The Xero Limited (ASX: XRO) share price has been a strong performer in 2020 despite the market volatility.

In fact, on Thursday the cloud-based business and accounting platform provider’s shares raced to a record high of $91.49.

When Xero’s shares hit that level, it stretched their year to date gain to just under 15%. This compares very favourably to a 10.5% decline by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the Xero share price at a record high?

Investors have been driving the Xero share price higher this year after it continued to deliver strong growth across key metrics.

In FY 2020 Xero delivered a 30% increase in operating revenue to NZ$718.2 million and a 29% jump in annualised monthly recurring revenue to NZ$820.6 million.

This was driven by increases in both its average revenue per user and total subscribers. The latter rose 26% to 2.285 million subscribers thanks to the addition of 467,000 net subscribers during the 12 months.

And due to the benefits of scale, Xero’s earnings grew even quicker. The company reported a 52% increase in earnings before interest, tax, depreciation, and amortisation to NZ$139.17 million.

It also recorded its first net profit. Xero’s profit after tax came in at NZ$3.34 million for the year, compared to a loss of NZ$27.14 million a year earlier.

Is it too late to invest?

While Xero’s shares certainly aren’t cheap, I would still be a buyer of them if you planned to invest with a long term view.

At the end of the year Xero had 2.285 million subscribers. Although this is a large number, it is still on a fraction of its addressable market. Management estimates that less than 20% of the English-speaking addressable cloud accounting market has adopted cloud platforms.

This means there is still a material market opportunity for the company over the next decade. And given the quality of its product, I expect it to capture a growing slice of this market over the long term and drive strong earnings growth.

More reading

• 3 stellar ASX growth shares I would buy right now
• Are Megaport shares the ones to buy and hold beyond 2030?
• 3 large cap shares beating the ASX 200 this year
• Should the Xero share price have a P/E ratio of 4,000?
• 2 cheap ASX 200 shares to buy right now

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 Xero. 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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It’s been an interesting time for investors this year. The coronavirus pandemic caused the BHP Group Ltd (ASX: BHP), National Australia Bank Ltd. (ASX: NAB) and Afterpay Ltd (ASX: APT) share prices to plummet in March. Furthermore, the S&P/ASX 200 Index (INDEXASX: XJO) has fallen 16.47% from its February high. Whilst both BHP and National Australia Bank have gone on to rebound considerably, the Afterpay share price has not only also done this, but actually reached new, all-time highs. 

Share price falls present an opportunity for anyone considering investing in the ASX 200. When taking on board Warren Buffett’s wise words, investors should “be greedy when others are fearful and fearful when others are greedy”.

Even at today’s prices, I believe these 3 ASX 200 shares offer good value and could provide great, long-term returns for investors.

BHP share price

BHP is one of the oldest companies listed on the ASX, known for investing in high-quality resource assets. Currently, BHP is involved with iron ore, coal, copper, nickel, potash and petroleum. It has achieved significant growth over 135 years but recent turmoil has seen its share price trade at a hefty discount. The BHP share price has fallen 11.8% from its January high.

However, I believe BHP’s growth appears set to continue. At the end of March, BHP had 6 projects under development with a combined budget of US$11.4 billion over the life of the projects. These projects mean BHP will continue to maintain and expand its production in the years ahead.

BHP is committed to paying dividends to shareholders. Its current dividend policy states it will payout 50% of underlying profit in a given period. This means shareholders can expect an ongoing income stream from BHP. The policy should also support continued growth of the BHP share price. 

At the time of writing, BHP trades on a trailing dividend yield of 6.02% fully franked. This is a huge yield in the current interest rate environment and shows that BHP offers great value to investors at its share price today.

NAB share price

NAB has been in the news lately through its recent decision to raise capital from investors. When analysing the bank, however, it could be seen to offer great value. In February, the NAB share price reached $27.31, it now sits at $18.92 which represents a fall of just over 30%. This drop shows the capital raising and the damage to the bank’s balance sheet brought on by the coronavirus crisis. However, it also represents a good opportunity to invest in NAB shares at today’s price.

If the NAB share price eventually recovers to its previous high, which is very possible assuming no further significant setbacks, shareholders will make a 44% gain on shares purchased at today’s price. This represents great value and suggests that investors can make significant gains from investing in NAB shares.

NAB has a pro forma CET1 ratio of 11.2% after its capital raising. This suggests that the bank is in good financial health by international standards. If several of NAB’s loans turn bad, it still has a solid capital buffer to remain in business and continue lending.

NAB trades on a trailing dividend yield of 6.04% fully franked. Following its capital raising, NAB has promised to continue paying dividends to shareholders.

