The healthcare sector has been an interesting one to watch in 2020. Almost all ASX shares have been defined by how they have been affected, and perhaps reacted to, the coronavirus pandemic in 2020. But healthcare, especially so, for obvious reasons.

So let’s have a look at which ASX healthcare shares have been the best performers of the year so far. As a benchmark, the S&P/ASX 200 Index (ASX: XJO) is currently down 0.5% for the year to date – not exactly a hard benchmark to beat, but it puts things into perspective for healthcare shares. So, here are 8 top performers of the sector:

ASX Healthcare Share	YTD share price gain (as of 14 December)	Market Capitalisation
Mesoblast Limited (ASX: MSB)	121.46%	$2.67 billion
Polynovo Ltd (ASX: PNV)	106.45%	$2.54 billion
Healius Ltd (ASX: HLS)	40.94%	$2.42 billion
Pro Medicus Limited (ASX: PME)	37.28%	$3.19 billion
Resmed Inc (ASX: RMD)	23.52%	$39.79 billion
Ansell Limited (ASX: ANN)	18.36%	$4.44 billion
Nanosonics Ltd (ASX: NAN)	12.74%	$2.16 billion
CSL Limited (ASX: CSL)	4.17%	$130.35 billion

Evidently, some ASX healthcare shares have done better than others. This is for various reasons that we shall dive into momentarily.

COVID brings opportunities

So, the overarching theme here is how companies that have been able to adapt their products or services towards fighting the pandemic have been rewarded.

Take top performer Mesoblast for instance. It recently signed a deal with Swiss giant Novartis to use its ‘remestemcel-L’ product for the treatment of respiratory difficulties experienced by COVID-19 patients. Remestemcel-L has also recently managed to get a tick of approval from the notoriously-strict US Food and Drug Administration (FDA). Optimism over potential FDA approval has been boosting this company all year.

Similarly, Helius saw rising revenues and cash flow for FY2020, which was supplemented by revenue growth of 17.5% in the first quarter of FY2021. The company told investors that its pathology division, which assists with COVID testing, was keeping the business strong.

We also see it through raw medical supplies that some of these companies have been providing. Ancell, for example, develops, manufactures, and sells medical gloves and other protective personal equipment. Last month, this company reported a 7.6% increase in sales for FY2020, including a 13.4% increase in its healthcare unit.

It was a similar story with sleep device manufacturer ResMed. ResMed pivoted to manufacturing ventilators and masks early in the year in response to the pandemic, as well as acute ventilator shortages around the world. As a result, this company was able to report revenue growth of 15% for FY2020 back in August, which was supplemented by a strong quarterly update in October.

Other ASX healthcare shares simply saw strong gains because they were able to weather the ‘COVID storm’ without taking a hit to the bottom lines.

ASX healthcare shares show resilience

For example, the second-best performer, Polynovo, has received endorsement after endorsement for its flagship ‘Novosorb’ product, which assists burn victims in recovering skin damage and loss. Last month, Polynovo informed the markets that it was expanding this product into countries like Belgium, Luxemburg and Sweden. That came after it was given the green light by the FDA for a trial in the US. 

We see a similar trajectory with Pro Medicus and Nanosonics. Pro Medicus announced a $10 million contract win last month with LMU Klinikum, which will see its Visage 7 technology across Europe. That came after the company reported revenue growth of 23.9% for FY2020 and a 20.7% increase in profits over FY2019 back in August.

Turning to Nanosonics, we can see this is another company that isn’t letting 2020 drag it down. Last month, the company reported that, after an initial dip,  installation of its flagship Trophon disinfectant machines was up 16% in the first four months of FY2021 (July-October) compared to the last four months of FY2020 (March-June). All that came on top of FY2020 revenue of $100.1 million, up 195 from FY2019.

Some exceptions

So, it’s worth noting first up that a few of the ASX’s more well-known healthcare shares aren’t actually doing too well this year. The ‘big dog’ is of course CSL, the ASX’s second-largest company overall behind Commonwealth Bank of Australia (ASX: CBA).

CSL does make this list, but only just. Far from the recent performance investors are used to, this healthcare giant is ‘only’ up 4.48% for the year. In 2019, CSL managed to grow almost 50% in value, coming after 2018’s increase of around 30%.

