareholder, Geoff Wilson of Wilson Asset Management, sided with Premier against voting for Mr. Hounsell’s re-election. Mr. Lew has also called on the entire board to step down or be shown the door, and has threatened to call an extraordinary general meeting over the matter.

My-store for much longer?

According to reporting in the Australian Financial Review (AFR) yesterday, this is what was behind the massive surge in Myer shares yesterday. The AFR reports that there is building speculation that Mr. Lew, through Premier, is preparing to mount a takeover of Myer. Premier’s retailing businesses like Smiggle, Peter Alexander and Just Jeans have done enormously well during the pandemic, if the company’s stellar FY2020 earnings numbers are anything to go by. It seems plausible at least that Myer shareholders would be excited about the prospects of Mr. Lew running the company.

However, this might not be the whole story. The AFR also quotes Wilson Asset Management fundie, Oscar Oberg, who reckons that Myer is simply benefitting from the goodwill flowing out of the recent coronavirus vaccine announcements:

“If I look into 2022 we’d like to think a vaccine brings back some normality in the business”, the AFR quotes Mr. Oberg as stating. “We think management has been doing a great job, the balance sheet is in great nick and we think they’ll be able to repay their debt when it comes due next year”

It could be one, or a combination of these factors that is pushing the Myer share price to an 8-month high this week.

More reading

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments 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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For a company often labelled Australia’s version of Amazon.com Inc (NASDAQ: AMZN), Booktopia Group Limited (ASX: BKG) founder and chief Tony Nash doesn’t see the resemblance.

“Books are not a priority for Amazon anymore,” he told The Motley Fool.

“It’s less than 3% of their revenue now. Sure, it was 100% when they started out, and is a part of their DNA, but it’s not a priority for them.”

But Amazon did start as an online book store, so the comparisons are inevitable.

Booktopia’s initial public offering closes on Tuesday with the shares released on the ASX on Thursday 4 December.

The IPO price is $2.30 per share, giving the retailer a market capitalisation of $315.8 million.

Not the first time at the circus

Booktopia attempted to float 4 years ago, but soon after Amazon announced plans to open Australian operations.

Potential investors became nervous and the IPO was cancelled.

“People needed to see that they weren’t going to annihilate us,” said Nash.

“We’ve gone from $80 million to over $200 million [of revenue] during that time.”

This showed that Amazon was never a threat, according to Nash. It’s too busy with other projects like cloud computing, grocery deliveries, video streaming and audio books.

“They would prefer someone else to sell the book to someone else and they take their 20% clip of the ticket,” he said. 

“Physical books are not what they want to focus on.”

The money raised from this IPO – $43.1 million – is similar to the amount Booktopia sought the first time round in 2016.

Our moat is incumbency: Booktopia CEO

When Nash created Booktopia in 2004, he remembers people calling him crazy for establishing a bookstore against the giant incumbents.

By 2015, the internet upstart was acquiring fallen star Angus & Robertson. The company also bought University Co-op Bookshop last financial year.

Notwithstanding this industry disruption in the past 16 years, Nash said Booktopia’s moat is its sheer market dominance.

“The number 2 online book retailer in Australia is turning over $25 million – a company named Zookal. They do textbooks for university students then it drops away after that,” he told The Motley Fool.

“We don’t have daylight between us and our competitors. We’ve got days and weeks… There’s really no one else.”

When you can’t just hire more people

According to Nash, Booktopia is at a point now where automation and robotics are required to take its operations to the next stage of growth.

“As you grow, you hit certain choke points within your business and you need to invest,” he said. 

“You can’t simply throw more people at it… You just don’t have the hours in the day nor the space to put people in.”

As such, it has gone on a spending spree of $36 million for logistical technology to pick and pack books in its western Sydney warehouse.

The program will upgrade its capacity from 800,000 units of stock to 1.8 million.

