The S&P/ASX 200 Index (ASX: XJO) is having a pretty ho-hum kind of day. At the time of writing, it is essentially flat at 6,087 points.

We seem to have struck both a floor and a ceiling for investor sentiment. The ASX 200 has been playing jump rope with the 6,000 point threshold for nearly 2 months now – since it (for the first time since March) hit the psychologically-important milestone in early June. We still remain around 15% off of the pre-crash highs we were seeing back in February.

But reporting in yesterday’s Australian Financial Review (AFR) reckons we might be about to take off on another ASX 200 bull run. Why? Because the federal government has just cleared a massive cloud of uncertainty that might have been holding the markets back.

On Monday, the government announced that its supportive JobKeeper and coronavirus supplement payments are to be extended. JobKeeper will continue on until at least 28 March 2021 (albeit at a lower rate that will come in 2 tiers). Meanwhile, the coronavirus supplement that most other welfare recipients (including those on JobSeeker or Youth Allowance) are receiving will be trimmed to $250 per fortnight come September, down from the current $550.

What does this mean for ASX 200 shares?

The economy is not well right now. Nearly a million Australians are unemployed and it’s these government payments that are holding the economic fort. So up until Sunday, ASX 200 investors and businesses were fearing a ‘fiscal cliff’ in September. This is when the extra payments were due to expire — creating a lot of uncertainty in the markets.

Now that we have the certainty of knowing these payments will be extended and tailored, the AFR is predicting “institutional investors [will] start deploying the cash sitting idle because of uncertainty”.

However, the AFR also notes this may not be a good thing for ASX 200 shares in the long term, pointing to what it sees as “signs of a bubble in certain parts of the market”.

It quotes the legendary investor Warren Buffett:

“Once a bull market gets underway, and once you reach the point where everybody has made money no matter what system he or she followed, a crowd is attracted into the game that is responding not to interest rates and profits but simply to the fact that it seems a mistake to be out of stocks. In effect, these people superimpose an ‘I-can’t-miss-the-party’ factor on top of the fundamental factors that drive the market.”

Pertinent words indeed from Mr Buffett.

Foolish takeaway

I think the AFR makes some cutting insights here. I do think it’s possible that the markets will push higher from here. But remember, the economy is still very damaged, and the government can’t prop it up forever. Keeping this in mind over the next year or two would be advantageous for all investors in my view.

More reading

• Warning: Investors are betting against these 3 ASX shares
• Why the Santos share price is back on my radar
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops 1.3%, Resolute Mining soars
• Top brokers list the latest ASX small cap stocks to buy today

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

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The Cogstate Limited (ASX: CGS) share price ripped more than 78% higher in early trade after the company released its quarterly cash flow statement and business update. It has since been sold down and is currently trading 30.95% higher at 55 cents per share.

What did Cogstate announce?

The company’s report was highlighted by a record high in sales contracts, with Cogstate executing $8.4 million in clinical trial sales contract for the quarter ending 30 June 2020. As a result, the company has completed $46 million in sales contracts for the year, making FY20 its most successful financial year.

Cogstate expects the substantial increase in clinical trial sales contracts to result in increased revenue for the quarter. The company also reported a cash positive quarter, with cash reserves totalling $10.6 million, an increase of $3.3 million during the period.

In addition to its cash flow statement for the quarter, Cogstate also provided the market with a business update regarding its partnership with ERT. According to the update, Cogstate has entered into a preferred partnership with ERT, which is a global leader in clinical endpoint data collection. The partnership will see the company deliver cognitive assessments via ERT’s technology platform, providing Cogstate with the potential to significantly expand its distribution channel.  

What does Cogstate do?

Cogstate is a neuroscience technology company that specialises in brain health assessments, with the aim of advancing development of new medicines and clinical insights. The company’s technologies allow for rapid and reliable computerised cognitive tests, which are designed to replace traditional costly and error-prone paper assessments.

The company’s clinical trial solutions provide quality assurance services that streamline the measurement of clinical outcomes, whilst also eliminating the need for duplicate hardware.

