Investors search for quality companies. Customers search for quality goods and services. All investors are also customers. This is why many investors look to their own spending patterns to identify potential investment opportunities. Have you started using buy now, pay later (BNPL) services such as Afterpay Ltd (ASX: APT)? Do you shop at one of the major supermarket outlets? 

Looking at your own spending habits can lead you to the ASX shares behind the products and services you use. If you love a particular brand or product, take a look at the company behind it – it could be a fruitful investment opportunity. In fact, you’re probably already a customer of multiple ASX shares. Here we take a look at 3 of them. 

Afterpay 

Afterpay is the largest of the BNPL providers on the ASX by market capitalisation. The Afterpay share price dropped to a low of $8.90 in the March correction, but has since posted a huge comeback, gaining 658% to trade at $67.50. Based on recent share price rises, the company is close to joining the S&P/ASX 20 (ASX: XTL). 

Operating in Australia, Zealand, the United States and the UK, Afterpay extends credit to customers, allowing them to make purchases that are paid off in fortnightly instalments. According to research by Roy Morgan, BNPL services such as Afterpay had been used by nearly 2 million Australians in September last year, double the number the previous year. 

According to a report by Worldpay, the BNPL sector will have doubled its market share to 4 million users, or 1 in 5 Australians by 2023. Afterpay reported it had 3.2 million active customers in Australia and New Zealand in March 2020, a 21% increase over the 2.6 million it had in March 2019. The United States and UK are considered key growth markets for the company. In May Afterpay reached 5 million customers in the US and last month it hit 1 million customers in the UK. 

Despite its massive market capitalisation, it is worth remembering that Afterpay is not yet profitable. In 1H FY20 Afterpay recorded $4.8 billion in underlying sales, which gave it a total income of $212.2 million, a 105% increase on 1H FY19. Nonetheless the company recorded a statutory loss after tax of $31.6 million, although this was impacted by one-off and non-cash items. Profitability should come as Afterpay increases active customers numbers and transaction volumes. By FY22, Afterpay is aiming for +$20 billion in transaction volumes. 

Coles Group Ltd (ASX: COL)

Coles is ubiquitous as the second largest supermarket group in Australia. If you don’t shop at Woolworths Group Ltd (ASX: WOW), chances are you shop at Coles. The company is behind some 2,500 retail outlets nationally, including 800 supermarkets, 900 liquor stores, and more than 700 fuel and convenience retailers. 

Given the essential nature of the goods Coles sells, its share price was relatively resilient in the March downturn. The Coles share price fell 17% from a February high of $17.17 to a low of $14.21 in March, but has since recovered and is currently trading at $17.16. The onset of coronavirus resulted in panic-buying and stockpiling, which boosted Coles’ sales. Beyond this, Australians continue to spend more time living and working from home, resulting in increased demand for household products. 

Coles reported a 12.9% increase on third quarter sales with revenue rising to $8.32 billion. Supermarket sales increased by 13.8%, the division’s 50th consecutive quarter of comparable sales growth. Liquor sales rose by 7.2% and express sales by 4.3%. Coles Online sales revenue grew by 14% in the third quarter, despite home delivery being temporarily suspended in March. 

According to Roy Morgan, Coles has 26.6% market share of the Australian grocery market. This makes Coles shares a defensive staple, despite operating in one of the most competitive industries in Australia. Revenue for the grocery industry is predicted to grow by 4.6% in 2019–20, up from 2.3% thanks to the COVID-19 pandemic. Nonetheless, price competition from competitors such as Aldi had led Coles to expand its private-label product range, with more than 260 products added in the third quarter. 

Adairs Ltd (ASX: ADH)

Adairs is a leader in the Australian homewares space, a sector that has benefitted from consumers spending more time at home. Adairs retails everything from bed linen to houseplants, with a strong online presence that customers took advantage of during lockdown. 