The year 2020 has delivered a reality check here for CSL shareholders. In 2020, disruptions to the company’s plasma business, as well as the recent failure of the vaccine candidate CSL was working on with the University of Queensland, have dampened investor enthusiasm with this giant.

Further, the ASX’s third-largest healthcare share, private hospital operator Ramsay Health Care Limited (ASX: RHC), remains down almost 12% year to date. This company was affected by global hospitals pivoting to prioritise coronavirus cases, and in doing so suspending elective surgeries.

Foolish takeaway

As you can see, 2020 has brought challenges and opportunities to the ASX healthcare sector. While there have been some clear winners and losers here, it’s a great reminder of the ‘evergreen’ nature of this sector, and the benefits it can bring to us all.

More reading

• Why the Afterpay (ASX:APT) share price is not the only rising star this year
• 5 things to watch on the ASX 200 on Tuesday
• Why ASX oil stocks could replace the ASX tech boom in 2021
• ASX 200 rises on Monday
• Why the Webjet (ASX: WEB) share price is climbing higher

Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Ansell Ltd., Nanosonics Limited, Ramsay Health Care Limited, and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Altium Limited (ASX: ALU) share price was out of form on Monday and dropped slightly lower following a major announcement.

The electronic design software platform provider’s shares fell almost 0.5% to $36.03.

This compares to a 0.25% gain by the S&P/ASX 200 Index (ASX: XJO) and a 1.9% gain by the S&P/ASX All Technology Index (ASX: XTX).

What happened?

On Monday Altium announced an agreement to sell its TASKING business to European private equity firm FSN Capital for US$110 million.

The company revealed that it was selling the non-core asset so that it could focus on its new Altium 365 platform.

Altium’s Chairman, Sam Weiss, explained: “We are generating real momentum with Altium 365, the world’s first cloud platform for PCB design and realization, and we believe that Altium 365 is critical to enhance long term shareholder value. The divestment of TASKING enables us to singularly focus on our transformative vision and to fast track the building and acquisition of complementary assets.”

Altium expects the deal is to be finalised in the first quarter of 2021, subject to standard conditions and regulatory approval.

In addition to this, management revealed that its first half performance remains solid. And while ongoing COVID lockdowns in the US could impact its performance, it remains confident it will achieve its full year guidance for FY 2021.

Is this a buying opportunity?

One broker that believes this is a buying opportunity for investors is Morgan Stanley. This morning the broker retained its overweight rating and $40.00 price target on the company’s shares.

Based on the current Altium share price, this represents potential upside of 11% over the next 12 months.

It was happy to see the company reaffirm its guidance and was pleased with management’s positive commentary regarding its Altium 365 platform. It believes this platform will be the key driver of growth in the future.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises on Monday
• ASX 200 up 0.55%: Altium update, Afterpay jumps, NAB given ACCC approval
• These are 10 of the best performing ASX tech shares of 2020 so far
• Here’s why the Altium (ASX:ALU) share price is on watch today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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We’re already 20 years in, but the 21st century has finally arrived.

PayPal co-founder and early Facebook investor Peter Thiel told Forbes this month that many shares are way overvalued and it would take years for those companies to grow into their valuations.

“But I keep thinking the other side of it is that one should think of COVID and the crisis of this year as this giant watershed moment, where this is the first year of the 21st century,” he said.

“This is the year in which the new economy is actually replacing the old economy.”

And Sydney portfolio manager Michael Frazis couldn’t agree more.

“For all the trials and tragedies of 2020, this was a year when all kinds of technology accelerated,” he said in a memo to Frazis Capital clients.

“This was a year where those taking extraordinary risks to advance the human race were richly rewarded, and for that we can all be thankful.”

Be on the right side of history

He acknowledged investing in new trends and technological shifts is “often uncomfortable”, but investors want to be on the right side of history.

“Balance sheets and income statements are messy, and the extraordinarily talented people that build new businesses are often odd,” he said.

