The Kogan.com Ltd (ASX: KGN) share price has taken a dive of more than 7% (at time of writing) based on a Federal Court judgement.

The Federal Court decision

Kogan advised to the ASX today that the Federal Court upheld allegations by the Australian Competition and Consumer Commission (ACCC). The ACCC alleged Kogan breached Australian Consumer Law with respect to a four day promotion it conducted in June 2018. In the promotion, Kogan advertised that consumers could achieve a 10% price reduction at checkout using a coupon code.  

Kogan maintains, however, it never intended for the promotion to mislead consumers. As a result of today’s decision, a further hearing will be held concerning a penalty. 

The company is currently reviewing the decision and has advised it may provide an update when the review is finalised. 

Additionally, a business update will be provided towards the end of this month. 

Other recent updates

Kogan recently raised $20 million through a share purchase plan (SPP) announced 8 July 2020. According to its SPP booklet, Kogan intends to use the proceeds to provide financial flexibility to act quickly on future value accretive opportunities. 

The $20 million raised follows a successfully completed $100 million share placement announced last month. 

In its June Investor Presentation, Kogan announced it has approximately 2 million active customers. Additionally, it has increased its online market share significantly with strong growth in sales and earnings. 

About the Kogan share price

Kogan is an online retail business headquartered in Melbourne. It has a diverse offering with a portfolio of retail and service businesses. Some services it offers include mobile, internet, insurance and travel. Additionally it’s focused on providing affordable prices to consumers through its retail websites Kogan.com and Dicksmith.com.au.

As a result of the coronavirus pandemic, the Kogan share price, along with range of other online related businesses, have benefitted. In the past year, Kogan shareholders have been rewarded with a share price increase of over 214%. 

The Kogan share price is currently trading at $16.52 which represents a fall of 7.19% today. However, the price has rebounded somewhat after the initial shock of the announcement. It will be interesting to see how this announcement will weigh on the share price until the penalty is known. 

More reading

• Invest like Warren Buffett and buy and hold these excellent ASX shares
• Why outperforming ASX retail stocks could be running out of puff
• 3 ASX shares to buy before earnings season
• These 2 ASX retail shares have surged higher in 2020
• Where I would invest $5,000 into ASX shares in July

Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia 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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If you have $1,000 sitting in a bank account and no immediate use for it, I would suggest you consider putting it to work in the share market.

After all, the potential returns on offer in the share market are vastly superior to the interest rates being offered by the big four banks right now.

Three top ASX shares that I would buy with these funds are listed below. Here’s why I like them:

a2 Milk Company Ltd (ASX: A2M)

This New Zealand-based fresh milk and infant formula company could be a great place to invest $1,000. I’m a big fan of the company due to its ongoing expansion in North America and the increasing demand for its infant formula products in the China market. The latter has been a key driver of growth in FY 2020 and looks set to underpin a very strong full year result in August. The good news is that I believe there’s still plenty more growth to come thanks to its relatively small market share in China and differentiated brand. It also has the opportunity to accelerate its growth through acquisitions thanks to its sizeable cash balance.

CSL Limited (ASX: CSL)

I think this biotherapeutics giant would be a great place to invest $1,000. I believe CSL is one of the highest quality companies Australia has produced and well-placed for long term growth. It is made up of two businesses – CSL Behring and Seqirus. CSL Behring is the global leader in plasma therapies and Seqirus is the second biggest in the influenza vaccines industry. I believe both businesses have strong long-term growth potential due to favourable industry dynamics, their leading products, and burgeoning research and development pipelines. And with the CSL share price down over 18% from its high, now could be an opportune time to invest.

Jumbo Interactive (ASX: JIN)

Another ASX share to consider buying with that $1,000 is online lottery ticket seller Jumbo. It is best-known as the operator of the Oz Lotteries website. It has been benefiting greatly from the shift to online gambling in the Australian market and looks well placed to capitalise on the same trend internationally. Jumbo is targeting $1 billion in ticket sales through its platform by FY 2022. This will be triple what it achieved in FY 2019. While this is an ambitious target, I think it could achieve it thanks to its Powered by Jumbo Software as a Service (SaaS) offering.

More reading

• Why these excellent ASX healthcare shares could be long-term market beaters
• Why the Pointsbet share price is outperforming today
• 5 ASX shares with huge moats to own today
• Why the A2 milk share price gained 38% in the first half of 2020
• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade

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 CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of A2 Milk. 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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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is having a bit of a subdued day. The benchmark index is currently trading roughly flat at 6,011.7 points.

