The A2 Milk Company Ltd (ASX: A2M) share price has been a very strong performer in 2020.

Since the start of the year, the infant formula and fresh milk company’s shares are up 39%.

Is it too late to buy a2 Milk shares?

Although its shares are admittedly not cheap, I don’t believe it is too late to invest. This is due to the quality of its business and its very positive long term outlook. I believe these justify the premium its shares are trading at.

One leading fund manager that appears to agree is Ophir Asset Management.

Its Director and Portfolio Manager, Andrew Mitchell, recently told Livewire Markets that he believes a2 Milk Company has a “huge runway” and could double or even triple its Chinese market share in the future.

According to the Livewire podcast, the fund manager notes that the premium end of the Chinese infant formula market continues to grow even during the pandemic. This is because Chinese families are not cutting back on infant formula in difficult times.

This is a big positive for a2 Milk Company and offers “downside protection” during periods of time like those we are experiencing at present.

Potential market share gains.

At the end of the first half of FY 2020, a2 Milk Company had an infant formula consumption value share of 6.6% in China. This was up from 5.4% a year earlier.

Mr Mitchell appears confident that the company’s growth in the market is only just getting started and has suggested it is “headed towards 15% to 20% in market share.”

In addition to this, the fund manager sees opportunities for the company to expand its “innovative product” globally and notes that it has a significant amount of cash on its balance sheet. The latter gives the company a lot of options to bolster its future growth.

And while some investors have concerns that competing a2-only products could stifle its growth, Mr Mitchell doesn’t believe this will be the case. In fact, Ophir’s contacts in the China market believe the launch of a2-only products by big multinationals only reinforces the a2 Milk Company’s premium brand with Chinese consumers.

Overall, the fund manager believes a2 Milk Company is a “fantastic” company and on a “trajectory to be a much larger business.” I agree completely with this view and feel a2 Milk Company would be a great buy and hold option.

More reading

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• Xero and 1 other ASX growth share to watch in August

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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The tough new restrictions implemented by the Victorian Government will have a prolonged impact on the national economy and many businesses. As the state attempts to control a second wave of the COVID-19 pandemic over the next 6 weeks, many industries and sectors will suffer under the lockdown.

Despite the pessimistic outlook for general commerce, there are certain sectors and companies on the ASX that could get a boost from Victoria’s second lockdown.

Victoria is leading the shift online

A recent article in The Australian has highlighted how online retail shares on the ASX could receive a surprise boost from Victoria’s second lockdown. The article cites a report from National Australia Bank Ltd (ASX: NAB) which showed that Victoria was ahead of the curve in adapting to internet shopping.

According to the insight from NAB, Metropolitan Melbourne is the leading online commerce zone in the country while even regional Victoria is ahead of Metropolitan Sydney.

In addition, year-on-year online retail sales in Victoria are nearly 60% higher, compared to the national figure of 50% year-on-year. As a result, the extended lockdown period should see the same shift to online shopping that was experienced earlier this year.

Which ASX shares could benefit?

In my opinion, the 2 standout performers during the pandemic have been Kogan.com Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW). Kogan.com has become a household name during the lockdown period, with the company’s active user base growing to more than 2 million.

The Kogan share price has reflected the surge in demand, rallying more than 430% since mid-March. Temple & Webster has also reaped the benefits of shoppers switching to online retail avenues. In its most recent trading update, the company highlighted a 130% surge in gross sales to 28 June on a year-on-year basis.

In addition to the popular online retailers, supermarkets and other essential service providers should also receive a boost.

With the new restrictions leading to panic buying and purchase restrictions, supermarkets have been forced to adapt. Woolworths Group Ltd (ASX: WOW) is set to remodel 3 of its existing Melbourne supermarkets to become online delivery hubs in the coming weeks. With many customers opting to bypass supermarkets and move online, meal kit provider Marley Spoon AG (ASX: MMM) is also seeing a boost in demand.

Foolish Takeaway

In my opinion, the coronavirus pandemic has accelerated the inevitable shift to online commerce. As consumers, not only in Victoria, opt for the convenience of online shopping over traditional brick and mortar shops, companies with a solid online presence are poised to boom in 2020 and beyond.