“But it’s far riskier, in our opinion, to be on the other side of these shifts. Simply look at the performance of Tesla Inc (NASDAQ: TSLA) and Carvana Co (NYSE: CVNA) versus the auto industry; Afterpay Ltd (ASX: APT) and Square Inc (NYSE: SQ) versus global banks; and Shopify Inc (NYSE: SHOP), Mercadolibre Inc (NASDAQ: MELI) and Sea Ltd (NYSE: SE) versus traditional retailers.”

Sectors for the new century

Frazis pointed to the extraordinary science behind the development of COVID-19 vaccines as proof that the world has now ticked over to a new era.

“Biology has always had data at its core, but in 2020 this data science reached new heights,” he said.

“Chinese scientists posted the genetic code of the coronavirus online, and within days Moderna Inc (NASDAQ: MRNA) developed the first of what will likely be many mRNA vaccines without any access to the virus itself. Truly science fiction stuff.”

Biological research received a lot of government and investment funding this year, according to Frazis.

“It has never been cooler to be a biological scientist. Talent and capital is a thrilling combination. The next decade should be a good one for the life sciences.”

Non-government space exploration also made tremendous progress in 2020, said Frazis, making private travel out of earth a possibility this century.

“It was also a good year for space, with Virgin Galactic Holdings Inc (NYSE: SPCE) (which we own) and SpaceX (which sadly we can’t) both laying down serious milestones in what will be one of the future’s largest industries.”

He also picked the hydrogen fuel industry as a winner in the coming years.

“In 2020 the use of hydrogen in transportation reached critical levels, much to the benefit of Plug Power Inc (NASDAQ: PLUG), whose fuel cells now transport [about] 30% of US retail food and groceries.”

Frazis Capital has returned more than 92% net for the year to date, according to the portfolio manager.

Frazis told his clients last month that he was calling the peak of “red hot tech stocks” and would be selling them down.

“Longer term yields have begun to rise, tech valuations are at record highs, and we believe a period of serious multiple compression has already begun.”

More reading

• Sell now or hold forever? What to do with shares like Afterpay (ASX:APT)
• Here’s why Bubs (ASX:BUB) and this ASX share are underperforming in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Better Buy: Square vs. Visa
• Why ASX oil stocks could replace the ASX tech boom in 2021

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook, MercadoLibre, PayPal Holdings, Sea Limited, Shopify, Square, Tesla, and Virgin Galactic Holdings Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Facebook and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Laybuy Holdings Ltd (ASX: LBY) share price has been out of form recently and sank to a 52-week low of $1.23 on Monday.

In light of this, the buy now pay later (BNPL) provider’s shareholders will be hoping that the release of a market update this morning will be enough to put its shares on a positive trajectory at long last.

What did Laybuy announce?

This morning Laybuy announced that it has achieved three major growth milestones.

One of these is its Tap to Pay product, which has been successfully released in New Zealand following the successful launch in Australia.

The company notes that it is the first BNPL provider to offer Tap to Pay in New Zealand thanks to the collaboration with Mastercard as part of the payment giant’s Fintech Express program.

Management advised that Laybuy is already seeing a strong interest from consumers and looks forward to a UK rollout early in the new year once COVID headwinds ease.

Acceptance from consumers in both Australia and NZ has been strong and Laybuy is expecting continued strong growth. Particularly given the increased potential for further take up of its BNPL offering via simple Tap to Pay in physical retail stores.

US launch.

Another milestone that has been achieved is the launch of the beta testing of its offering in the United States via its Laybuy Global product with selected retailers. A full rollout is expected across the country in April 2021.

Management commented: “The US market is extraordinarily large and represents a significant opportunity for Laybuy. The US Census Bureau estimates that for the 12 months ended September 2020, the total US Retail market was US$5.5 trillion with online e-commerce representing over US$730 billion. BNPL is at relatively early stages of penetration in the US market and represents a strong growth opportunity.”

Prezzee collaboration.

A third milestone the company announced is a collaboration with Prezzee.

This collaboration will see Laybuy offering customers the opportunity to ‘Pay in 6’ for gift cards at a huge variety of stores, initially across Australia and the UK.

It advised that via the Laybuy shop directory, consumers will be able to acquire gift cards, either for their own use or for gifts, from leading merchants. This includes ASOS (AU), Bunnings, Catch, Dymocks, Freedom, Ikea, Kogan.com Ltd (ASX: KGN), The Iconic, and Webjet Limited (ASX: WEB).