Afterpay share price

Investors usually invest either for growth or income. While Afterpay does not currently offer income, it does offer growth. At today’s share price, investors could make considerable gains. Especially if Afterpay is successful in its current growth ambitions. Afterpay has over 8.4 million users worldwide and plans to become a major payment service provider. This would see it rival major industry players like Visa or Mastercard.

While it is growing rapidly, Afterpay is already offered by 48,400 retailers worldwide. It’s true that this scale may not be up there with the major payment providers, but it does offer room for considerable expansion. When more retailers and, therefore users, take up Afterpay, it could also become a takeover target as major technology or financial companies attempt to capitalise on the platform’s popularity. The likelihood of this is reinforced by an announcement last month which saw Afterpay welcome an investment by major Chinese technology company, Tencent Holdings Ltd (HKG: 0700). 

Tencent currently has revenue per share of $1.51 which is less than the Afterpay share price. However, it is important to consider the scalability of Afterpay’s platform. If this company becomes a major global player as planned, this figure could grow phenomenally, leaving today’s Afterpay price a distant memory.

Foolish takeaway 

BHP, NAB or Afterpay shares could be a great investment at today’s prices. When contemplating which company to invest in, buyers should consider if they are primarily targeting growth or income. In my opinion, both NAB and BHP offer great income at their current share prices. Today’s Afterpay share price, on the other hand, offers the potential for phenomenal growth and the possibility of a takeover in the future. Whilst investors should consider their individual needs and invest accordingly, I believe all 3 of these companies offer great value at today’s share prices. 

More reading

• Is the Westpac share price too high?
• Why today might be a good day to buy NAB and Westpac shares
• Could the Openpay share price signal a wider boom for BNPL?
• 3 small cap ASX tech shares that could be stars of the future
• 5 things to watch on the ASX 200 on Friday

Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. 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 (Index:^AXJO) is poised to open weaker this morning. But the pullback might be an opportune time to buy National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

The broader market weakness is no thanks to weak leads from Wall Street on worries that stocks have run too far ahead of fundamentals.

But there’s value to be found in the NAB share price and Westpac share price, at least that’s according to UBS.

Last few places on the ASX to find value

The broker just upgraded these stocks to “buy” from “neutral” as the sector is one of the last few places you can find value.

It isn’t only the COVID-19 pandemic that’s been weighing on bank shares. Competition from fintechs, pressure from the banking regulator to increase their cash buffers, the fallout from the Haynes Royal Commission and tumbling interest rates are just some of the other punishing headwinds.

Shares in the big banks, excluding Commonwealth Bank of Australia (ASX: CBA), are trading at their lowest multiples in 27 years, noted UBS.

Light at the end of the tunnel

“However, with the economic outlook less bleak than anticipated even a few weeks ago,” said the broker.

“The likelihood of a further deterioration in asset quality and RWA [risk weighted asset] inflation driving additional highly dilutive capital raisings has reduced materially.

“The lower reliance on JobKeeper (wage subsidies) than government expectations also provides some flexibility for further targeted stimulus as current packages, loan deferrals and rental relief expires in October.”

Banks will recover ahead of the economy

While we the coronavirus will continue to have an impact on the economy until a vaccine is found, the broker pointed out that the market factor in the recovery before then, barring a sharp deterioration in the economy.

It’s also worth noting that the damage from the COVID-19 crisis hasn’t been as bad as what many experts (and the government) were expecting. Despite this, the government is adding to its record stimulus to get our economy back on its feet.

ASX banks could re-rate

What this means is that the threat of ballooning bad debt shouldn’t be as bad as forecast, and that will be a trigger for a re-rating in the sector.

“Although sustained low rates will weigh on NIM [net interest margin] and credit growth will be anaemic, a sector ROE of ~9% looks possible,” said UBS.

“At these levels, the banks could re-rate to around book value, and with an 80% payout ratio offer ~7.2% dividend yield.”

More reading

• Is the Westpac share price too high?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.8%, travel shares fly higher
• This ASX 200 stock is well placed to beat earnings expectations

Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. 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 Qantas Airways Limited (ASX: QAN) share price was a strong performer on Thursday.

The airline operator’s shares jumped 7% to $4.49 after announcing plans to increase the number of domestic flights in June and July.

What did Qantas announce?

With travel restrictions starting to ease across the country, both Qantas and Jetstar will increase their domestic and regional flying for June and July.

According to the release, the additional services will see capacity increase from 5% of pre-pandemic levels, to 15% by the end of June. This represents an increase of more than 300 return flights per week.

The company is prepared to further increase the number of flights it operates in July. This will depend on travel demand and the further relaxation of state borders. Qantas revealed that it has the ability to increase the number of flights to upwards of 40% of its pre-crisis domestic capacity by the end of July.

