My ASX share for the week (and the long-term) at today’s price is Bubs Australia Ltd (ASX: BUB).

I think it has a very exciting future. At a share price of $0.93 it has a market capitalisation of around half a billion dollars.

Overview of Bubs

Bubs describes itself as Australia’s only vertically integrated producer of goat milk formula, with an exclusive milk supply from Australia’s largest milking goat herd.

In December 2017, Bubs Australia acquired NuLac Foods, Australia’s largest producer of goat milk products, including CapriLac, a leader in goat milk, powder and yoghurt, and Coach House Dairy, a premium range of Jersey milk products. The acquisition guaranteed exclusive sustainable supply of locally sourced goat milk from Australia’s largest herd of milking goats, with existing capacity to produce over six million litres of milk annually.

Bubs can be described as vertically integrated because last year it acquired Deloraine. At the time it was one of only 15 licensed canning facilities in Australia that was allowed to import into China under regulatory requirements administered by State Administration for Market Regulation (SAMR).

Why I think Bubs is a strong pick for the next 5+ years

There are several reasons why I think Bubs is one of the best ASX growth shares right now:

Control of supply chain

Having control of your supply chain can be important for consumer goods businesses. The more steps and businesses there are between production and the end customer, the more margin that is lost by the company.

Customers can have full confidence in Bubs’ products because they know Bubs is responsible from the farm all the way to the finished product.

International expansion

I think international growth is one of the most important factors for many ASX shares to beat the market over the long-term.

Australia can support very large businesses. Just look at Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS).

But Australia only has a population of just over 25 million people. Asia has a much larger population and therefore a much bigger total addressable market. ASX shares that can tap that market successfully can do very well. 

Bubs is targeting Asian growth right now. Bubs may expand to other countries in the future such as the US like A2 Milk Company Ltd (ASX: A2M) has done, but China and Vietnam alone are producing good results for Bubs.

Revenue growth and growing gross profit margin

Chinese revenue rose by 104% in the last quarter. ‘Other market’ revenue rose almost 20 times compared to the prior corresponding period and represented 12% of gross sales in the quarter. Asia is very important for the company’s medium-term growth plans. But Australian revenue actually grew by 34%, so domestic sales are going very well too.

The quarter to 31 March 2020 showed overall quarterly revenue of $19.7 million for the ASX share. This was a 67% uplift from the prior corresponding period and 36% growth on the previous quarter. Infant formula sales increased by 137%. These are impressive numbers.

In the FY20 half-year result Bubs revealed that its gross margin improved from 19% to 24%. This is a significant improvement and shows that Bubs is very scalable as it generates more revenue.

Capable management

I think Bubs’ management has done a really good job to grow the ASX share into what it is today. It has made a number of smart strategic decisions which improve the quality of the businesses.

The focus on growing its distribution footprint will help grow revenue further in the coming years. It’s sold across a variety of different retailers like Alibaba’s Tmall and Beingmate, Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL), Baby Bunting Group Ltd (ASX: BBN) and Chemist Warehouse.

Foolish takeaway

I’m not sure how big Bubs can become. But I think it has plenty of room for growth. The rising profit margin and rocketing revenue growth tells me it can become a very profitable business over the next few years. I’d be very happy to load up on shares for the next five years (or more) at the current share price.

More reading

• Do you have $1k to invest? Buy 1 of these ASX shares
• Are you in your 20s? Here’s why I would buy these quality ASX shares
• 3 top ASX growth shares to buy for FY21
• 10 high quality ASX shares to buy in FY 2021
• Where to invest $5,000 into ASX shares in July

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 BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Wesfarmers Limited. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post My ASX share for the week appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) fell 1.5% today as investors fears increased about the continuing growing COVID-19 cases.

In Victoria there was an additional 75 new positive COVID-19 cases. The state is now considering local lockdowns and it’s undertaking a testing blitz in several suburbs.

Here are some of the highlights from the ASX 200 today:

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) reports solid growth

The healthcare business released its FY20 report today. It’s one of the ASX businesses involved in helping patients who are suffering due to COVID-19.