Foolish takeaway

The Cogstate share price was trading around 78% higher in early trade, hitting an intra-day high of 80 cents. Since then the company’s share price has been sold-down and is currently trading around 30% higher at 55 cents.

More reading

• DroneShield share price surges 25% on US Air Force contract
• 3 ASX growth shares that could be long term market beaters
• Buy and hold Cochlear and these ASX shares for strong long term returns
• Are ASX 200 shares about to take off on another bull run?
• What to do if your ASX shares hit a record high

Motley Fool contributor Nikhil Gangaram 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 S&P/ASX 200 Index (ASX: XJO) has been on a tear in recent months. Since bottoming out on 23 March, the ASX 200 has gained more than 33% and is now sitting firmly above 6,000 points.

With all of this good news, there are bound to be some shares that have been performing better than others. And despite the questionable health of both the Australian and global economies right now, many ASX shares have reached all-time record highs in recent weeks.

Some of the lucky bunch include Fortescue Metals Group Limited (ASX: FMG), Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P), Xero Limited (ASX: XRO) and Kogan.com Ltd (ASX: KGN).

If you’ve been lucky enough to hold one (or more) of these shares, well firstly congratulations! It’s always a cause for celebration when you have a real winner like any one of these top companies.

But I’m sure many investors holding these shares might be a little conflicted about what to do next, given they likely have some (perhaps substantial) profits sitting on the table.

When should you sell a winner ASX share?

Well, that’s a very personal question. The first thing to say is that if you have supreme confidence that your company is a true winner and will keep winning for you in the years ahead, there is no reason to sell! Picture someone who bought CSL Limited (ASX: CSL) shares 10 years ago for around $30. If that person sold them when the share price hit $50, just to cash in a quick gain, I’m sure they would be ruing the decision today given CSL shares are currently going for around $282. After all, the great investor Warren Buffett is famous for saying his favourite time to sell shares is ‘never’.

But this doesn’t apply in all cases, of course. So if you bought into Afterpay, Xero or any other ASX share on a quick bet or a speculative play, it might be time to cash out if you’ve got some handsome profits on the table. Finding real and consistent winners usually involves a lot of research and dedication. If this isn’t your ‘jam’, then it might be time to recognise you bought a lottery ticket and got lucky.

But even if you did buy a wining share for a long-term investment, after doing your due diligence, there still might be a good cause for a sell. Your company’s shares might have become overvalued. You might not be impressed with how the company raised capital during the pandemic, or otherwise be dissatisfied with the direction they are taking the company.

Foolish takeaway

At the end of the day, a sell decision is yours alone and there is no way of knowing whether you made the right call until hindsight comes along. I always ask myself this question before executing a buy or sell order: ‘is it me or the person on the other end of the deal who might regret this in 5 years’ time?’.

More reading

• 3 ASX growth shares that could be long term market beaters
• Why the Zip share price is a better buy than Afterpay
• 4 trends to invest in before August earnings season
• Warning: Investors are betting against these 3 ASX shares
• How you can take advantage of the surging Australian dollar

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

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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

OZ Minerals Limited (ASX: OZL)

According to a note out of Credit Suisse, its analysts have retained their underperform rating but lifted the price target on this copper producer’s shares to $9.00. Although the broker notes that Oz Minerals had a strong second quarter and has lifted its estimates to reflect this, it isn’t enough for a change of rating. Credit Suisse continues to believe its shares are overvalued. The OZ Minerals share price is trading at $13.81 this afternoon.

QBE Insurance Group Ltd (ASX: QBE)

A note out of the Macquarie equities desk reveals that its analysts have downgraded this insurance giant’s shares to an underperform rating with an improved price target of $8.20. Macquarie has revised its earnings estimates lower to reflect QBE’s latest update. In addition to this, it continues to believe that a sweeping review of its business is required to get it back on track. The QBE share price is up at $10.16 on Thursday.

Tyro Payments Ltd (ASX: TYR)

Another note out of the Macquarie equities desk reveals that its analysts have an underperform rating and $2.65 price target on this payments company’s shares. According to the note, the broker believes Tyro’s recovery is at risk from a second wave of coronavirus. Furthermore, it fears that a lot of its total transaction value may be coming from low margin channels. As a result, it has concerns that its full year results could disappoint. The Tyro share price is changing hands for $3.74 this afternoon.