Many Australians are upgrading home furnishings and manchester as a result of spending more time at home. This was evident in Adairs latest trading update, which saw sales growth despite the closure of stores between March and May. In the 24 weeks to 14 June 2020, store sales increased 5.3% and online sales by a massive 92.6%. The surge in online sales saw total sales growth of 27.4% for the half year to 14 June and 15.7% for the 50 weeks to 14 June. 

In the update, Adairs managing director Mark Ronan stated:

Our omni channel strategy and focus on the home decorating and furnishings category has served us well during this period where our customers have spent significantly more time at home. Since Adairs stores re-opened we have seen strong sales across both the store network and online channel as customers return for the in store service and experience they expect from Adairs.

Last year, Adairs acquired online furniture retailer Mocka, which also saw a surge in sales during lockdown. Mocka’s sales were up by 52.1% in the 24 weeks to 14 June 2020. Over FY20, Mocka is expected to contribute $27–$28 million in sales, representing sales for the 30 weeks it has been under Adairs ownership. 

The Adairs share price was rocked in the March correction but has since staged a strong recovery. The share price fell 80% from a high of $2.62 in February to a low of 50 cents in March, but has since surged 388% and is currently trading at $2.44. Full year results will be released next month, however Adairs has provided sales guidance of $385 million to $390 million. 

More reading

• Afterpay’s founders are selling shares. Should you?
• Why retirees should buy Coles and Telstra shares for income
• Leading brokers name 3 ASX 200 shares to sell today
• ASX 200 up 0.1%: Afterpay announces capital raising, big four banks lower ahead of RBA meeting
• Does Afterpay have a competitive advantage?

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, and Woolworths 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 Appen Ltd (ASX: APX) share price has been on form again on Tuesday and charged higher.

The shares of the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence (AI) have climbed 3% to hit a new record high of $36.90.

This latest gain means that Appen’s shares have now rocketed 135% higher since hitting a 52-week low of $15.70 in March.

Is it too late to buy Appen shares?

Based on the current Appen share price, I estimate that its shares are changing hands at approximately 43x FY 2021.

While this is certainly a premium to the market average and does mean they carry a lot of risk, I still see a lot of value in Appen’s shares for long-term focused investors.

Last year a company presentation advised that the AI market is expected to grow to be worth between US$169 billion and US$191 billion per annum by 2025.

This puts Appen in a particularly strong position for growth, because an estimated 10% of spending in this market goes towards data labelling. That means Appen’s addressable market could be worth US$17 billion to US$19 billion in five years.

This is materially more than the revenue of $536 million it generated in FY 2019.

And given the company’s leadership position in the market and its high quality customer base, I believe it is well-positioned to grow its market share strongly over the next decade.

Especially following the acquisition of Figure Eight. This business has a strong position in the government sector and looks well-placed to capture a slice of growing government spending on AI.

For example, Appen has previously noted that the US government has a US$5 billion AI budget and the UK government has a £2.3 billion AI budget.

Foolish Takeaway.

Although Appen’s shares are not cheap, I believe its extremely positive long-term outlook justifies the premium.

As a result, I think they would be great buy and hold options along with fellow tech shares Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO).

More reading

• Why CSL and these ASX 200 shares could be fantastic buy and hold options
• 3 of the best ASX tech shares to buy in July
• 2 fantastic ASX tech shares to buy and hold
• Why I would buy Appen and this ASX growth share right now
• What’s next for WAAAX shares?

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 Altium and Xero. 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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If the stock and currency markets were hoping to get some direction from the Reserve Bank of Australia (RBA) this afternoon, they would be left disappointed.

The  S&P/ASX 200 Index (Index:^AXJO) didn’t react to the RBA’s interest rate decision while the Australia dollar barely blinked as it stayed around 69.6 US cents.

Rates effectively at zero

The central bank held the official cash rate steady at a record low of 0.25% and left its targeted yield on the three-year Australian government bond at the same level.

Given that interest rates can’t go lower, especially not when the RBA already ruled out negative rates here, what else could governor Philip Lowe do?

But this doesn’t mean there weren’t a few interesting takeaways for ASX investors from Dr Lowe’s monetary statement.