The ASX 200 business reported operating revenue of NZ$1.26 billion, up 18% compared to FY19. This represented growth of 14% in constant currency terms.

Management said that the increase of revenue was largely driven by growth in the use of Optiflow (nasal high flow therapy), demand for products to treat COVID-19 patients and strong hospital hardware sales throughout the course of the year.

Net profit after tax was NZ$287.3 million, up 37% on the previous year, or 30% in constant currency. However, excluding the impact from tax changes, being the R&D tax credit and building tax depreciation, net profit after tax grew by 23% in constant currency terms.

Whilst revenue growth was strong, there was one downside. The gross margin decreased by 73 basis points to 66.1%, primarily driven by additional air freight costs required to acquire the increased supply of raw materials and expedite finished goods to customers. There was also additional start-up costs of the company’s second Mexico manufacturing facility.

The board declared a final dividend of 15.5 cents per share, an increase 15% compared to last year. This brings the total dividend to 27.5 cents per share, an increase of 18% on last year.

In FY21 the ASX 200 company is guiding revenue to be approximately NZ$1.48 billion and net profit of between NZ$325 million to NZ$340 million.

The Fisher & Paykel Healthcare share price rose almost 7% today.

Jumbo Interactive Ltd (ASX: JIN) share price drops 13%

Lottery reseller business Jumbo suffered a selloff today as the new agreement with Tabcorp Holdings Limited (ASX: TAH) was announced.

The new deal is a 10-year term which extends the current expiry by approximately seven years.

A fixed extension fee of $15 million is payable by Jumbo to Tabcorp upon commencement.

But there is also a service fee payable on the ticket subscription price. It starts at 1.5% in FY21, then it increases to 2.5% in FY22, rises again to 3.5% in FY23 and is scheduled to reach 4.65% after that. For FY21 to FY23, where the value of subscriptions is in excess of $400 million for each applicable financial year, Jumbo will pay a service fee of 4.65% on the value in excess of $400 million.

The share price of ASX 200 business Tabcorp went up 0.9% today.

More bids for renewable energy business Infigen Energy Ltd (ASX: IFN)

There were more bids announced for wind farm business Infigen today.

UAC Energy increased its bid to $0.86 per share and also declared its offer wholly unconditional. However, Iberdrola Australia then outbid UAC Energy again, increasing its offer to $0.89 per share.

The share price rose 3.4% to $0.92, which may suggest investors are expecting further bids.

Other large ASX 200 share price movements from today

At the red end of the ASX there were several large declines. The NRW Holdings Limited (ASX: NWH) fell just over 10%, the WiseTech Global Ltd (ASX: WTC) share price dropped 8.6%, the Mesoblast Limited (ASX: MSB) share price dropped almost 7% and the Virgin Money UK PLC (ASX: VUK) share price fell 6.6%.

At the positive end of the ASX, some of the other positive movements aside from Fisher & Paykel Healthcare were: the Evolution Mining Ltd (ASX: EVN) share price went up 4.1%, the Silver Lake Resources Limited. (ASX: SLR) share price increased almost 3% and the Nearmap Ltd (ASX: NEA) share price climbed 2.8%.

More reading

• The latest ASX recommendation changes by top brokers
• 3 star ASX 200 shares for all types of investors
• Broker survey points to more upside for JB Hi-Fi and these ASX stocks
• ASX 200 drops 1.15%: Fisher & Paykel Healthcare impresses, big four banks tumble
• Why De Grey, Fisher & Paykel Healthcare, Perseus, & PolyNovo shares are charging higher

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 Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Nearmap 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 Centaurus Metals Limited (ASX: CTM) share price is charging higher today after the company delivered a maiden JORC 2012 mineral resource estimate (MRE) for its nickel-sulphide project in Brazil.

At the time of writing, Centaurus Metals shares have jumped 32.84% to trade at 44.5 cents apiece. This rise takes the company’s current market capitalisation to around $116 million.

About Centaurus Metals

Centaurus is an exploration company focused on the development of its wholly-owned Jaguar Nickel-Sulphide Project located in the Carajás Mineral Province in Brazil.