More reading

• Why Coca-Cola Amatil, Newcrest, QBE, & Tabcorp shares are pushing higher
• Oz Minerals share price rises 4% on quarterly report
• The ASX sector that’s heading for a V-shape recovery
• QBE share price rises despite expected half year loss
• 3 ASX fintech shares with exciting growth prospects

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The Evolution Mining Ltd (ASX: EVN) share price is down 2.5% today despite reporting a record cash flow in the June quarter. The gold miner produced 218,104 ounces (oz) of gold across its mines during the quarter leading to full year production of 746,463 oz. 

About Evolution Mining

Evolution Mining is an Australian gold producer operating five wholly owned mines. Four gold mines are located in Australia across Queensland, Western Australia, and New South Wales. The Red Lake mine is located in Canada. Evolution Mining also has an interest in a copper-gold mine in Queensland. 

What did Evolution Mining announce? 

Evolution Mining released its June quarterly results this morning which showed production of 218,104 oz of gold for the quarter. The company sold 218,685 oz of gold at an average price of $2,500 per oz during the quarter. The company also produced 233,252 oz of silver in 4Q FY20 and 6,684 tonnes of copper. FY20 gold production was 746,463 oz at an all-in sustaining cost of $1,043 per oz, above guidance of 715,000 oz. 

In the June quarter, mine operating cash flow increased 39% quarter-on-quarter to $352 million, while free cash flow increased 69% to $188 million. Over FY20, mine operating cash flow increased 45% year-on-year to $1,121 million and free cash flow increased 86% to $524 million. Cash in the bank increased by $205 million during the June quarter to $374 million. Net bank debt decreased to $196 million. 

How has the Evolution share price been performing? 

The Evolution share price is up 67% over 2020 and 87% from its March low. The rising share price has been aided by the increasing price of gold. The gold price has increased from around $2200 per ounce in January to closer to $2600 per ounce now. Other gold miners have seen similar share price rises as a result. The Silver Lake Resources Limited (ASX: SLR) share price is up 92% over 2020 and the Saracen Mineral Holdings Limited (ASX: SAR) share price is up 86%. 

What’s next for the Evolution share price? 

Evolution Mining is progressing the transformation of the Red Lake mine, with progress ahead of schedule. The company has advised that the scale of opportunity at Red Lake is far greater than expected. The group has an average reserve life of over 10 years and had exploration success in FY20 at a number of sites. 

More reading

• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• Saracen share price on watch as production guidance exceeded
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points

Motley Fool contributor Kate O’Brien 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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On Thursday, the Helloworld Travel Ltd (ASX: HLO) share price plunged by more than 8% following a business update by the company. At the time of writing, the Helloworld share price has lifted slightly to $1.92 per share, down 6.55% on yesterday’s close.

What was in the announcement

Today, Helloworld reported that it is going ahead with its previously announced capital raising. The offer opened to retail shareholders today with 1 for 9 shares offered at a price of $1.65 per share. Shareholders also had the option to apply for additional shares under the offer.

The company previously raised $41.6 million from institutional investors and plans to raise $8.4 million from retail shareholders to reach a total of $50 million. The funds will be used to provide liquidity and to improve balance sheet flexibility, as the company faces prolonged disruption to the travel industry in the midst of the ongoing coronavirus pandemic. 

The company advised it expects travel restrictions to remain in place for the remainder of 2020 and into 2021. As a result, total transaction value remained at around 10-12% of previous levels. According to the announcement, Helloworld’s equity raising would help to fund operating and capital expenditure through to the end of 2022, assuming ongoing disruption to the travel industry.

The company announced that net cash operating costs had been reduced to around $2 million per month since late March 2020, with variable discretionary spending being reduced to near zero since April 2020. It announced that cost reductions would be sustained over the remainder of 2020 with cost reductions from landlords and suppliers included.

Helloworld also notified investors that the company would write down its intangible assets and record restructuring-related provisions in its financial year 2020 results. 

The company announced that it has closed its centres in Mumbai and Manila and is also divesting its US wholesale operation. Helloworld also reported that 5% of its franchisees had elected to close. 