RBA just as confused as the rest

What stood out the most this time was that the RBA looked as clueless about the economic outlook as the rest of us.

The statement highlighted the “severe downturn” in the global economy due to the COVID-19 pandemic and the sharp rise in unemployment.

It then highlighted recent positives like how leading indicators have turned up, signalling that “the worst of the global economic contraction has now passed”.

But it wasn’t ready to say anything more substantive about the outlook for the Australian economy except that the road ahead will be “bumpy” and will depend on the containment of the coronavirus.

Tell us something we don’t know already! No wonder currency and equity investors were so unmoved.

What did take me by surprise is that the RBA didn’t push the government to keep stimulus measures in place like it did in its last statement.

Given that Federal Treasurer Josh Frydenberg is scheduled to give an update on this issue in two weeks, I thought this would be an opportune time for the RBA to say something more.

Flushed with cash

The second takeaway is more encouraging. Our bond market is functioning well despite the COVID-19 hit to global markets.

It’s working so well that the RBA didn’t have to pull its quantitative easing (QE) trigger again by buying Australian government bonds. The board also believes it’s providing more than enough cash to the broader financial system.

This is good news as it shows that there is enough liquidity to keep the gears turning in the Australian economy.

Implications for ASX bank stocks

Perhaps the bigger takeaway for investors is that ASX banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) have sufficient access to capital to keep lending.

The abundance of liquidity won’t help overcome bad debt worries that weighing on ASX banks, nor will it make it easier for Aussies without stable income from borrowing, but it’s at least one less thing bank shareholders will need to fret about.

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• Where to invest $1,000 in ASX tech shares today
• Why these ASX tech shares should be on your radar
• 3 quality ASX shares to buy right now with $3,000
• 2 exotic ETFs for your ASX portfolio

Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia and Westpac Banking. Connect with me on Twitter @brenlau.

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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Rather than leaving a spare $5,000 sitting in a bank account, I would suggest investors put their money to work in the share market.

After all, as small an investment as it might seem, on a long enough time horizon a $5,000 investment can grow into something significant.

According to Fidelity, the Australian share market has provided an average annual return of 9.2% in the 30-year period between 1990 and 2020. That means a single $5,000 investment in 1990 would have grown to be worth a massive $70,000 today.

With that in mind, here’s where I would invest $5,000 today:

a2 Milk Company Ltd (ASX: A2M)

Demand for a2 Milk’s infant formula from Chinese consumers has been growing at a rapid rate in recent years. This has led to the infant formula and fresh milk company delivering stellar earnings growth. And while its growth is likely to moderate in the coming years, I still expect it to be at a level that most companies would be envious of. Especially given its modest market share in China and expanding fresh milk footprint. Furthermore, the company could accelerate its growth inorganically if it chooses to put its hefty cash balance to work. There is speculation it could make an acquisition or launch a new product in the near term.

Ramsay Health Care Limited (ASX: RHC)

I think this private hospital operator would be a fantastic buy and hold investment option. Although trading conditions are admittedly tough at present and its growth is likely to be subdued in the near term, I’m very positive on its longer term outlook. This is because, as the global population ages, I believe demand for healthcare services will increase substantially. I feel this puts Ramsay and its expansive global network of private hospitals in a strong position to deliver solid earnings growth for decades to come.

More reading

• Is the Ramsay Health Care share price a buy?
• Why I would buy a2 Milk and this ASX growth share right now
• Here’s how to play China’s V-shaped growth story
• Why I would buy Appen and this ASX growth share right now
• Why I would buy and hold a2 Milk and this ASX 200 share until 2030

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Ramsay Health Care 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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I don’t really like selling ASX shares. For the entirety of my investing career, I have been a net buyer of shares (and sometimes a net holder), but never a net seller. The great investor Warren Buffett once told us that his favourite holding period for a share is ‘forever’. This is a sentiment I share.

But last week, I did sell one of my investments. It wasn’t an easy decision, and the inevitable has happened in that those shares have now appreciated far beyond my selling price. But I sold all the same and I’m glad I did.