The company acquired the Jaguar Project from global mining giant Vale S.A. in September 2019. Vale completed a historical non-JORC MRE in 2010, which comprised 40.4 million tonnes at 0.78% nickel for a total of 315,000 tonnes of contained nickel.

Additionally, Centaurus holds the development-ready Jambreiro Iron Ore Project, which is located in south-east Brazil. It is a fully permitted, wholly-owned project that is licensed for 3 million metric tonnes per year of production.

Why is the Centaurus Metals share price surging? 

This morning, Centaurus announced a maiden JORC 2012 indicated and inferred MRE of 48 million tonnes at 1.08% nickel for a total of 517,500 tonnes of contained nickel for its Jaguar Project.

What’s more, this maiden MRE includes a higher-grade component of 20.6 million tonnes, grading 1.56% nickel for 321,400 tonnes of contained nickel. The company noted that this provides an “outstanding” platform from which to commence scoping and development studies.

This maiden MRE is based on more than 65,000 metres of diamond drilling, including 218 diamond drill holes.

“This is a phenomenal starting point confirming Jaguar’s status as a new globally-significant nickel sulphide project,” said managing director Darren Gordon.

“With a maiden Resource containing more than 500,000 tonnes of nickel, this is already one of the largest near-surface undeveloped nickel sulphide projects in the world and, as a maiden JORC Resource number, we believe it is up there with some of the best initial JORC Resources ever published by an ASX-listed junior,” Mr Gordon added.

Centaurus pointed out that Jaguar is unique in the nickel-sulphide space as the high-grade mineralisation comes almost to surface and continues at depth. Around 80% of the nickel metal in the maiden MRE sits less than 200 metres from the surface, which the company believes demonstrates the strong open pitiable potential of the project.

What now?

The maiden JORC MRE for the Jaguar Project covers the six Jaguar deposits and two Onça deposits. Since drilling commenced in November 2019, the company has drilled and successfully intersected high-grade nickel sulphides at three of the Jaguar deposits (south, central and north), as well as both Onça deposits.

Centaurus is yet to commence drilling at the Jaguar West or Jaguar North-East deposits, however, drilling is planned in the second half of 2020.

Additionally, the company will undertake step-out drilling at Jaguar in the second half of 2020 to test deeper high-grade underground targets and strike extensions of the known deposits.

In-fill drilling is already in progress, with two diamond rigs operating on day-shift only and a third rig on standby. The company plans to ramp-up back to three rigs on double-shift and mobilise a reverse circulation rig in the third quarter of 2020. This is part of its strategy to unlock the full potential of the Jaguar Project as quickly as possible.

“This multi-pronged approach should ensure that we can continue to grow the resource as we advance this exceptional project towards development,” Mr Gordon said.

Closing out his comments, Mr Gordon stated: “We also expect to complete a Scoping Study and deliver a further Resource upgrade this year, providing shareholders with strong news flow over the coming months.”

More reading

• Do you have $1k to invest? Buy 1 of these ASX shares
• Not sure about the big four banks? Buy these ASX dividend shares instead
• The latest ASX recommendation changes by top brokers
• ABS reveals which industries (and ASX shares) may rebound hard after COVID-19
• 3 exciting small cap ASX shares to add to your watchlist

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

The post Centaurus Metals share price soars 33% on maiden JORC mineral resource appeared first on Motley Fool Australia.

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Investing $1,000 is an important choice. Delaying spending and saving instead is a praiseworthy decision. But what ASX shares are you meant to choose?

Aussies should want their money to work as hard as it can to grow their wealth for the long-term.

Vanguard Australian Shares Index ETF (ASX: VAS) isn’t a terrible choice. It has low costs and (normally) a decent dividend yield. However, a large percentage of it is invested in the big four ASX banks of Westpac Banking Corp (ASX: WBC) and its peers.

I think Aussie investors can do better for their portfolio than that. Here are three ideas:

Share 1: BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

I believe there are several exchange-traded funds (ETFs) that Aussies can buy that would provide better returns than the Vanguard Australian Shares Index ETF over the long-term.