In terms of remuneration, 2 of Helloworld’s executive directors and 3 non-executive directors reduced their remuneration to zero from late March until June 2020. The company’s senior management have reduced remuneration to 60% of previous remuneration. The company has accessed government wage subsidies for 1,200 employees.

Helloworld expects an earnings before interest tax depreciation and amortisation loss of around $3.5 million for the June quarter, unaudited. The company advised it has a pro forma liquidity position after its capital raising of $187.1 million at 30 June 2020.

About the Helloworld share price

Helloworld is a travel agency company with operations Australia and New Zealand. The company has retail travel networks and provides corporate travel management, destination management, air ticket consolidation, wholesale travel services and online operations.

The Helloworld share price is up 185% from its 52-week low of $0.66 cents. It is down 60.7% since the beginning of the year and down 60.8% since this time last year.

More reading

• Leading brokers name 3 ASX shares to buy today
• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower
• Helloworld Travel unveils $50 million capital raising

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Helloworld 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 Tesserent Ltd (ASX: TNT) share price has soared more than 42% higher today, on the back of an announcement regarding a strategic acquisition of Seer’s security businesses in Melbourne and Canberra.

What does Tesserent do?

Tesserent provides enterprise-grade cyber security and networking solutions targeted at the mid-market. Its customer base spans Australia, the United Kingdom and Korea. The company’s flagship offering is its ‘Cyber 360’ strategy which includes solutions such as identification, protection and 24/7 monitoring to combat the growing risk of cyber security threats. 

Tesserent’s acquisition today follows a series of previous cyber security acquisitions for the company. These include Pure Security, Rivium and North. Tesserent is now Australia’s largest ASX listed dedicated cyber security firm.

Details of Seer acquisition

Tesserent announced the strategic acquisition of Seer’s security businesses today by the signing of a binding share purchase agreement. Seer’s security businesses are based in Melbourne and Canberra. The acquisition was purchased with a combination of $5 million of cash and existing Tesserent shares.

Seer reported over $7.6 million in revenue and $2.2 million of sustainable earnings during FY 2020. In addition, Seer has strong revenue and earnings growth anticipated for FY 2021.

The acquisition strengthens Tesserent’s security services and delivery capabilities to a number of Australian Federal Government departments and agencies. These include both Defence and Law Enforcement. In particular, it will assist in the delivery of Assurance and Governance, as well as Risk and Compliance (GRC) services. The acquisition will also enhance Tesserent’s software development capabilities.

On the back of this most recent acquisition, Tesserent has now evolved to become Canberra’s largest pure cyber security provider.

Seer’s Managing Director, Scott Ceely, commented; “there is a significant opportunity for Australian-based cyber firms to work with all levels of Australian government to improve their security posture.”

Julian Challingsworth, Tesserent’s Co-CEO commented; “current market conditions continue to present tremendous consolidation opportunities in the short to medium term, and we fully expect to take advantage of this with additional acquisitions currently under consideration”.

Surge in Tesserent share price this week

The strong rise in the Tesserent share price today follows a surge in its share price earlier this week. This came after the company released a very positive trading update on Monday. Tesserent announced that it had successfully completed its financial objectives for the year and secured a debt facility. At the time of writing, the Tesserent share price is trading at 18.5 cents.

More reading

• Tesserent share price leaps 28% following trading update

Motley Fool contributor Phil Harpur 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 gold price is up more than 20% this year alone. Starting the year around US$1,500 and currently trading closer to US$1,860 (at the time of writing), there’s no doubt gold is doing very well. Despite a slump during the March ASX crash, it bounced strongly and has not looked back.

So, with the gold price now eyeing US$1,900, in my view it’s time to look at ASX gold shares and take advantage of this rising tide. 

Is the Newcrest Mining share price a ‘solid gold’ buy?

One ASX share I’m looking at for a ‘solid gold’ play right now is Newcrest Mining Limited (ASX: NCM). Even though the Newcrest Mining share price is currently up more than 60% from its March lows (at the time of writing), it’s still selling at around a 10% discount to it previous highs of around $38.00.