Laybuy’s Managing Director, Gary Rohloff, revealed that he was delighted with the pace at which the Laybuy team has been able to deliver these innovations to the market.

He added: “I also look forward to announcing further product feature enhancements in the first quarter of calendar year 2021. December trading has continued the strong momentum from November as customers use Laybuy as a budgeting tool in the lead up to Christmas, and I will be pleased to announce more record breaking performance as we continue into 2021.”

More reading

• Why the Afterpay (ASX:APT) share price continues to dominate
• Why Laybuy, Mesoblast, Sandfire, & Telix shares are charging higher
• Laybuy (ASX:LBY) share price on watch after delivering strong growth in November
• Laybuy (ASX:LBY) share price pushes higher following half year results
• Is buy now, pay later (BNPL) giving Aussies a headache?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Austin Engineering Ltd (ASX: ANG) share price will be on watch this morning. This comes after the company announced after yesterday’s market close it has received a number of new orders for its products.

The Austin share price finished Monday’s trading session at 17.5 cents. It will be interesting to see how the company’s shares perform today as investors digest this latest news.

Strong orders received

Austin Engineering, a global mining equipment designer and manufacturer, reported last night it has received new customer orders for more than 100 of its products. These include truck bodies, water tanks and buckets for large mining companies.

The recent order flow is estimated to comprise more than $35 million in revenue for the company. Furthermore, the recent purchases will support Austin’s previous earnings guidance of underlying net profit after tax of above $9 million.

The company’s order book now accounts for over 70% of expected revenues, which is on par with the same time last year.

Segment performance

Management said that while the Asia-Pacific region continues to outperform expectations, its North and South American segments are lagging behind.

In the United States market, the intensifying COVID-19 situation, and continued federal election noise are negatively impacting Austin’s order flow. Consumer confidence appears to have stunted as businesses refrain from capital expenditure.

Looking ahead however, Austin is forecasting an improvement post January 2021 with annual budgets usually reset for the new year. Currently, the company has already quoted several works in the region, with final customer commitments anticipated in the third quarter of FY21.

Similar to its northern neighbour, South America has seen business activity falter amid COVID-19 restrictions. Tender contracts for long-term supply of equipment, repair and maintenance have become delayed in Chile. Austin advised it is well positioned to weather the storm and sees a number of opportunities in the post-pandemic world.

What did management say?

Commenting on the company’s performance, Austin managing director Mr Peter Forsyth said:

The Asia-Pacific region is performing exceptionally well at the moment with a strong line of sight to keeping our two large facilities in Perth and Indonesia close to capacity.

Offsetting this strength, the Americas are currently facing challenging operating environments, and this is a product of the broader economies in those regions. I am heartened by the scale of opportunities in the US, Canada and Chile and we remain confident that the tide will begin to turn early in the New Year in these regions.

Austin share price summary

The Austin share price has had a bumpy road over the past 12 months. Its shares reached a high of 23 cents in January, before falling as low as 10.5 cents in March.

Based on the current Austin share price, the company has a market capitalisation of $101.5 million and a price-to-earnings (P/E) ratio of 19.4.

More reading

• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
• Why the Pushpay (ASX:PPH) share price is in a trading halt
• Sell now or hold forever? What to do with shares like Afterpay (ASX:APT)
• Here’s why Bubs (ASX:BUB) and this ASX share are underperforming in 2020
• 2 ASX shares with generous dividend yields

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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

There’s also one called WAM Capital Limited (ASX: WAM) which targets “the most compelling undervalued growth opportunities in the Australian market.”

The WAM Capital portfolio has delivered an investment return of 16.3% per annum since inception in August 1999, before fees, expenses and taxes. This gross return outperformed the S&P/ASX All Ordinaries Accumulation Index return of 8.3% per annum over the same timeframe.

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

Infomedia Limited (ASX: IFM)

According to the ASX, Infomedia has a market capitalisation of $722 million.

WAM describes Infomedia as a leading provider of parts, services and data insights to the global automotive industry.

