The Qantas Airways Limited (ASX: QAN) share price has been a strong performer in November.

Since the start of the month, the airline operator’s shares have gained an impressive 32%.

Can the Qantas share price go higher from here?

One leading broker that believes there are still more gains ahead for the Qantas share price is Goldman Sachs.

According to a note out of the investment bank, its analysts have just reiterated their buy rating and $6.99 price target on its shares.

This price target implies potential upside of 26.5% for the Qantas share price over the next 12 months.

Why is Goldman bullish on Qantas?

Goldman Sachs has previously highlighted that the risks to a domestic market reopening were diminishing and that it had become more confident in a reopening pre-Christmas.

Last week there has been major progress on this front with the NSW-Victoria border reopening on 23 November, and the Queensland government announcing that it would re-open to NSW and Victoria from 1 December.

Its analysts feel this is great news for airlines and particularly for Qantas. This is because rival Virgin Australia has closed its Tiger brand and is committed to retaining a third of the domestic market capacity share. This is down from ~40% pre-COVID, including the Tiger brand.

The broker believes this gives “breathing space for Qantas to gain market share as domestic market re-opens.”

It commented: “The full scale reopening of the east coast states marks a major advance in the Australian aviation market recovery. Movements between NSW, Victoria and Queensland represent c.80% of total air travel, so the opening of these borders was necessary to facilitate a material recovery of the domestic market. As indicated the airlines have moved rapidly to schedule additional capacity and launch renewed marketing campaigns.”

“The key takeaway from the most recent Virgin Australia commentary is the latest confirmation that it will retreat to its previous market position as a mid-market carrier, targeting SME’s and premium leisure travelers,” it added.

Goldman Sachs sees this as a big win for Qantas and its Jetstar brand, essentially handing it full control of some key markets.

Goldman said: “The plan effectively hands back to Qantas full control of the high-end corporate and premium markets, and to Jetstar the low-cost, price sensitive leisure end of the market.”

This is positive for three reasons.

“With limited competition at these ends of the market during the early phase of the recovery we believe QAN will be well-placed to: (i) manage available capacity to meet demand, (ii) set ticket pricing; and (iii) apply appropriate discounting, to ensure profitable utilisation,” it explained.

At present, Goldman Sachs is forecasting a 50% recovery in domestic travel by Christmas. Though, it acknowledges that there is upside risk to its forecasts given the pent up demand.

More reading

• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 next week
• Is the Qantas (ASX:QAN) share price flying closer to recovery?
• Why the Webjet (ASX:WEB) share price is soaring 6%
• Why Origin, Qantas, Webjet, & Westpac shares are storming higher

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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The EML Payments Ltd (ASX: EML) share price has recovered a lot of the lost ground since the COVID-19 crash. It has risen by 168% since the bottom of March, however it’s actually still down by 37% from before the COVID-19 crash.

What is EML Payments?

EML Payments is a business that offers a wide variety of payment services. It has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, it offers virtual account numbers.

What happened during the worst of COVID-19?

FY20 was a record year for EML Payments. It generated a record underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $32.5 million, excluding acquisition costs for buying Prepaid Financial Services (PFS). EML said that it had a strong financial performance during the first eight months of the year before COVID-19 impacted trading conditions. The physical gift cards were hit, though online retailers provided some offset.

EML said that it had signed and launched with major new customers in all its verticals with the sales pipeline momentum evident in all markets. In FY21 it’s seeing more companies seeking digital payment solutions as part of a global trend to move away from cash payments.

What happened in the latest quarter?

EML Payments recently gave an update for the first quarter of FY21 for the three months to 30 September 2020.

It said that first quarter revenue was $40.6 million, up 75% over the prior corresponding period and it was 20% higher than the fourth quarter of FY20. It also said that its EBITDA of $10 million was up 215% compared to the prior corresponding period and up 69% compared to the fourth quarter of FY20.

Historically, the first quarter of the financial year is the weakest. Cost control initiatives helped reduce cash overheads by $0.7 million over the prior corresponding period, excluding PFS.

The gift and incentive yield was ahead of expectations at 5.98% due to improved trading in shopping centre programs. Trading through the three months to December is crucial to the results of this segment.