With the gold price continuing to rise, this 10% discount on Newcrest’s previous highs is an attractive proposition, in my view.

Operations

Newcrest is Australia’s largest ASX gold producer and is headquartered in Melbourne. The miner currently has 4 operations and 1 advanced project across Australia, Papua New Guinea and Canada.

Newcrest indicates that its reserve and resource base is strong, with estimates of current gold reserves able to sustain a minimum of 25 years at current production rates. This indicates a solid runway ahead for investors.

Performance

Newcrest’s share price returns are interesting if you plot them over a longer timeline. While its year-to-date share price growth is up around 15%, if we plot a 5-year return, the numbers stand at around 180%. As a point of reference and to ensure transparency, it should be noted that if we go back 10 years, the Newcrest share price is only up by 5%.

Interestingly, Newcrest shares peaked at an all-time high in November 2010 of around $43.00. Personally, I like to know what the previous all-time high was, as this gives us a soft target for future growth. The Newcrest Mining share price is trading at $34.78 (at the time of writing), so it is comforting to know there’s room to grow, even if it’s only a return to previous highs.

Recent reporting

Just this morning, Newcrest released its quarterly report with positive results. Some of the key details from the report include:

• Achieving FY20 guidance
• Gold production up 7% on previous quarter
• Refinancing of debt to lower costs
• Completion of a successful equity raise to support growth
• Copper production up 15% on previous quarter
• Priority of remaining COVID-19 free at Newcrest’s operations

The company’s quarterly report for the period ended September 2020 is due to be released in late October and the annual general meeting is scheduled for November. Based on the results we have seen from this most recent quarterly report, I am feeling positive about continued growth in both operations and the Newcrest share price.

Dividends

Newcrest has paid dividends twice a year for the last decade. Whilst the dividend yield is quite low (around 0.9%), it has certainly been reliable. The most recent dividend was paid on 27 March 2020 at 7.5 US cents. Newcrest switched its dividend currency from AUD to USD in 2015 and is currently paying all dividends in US dollars.

Foolish takeaway

Newcrest Mining isn’t the only gold stock on the ASX, but it is the largest ASX gold producer and has a solid track record.

The company’s goal of remaining COVID-19 free at its operations is an important one, as this can throw a spanner in the works of even the best companies. In its quarterly report Newcrest confirmed that, to date, it has not had a single case of COVID-19 across its workforce. Keeping it that way is critical.

With the Newcrest Mining share price trading at a 10% discount to its previous highs, its strong recovery from March lows and positive recent reports, I’m bullish on Newcrest shares. Add to this the strong gold price of late and in my opinion Newcrest is one stock to strongly consider adding to your portfolio.

More reading

• ASX 200 up 0.4%: Banks lower, Newcrest impresses, Coca-Cola Amatil jumps
• Why Coca-Cola Amatil, Newcrest, QBE, & Tabcorp shares are pushing higher
• Newcrest Mining share price on watch after strong Q4 update
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points

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For investors looking to access growth out of China, in my opinion it’s worth taking a closer look at VanEck’s China New Economy ETF (ASX: CNEW).

According to VanEck, the China New Economy ETF gives investors access to China’s most fundamentally sound companies. VanEck has determined that certain sectors make up what it refers to as “the new economy”. By investing in this ETF, you can gain access to these sectors and ride the wave of growth coming out of China.

What is “the new economy” in China?

VanEck believes that healthcare, consumer staples, consumer discretionary and of course, technology, make up the key sectors for growth in China. VanEck also argues that although China has historically obtained growth from sectors such as the financial, energy and materials industries, policy reform and a transitioning economy has led to a change in growth sectors. Its China New Economy ETF aims to capture this growth by spreading investment across the new sectors.

Tracking and performance

The fund aims to track the performance of the CSI MarketGrader China New Economy Index (AUD). The index is designed to follow the “most fundamentally sound” companies that trade and are headquartered in China.

Using the GARP principle (growth at a reasonable price), the index identifies companies within the new growth sectors that make the cut across 4 categories: growth, value, profit and cashflow. MarketGrader recently announced in its June 2020 rebalancing notes that it had replaced 61 companies within the index, citing that COVID-19 has caused much disruption to the economy and therefore the companies operating within it.