This ETF is invested in around 200 international climate change leaders (as measured by their relative carbon efficiency) and they “are not materially engaged in activities deemed inconsistent with responsible investment considerations”.

Its top 10 exposures are: Apple, Mastercard, Visa, Nvidia, Home Depot, Adobe, Paypal, Toyota, Netflix and ASML. As you can see, it has excluded some of the biggest businesses in the world like Facebook, Alphabet and Microsoft.

But the returns of the ETF haven’t been hampered by the lack of those big names. At the end of May 2020 it had returned 33% over the prior 12 months. Over the past three years it had returned 19.75% per annum. Since inception in January 2017 it had returned 21.2% per annum. I think those are compelling returns. Plus, those returns are after fees. The ETF charges 0.59% per annum, which is good value considering there are ethical screens for the shares involved.

With this ETF I like that you get great international diversification, strong returns and it can align your investments with your values, if that’s what you’re aiming for.

Share 2: PM Capital Global Opportunities Fund Ltd (ASX: PGF)

At a share price of $0.89 I think listed investment company (LIC) PM Capital Global Opportunities Fund looks really good value.

The job of a LIC is to invest in shares on your behalf. PM Capital Global Opportunities looks to invest in good value non-ASX shares. The strengthening Aussie dollar makes this a good time to invest in overseas shares.

PM Capital Global Opportunities is invested in shares like Visa, KKR & Co and Siemens. It has a diversified portfolio and it is able to short shares, where it can make money if share prices go down. At the end of May, 8.2% of its portfolio was in short positions.

I think it looks great value right now because the share price is valued at a 24% discount to the pre-tax net tangible assets (NTA) at 19 June 2020. The NTA has probably reduced since then, but a 20% discount would still be great value in my opinion.

Share 3: Bubs Australia Ltd (ASX: BUB)

At a share price of $0.92 I think this ASX share looks increasingly good long-term value.

If you look at today’s revenue versus the market capitalisation then Bubs doesn’t look exciting. But as investors we need to think where businesses might be in a few years from now.

Bubs is growing at a very fast pace. In the quarter to 31 March 2020 it generated record quarterly revenue of $19.8 million – this was growth of 67% compared to the prior corresponding period and it represented growth of 36% compared to the previous quarter.

I think there’s plenty more growth in store for the goat milk infant formula business. Asia is a very large market that Bubs is targeting. Vietnam and China growth alone could turn Bubs into a much larger business. Also, Bubs’ profit margins are growing as it benefits from the economies of scale effect. 

The fact that Bubs recently turned cashflow positive is a very good step for a business in the current COVID-19 circumstances. I think Bubs is definitely one ASX share to watch over the next five years.

Foolish takeaway

I’d be happy to invest $1,000 into one of the above ASX shares. Indeed, at these prices I’d be happy to invest a lot more than just $1,000. The short-term may be volatile, but I think all three shares can beat the ASX index over the long-term at the current prices.

More reading

• Are you in your 20s? Here’s why I would buy these quality ASX shares
• 3 top ASX growth shares to buy for FY21
• 10 high quality ASX shares to buy in FY 2021
• Where to invest $5,000 into ASX shares in July
• 3 top ASX shares to buy for growth investors in July

Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Do you have $1k to invest? Buy 1 of these ASX shares appeared first on Motley Fool Australia.

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While I think that the big four banks are top options for income investors right now, not everyone is a fan of them.

So, if you’re looking for dividends outside the banking sector, then the two shares listed below might be the ones to buy:

Aventus Group (ASX: AVN)

The first share that I think could be a good alternative to the big four banks is Aventus. It is a retail property company which specialises in large format retail centres (retail parks) across Australia. At the last count, the company had a total of 20 centres in its portfolio. These centres are home to a diverse tenant base of 593 quality tenancies. This includes many of the largest retailers in the country such as ALDI, Bunnings, Officeworks, The Good Guys, and Super Cheap Auto.