The general purpose reloadable yield was in line with expectations at 1.1%, the same as the previous quarter, with a stable program mix. Excluding PFS, EML grew gross debit volume (GDV) by 16% compared to the prior corresponding period, driven by Australian payroll and gaming payout volumes.

The virtual account numbers saw GDV recover in the FY21 first quarter, with growth of 23% compared to the fourth quarter of FY20. It was in line with the prior corresponding period.

In terms of other growth avenues for the company, EML Payments is expanding to include non-card payments and open-banking payments. It’s going to invest $10 million to $15 million on its technology and platform over 2021 and 2022.

Is the EML share price a buy?

EML is currently rated as a buy by the Motley Fool Million Dollar Portfolio investment service.

According to estimates on Commsec, the EML Payments share price is trading at 24x FY23’s estimated earnings.

More reading

• 3 compelling ASX payment shares rated as buys
• Top brokers name 3 ASX shares to buy next week
• Are these 2 COVID-hit ASX shares worth buying?
• ASX 200 Weekly Wrap: ASX 200 has another shocker as US election approaches
• These were the worst performing shares on the ASX 200 last week

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. 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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Are you looking to buy some dividend shares next week? Then listed below are two shares that might be worth considering.

Here’s why they are being tipped as dividend shares to buy:

Accent Group Ltd (ASX: AX1)

The first dividend share to look at is Accent. It is a leading footwear-focused retailer which owns a number of retail store brands such as HYPE DC, Platypus, The Athlete’s Foot, and Sneaker Lab. It has also just launched a couple of new brands, Australian Stylerunner and Pivot. This is part of its store expansion plan, which is aiming to add approximately 80 new stores in FY 2021.

Last week Accent held its annual general meeting and released a trading update. That update revealed that the company’s sales for the first 20 weeks of FY 2021 are well ahead of its expectations. Excluding its Auckland and Victorian stores, Accent’s like for like sales are up 15.7% over the period. Its online sales have been even stronger thanks to the shift to online shopping. It recorded a 129% increase in sales compared to the same period last year.

This update caught the eye of analysts at Citi. In response to its update, its analysts upgraded the retailer’s shares to a buy rating with an improved price target of $2.09. And while its shares have now reached this level, they still offer a generous trailing 4.4% dividend yield.

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a leading provider of software products and services to the wealth management and funds administration industries. It is the company behind the Sonata wealth management platform, the Rufus transfer agency solution, the Midwinter financial planning solution, and the recently acquired Delta Financial Systems.

The Bravura share price has come under pressure this year due to the pandemic and its impact on its performance in FY 2021. Management advised that its earnings could be flat year on year. While this isn’t terrible, all things considered, it’s the 80% weighting to the second half which has investors concerned. 

Analysts at Goldman Sachs think investors should accept this short term pain due to the potential for significant long term gains. It believes Bravura is well positioned due to its strong market position, high degree of recurring revenue, and its emerging microservices ecosystem strategy. It has a buy rating and $5.00 price target on its shares. It is also forecasting a ~10.6 cents per share dividend in FY 2021. Based on the current Bravura share price, this represents a 3.2% dividend yield.

More reading

• Why Beach, Bravura, Flight Centre, & Treasury Wine shares are dropping lower
• Is the Bravura Solutions (ASX:BVS) share price a buy?
• Top brokers name 3 ASX shares to buy today
• Why Coles and this ASX dividend share are buys for income investors
• Here’s why the Bravura Solutions (ASX:BVS) share price raced higher 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 Bravura Solutions Ltd. The Motley Fool Australia has recommended Accent Group and Bravura Solutions 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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Although the S&P/ASX 200 Index (ASX: XJO) finished the week softly, it couldn’t stop it from recording another solid weekly gain. The benchmark index rose 1% over the five days to 6,601.1 points.

Another busy five days is expected next week. Here are a few things to watch:

ASX 200 futures pointing higher.

The Australian share market looks set to start the week on a very positive note. According to the latest SPI futures, the ASX 200 is expected to rise 39 points at the open tomorrow. This follows a solid end to the week on Wall Street on Friday, which saw the Dow Jones rise 0.1%, the S&P 500 climb 0.25%, and the Nasdaq jump 0.9%.