Booktopia earlier this year raised $8 million through a private equity round to fund the technology drive. Nash said $25 million of the funds raised in the IPO would also go towards this program.

The company has found a sweet spot in a highly commoditised industry, Nash believes. 

“We don’t necessarily have to be the cheapest. We’ve worked out at that if you’re in the ballpark people will come to us.”

Cycling to Paris

The funding will also allow Booktopia to keep higher stock levels.

“I don’t want to run out of the popular ones. That’s my main issue right now,” Nash said.

“The top 10, 20, 30 thousand titles – we shouldn’t run out of stock… These are the things we’re going to address because we’re well-funded.”

Booktopia wants to take full advantage of people rediscovering reading during the year of COVID-19.

“People are starting to re-evaluate their lives… The value of a book and the value of your time and a value of an enriched life – the pandemic has really helped recalibrate ourselves.”

Despite a long 16-year journey, the ASX listing is not the beginning of the end for Nash. 

“If I was doing the Tour de France, the IPO to me is like on the 10th stage, going through the 40km mark, you have 40km to go, you’ve a big climb up some mountain… Then after the 10th stage there’s another 11 stages to go.”

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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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Two fund managers have revealed the stocks they think will perform strongly after a COVID-19 solution comes along.

With growth shares taking off since the coronavirus trough in March, it’s difficult for investors to find companies that haven’t already blown up in value.

But TMS Capital portfolio manager Ben Clark and First Sentier Investors deputy head of Australian growth equities David Wilson each reckon they have found one.

Mining without the mineral price rollercoaster

Clark tipped Deterra Royalties Ltd (ASX: DRR) for a rosy future in the post-virus world.

“One stock we’ve started buying is a company called Deterra, which has just been spun out of Iluka Resources Limited (ASX: ILU),” he said on a Livewire video.

“It owns a mining royalty over some land that BHP Group Ltd (ASX: BHP) mines in, and BHP’s going to almost triple its output from Mining Area C over the next 3 years.”

The advantage of a mining royalty company is that it’s not exposed to wild fluctuations in the global minerals market.

“You’re almost certainly going to see very strong growth in their underlying earnings even if we see quite a significant pullback in the iron ore price,” Clark said.

The company only listed on the ASX a month ago, starting at $4.87 a share and a market capitalisation of $2.57 billion. The stock has since dipped to $4.36 as of Monday afternoon.

The current price is very tempting, according to Clark.

“When you can compare it to the royalty companies that trade in Toronto and in New York, it looks quite cheap,” he said.

“We would argue it’s probably one of the highest quality mining royalty streams anywhere in the world, given the counterparty, the production growth, the length of the asset.”

Pivoting for the future

Wilson’s tip for growth was gaming provider Aristocrat Leisure Limited (ASX: ALL), which made its name in the past for poker machines.

“A little while ago they took the bold step to actually step away from their traditional business and move into the digital space,” Wilson said.

“That digital part of their business is now 40% of their earnings.”

The Aristocrat share price peaked at $37.43 in February before sinking to $17.54 in March during the COVID-19 panic. It is now back at $33.88.

The pivot was “a brave decision”, according to Wilson.

“They said ‘No, we need to step away from our core business, but try and get to where our business is going to be in 10 years’ time’. It’s going to be rough at times, but I think you can’t fault the way that they’ve executed thus far.”

Both fund managers said Australian stocks have excellent prospects compared to their northern hemisphere counterparts.

“We’re lucky we’ve got a great system here. Investors were happy to stump up quite significant amounts of cash in a pretty scary period. It allowed companies to get through,” said Clark.

More reading

• Top brokers name 3 ASX shares to buy next week
• Could the Aristocrat (ASX:ALL) share price be a leading ASX 200 growth share?
• Why the Aristocrat Leisure (ASX:ALL) share price can go higher from here
• ASX 200 rises again on Wednesday
• Why Aristocrat Leisure, Chalice Gold, Westpac, & Whitehaven Coal shares are charging higher

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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