Here’s what has been happening on the market today:

Westpac class action.

The Westpac Banking Corp (ASX: WBC) share price is edging higher today despite being hit with another class action. This morning the banking giant confirmed that it has been named in a class action brought by law firm Maurice Blackburn in relation to allowing automotive dealerships to charge customers flex commissions on car finance. Flex commissions allowed automotive dealerships to set the interest rate on car loans above a base rate set by the bank and take a cut of the difference. Westpac intends to defend the claim.

Rio Tinto Q2 update.

The Rio Tinto Limited (ASX: RIO) share price is pushing higher on Friday after the release of its second quarter update. During the second quarter Rio Tinto reported 86.7Mt of Pilbara iron ore shipments, bringing its first half shipments to a total of 159.6Mt. This was a 1% and 3% increase, respectively, on the prior corresponding periods and puts it on track to achieve its full year guidance.

Travel shares tumble.

It has been another disappointing day of trade for travel and tourism shares such as Flight Centre Travel Group Ltd (ASX: FLT), Qantas Airways Limited (ASX: QAN), and Webjet Limited (ASX: WEB). They are all trading notably lower at lunch. This could be due to the New South Wales government announcing that COVID-19 restrictions will be extended to restaurants, bars, cafes, and clubs.

Best and worst ASX 200 shares.

The best performer on the ASX 200 index on Friday has been the Abacus Property Group (ASX: ABP) share price with a gain of almost 4%. This morning Ord Minnett retained its accumulate rating and lifted its price target to $3.10. The worst performer on the index has been the Flight Centre share price with a 4.5% decline. This follows broad weakness in the travel sector.

More reading

• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower
• BlueScope’s earnings to halve as it takes $200m write-down
• Rio Tinto share price on watch after Q2 production update
• Westpac share price on watch after being hit with flex commissions class action
• Why this fundie sees an ASX bank share recovery

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has given back its early gains and is heading lower. At the time of writing the benchmark index is down 0.1% to 6,006.1 points.

Four shares that have fallen more than most today are listed below. Here’s why they are dropping lower:

The Cann Group Ltd (ASX: CAN) share price has crashed 16% lower to 69 cents. This morning the cannabis company announced a heavily discounted $24.3 million capital raising. These funds were raised at $0.40 per new share, which represents a 51.2% discount to its last closing price. Cann advised that the proceeds from capital raising will be used to fund its business while it pursues near-term growth opportunities It also revealed that it is gaining strong commercial momentum and is forecasting FY 2021 revenues of $15 million.

The Flight Centre Travel Group Ltd (ASX: FLT) share price is down 4.5% to $10.27. The domestic travel market was dealt a blow this morning when the New South Wales government announced that COVID-19 restrictions will be extended to restaurants, bars, cafes, and clubs. A number of other notable travel and tourism companies have dropped lower with Flight Centre today.

The Helloworld Travel Ltd (ASX: HLO) share price has fallen 7.5% to $1.82. This follows the completion of its institutional placement and entitlement offer this morning. Helloworld raised gross proceeds of approximately $41.6 million at an offer price of $1.65 per new share. This represents a discount of 16% to its last close price. The proceeds of the equity raising will provide it with balance sheet liquidity through to 2022.

The Zip Co Ltd (ASX: Z1P) share price is down a further 6% to $5.58. Investors have been selling the payments company’s shares this week after they were downgraded by a leading broker. UBS downgraded Zip to a sell rating with a $5.70 price target. As the Zip share price has now fallen below this target price, I suspect it might start to find support from buyers.

More reading

• Cann Group share price tanks on discounted capital raising
• How to pick an ASX 200 share market bubble
• Why the Zip Co share price sank 11% lower today
• Helloworld Travel unveils $50 million capital raising
• Top brokers name 3 ASX 200 shares to sell 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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Helloworld Limited. The Motley Fool Australia has recommended Flight Centre Travel Group 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 BlueScope Steel Limited (ASX: BSL) share price fell this morning after management forecasted earnings to more than halve and a circa $200 million write-down.

Shares in the steel products maker slipped 0.6% to $11.32 when the S&P/ASX 200 Index (Index:^AXJO) gained 0.2% at the time of writing.