In November, the ASX share secured a strategic contract with Ford Europe valued at $14 million over five years, to provide the next generation of Ford’s electronic parts catalogue in the European region. The fund manager explained the contract allows Infomedia to continue to focus on the parts and services element of the value chain, expanding usage of its integrated parts selling platform and taking advantage of the trend towards innovative technology solutions in the automotive industry.

Infomedia management has provided an aspirational target to double revenue over the next five years, and the fund manager is positive about Infomedia’s ability to increase its current 0.5% market share in the global automotive dealership software market going forward.

Using the current Infomedia share price and Commsec earnings estimated, it’s priced at 25x FY23’s estimated earnings.

Graincorp Ltd (ASX: GNC)

According to the ASX, Graincorp has a market capitalisation of $1 billion.

WAM describes Graincorp as a business that handles, receives and stores agricultural commodities including grain and assists with the transporting, testing, storing and marketing of agricultural products.

The fund manager said that with a September financial year end, the ASX share issued its FY20 results in November that highlighted a significant lift in financial performance despite the impact of the drought, with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continued operations of $108 million and a fully franked full year dividend of 7 cents per share.

Graincorp also reported that underlying net profit after tax was a loss of $16 million whilst statutory net profit after tax was $343 million.

At the time, Graincorp chief financial officer Ian Morrison said: “Although ECA grain production was again adversely impacted by drought, the company benefited from the first year of the CPC, receiving a total gross payment of $58 million due to the reduced size of the harvest.

“Throughout the year, the business continued to import grain from other states to manage east coast grain deficits, although these trans-shipments slowed in the second half as expectations for the 2020/21 crop improved. It is pleasing to see improvements in performance right across the business and the benefits being delivered from our capital investments and operating initiatives.”

WAM said that the FY21 outlook is strong with a record east coast crop tracking ahead of expectations.

The WAM thesis about the investment is that Graincorp is leveraged to an increase in crop volumes and the fundie believes that the efficiency gains and cost savings implemented by management over the past years will materialise in financial performance.

More reading

• Westpac (ASX:WBC) tips Australian dollar to hit 80 US cents in 2021
• Australian wheat exporters retreat amid trade dispute with China
• Morgans picks the best ASX stocks to buy for 2021
• 5 things to watch on the ASX 200 next week
• Is the Bapcor (ASX:BAP) share price a buy?

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 Infomedia. The Motley Fool Australia has recommended Infomedia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Pushpay Holdings Ltd (ASX: PPH) share price has been a very strong performer in 2020.

Since the start of the year the donation and engagement platform provider’s shares have risen a massive 83%

However, they won’t be building on this today after the company requested a trading halt.

Why is the Pushpay share price in a trading halt?

This morning Pushpay requested a trading halt whilst it undertakes a bookbuild process relating to the sale of a significant combined stake in the company by two existing shareholders.

According to the release, the bookbuild will facilitate the sale of 54.68 million shares in Pushpay, which represents 4.96% of the issued capital. This comprises 41.67 million shares held by interests associated with former CEO Chris Heaslip and 13.01 million shares held by interests associated with Executive Director Chris Fowler.

Following the transaction, Mr Heaslip’s stake will reduce from 4% to 0.20% (and will be held by Mission 316 Foundation) and Mr Fowler’s stake will reduce from 2.4% to 1.2%.

The sell down is fully underwritten at a floor price of NZ$1.75 per share, which represents a 7.4% discount to the last closing price of NZ$1.89 on 14 December 2020.

The bookbuild is expected to commence today and then complete in time for the market open on Wednesday.

Guidance reaffirmed.

To reassure shareholders that the two major shareholders are not selling shares because of any underperformance, Pushpay also released an update on its expectations for FY 2021.

The release explains that the company is on track to achieve its EBITDAF guidance of between US$54 million and US$58 million for the 12 months ending 31 March. This represents a 116% to 132% increase, respectively, on the FY 2020’s operating earnings of US$25.1 million.

Though, management has warned that there are uncertainties and impacts surrounding COVID-19 and the broader US economic environment that remain.

