The Appen Ltd (ASX: APX) share price has edged lower so far today, down by 2.12% at the time of writing. This downward slide is despite the company providing a very positive update on its financial and operational performance.

Minimal coronavirus impact on business operations

In its AGM CEO’s presentation released to the market this morning, Appen revealed its earnings base remains resilient in the face of the coronavirus pandemic. Use of its products and services remains high among its major customers.

Despite a global slowdown in digital ad spending, Appen reported this has had minimal impact on its major customers to date. The tech company did acknowledge that the continued global economic downturn may have some impact on its smaller customer base moving forward.

Appen confirmed most of its staff continue to work efficiently and successfully in remote locations, supported by its at-home ‘crowd’ base of employees spread across the globe.

Strong balance sheet and healthy cash flow in place

In Appen’s market update in April, the company reported it had a strong balance sheet with cash in excess of $100 million. Today it confirmed its cash balance continues to be in this range. It also has an undrawn working capital facility available. Appen also confirmed that it is in a healthy cash flow position, which is underpinned by low overall capital requirements.

Outlook for FY 2020

Appen emphasised that despite current market challenges, it is continuing to strengthen its market position though continued investments in technology in the appropriate areas in order to achieve its long-term growth trajectory.

Based on Appen’s currently available market information, it expects negligible overall impact on its business performance due to the coronavirus pandemic in the months ahead.

It noted, however, that its current investment pipeline is likely to soften margins for 1H FY2020 to the mid teens, although margins for the full year to December 2020 are likely to be in the high teens.

Appen revealed that year-to-date revenue as at May 2020, including any orders in hand for delivery to customers, amounted to around $350 million. This compares favourably with overall revenues of $536 million for the 12 months to December 2019, and previous guidance.

Appen reaffirmed its full year earnings before interest, tax, depreciation and amortisation guidance of $125–$130 million.

More reading

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• If you invested $10,000 in the Appen IPO, this is how much you’d have now

Motley Fool contributor Phil Harpur owns shares of Appen Ltd. 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) looks set to end a very positive week on a disappointing note. At the time of writing the benchmark index is down just over 1.2% to 5,778.8 points.

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

The Costa Group Holdings Ltd (ASX: CGC) share price is down 4% to $3.16. This follows the release of the horticulture company’s annual general meeting update this morning. That update revealed that Costa’s long-serving CEO intends to retire within the next nine months. In addition to this, the company revealed that the majority of its produce is in demand and receiving favourable prices. However, it did warn on increasing operating costs relating to the pandemic.

The Freedom Foods Group Ltd (ASX: FNP) share price has crashed 13% lower to $3.80. Investors have been selling the diversified food company’s shares after the release of trading update. According to the release, a number of Freedom Foods’ channels have been materially impacted by the pandemic. And given the importance of the second half for its overall result, this looks likely to lead to a significantly weaker than expected full year result in FY 2020.

The Sonic Healthcare Limited (ASX: SHL) share price is down 3% to $28.34. This decline may be in relation to a broker note out of UBS this week. According to the note, the broker has a sell rating and $25.10 price target on the company’s shares. It appears concerned that Sonic may not benefit as greatly from pandemic testing as the market expects.

The Westpac Banking Corp (ASX: WBC) share price has fallen over 4% to $17.60. This sizeable decline appears to be the result of profit taking after some sensational gains this week. Prior to today, the Westpac share price was up over 22% week to date. The rest of the big four are tumbling lower with Westpac today, which is weighing heavily on the performance of the ASX 200.

More reading

• Why the Freedom Foods share price crashed 19% lower today
• Why the Costa share price is sinking lower today
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises again, ASX banks push higher
• Are ASX bank shares finally back in the buy zone?

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Freedom Foods Group Limited and Sonic Healthcare 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 Wesfarmers Ltd  (ASX: WES) share price has been up and down in 2020. Shares in the Aussie conglomerate are down 2.46% this year whilst still outperforming the S&P/ASX 200 Index (ASX: XJO) but this doesn’t tell the whole story.

The group’s shares hit a new 52-week high of $47.42 per share in mid-February. That was just prior to the bear market which sent the Wesfarmers share price tumbling to a 52-week low of $29.75 on 23 March.