But it may not be its earnings guidance or the large provisioning that’s knocking the wind out of the BlueScope share price.

Earnings weakness not the main drag

Management expects underlying earnings before interest and tax (EBIT) to come in around $560 million for FY20 with $260 million of this attributed to the COVID-19 affected June half. This compares to the $1.4 billion it posted in FY19.

That’s actually not too bad given the economic hit from the coronavirus pandemic on countries that the group operates in.

Further, analysts were expecting the last financial year to be weak anyhow. For instance, Credit Suisse pencilled in a net profit of $318.7 million for FY20 when BlueScope reported an underlying net profit of $966.3 million in FY19.

Write-down is no surprise

I doubt anyone would be surprised by the write-down of its underperforming businesses too when so many others are doing the same. Woodside Petroleum Limited (ASX: WPL) and Origin Energy Ltd (ASX: ORG) are but to recent examples.

I believe it’s the sombre outlook that’s weighing on the stock instead.

Uncertain outlook

Management warned that steel spreads in North America and Asia have weakened since the start of this financial year compared to the average achieved in the 2HFY20.

“Further, while at this point orders and despatches in Australia remain stable and North Star is despatching near full capacity, there is a high level of uncertainty in the current environment,” said BlueScope in its ASX statement.

This isn’t only due to COVID-19 directly impacting on demand, supply chains and operations, but the broader economic fallout that’s expected to dampen demand for its products.

Management said it will provide more details on trading conditions when it releases its full year results on 17 August.

Shiny side to BlueScope’s results

On the bright side, the $100 million that BlueScope’s holding on its balance sheet should provide it enough firepower to get through the turmoil.

Its US North Star business is also performing better than expected with utilisation rates staying above 90% through the second half of FY20. This is despite the shutdown of key industries like automobile from mid-March to mid-May.

BlueScope’s Building Products Asia & North America is also surprisingly resilient with its second half result coming in at around the same as the first half.

I think the stock is cheap despite the uncertain outlook. Having said that, I don’t think the BlueScope share price will be going anywhere till management provides a further update in a month’s time.

More reading

• Why this fundie sees an ASX bank share recovery
• Are Transurban shares a hot buy today?
• 5 things to watch on the ASX 200 on Friday
• Market close: ASX 200 drops 0.7% today
• The ASX tech ETF you can buy and hold forever

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited. 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 Cann Group Ltd (ASX: CAN) share price has tanked this morning after the cannabis grower announced a $24.3 million capital raising at a steep discount to yesterday’s closing price. Shares were trading down 16% at the open in response to the raising, which aims to provide working capital. Since then, the Cann Group share price has continued edging lower and is currently sitting at 66 cents at the time of writing.

What does Cann Group do? 

Cann Group is a cannabis cultivator with a vision to be a leading developer and supplier of medicinal cannabis products. The company has established cultivation and R&D facilities in Australia and is pursuing a fully-integrated business model that will enable it to establish a leading position in plant genetics, breeding, cultivation, production and manufacture of medicinal cannabis products. 

In January, the company announced a strategic reset in response to disruption in the global cannabis market. An excess supply of cannabis meant the company chose to focus on initially meeting Australian domestic demand while reducing operating expenses to transition to profitability. Plans for Cann Group’s new Mildura facility were revised to take a staged approach to construction given higher than expected supply of cannabis globally. To date, funding for construction has not been secured due to the impacts of COVID-19. 

What are the details of the capital raising? 

Cann Group is raising capital to support its near-term growth plans. The company is not yet profitable and reported an operating loss of $8.4 million for 1H FY20. At 31 December 2019, Cann Group reported cash and cash equivalents of $8 million, down from $43 million at 30 June 2019. In February this, year Cann Group completed the issue of $8 million in convertible notes to provide for working capital purposes. 

Under the current capital raising, Cann Group has received firm commitments from sophisticated and institutional investors to raise $14.3 million at 40 cents per share. Up to $10 million will be raised under the share purchase plan with shares issued at 40 cents. The Cann group share price hit a high of $1.69 in January before dropping to a low of 61 cents in March. Shares were trading at 82 cents at close of market yesterday, meaning the capital raising is occurring at more than a 50% discount to yesterday’s share price. 

What is the outlook for Cann Group? 