More reading

• These are 10 of the best performing ASX tech shares of 2020 so far
• 2 ASX shares to buy with big international growth plans
• 2 outstanding ASX shares to buy and hold
• 3 of the best ASX shares you can buy today
• 3 compelling ASX payment shares to buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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So you were lucky enough to have Afterpay Ltd (ASX: APT) shares this year.

According to my Fool colleague Sebastian Bowen, the stock has risen 244% so far this year and a spectacular 1,200% since the March COVID-19 trough. The price hit yet another all-time high on Monday.

Wonderful stuff. 

But shareholders now have an absolute headache: when do you exit?

Yes, it’s a great problem to have. But it’s a problem nevertheless.

Can the buy now, pay later provider continue its rise, or should retail investors cash in their handsome profits before the dream is shattered?

There is a hint from the professionals on how to handle this.

Chloe Stokes, research analyst at Forager Australian Shares Fund (ASX: FOR) revealed last week she grappled with a similar situation.

“Farfetch Ltd (NYSE: FTCH) is a digital platform for the luxury industry. They operate on a global scale, including here in Australia,” she told a Forager video.

“I’ve been interested in the business from a consumers perspective for a couple of years. I’ve ordered from the platform, and so have a lot of people that I know. The stock has been loosely on my radar for a year or two.”

After watching the volatile share price and doing research on its business model, Stokes’ consumer interest slowly converted to a professional one.

“It listed in late 2018 in September at US$27 a share – by December that year, it was trading below US$18,” she said.

“It got down as low as US$7 in March this year. Of course, we wish we bought it back then, but we were looking at other things. In June, when it was trading at around US$20, we started to do some pretty deep research on the stock. And we started to get comfortable around the value that was in the business.”

Forager ended up buying in the middle of this year for mid-US$20s. 

Then it took off.

“Since then the price has run up pretty significantly… it’s up more than 100% on our purchase price,” said Stokes.

“COVID has been great for them, consumers are forced to shop online. And for somewhere like China, where they did a lot of their luxury spending internationally, they have been forced to find new ways to purchase those luxury goods. Farfetch has been a huge beneficiary of that.”

Farfetch shares are now trading for US$60.08.

What to do with a pot of gold?

So what would Stokes’ team do now that the price has rocketed up? Cash in or hold on?

Making the decision harder for Forager is that it thinks the company has excellent growth prospects in the future.

The revenue model for Farfetch has eerie similarities to Afterpay, in that the merchant – not the end customer – pays a fee to the platform.

How long would suppliers put up with this expense?

“You might think Farfetch is taking sales from those designer brands. And they’re paying them, say, a 30% take rate for the pleasure,” said Stokes.

“But if you look at it from another angle, Farfetch… is actually broadening the market for luxury goods, and especially for luxury goods online, because it’s getting rid of a lot of constraints that those retailers would have had in their bricks and mortar stores.” 

Afterpay enthusiasts say the same – merchants lose margin but the buy now, pay later brings in additional sales that they would not have otherwise had.

“They are expanding the definition of luxury,” said Stokes.

“Farfetch has two-thirds of its sales coming from millennials and Gen Z consumers… It’s not just the fancy designer bags on there. There’s expensive streetwear – you’ll see pairs of Nikes on there.”

Here’s what Forager did

Stokes said she had many sleepless nights trying to figure out what to do with these now-inflated shares.

Her team ended up having their cake and eating it.

“We’ve sold more than half of what we initially bought in Farfetch. I think it’s [now] down at a manageable position,” she said.

“It is a brilliant business and one I want to own in the portfolio for a long time. I still think there’s a lot of upside from here, although it’s not as obvious as it once was.”

Forager is an investment house based in Sydney. Its Australian Shares Fund is trading at $1.39 per share, which is 18% up year-to-date.

More reading

• Here’s why Bubs (ASX:BUB) and this ASX share are underperforming in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Why ASX oil stocks could replace the ASX tech boom in 2021
• Why the Webjet (ASX: WEB) share price is climbing higher
• ASX stock of the day: Afterpay (ASX:APT) hits yet another new all-time high

Motley Fool contributor Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The likes of Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) may have just hit record highs, but not all shares are faring as well.