Where will Qantas be flying to?

The company advised that the additional flights include more services on capital city routes. This is particularly the case with Melbourne-Sydney and a number of routes to-and-from Canberra.

As travel restrictions start to ease domestically, Qantas and Jetstar will increase domestic and regional flying for June and July, with more than 300 additional return flights per week by the end of June. Read more: https://t.co/iW5sNBpPtZ pic.twitter.com/DNO3HM2p57

— Qantas (@Qantas) June 4, 2020

https://platform.twitter.com/widgets.js

As you can see above, it will also increase intra-state flights for Western Australia, Queensland, New South Wales, and South Australia. Weekly flights to Broome, Cairns, and Rockhampton will see also receive significant boost.

In addition to this, flights will resume on eight routes that are not currently being operated. This includes flights from Sydney to Byron Bay, which previously saw its route launch postponed because of the pandemic.

Will there be enough demand?

Also supporting the Qantas share price on Thursday were positive comments by Qantas CEO, Alan Joyce.

Mr Joyce believes Australians are eager to take to the skies again. He commented: “We know there is a lot of pent up demand for air travel and we are already seeing a big increase in customers booking and planning flights in the weeks and months ahead.”

“We are gradually adding flights in June as demand levels increase, which will go from 5 per cent of pre-crisis levels currently to 15 per cent by late June. We can quickly ramp up flying in time for the July school holidays if border restrictions have eased more by then,” Joyce added.

Mr Joyce also revealed that Qantas is taking precautions to make the flying experience safe for travellers.

He explained: “Customers will notice a number of differences when they fly, such as masks and sanitising wipes, and we’ll be sending out information before their flight so they know exactly what to expect and have some extra peace of mind. Importantly, the Australian Government’s medical experts have said the risk of contracting Coronavirus on an aircraft is low.”

Overall, this looks like a big positive for Qantas and should help limit the cash burn it is currently experiencing.

More reading

• ASX 200 rises 0.8%, travel shares fly higher
• This ASX 200 stock is well placed to beat earnings expectations
• Why the Alliance Airlines’ share price is surging higher
• Is the Qantas share price a buy?
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging 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 Appen Ltd (ASX: APX) share price will be one to watch this morning after an announcement by the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence.

What did Appen announce?

Appen’s announcement after the market close on Thursday revealed that a number of executives have been selling shares this week.

The biggest seller was Non-Executive Chairman, Chris Vonwiller. He offloaded 2 million Appen shares on-market for an average of $29.00 per share. This represents a total consideration of $58 million.

Also selling shares was the company’s CEO and Managing Director, Mark Brayan. He sold 95,535 shares for an average of $30.60 per share. This equates to a total consideration of approximately $2.9 million.

And finally, another insider that was selling shares was Non-Executive Director, Bill Pulver. Mr Pulver sold 275,000 shares on-market for an average of $30.6865 per share. This represents a total consideration of $8.4 million.

Why were they selling shares?

Appen helpfully provided explanations for each of the sales.

Mr Vonwiller sold his shares for a number of personal reasons, including philanthropic endeavours.

Whereas the company’s CEO was selling shares to satisfy tax obligations and diversify personal investments. The latter was the reason Mr Pulver gave for selling his shares.

It is worth noting that all three directors still have sizeable shareholdings, even after these sales.

Should you be concerned?

Insider selling rarely goes down well with investors. The theory is that if a director was confident its shares would go a lot higher from here, they wouldn’t sell them today. So, the decision to sell is often interpreted to be a bearish indicator.

However, I think the explanations they have given is reasonable. And as I mentioned above, they still have plenty of their wealth tied up in the company.

In light of this, if the Appen share price were to pullback meaningfully on the news, I would consider picking up shares.

After all, given the strong growth potential the company has over the next decade, I believe its shares could be a lot higher than this level in 2030.

More reading

• 3 small cap ASX tech shares that could be stars of the future
• 5 things to watch on the ASX 200 on Friday
• 3 stellar ASX growth shares I would buy right now
• Are Megaport shares the ones to buy and hold beyond 2030?
• Where to invest $5,000 into ASX 200 shares immediately

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

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The Openpay Group Ltd (ASX: OPY) share price has rocketed up by 160% since Monday. Followed hot on its heels was Zip Co Ltd (ASX: Z1P) which saw its share price rise by 59.95% so far this week. This was after announcing the acquisition of New York-based QuadPay, giving it access to the $5 trillion dollar US retail market. 

However, the higher Openpay share price rise is more intriguing. At the end of April, the company reported a 113% growth in the number of its active customers before announcing an institutional share placement on 4 June. This would raise over $30 million for the company to use towards further growth and could signal the start of a wider boom across the buy now, pay later (BNPL) sector. 