Since its inception on 8 November 2018, VanEck’s China New Economy ETF has returned approximately 86% for investors (at the time of writing). The return is sure to put a smile on the face of any early investor, however it is still a young product and I am looking forward to seeing how it performs in the future.

This year alone, CNEW is up more than 32%.

Holdings and fees

The VanEck website provides transparency in regard to CNEW’s full holdings. Of the 120 stocks held by the fund, the largest holding only constitutes 1.47%, which is great from a diversity point of view in my opinion.

However, it is worth noting the fund’s management fee. Clocking in at 0.95% p.a., this is hefty and certainly at the upper end of ETF fees. Personally, I can live with 0.95% p.a. if the returns continue at current rates (approximately 50% p.a.), however, this is one fee you will need to consider before adding CNEW to the portfolio.

About VanEck

VanEck is a long-standing asset manager, founded in 1955. It has actually been in business a lot longer than some of the well-known asset managers, such as Vanguard (1975) and BetaShares (2009). VanEck is one of the world’s largest issues of exchange-traded products (ETPs) and has operations across 6 countries. It is a reliable asset management firm with a long history of solid performance.

Foolish takeaway

Exposure to the Chinese economy is very interesting to me. These days, we are fortunate that we can access incredible products such as international market ETFs directly through the ASX. This means that not only are you able to gain exposure to the staggering growth coming out of these regions, but you are also able to effectively diversify your portfolio.

More reading

• Here’s how to play China’s V-shaped growth story

Motley Fool contributor Glenn Leese 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 Dicker Data Ltd (ASX: DDR) share price has surged 6.4% higher so far today, following the release of a very strong set of numbers in its unaudited H1 FY 2020 results.

Dicker Data has evolved to become Australia’s largest value added distributor of hardware, software, cloud and other emerging technologies.

Why the Dicker Data share price is climbing

Revenue growth climbs higher during the pandemic

Total half year revenue from ordinary activities broke through the $1 billion milestone for Dicker Data. It was up by 18.1% to $1,006 million for the six months ending 30 June 2020.

Particularly strong growth during the half has been driven by a surge in demand for remote and virtual work solutions during the coronavirus pandemic. This strong demand has been witnessed across both Dicker Data’s hardware and software portfolios.

Recurring software revenue was a real performer during the half, up by 53.1% to $225 million.

Profit surges higher on climbing revenues and increasing margins

Net profit also grew very strongly for Dicker Data. Net Profit before tax amounted to $42.0 million, an increase of 30.4%. Net Profit after tax was up by 23.5% to $29.4 million.

At a country level, New Zealand was the strongest performer, with revenues up by 31.6%. Australia’s revenue base grew by 17.2% during the six month period.

Gross profit increased by 24.8%, driven by growth in overall revenue and an improving margin. The driver of this growth has been a heightened focus on both the mid-market and the SMB market. Dicker Data specialises in servicing both of these market segments and specifically targets the pre-sales and value added services markets. The company also targets emerging solutions in the hybrid, end-to-end technology market.

During FY 2019 and H1 FY 2020, new vendors accounted for $26.3 million of incremental revenue during the half. Existing vendor relationships that were established in FY 2018 or prior, grew at 15.1% over the prior corresponding period, driven by access to new product lines.

Emerging opportunities

Dicker Data highlighted 5G as a particular area that it can tap into during the rest of 2020 and beyond.

As 5G is rolling out across Australia, more computing technology is required at the ‘Edge’ of the network. Dicker Data believes it is well placed to help supply the new devices and infrastructure required to support this growing trend.

How has the Dicker Data share price been performing?

The Dicker Data share price has been a strong performer since the beginning of 2019. It has increase from $3.10 to now be trading at $7.50. That’s an increase of 142%. However, most of that growth occurred in the first half of 2019. Dicker also pays an attractive forward dividend yield of 4.26%, fully franked.

More reading

• Why I would buy these fully franked ASX dividend shares
• Cash rate on hold until 2022? Buy these ASX dividend shares
• Why I would buy NAB and this ASX dividend share
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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data 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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