Two ASX shares that have thoroughly underperformed in 2020 are listed below. Here’s why their shares are down in the dumps:

Bravura Solutions Ltd (ASX: BVS)

The Bravura Solutions share price is down 37.5% since the start of 2020. The provider of software products and services to the wealth management and funds administration industries has come under pressure after providing underwhelming guidance for FY 2021. Bravura has warned that the pandemic could lead to flat profits this year.

While this guidance might not sound overly bad considering the disruption it has faced with COVID-19, investors appear concerned by just how much of this profit is expected to be generated in the second half. Bravura’s chief executive officer, Tony Klim, explained: “…second wave UK lockdowns and stalling Brexit negotiations have increased uncertainty and are slowing the progress of pipeline opportunities in the UK. As a result, Bravura expects FY21 NPAT to be weighted approximately 80% to the second half of FY21.”

One broker that thinks investors should look beyond this short term headwind and be taking advantage of the weakness in the Bravura share price is Goldman Sachs. It recently reiterated its buy rating and put a $4.50 price target on its shares. It believes the company is well-placed for long term growth once these headwinds ease.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price is down a disappointing 37% since the start of the year and 48.7% from the 52-week high it reached in May. Investors have been selling the infant formula, baby food, and vitamins company’s shares after COVID-19 impacted its sales in the first quarter of FY 2021.

For the three months ended 30 September, Bubs reported gross revenue of $9.4 million. This was down 34% from the $14.21 million it achieved in the prior corresponding period. Management blamed the decline on a COVID-led contraction in the daigou channel.

But perhaps worst of all was its free cash flow. After becoming cashflow positive late in FY 2020, Bubs suddenly started burning through its cash again. For the quarter, it posted an operating cash outflow of $10.146 million, which was greater than its revenue for the period. This has sparked fears that yet another capital raising will be required next year, further diluting shareholders.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why ASX oil stocks could replace the ASX tech boom in 2021
• Why the Webjet (ASX: WEB) share price is climbing higher
• Why the Xero (ASX:XRO) share price just hit a new record high
• ASX stock of the day: Afterpay (ASX:APT) hits yet another new all-time high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s why Bubs (ASX:BUB) and this ASX share are underperforming in 2020 appeared first on The Motley Fool Australia.

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Last month the Reserve Bank of Australia opted to cut the cash rate down to a record low of 0.1%.

This was another blow for income investors, who will have to contend with even lower rates in 2021.

But don’t worry, the Australian share market is home to countless dividend shares that offer better yields than term deposits and savings accounts.

Two great examples of this are listed below:

Aventus Group (ASX: AVN)

Aventus is the largest fully-integrated owner, manager, and developer of large format retail centres in Australia. At the last count, it had a portfolio of 20 centres valued at $2.2 billion. Its portfolio spans 536,000m2 in gross leasable area and comprises a diverse tenant base of 593 quality tenancies.

From these, national retailers represent 87% of the total portfolio. This includes retailers such as ALDI, Bunnings, and The Good Guys. Thanks to the quality of its tenancies and its high weighting to everyday needs, Aventus has been a positive performer this year despite the pandemic.

One broker that has been impressed is Macquarie. Last month its analysts put an outperform rating and $2.93 price target on its shares. The broker is also forecasting a dividend of 16.7 cents per share. Based on the current Aventus share price, this represents a 6% yield.

National Storage REIT (ASX: NSR)

National Storage is one of the ANZ region’s leading self-storage operators. Over the last few years, the company has been growing at a solid rate. This has been driven by its strong position in a fragmented market and its successful growth through acquisition strategy. In addition to this, new revenue streams, such as allowing small businesses to run their operations from Wi-Fi-enabled units, has also supported its growth.

Another solid result is expected in FY 2021. Management recently confirmed that it expects to report underlying earnings per share of 7.7 cents to 8.3 cents. It also advised that it intends to pay 90% to 100% of its earnings to shareholders as distributions. Based on the middle of both guidance ranges and the current National Storage share price, this equates to a 3.8% yield.

More reading

• 2 ASX dividend shares to buy this week
• 2 ASX dividend shares with attractive yields
• 2 excellent ASX dividend shares with 6%+ yields
• These ASX dividend shares will help you beat low interest rates
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX shares with generous dividend yields appeared first on The Motley Fool Australia.

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