So, despite the volatility, is the Wesfarmers share price set to climb in 2020?

Is the Wesfarmers share price headed higher this year?

I think Wesfarmers is actually in a strong position right now. The Aussie conglomerate is sitting on a pile of cash after having sold another part of its stake in Coles Group Ltd  (ASX: COL) for $1.1 billion at the end of March.

Wesfarmers is diversified across a number of sectors which is good for stability. However, one of those happens to be the Aussie retail sector which is struggling right now.

Even before the coronavirus pandemic, retailers were doing it tough. Late this month Wesfarmers made the call to restructure its Kmart Group arm. This includes the closure of up to 75 Target stores across Australia as well as the rebranding of further Target stores to Kmart.

It’s true that cash is king right now. Ordinarily, having excess cash could be bad for the Wesfarmers share price. This is because the cash is not being put towards earning a strong return. However, the current economic environment is quite uncertain.

This means that strong cash positions have a couple of advantages. One is balance sheet strength and the ability to operate confidently. The other is being primed to acquire more companies and expand operations in 2020.

Many companies are trading cheaply now because of lost earnings and lower growth forecasts. This means Wesfarmers could swoop in and buy undervalued shares to diversify and broaden its portfolio.

Foolish takeaway

I think the Wesfarmers share price could climb higher in 2020. The Aussie conglomerate is looking to restructure and improve its efficiency right now.

Combined with a strong cash position and undervalued companies in the market, Wesfarmers definitely has the potential to climb in value over the next 7 months.

More reading

• 2 ASX 200 tech shares I’d like to buy today
• Why I think the CSL share price is a strong buy today
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises again, ASX banks push higher
• Are ASX bank shares finally back in the buy zone?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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 Freedom Foods Group Ltd (ASX: FNP) share price is on course to end the week on a very disappointing note.

At the time of writing the diversified food company’s shares are down 15% to $3.68.

At one stage today they dropped 19% to a multi-year low of $3.53.

Why is the Freedom Foods share price crashing lower?

Investors have been selling Freedom Foods’ shares following the release of a trading update this morning.

That update revealed various impacts from the pandemic, both positive and negative, across its business.

During March and April, the company’s Australian retail grocery channel experienced stronger than expected demand. This was driven by consumer spending shifting to this channel during lockdown. Sales in the channel have now normalised.

Also performing positively was its dairy nutritionals business. Demand for lactoferrin remains strong and its performance is in line with expectations. Pleasingly, 80% of FY 2021 output is already contracted.

Things were not so positive for the out of home channel in Australia. Sales in this high margin channel were just 25% of its pre-pandemic expectations in April. This was due to distributors destocking because of reduced demand from widespread outlet closures and restricted trading. The channel is recovering slowly and in May its sales have recovered to 50% of pre-pandemic expectations.

It has been a similar story in the industrial channel. This channel produces cream products which are used in food service and hospitality industries. Sales in April were approximately 55% of pre-pandemic expectations and are forecast to be 45% in May.

Finally, its export channel has underperformed during the pandemic. Sales to China are down 35% compared to expectations. However, management notes that the channel has started to recover now.

What does this add up to?

The sum of the above is a much weaker second half result. And given the importance of its second half to its overall result, its full year result looks set to fall well short of expectations.

Management explained: “Typically, the second half of the financial year is a significant sales and margin contributor to the overall result: normally the second half contributes over 60% of full year operating EBDITA. For FY2020, the combination of the level of sales, changed sales mix from March to June, the impact of doubtful debts and an unrecovered higher seasonal milk pricing will materially impact the second half operating EBDITA relative to pre COVID 19 plans.”

More reading

• Why Costa, Freedom Foods, Sonic, & Westpac shares are tumbling lower
• Why Fortescue, Freedom Foods, Pushpay, & QBE shares are dropping lower
• Where to invest $10,000 into ASX shares immediately
• Where I would invest $5,000 into ASX shares immediately
• 3 top ASX shares to buy now and hold for 10 years

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Freedom Foods 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 Acrux Limited (ASX: ACR) share price has taken off this morning, bolting out of the gates to be up by as much as 62.96% in early trade. At the time of writing, Acrux shares are still sitting 40.74% higher at 19 cents per share, taking its current market capitalisation to around $32 million.