Collins Foods half year result.

The Collins Foods Ltd (ASX: CKF) share price will be one to watch on Tuesday when it hands in its half year results. The KFC and Taco Bell operator has been a positive performer during the pandemic and delivered strong sales and earnings growth in FY 2020. Expectations are high for FY 2021, with more of the same being forecast in the first half. Investors will also be keen to see how its European businesses are faring given the rising COVID cases on the continent.

Zip Co AGM.

The Zip Co Ltd (ASX: Z1P) share price could be on the move on Monday when it holds its annual general meeting. While the buy now pay later provider only recently released a trading update, it could potentially provide investors with an idea of how it has performed in November and during the Black Friday sales event. In addition, the company could update the market on its international expansion plans and progress.

Premier Investments AGM.

Smiggle, Peter Alexander, and Just Jeans owner, Premier Investments Limited (ASX: PMV), is holding its annual general meeting on Friday. It was a surprisingly strong performer in FY 2020 thanks to its online sales growth. Premier Investments reported a 29% increase in net profit after tax to $137.8 million. Investors will no doubt be keen to hear whether this momentum has carried over into the new financial year.

Qantas rated as a buy.

The Qantas Airways Limited (ASX: QAN) share price could be heading higher next week according to analysts at Goldman Sachs. They have just reiterated their buy rating and $6.99 price target on the company’s shares. The broker believes that a change of focus from rival Virgin Australia has put Qantas in a strong position domestically as borders reopen.

More reading

• Are gold and bitcoin both ‘safe havens’?
• Is the Qantas (ASX:QAN) share price flying closer to recovery?
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week
• Are near-zero interest rates the reason the ASX 200 is surging in 2020?

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Collins Foods 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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Obtaining a growing passive income in retirement may be more straightforward than many people realise.

Certainly, the recent stock market crash may dissuade some investors from buying shares. They may decide that other less risky assets offer more stability.

However, investing regularly in high-quality stocks at low prices over the long run could lead to a surprisingly large retirement nest egg. Therefore, even if you have no retirement savings at 50, now could be the right time to start buying a diverse range of stocks.

Investing money in cheap shares

A portfolio of shares could act as a solid vehicle through which to obtain a passive income in retirement. The stock market has a long track record of delivering annual total returns that are in the high-single digits. At the present time, it may be possible to achieve an even higher rate of return due to low valuations that are on offer across a variety of sectors. Buying cheap shares may allow you to benefit from a likely long-term recovery that could have a positive impact on your retirement plans.

At the same time, other investment opportunities may have become more limited since the start of the year. An uncertain economic environment means that policymakers may retain an accommodative monetary policy over the coming years to stimulate GDP growth. This may mean that investing money in bonds or cash fails to improve your spending power over the long run. Meanwhile, high house prices and gold’s strong performance this year could limit their scope to produce capital returns that lead to a large retirement nest egg.

Regular investing for a passive income

Regularly buying cheap shares could lead to a surprisingly large passive income in retirement. Regular investment means that you stand to benefit from future bear markets between now and your retirement, since you will continue to invest money in stocks through a range of market conditions. As such, it is imperative to ignore short-term stock market movements, and instead focus on the long-term potential of your portfolio.

Furthermore, investing in a diverse range of companies can reduce your overall risks. Some companies may fail to deliver impressive returns over a long time period due to factors that could not be anticipated by an investor ahead of time. By holding a variety of companies, you can reduce your dependency on a limited number of businesses for returns.

Starting to invest today

Starting to invest money in shares today could produce a worthwhile passive income by the time you retire. For example, investing $750 per month from age 50 to 65 could produce a portfolio valued at $260,000 if the stock market continues to deliver total returns of 8% per annum (as it has done over recent decades). From this, a 4% annual withdrawal could produce an income of over $10,000.

As such, now could be the right time to start investing regularly in a range of stocks. Doing so may improve your retirement prospects.