More reading

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• Woolworths provides update on the impact of COVID-19 restrictions

Nikhil Gangaram 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 and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group 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 PointsBet Holdings Ltd (ASX: PBH) share price jumped 4% higher in early trade today to as high as $6.24 before being partially sold down. The increase in the Pointsbet share price came following the company’s announcement of an important new agreement in its United States market.

New Sporting Agreement in the US

PointsBet has announced today that its US subsidiary has entered into a new agreement with Pacers Sports & Entertainment. The multi-year agreement will see the company’s PointsBet USA subsidiary become an Official Sports Gaming Partner in respect to the National Basketball Association (NBA) for the Indiana Pacers team.

PointsBet branding will be positioned along the out-of-bounds space that is located between the base line and the team bench. This is the first time in the US that a betting operator has been able to advertise in this position.

Also, as part of the agreement, PointsBet signage will be permitted to be displayed in the Pacers’ home arena, The Fieldhouse. The Fieldhouse is located in downtown Indianapolis. In addition, PointsBet will be able to utilise online advertising on the Pacers’ range of digital platforms. This will include offering unique promotions to fans.

PointsBet was appointed earlier this year to become an Authorised Sports Betting Operator of the NBA. This was PointsBet’s first partnership with a professional sports league in the US.

Johnny Aitken, PointsBet USA CEO commented: “Indiana represents a massive opportunity for PointsBet, and we will take a heavily localized approach to ensure we are delivering the best overall customer experience Indiana sports fans and bettors are seeking….”

Recent financial performance

PointsBet recently provided the market with a fourth quarter update. The company delivered turnover of $349.4 million, which was a very strong increase of 57.9% on the prior corresponding period. Growth was very much driven by its Australian operations, with growth of 80.5% during this period. In comparison, its US operations saw a decline in turnover. In respect to the full financial year for 2020, PointsBet recorded turnover more than double that of a year prior.

PointBet share price performance

The PointsBet share price has risen strongly over the past 12 months from $3.19 to now be trading at $6.12. That’s a very strong 92% increase. The company’s share price was hit very hard during the early phase of the pandemic, falling to as low as $1.19 in late March. However since then the PointsBet share price has recovered all of those losses plus substantially more.

More reading

• Short-sellers are targeting these ASX stocks ahead of the reporting season
• Why Bubs, PointsBet, Perpetual, & Waypoint shares are dropping lower
• PointsBet share price tumbles lower on Q4 update
• Why the Pointsbet share price is outperforming today
• Why PointsBet, Recce Pharmaceuticals, Vocus, & Webjet shares are storming higher

Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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Looking for 2 ASX shares to provide you with above average shareholder returns over the long term?

There are never any guarantees with share investing. However, here’s why I believe why the following two ASX shares have a better chance than most of achieving this goal.

TPG Telecom Ltd (ASX: TPG)

TPG now has a significantly stronger market position in the Australian telecommunications landscape since its merger with mobile operator, Vodafone.

TPG has been previously financially challenged over the past few years as a fixed broadband operator. This was mainly due to the lower retail margins it received from wholesaling broadband services on the National Broadband Network. However, following the merger with the local subsidiary of global mobile operator Vodafone, this now places TPG in a much stronger competitive position.

The TPG share price has lost a bit of ground since it was re-listed post the merger at the beginning of July. However, I think it is way too early to read anything into this trend just yet. I believe that TPG is well-placed for above-average shareholder returns over the next five years. Growth is likely to be driven from a combination of a competitive fixed broadband and 5G offering.

REA Group Limited (ASX: REA)

The REA Group share price fell heavily during the early phase of the coronavirus pandemic up to late March. However, the company’s share price has rebounded strongly since then, recovering nearly all of those losses. It has risen from a low of $65.02 on 23 March to now be trading at $110.47.

Although the Australian housing market has been impacted by the pandemic, national house price falls have only been moderate since early this year.

Further house price falls as well as further restrictions on sales activities, such as property open for inspections, may occur in the months ahead.

However, I believe that REA Group is well-placed for strong, long-term growth. In my opinion, REA Group has a much stronger market position than its main rival Domain Holdings Australia Ltd (ASX: DHG). REA Group is well-placed to tap into a rising demand for online property services over the next decade as our national housing market continues to grow.