Acrux is an ASX pharmaceutical share dedicated to developing and commercialising topical pharmaceuticals. The company currently has 3 pharmaceutical products approved and marketed, along with a portfolio of generic topical products in development. It was established in 1998 and its operations extend to the US and Europe.

Why is the Acrux share price shooting higher?

This morning, Acrux revealed it has entered into an exclusive sales, marketing and distribution agreement with US-based private company TruPharma. 

According to TruPharma’s website, “TruPharma has a proven track record of building niche product portfolios and getting difficult products FDA-approved and into the market”.

Subject to approval by the US Food and Drug Administration (FDA), TruPharma will be responsible for the commercialisation of 6 existing products from the Acrux pipeline. This includes the sponsorship and management of each FDA application, management of commercial manufacturing, marketing and distribution of each product.

The 6 products are at various stages of development and have not been lodged with the FDA.

In turn, Acrux and TruPharma will share the gross profits generated from the sales of the products. Unless otherwise agreed, the agreement for each product will have a 10-year term from launch.

Commenting on today’s update, CEO and managing director, Michael Kotsanis, said:

“We are excited to enter into this agreement with TruPharma and we look forward to developing a long-lasting relationship between the two companies. The agreement marks a significant step forward in achieving Acrux’s transition into the generics market.”

More reading

• Appen share price falls after positive update fails to impress
• Why Costa, Freedom Foods, Sonic, & Westpac shares are tumbling lower
• Will the Wesfarmers share price climb higher in 2020?
• Why the Freedom Foods share price crashed 19% lower today
• Build wealth for life with these 2 ASX 200 shares

Motley Fool contributor Cathryn Goh 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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Investors chasing long-term security generally look towards blue-chip ASX 200 shares. However, if you want to build wealth for life, then you need to look at companies with a lot of growth ahead of them.

If a share price is to grow by 10 times the initial investment, it needs to compound at a rate of at least 30% per year for 10 years. At the least this requires access to markets, good management, and the free cashflow to fund future growth.

Growth share examples

Over the past decade, most of the ASX shares that grew more than 10 times the initial investment shared a high growth rate in free cashflow. Altium Limited (ASX: ALU) achieved an average share price growth of 65% every year for 10 years. Jumbo Interactive Ltd (ASX: JIN) grew its share price by an average of 40% each year for 10 years. 

Both of these fantastic ASX shares had very high annual growth rates in free cashflow.

Building wealth for life

These 2 ASX 200 shares are growing their free cashflow at very high rates every year. They are all undervalued in my view, have strong share price momentum, and have potentially large markets to grow into. They may not grow by 10 times the investment over a decade, but they are likely to grow considerably nonetheless. 

TechnologyOne Ltd (ASX: TNE) develops online enterprise resource planning (ERP) systems for managing companies with a lot of physical assets. The company was a pioneer in this space and predominantly services councils, utilities and universities.

The potential market for this company in Australia alone is quite large. Its customers and internet delivery model make it resistant to events like the coronavirus pandemic. Moreover, it is still a founder-led company, which I always prefer.

EML Payments Ltd (ASX: EML) has been cashflow positive for the past 4 years. In that time it has grown its free cashflow at a very healthy rate. The core market for EML is gift cards in supermarkets. This is a high margin area and is likely to pick up as pandemic restrictions ease. Its share price has grown 18% per year, on average.

Foolish takeaway

If you are serious about creating wealth for life then, in my experience, part of your portfolio must be directed to early stage growth companies. These 2 ASX 200 shares are still in their growth phases. They have a very healthy level of cash flow growth, and have proven management teams in place. 

More reading

• 2 ASX 200 tech shares I’d like to buy today
• 10 quality ASX shares to buy in June
• These ASX tech shares could take your portfolio to the next level
• Grow your wealth with these exciting ASX mid cap shares
• 4 ASX fintech shares to make you rich

Daryl Mather 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 Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Emerchants Limited and Jumbo Interactive 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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