More reading

• 2 of the best ASX shares for your retirement portfolio
• 2 top ASX blue chip shares to buy
• Why stock market crash round 2 could be a rare chance to make a million
• Are gold and bitcoin both ‘safe havens’?
• Is the Webjet (ASX:WEB) share price a buy today?

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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If you’re approaching retirement, then now might be the time to start focusing on capital preservation and income rather than chasing huge gains.

But which shares should you buy? Two ASX shares that could be great additions to a well-balanced retirement portfolio are listed below. Here’s why they are being tipped as buys:

Coles Group Ltd (ASX: COL)

This leading supermarket operator has been a very positive performer this year. Due to the pandemic, Coles has experienced a surge in demand from consumers, leading to a notable jump in sales and profits.

For example, in FY 2020 the company reported a 6.9% increase in sales to $37.4 billion and a 7.1% lift in net profit after tax to $951 million. Pleasingly, this strong growth accelerated in the first quarter of FY 2021 despite easing COVID restrictions. For the three months ended 30 September, Coles delivered a 10.5% increase in total sales over the prior corresponding period to $9.6 billion.

This was stronger than expected, with analysts at Goldman Sachs predicting first quarter growth of 7.7%. In light of this, the broker retained its buy rating and lifted the price target on the company’s shares to $20.50. The Coles share price is currently trading at $17.94.

Goodman Group (ASX: GMG)

Goodman Group is an integrated commercial and industrial property group that owns, develops, and manages industrial real estate across 17 countries. It counts a large number of blue chips as customers such as Amazon, Coles, and Walmart.

It has been a strong performer this year thanks partly to its exposure to quick growing markets such as ecommerce. At the end of the first quarter of FY 2021, the company reported 2.9% like-for-like net property income growth across its managed partnerships. It also revealed a 97.8% occupancy rate across its partnerships and $7.3 billion of development work in progress. The latter was ahead of management’s guidance.

This appears to have impressed analysts at Morgan Stanley. Following its first quarter update, the broker retained its overweight rating and $20.90 price target on its shares. This compares to the current Goodman Group share price of $18.61.

More reading

• 2 ASX blue chip dividend shares with yields over 4% today
• 2 ASX blue chip shares tipped as buys
• These ASX dividend shares have been named as buys
• Why Coles and this ASX dividend share are buys for income investors
• ASX 200 rises more than 1% on Tuesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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If you’re looking to firm up your portfolio with the addition of some ASX blue chip shares, then you might want to take a look at the two listed below.

Here’s why these ASX blue chips come highly rated right now:

Ramsay Health Care Limited (ASX: RHC)

Trading conditions certainly have been tough for Ramsay Health Care in 2020 because of the pandemic. However, thanks to it world class network of private hospitals, favourable industry tailwinds, and growth through acquisition strategy, management remains very positive on its long term prospects.

With its Q1 update, Ramsay’s Managing Director and CEO, Craig McNally, commented: “Ramsay is well positioned to capitalise on the shifting industry dynamics in each of our key markets. Following the recent equity raising, the Company has a strong balance sheet to support new opportunities as they arise.”

Analysts at Macquarie agree with this view and recently retained their outperform rating and lifted the price target on its shares to $73.65. The broker remains positive on the future and believes it is well positioned for long term growth.

SEEK Limited (ASX: SEK)

SEEK is the ANZ region’s largest job listings company. It has been growing at a consistently strong rate over the last decade thanks to its dominant position in the local market, its investment in growth opportunities, and its quick growing Zhaopin business in China.

Given the size of the China market, the latter business is becoming an increasingly important part of the SEEK business and looks set to be a key driver of growth in the 2020s. It is partly because of this that management has set itself an ambitious aspirational revenue target of $5 billion later this decade. This will be more than triple what it recorded in FY 2020.

Credit Suisse likes what it sees here. Earlier this month its analysts retained their outperform rating and lifted their price target on this job listings company’s shares to $28.50.

More reading

• ASX 200 events this week that could move the market
• Exciting ASX shares rated as buys by top fundie
• How to turn $20,000 into $180,000 in 10 years with ASX shares
• 5 things to watch on the ASX 200 next week
• Brokers name 3 ASX shares to buy right now

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The prospect of a second stock market crash over the coming months may cause some investors to become worried about their financial prospects. That’s understandable, since this year’s market decline prompted severe falls in the share prices of many companies.