Pleasingly, its portfolio has a high weighting towards everyday needs, which I believe leaves it better positioned than most to ride out the current crisis. One broker that is particularly positive on Aventus is Goldman Sachs. It recently forecast a ~17.3 cents per unit distribution in FY 2021. This equates to a massive forward ~8.2% distribution yield.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

If you don’t mind waiting until FY 2021 for dividends, then I think Sydney Airport could be a great option. While the airport operator could still pay a heavily reduced final dividend, I would suggest investors turn their attention to the future.

Although it will take time for travel markets to recover in full, I’m optimistic the domestic travel market will be strong enough to allow the company to pay a 29 cents per share dividend in FY 2021. If this estimate proves accurate, it will mean a 5.2% dividend yield next year. I think this makes it well worth considering a patient investment in its shares.

More reading

• ABS reveals which industries (and ASX shares) may rebound hard after COVID-19
• Broker survey points to more upside for JB Hi-Fi and these ASX stocks
• ASX 200 Weekly Wrap: ASX retreats as confidence wanes
• Share price winners and losers of the pandemic
• These top ASX dividend shares could be great option for income investors

The post Not sure about the big four banks? Buy these ASX dividend shares instead appeared first on Motley Fool Australia.

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Get used to being whiplashed fellow Fools! The market is ding-donging and unlikely to break out to the up or downside until the August reporting season or a black swan event – whichever comes first.

It doesn’t take much to move share prices in this environment, and I think changes to broker recommendations will have an outsized impact on ASX share prices.

While the S&P/ASX 200 Index (Index:^AXJO) slumped by more than 2% in after lunch trade, the 3P Learning Ltd (ASX: 3PL) share price surged by a similar amount to 85 cents for this reason.

Education’s priceless

Morgan Stanley upgraded the online education services group to “overweight” from “equal-weight” after secured a US$10 million ($14.6 million) revenue opportunity.

3PL will supply the ministry of education of a Middle East country with Mathletics licenses and services.

This is a significant deal given that the group posted revenue of $54 million in FY19.

While the agreement is for 12-months, there is scope to extend the term and to increase the number of licenses for the online math program.

Price target upgrade

Morgan Stanley believes the ministry wants 3PL to succeed, but just counting the one-year revenue, the broker’s price target jumps to $1.10 from 86 cents a share.

“Initial evidence of sales execution, uplift in cash from service delivery and positive implications on strength of sales pipeline (with high incremental margins) suggests that 3PL is too cheap at <2x EV/Sales FY20e,” said the broker.

“There are questions that need clarifying, but sales have improved significantly and the risk-reward is much more constructive now in our view.”

Falling star

On the flipside, the Galaxy Resources Limited (ASX: GXY) share price came crashing back to earth after Credit Suisse downgraded it to “neutral” from “outperform”.

Shares in the lithium miner tanked 4.4% to 76 cents at the time of writing as a result.

The broker’s decision comes after it updated its estimates for Galaxy’s Mt Cattlin project, moderating production and the weak outlook for the commodity, which is made worse by the COVID-19 pandemic.

Nearer-term challenges

This is despite Germany and China increasing or extending subsidies for electric vehicles. Lithium is a key component used in the batteries of these automobiles.

But Credit Suisse believes it will take time for these subsidies to make an impact on the demand-supply of the commodity.

“Sustained demand growth will be needed to absorb supply chain inventory and latent production capacity as a precursor to improved pricing,” explained the broker.

“We estimate concentrate inventory held by [Australian] producers at ~130kt, but production utilisation of only ~55%, meaning there is >1.4Mt latent concentrate supply, equivalent to over half of 2019 global lithium production.”

More reading

• 3 star ASX 200 shares for all types of investors
• Broker survey points to more upside for JB Hi-Fi and these ASX stocks
• ASX 200 drops 1.15%: Fisher & Paykel Healthcare impresses, big four banks tumble
• Why Galaxy, Jumbo, Webjet, & Zip Co shares are sinking lower
• Fortescue Metals and 2 other ASX 200 shares to buy in a recession

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

The post The latest ASX recommendation changes by top brokers appeared first on Motley Fool Australia.

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