Foolish Takeaway

TPG and REA Group are 2 ASX shares that I am confident are well-positioned for strong, long-term growth over the next five years. This is likely to lead to above average shareholder returns.

More reading

• Where to invest $20,000 into ASX shares right now
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• Is the REA Group share price a buy?
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Motley Fool contributor Phil Harpur owns shares of REA Group Limited. The Motley Fool Australia has recommended REA 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 Splitit Ltd (ASX: SPT) share price has returned from its trading halt and zoomed higher this morning.

In early trade the buy now pay later provider’s shares were up as much as 20% to $1.64.

Why was the Splitit share price in a trading halt?

The Afterpay Ltd (ASX: APT) rival requested a trading halt on Monday while it launched an equity raising.

This morning Splitit announced that it has received firm commitments to raise $90 million (before costs) in new equity. These funds will be raised via a fully committed two-tranche share placement to institutional, sophisticated, and professional investors.

This will be through the issue of approximately 69.2 million new shares at a price of $1.30 per share. This represents a discount of 4.8% to Splitit’s last close price.

Management advised that the placement was well supported by existing shareholders and will see a number of new, high quality institutions join the company’s register.

This includes cornerstone investor, Woodson Capital Management, as a substantial shareholder. Woodson Capital manages a global consumer and technology investment fund headquartered in New York and launched in 2010 with seed backing from Tiger Management.

What about retail shareholders?

The company also intends to launch a non-underwritten share purchase plan following the issue of the first tranche of the placement shares.

This is expected to raise approximately $10 million, which brings the total of the equity raising to $100 million.

What will the funds be used for?

Management advised that the proceeds from the equity raising will be used to accelerate Splitit’s high-growth strategy. This will be through funding additional sales and marketing, and further investing in product and technology development.

Its strengthened balance sheet is also expected to further support growth across the business, including growth of its funded merchant model.

Splitit CEO and Managing Director, Brad Paterson, commented: “We are excited to welcome North American and Global institutional investors to our register. With the business foundations in place and our strategy working well, this equity raising allows us to take things to the next level.”

“We are the only BNPL provider servicing the huge and growing credit card industry and our investors recognise the enormous opportunity to accelerate merchant and customer adoption across our key markets. Our business outlook remains extremely positive, with a healthy pipeline of new merchants and as we work towards activating our strategic partnerships with Visa and Mastercard. We are just getting started and I look forward to building on this positive momentum,” he concluded.

More reading

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• 3 quality ASX tech shares to buy in August
• ASX 200 jumps 2%: Big four banks rebound, Wesfarmers update, Afterpay rockets

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Zoom Video Communications Inc (NASDAQ: ZM) was one of the hottest growth stocks of the year, rallying over 270% as the COVID-19 crisis brought millions of new users to its video collaboration platform. That growth attracted the attention of larger tech companies like Microsoft Corporation (NASDAQ: MSFT), which aggressively promoted Teams as an alternative to Zoom.

Zoom easily outpaced Microsoft’s 30% gain this year, and it likely remains a more appealing stock for growth-oriented investors. But is Zoom actually a better long-term investment than Microsoft?

David vs. Goliath

Zoom has a market cap of more than $70 billion, but it’s dwarfed by Microsoft’s valuation of over $1.5 trillion. Microsoft also generated 230 times as much revenue and over 2,000 times as much generally accepted accounting principles (GAAP) profit as Zoom last year.

Zoom is also trading at much higher valuations than Microsoft. Zoom trades at 200 times forward earnings, while Microsoft has a more grounded forward price-to-earnings (P/E) ratio of 31. Zoom trades at 40 times this year’s sales, compared to Microsoft’s cooler forward price-to-sales (P/S) ratio of 10.

The bears will argue that Zoom is overvalued, while the bulls will claim its valuations are justified by its growth rates.

How fast is Zoom growing?

Zoom’s revenue surged 88% to $622.7 million in fiscal 2020, which ended this January, as its adjusted net income surged 514% to $101.3 million.

In the first quarter, which bore the full impact of the COVID-19 shutdowns, Zoom’s revenue rose 169% annually to $328.2 million, and its adjusted net income soared 555% to $58.3 million. Its number of customers contributing over $100,000 in revenues over the past 12 months also grew 90% annually.