However, a market decline can also prove to be a rare buying opportunity. Certainly, it causes short-term paper losses. However, low stock prices can deliver recoveries that produce high capital returns for your portfolio.

Therefore, rather than worrying about a potential market downturn, viewing it as an opportunity to lock-in cheap share prices could be a more profitable move.

A rare opportunity

This year’s stock market crash was a relatively rare event. The last market downturn of a similar size and scale occurred over a decade ago when the global financial crisis was in full flow. Prior to that, there have been relatively few similar occurrences, with notable bear markets including the dot com bubble in the early 2000s.

Certainly, there have been many market corrections and periods of high volatility throughout the stock market’s history. However, occasions where investors are selling equities en masse to pile into less risky assets due to panic and fear being prevalent are fairly uncommon. Therefore, opportunities to buy high-quality companies at rock-bottom prices are worth grasping for any investor who can look beyond the next few months and instead focus on recovery prospects over the coming years.

Recovering from a stock market crash

The track record of indexes such as the FTSE 100 Index (INDEXFTSE: UKX) and S&P 500 Index (INDEXSP: .INX) suggests that buying shares after a stock market crash is a sound move. After all, equity markets have always delivered recoveries following their declines. Sometimes this process has taken a matter of months. In other cases, it has taken years for the stock market to return to previous highs.

Investors can improve their prospects of taking part in a stock market recovery by focusing on high-quality businesses. For example, those companies with low debt and a competitive advantage may be better able to survive weak operating conditions in the short run. They may also be better placed to benefit from an economic recovery. This may lead to higher profits and a rising share price that positively impacts on your portfolio.

Making a million

Investing in a diverse range of shares after a stock market crash may increase your return prospects. This may enable you to beat the market’s average return over the long run.

Even assuming you match the 8% annual total return that indexes such as the FTSE 100 have delivered could lead to a portfolio valued in excess of a million. For example, investing $100,000 today at an 8% return would produce a seven-figure portfolio within 30 years. Similarly, a $750 monthly investment would lead to a $1m portfolio over the same timeframe.

However, you could obtain a greater return by purchasing high-quality shares at low prices after a stock market crash. This could reduce the amount of time it takes to obtain a portfolio valued at seven figures.

More reading

• Are gold and bitcoin both ‘safe havens’?
• Is the Webjet (ASX:WEB) share price a buy today?
• Is the Qantas (ASX:QAN) share price flying closer to recovery?
• 10 fantastic ASX shares to buy in December
• 4 great ASX growth shares to buy

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Gold has always been an asset class that investors have flocked to in times of turmoil. Despite its ‘unproductive’ nature (gold is just a shiny metal at the end of the day), investors throughout history have always been attracted to gold as an investment.

It is widely believed to be a good hedge against inflation for one. Investors enjoy gold’s scarcity and its past as a monetary base (the gold standard) for another, as well as the fact it has a globally consistent intrinsic value.

But in recent years, gold has had a growing rival: bitcoin. On the surface, you might not think that a metal and a digital cryptocurrency have too much in common. Indeed, bitcoin was dismissed by many (including investing legends like Warren Buffett) as being worthless when the bitcoin price collapsed after a bubble-like rally in late 2017.

But is being turned on its head in 2020. It’s worth noting that bitcoin did not have a great start to the year. It collapsed more than 50% in value during the sharemarket crash in March, going from more than US$10,000 a coin in mid-February to under US$5,000 by late March.

Fast forward to today, and bitcoin is trading for more than US$17,000 a coin at the time of writing. Earlier this week, it hit more than US$19,000, the first time it has done so in 3 years. That peak puts it up more than 140% year to date.

Gold vs. bitcoin

According to reporting in the Australian Financial Review (AFR) this week, the factors fuelling demand for bitcoin and cryptocurrencies have been “demand for risk-on assets amid unprecedented fiscal and monetary stimulus, hunger for assets perceived as resistant to inflation, and expectations that cryptocurrencies would win mainstream acceptance”.