Cann Group is predicting revenues of $15 million in FY21, underpinned by existing supply contracts. Commercial supply agreements for medicinal cannabis products and dried flower products have been secured for Australia and export markets, including the United Kingdom and Europe. While its major shareholder, Aurora Cannabis Inc, did not participate in the placement, Cann Group believes Aurora remains committed to the strategic relationship. 

More reading

• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower
• Althea share price lifts as cannabis market growth predicted

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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. At the time of writing the benchmark index is up 0.15% to 6,020.8 points.

Four shares that are climbing more than most are listed below. Here’s why they are charging higher:

The Alumina Limited (ASX: AWC) share price is up over 4% to $1.80. The catalyst for this gain is likely to have been a broker note out of Credit Suisse today. Its analysts have upgraded Alumina’s shares to an outperform rating with an improved price target of $2.00. It believes the company’s outlook is improving greatly thanks to lower unit costs and a rebounding aluminium sector.

The BWX Ltd (ASX: BWX) share price has jumped 5.5% higher to $3.86. Investors have responded positively to the personal care products company’s equity raising and trading update for FY 2020. This morning the company behind the Sukin brand raised $40 million via a placement to fund the development and construction of a game-changing, world class manufacturing facility. BWX also revealed a 25% increase in unaudited revenue to $187.6 million and a 30% lift in EBITDA (pre-AASB 16) to $27.5 million for FY 2020.

The Life360 Inc (ASX: 360) share price is up over 4% to $3.16. This morning analysts at Credit Suisse retained their outperform rating and lofty $4.80 price target on the family-focused app platform company’s shares. This follows the announcement of new membership plans on Thursday. The broker believes this could be a step-change for Life360 and sees a potential significant re-rating of its shares in the future.

The Perpetual Limited (ASX: PPT) share price has climbed over 3.5% to $32.90. This appears to have been driven by a broker note out of Citi this morning. Its analysts were pleased with Perpetual’s business update and upgraded its shares to a neutral rating from sell with an improved price target of $32.00. It feels that there are signs that its performance is turning around at long last.

More reading

• BWX share price storms higher after $40 million placement and strong FY 2020 growth
• Market close: ASX 200 drops 0.7% today
• BWX delivers strong growth in FY 2020 and announces $50 million equity raising
• Leading brokers name 3 ASX shares to buy today
• Why Afterpay, Alumina, Magellan, & Webjet shares are dropping lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX 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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If you have a high tolerance for risk, then I feel it would be well worth gaining some exposure to the small cap side of the market.

This is because if you can find the next blue chip share when it is still only a small cap, you could generate mouth-watering returns.

A prime example of this is Ramsay Health Care Limited (ASX: RHC). The global private hospital operator has gone from being a reasonably small player to an industry juggernaut over the last couple of decades.

In fact, in 2000 you could have picked up Ramsay’s shares for 80 cents each. This means that a $5,000 investment at that point would have given you 6,250 shares.

This morning the Ramsay share price is changing hands for $63.22, which gives those 6,250 shares a valuation of approximately $400,000.

In addition to this, in FY 2021 Ramsay is being tipped to pay fully franked dividends of $1.28 per share.

This means those 6,250 shares you picked up in 2000 will be generating a tidy $8,000 in dividends next year. That’s $3,000 more than your original investment!

Overall, I believe this demonstrates why buying quality small cap ASX shares has the potential to have a very positive impact on a balanced a portfolio.

But which small cap ASX shares should you buy today?

It is worth remembering that for every Ramsay, there are countless small cap ASX shares that fail to live up to expectations.

However, I believe you can increase your probability of success by focusing on small cap shares with strong business models, large addressable markets, and industry-leading products.

Three small cap ASX shares which I think tick a lot of boxes and could be worth investigating further are sales enablement software provider Bigtincan Holdings Ltd (ASX: BTH), HR and payroll software provider ELMO Software Ltd (ASX: ELO), and cloud communications platform provider Whispir Ltd (ASX: WSP).

More reading

• Why these excellent ASX healthcare shares could be long-term market beaters
• ASX 200 jumps almost 2% today, Afterpay rises
• 2 ASX tech shares with stellar growth prospects
• Why Afterpay, ELMO, Oil Search, & Paradigm shares are racing higher
• ASX tech star ELMO Software delivers strong growth in FY 2020 despite the pandemic

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 BIGTINCAN FPO and Whispir Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO, Elmo Software, Ramsay Health Care Limited, 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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