The largest Afterpay Ltd (ASX: APT) challenger

The rise of Afterpay to a $13.98 billion ASX behemoth has been well documented. Not so the rise of its competitors.

Zip Co is the largest independent challenger of Afterpay. Unlike Afterpay, however, Zip Co credit checks its users. This could prove to be a competitive advantage over the coming months. In times of true recession, when things get tough, unsecured debts could result in increased defaults. 

Sezzle Inc (ASX: SZL)

The Sezzle share price is up by 41.75% this week. Unlike many of the other BNPL companies on the ASX, Sezzle is headquartered in the United States. So while others are trying to buy their way in, Sezzle is a market native.

The company already boasts a network of 1.3 million users and 14.9 thousand merchants. It has also secured a fighting fund of US$100 million. In addition, the company is already making moves towards the US$460 billion Canadian retail market.

Splitit Ltd (ASX: SPT) 

The Splitit share price is up by 78.26% so far this week. The company announced an increase in merchant sales volume by 321% compared to May 2019. Also headquartered in the US, the company does not have to push its way into a foreign market. With a network of 964 merchants, it is clearly the junior player thus far.

EML Payments Ltd (ASX: EML)

EML is not immediately recognised as one of the major BNPL players. This company made its name in gift cards sold in supermarkets. However, EML is one of the great enablers of the ASX fintech sector. The EML share price has risen only 9.3% this week. I believe this to be an unfairly small gain when compared to the meteoric rise of the Openpay share price. 

Its product, ControlPay, is the technology under the hood of many BNPL companies today. It is the platform processing payments for Zip Co’s ‘shop everywhere’ functionality. It is also being used by Sezzle in the US as well as Scalapay in Italy. 

Foolish takeaway

The slow death of credit cards is being brought about by Gen Z and Millennials. This is clearly a large-scale business transformation, and one that will likely see many of the companies mentioned above grow significantly.

Even with the large rise in the Openpay share price, I think EML is best placed to benefit over the medium to long term. By operating the back-end technology that powers some of its cohorts, the company is less exposed to unsecured debt. It also gets to process payments across many companies and countries with little competitive tension. 

More reading

• 3 small cap ASX tech shares that could be stars of the future
• ASX shares are in a bull market. What should investors do now?
• 3 top ETFs you can easily diversify your portfolio with immediately
• Are Megaport shares the ones to buy and hold beyond 2030?
• Why the Splitit share price rocketed 43% higher this morning

Daryl Mather owns shares of Sezzle Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Emerchants Limited, and ZIPCOLTD FPO. The Motley Fool Australia has recommended Emerchants Limited and Sezzle Inc. 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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I’m sure most readers will be very familiar with Australian tech shares such as Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX).

These tech shares have been growing at an exceptionally strong rate over the last few years and are now multi-billion dollar companies.

But it wasn’t always that way. Both companies were at one stage small cap tech shares flying under the radar.

Anyone that identified them at that stage and bought (and held onto) their shares, will have generated significant wealth.

With that in mind, I have been scouring the small cap side of the market for tech shares that I think could follow in their footsteps over the coming years.

Three small cap tech shares that I think investors should have on their watchlists are listed below. Here’s why:

Bigtincan Holdings Ltd (ASX: BTH)

The first small cap tech share to watch is Bigtincan. It is a fast-growing provider of enterprise mobility software. The company’s software allows sales and service organisations to increase their sales win rates, reduce expenditures, and improve customer satisfaction. Users achieve this through mobile worker productivity improvements. Management estimates that its total addressable market will be worth US$5 billion by 2021.

ELMO Software Ltd (ASX: ELO)

Another small cap to watch is ELMO. It is a cloud-based human resources and payroll software company. Its platform has been growing in popularity over the last few years, leading to very strong sales and earnings growth. The good news is ELMO still only has a very small share of an addressable ANZ market estimated to be worth $2.4 billion per year. And given how its platform is jurisdiction agnostic, it could grow its addressable market by expanding internationally in the future.

Whispir (ASX: WSP)

A final small cap tech share to watch is Whispir. It is a communications platform as a service (CPaaS) provider. Its industry-leading software platform allows organisations to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. The CPaaS market is growing at a rapid rate and is expected to be worth US$6.7 billion per year by 2022.

More reading

• 5 things to watch on the ASX 200 on Friday
• 3 stellar ASX growth shares I would buy right now
• ASX shares are in a bull market. What should investors do now?
• 3 top ETFs you can easily diversify your portfolio with immediately
• Are Megaport shares the ones to buy and hold beyond 2030?

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 Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, BIGTINCAN FPO, and Whispir Ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO, Elmo Software, and Whispir 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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