On the latter point, the AFR also notes that:

The bitcoin market now boasts a functioning derivatives market and custody services by established financial institutions. Large firms including Fidelity Investments and Japan’s Nomura Holdings have started safeguarding bitcoins and other cryptocurrencies for institutional investors.

Does all this sound familiar? Well, it should, because those are the kinds of reasons that investors buy gold, as we discussed earlier. So are gold and bitcoin two halves of the same, er, coin?

Well, although the two assets have a similar appeal (scarcity, an absence of government control, inflation hedging properties), they aren’t exactly correlated in an absolute sense. A case in point: over the past month, bitcoin has risen approximately 24% in value. Over the same month, gold has fallen roughly 4.6% from US$1,900 an ounce to US$1,812.

It appears a ‘safe haven’ means different things to different investors after all.

More reading

• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week
• Are near-zero interest rates the reason the ASX 200 is surging in 2020?
• Why this ASX cybersecurity ETF is a buy today
• ASX 200 drops on Friday

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

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The Webjet Limited (ASX: WEB) share price has risen by 63% since the start of November 2020.

What has been going on?

COVID-19 impacts have significantly disrupted Webjet during 2020. Its FY20 result was a story of two polar opposite halves. Webjet reported that its FY20 underlying operations, which excludes a number of one-offs, showed total $3 billion of total transaction value (TTV) with $2.3 billion of that coming in the first half. Total FY20 revenue was $266.1 million, with $217.8 million of that generated in the first half. FY20 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $26.4 million, but it made a $59.9 million EBITDA loss in the second half and generated $86.3 million of EBITDA in the first half.

The FY20 statutory result included a number of one-off items totalling $117.7 million, of which $78 million were in the second half. These include $40 million of debtors write-off, $14.6 million associated with the closure of Webjet Exclusives and $20 million of impairment of intangibles from the closure of Online Republic Cruise.

However, Webjet has implemented a number of measures to ensure its survival and prepare for the recovery of global travel. It reduced costs by around 50%, it strengthened its balance sheet with a $346 million capital raising and carried out a $163 million notes issue. Webjet has been working on some strategic initiatives to maximise its performance when markets reopen.

Why has the Webjet share price been rising?

Webjet shares started rising on 3 November 2020, which was just after the US election when it appeared that Joe Biden was likely to be the winner (but without winning the Senate).

There has been a number of COVID-19 vaccine announcements in recent weeks. Moderna’s COVID-19 vaccine is reported to be around 95% effective. The BioNTech-Pfizer vaccine data also suggested an effective rate of over 90%. The Webjet share price has risen around 33% since news broke of the effectiveness of the BioNTech vaccine, which was the first one announced.

The Oxford University-AstraZeneca vaccine offers protection of at least 70% and perhaps up to 90% with a different dosage.

Webjet held its AGM a few weeks ago, before the US election and vaccine news.

It said that it expects people will resume their travel patterns as soon as conditions permit. Webjet sees considerable pent-up demand building for the travel services and products that it sells, particularly in the leisure market. Webjet believes the recovery will appear first in markets where there are vaccines, or in safe corridors.

The company pointed out that, after some research, over 70% of global travellers say they would travel within three months of restrictions being lifted and 70% said that they expect to have the same or more budget available for their holidays.

How is FY21 going?

Webjet said that its monthly cash burn in the first quarter was less than expected at $9 million per month compared to $10.5 million in FY20. The savings was due to an ongoing review of costs and staff attrition.

The company said that it has identified additional cost savings.

Webjet also said that TTV growth is now delivering positive working capital. WebBeds experienced TTV growth in the first quarter of FY21 compared to the fourth quarter of FY20 and is starting to produce positive working capital ($7 million) and aged debt collections ($6 million).

Webjet’s online travel agency (OTA) is also delivering positive working capital as the domestic leisure market starts to re-open.

The Motley Fool Million Dollar Portfolio currently rates the Webjet share price as a buy. According to Commsec, it’s trading at 22x FY23’s estimated earnings.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet 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.

The post Is the Webjet (ASX:WEB) share price a buy today? appeared first on Motley Fool Australia.

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