For the full year, Zoom expects its revenue to rise 185% to 189%, and for its adjusted earnings-per-share (EPS) to grow 246% to 269%. But after that growth spurt, analysts expect Zoom’s revenue and earnings to rise 25% and 19%, respectively, in fiscal 2022.

Investors should take those forecasts with a grain of salt, but they suggest Zoom’s COVID-19 boost could fade as it faces stiff competition from rivals like Cisco‘s Webex, Facebook‘s Messenger Rooms, Alphabet‘s Google Meet, and Microsoft Teams.

Zoom surpassed 300 million daily active-meeting participants in April but admitted that was a “peak” during last quarter’s conference call. Microsoft claimed Teams hit 75 million daily active users in April but hasn’t updated that figure since.

How fast is Microsoft growing?

Microsoft’s revenue rose 13% to $143 billion in fiscal 2020, which ended in June, as its adjusted EPS grew 14%. The COVID-19 crisis mainly curbed the growth of Microsoft’s Productivity and Business Processes unit, which sells productivity software like Office and Dynamics to enterprise customers.

However, Microsoft’s Intelligent Cloud unit, which houses its cloud platform Azure and server products, benefited from the higher usage of cloud services throughout the crisis. Its More Personal Computing unit — which sells its Windows licenses, Xbox games and hardware, and Surface devices — also benefited from stay-at-home measures.

In short, Microsoft’s strengths offset its weaknesses, and maintaining that balancing act allowed it to expand its ecosystem with loss-leading strategies — like bundling Teams as a free service for Office 365 users.

Microsoft estimated its revenue would rise 8% to 9% annually in the first quarter of 2021 but didn’t offer clear guidance for the rest of the year. Analysts expect its revenue and earnings to rise 10% and 12%, respectively, as the growth of its cloud services and the upcoming launch of the Xbox Series X offset the softness of its macro-sensitive businesses.

The long-term winner: Microsoft

Zoom’s stock still has a lot of momentum, but its valuations are too high, and the competitive threats are too great to ignore. It might be a good short-term play, but its long-term growth is too difficult to predict.

Microsoft is a more balanced investment. The “mobile first, cloud first” strategies, which CEO Satya Nadella spearheaded six years ago, are still generating strong returns; it’s well diversified across multiple markets; and it rewards patient investors with a 1% yield and consistent buybacks.

For now, Microsoft is the better overall investment for long-term investors. I admire Zoom’s robust growth, but I’m not convinced it can maintain its momentum and meaningfully widen its moat against its larger rivals.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Leo Sun owns shares of Cisco Systems and Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, Microsoft, and Zoom Video Communications and recommends the following options: short August 2020 $130 calls on Zoom Video Communications, long January 2021 $85 calls on Microsoft, and short January 2021 $115 calls on Microsoft. 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 is dropping lower today after an update from its rival Virgin Australia.

At the time of writing the airline operator’s shares are down 1% to $3.23.

What did Virgin Australia announce?

This morning Virgin Australia announced its plan for a stronger, more profitable, and competitive business. This plan aims to secure approximately 6,000 jobs as it prepares to exit voluntary administration under the ownership of Bain Capital.

Virgin Australia revealed that its plan is anchored around six key points. They are as follows:

Overhaul the cost base and simplify everything, starting with the fleet.

The company believes that to build a successful airline, it will need to align costs with a depressed and uncertain revenue outlook. This includes simplifying its fleet to realise cost efficiencies and remove operational complexity. This will see the airline transition to a single Boeing 737 fleet for domestic and short-haul flying and discontinue the Tigerair brand.

Focus on customer value.

Virgin Australia wants to be the best value carrier in the market and not a low-cost carrier. It intends to offer exceptional experiences at great value, regardless of purpose of travel. It will also continue to focus on delivering the best on-time performance and maintain an exceptional safety record and safety culture.

Harness culture.

Management believes the company’s culture is unique and the heart and soul of both the airline and Velocity Frequent Flyer. As such, it will continue to “reinvigorate the Virgin Australia brand and its passion for customer service, while embracing the diversity, talent and strength of its people.”

Investment in world class digital and data technologies.

Virgin Australia plans to invest significantly in the comprehensive digital re-platforming of both the airline and Velocity Frequent Flyer program. It expects this to accelerate its vision for the future. Which will not only improve its commercial capability and guest experience, but significantly enhance the employee experience and increase the pace of profitable revenue growth.

Strong balance sheet and investment capital for both transformation and growth.

Management expects the company to emerge from its voluntary administration with a strong balance sheet that is worthy of an investment grade rating. This is expected to provide resilience and future growth potential.

Jobs and future growth.

As a result of the changes announced today, Virgin Australia expects 3,000 jobs to be impacted. This will be primarily across the operations functions and corporate roles which directly support the operation. Management commented: “While devastating for our people, making these changes now will secure approximately 6,000 jobs once market demand recovers, with potential to increase to 8,000 jobs in the future.”

“Continued uncertainty.”

Virgin Australia Group CEO and Managing Director, Paul Scurrah, commented: “Our aviation and tourism sectors face continued uncertainty in the face of COVID-19 with many Australian airports recording passenger numbers less than three per cent of last year and ongoing changes to government travel restrictions.”

“Demand for domestic and short-haul international travel is likely to take at least three years to return to pre-COVID-19 levels, with the real chance it could be longer, which means as a business we must make changes to ensure the Virgin Australia Group is successful in this new world,” he added.

Mr Scurrah concluded: “Virgin Australia has been a challenger in the Australian market for 20 years, and as a result of this plan and the investment of Bain Capital we are going to be in a much stronger position to continue that legacy.”

More reading

• Earnings season: What to expect from the CSL FY 2020 result
• Afterpay and Qantas were among the most traded shares on the ASX last week
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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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ASX property stocks have been on the nose with asset write downs and dividend cuts forced on the sector from the COVID-19 meltdown.

But there’s one that’s promising a 9% yield for the current financial year. This is the Centuria Office REIT (ASX: COF) share price.

The office trust reported its FY20 full year results this morning and went to great pains to point out its relatively more defensive properties compared to its peers.

Big jump in earnings and revenue

Centuria reported a 38% surge in total revenue to $149.3 million as funds from operations (FFO) jumped $85.4 million in the latest financial year compared to FY19.

The trust even recorded an upward revision in the value of its office properties, although I think some of this could be unwound this year.

Work-from-home restrictions during the coronavirus pandemic is expected to lead to a drop in demand for office space even after the crisis passes.

Risk of write-downs

We have already seen a number of listed property stocks cut the value of their portfolios. This includes Mirvac Group (ASX: MGR) and GPT Group (ASX: GPT), although it relates mainly to their retail properties. I suspect their office portfolios will be next.

However, Centuria’s office properties may not be as badly impacted as these are outside of CBD areas.

It’s high-end central offices charging premium rents that are facing the most pressure. Centuria’s offices are instead in Fortitude Valley in Queensland and Chatswood in New South Wales.

Centuria rents are typically 47% to 77% below what equivalent offices in Sydney CBD charge. Government agencies make up around a quarter of its tenant base.

But Centuria isn’t immune. In fact, it took a $3.2 million hit before June 30 this year from credit losses and rent waivers.

WALE splash or crash?

The trust reported a weighted-average lease expiry (WALE) of 4.7 years and occupancy stands at around 98%.

However, I would take these numbers with a slight pinch of salt in this volatile environment. There are reports that some tenants still in contract are aggressively pushing to cut their rents or renegotiate terms.

Further, 15.2% of rents (based on WALE) expires in 2021 and another 6.8% matures in 2022. These are reasonably small numbers but if most of these tenants do not renew, it can have a big impact on Centuria’s FFO.

Should you be tempted by yield?

However, management will be hoping investors will be tempted by its forecast dividend yield. While the trust is guiding for a lower distribution in FY21 at 16.5 cents a unit (a 7.3% cut from FY20), this still works out to a 9% yield based on yesterday’s close of $1.83.

But in a sign that things remain in a state of flux, management isn’t providing guidance on its FY21 FFO at this point. This makes me wonder how much confidence we can have in the 16.5 cents forecast distribution.

More reading

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Motley Fool contributor Brendon Lau 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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