The share I sold was the iShares Asia 50 ETF (ASX: IAA).

What is the iShares Asia 50 ETF?

The iShares Asia 50 is an exchange-traded fund (ETF) that holds 50 of the largest companies across the Asian region, according to the S&P Asia 50 Index. Its largest exposure is to China, but it also holds companies from South Korea, Taiwan, Hong Kong and Singapore. Its largest individual companies include Tencent Holdings, Samsung, and Taiwan Semiconductor Manufacturing Company.

Why did I sell this ASX ETF?

I sold my position in the IAA ETF for 2 reasons.

Firstly, I think it’s prudent right now to increase the cash position in my portfolio. The ASX, as well as global share markets, have had an incredible run since the lows we saw in March. IAA’s largest holding, Tencent, has run up more than 20% in the last month alone, which was an orange flag for me. This ETF was therefore one holding I was happy to take some profits on and use to bump up the cash position of my portfolio as part of a risk management strategy.

Secondly, there’s an ETF that I prefer over IAA. I think exposure to emerging markets like China and Taiwan is important in a 21st-century portfolio. But IAA doesn’t include some of Asia’s biggest names in tech, like Alibaba, Baidu, iQiYi and JD.com.

However, the BetaShares Asia Technology Tigers ETF (ASX: ASIA) does, as it uses a slightly different index as its benchmark. For this reason, I think ASIA is better placed than IAA to capture the value that emerging markets can bring to the table over the next few years .

As such, it’s my intention to eventually redeploy my capital from the IAA sale into the ASIA ETF. But I’m in no rush at the current prices and am happy to sit on my gains from this sale until the markets take a chill pill and come back from their current levels.

More reading

• Where to invest $20,000 into ASX shares for market-beating returns
• Here are 2 easy ways to invest in quality international shares on the ASX
• Add some diversity to your portfolio with these quality ETFs
• Why ETFs are great for passive investing
• I don’t normally buy ETFs, but I would buy these 2

Motley Fool contributor Sebastian Bowen owns shares of Baidu. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. 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 think that the Rural Funds Group (ASX: RFF) share price is a buy for income. There has been some insider buying.

Insider buying

Rural Funds announced this morning that Michael Carroll has indirectly bought another 124,862 Rural Funds shares at a price of $2 per unit. That increases his total holdings from 84,734 units to 209,596 units. So he has significantly increased his holding.

That means his total holding is now worth $415,000 at today’s Rural Funds share price.

It’s always a good sign when people buy shares in their business on the market.

Why I think Rural Funds is a buy for income at today’s share price

Rural Funds is an agricultural real estate investment trust (REIT). It owns a variety of different types of farms including cattle, cotton, vineyards, almonds and macadamias.

In this COVID-19 era things are looking tough for the REIT industry with some of them decreasing the value of their properties and tenants negotiating lower rent.

Typically REITs are attractive income investments because they usually generate attractive monthly rental income, leading to steadily growing profits and distributions. I’m not sure that retail REITs and office REITs can be relied on for growing distributions this year.

Rural Funds seems to be in a much better position. Its farms are leased to good operators which are leaders in their field. Some of its tenants include Olam, Select Harvests Limited (ASX: SHV), JBS, Australian Agricultural Company Ltd (ASX: AAC), Treasury Wine Estates Ltd (ASX: TWE) and Queensland Cotton.

Aside from the initial selloff in March 2020, Rural Funds’ share price has recovered back to the pre-coronavirus price with its rental earnings unaffected. This allowed Rural Funds to reaffirm its FY20 adjusted funds from operations (AFFO) per unit of 13.5 cents. Stability in this uncertain time is very valuable.

Income potential

Rural Funds aims to increase the distribution by 4% per annum. The REIT achieves this growth through two main avenues. It has rental indexation built into all of its rental contracts which are either a fixed 2.5% increase or linked to CPI inflation, plus market reviews.

The other avenue for growth is productivity improvement investing. Currently 18 of the 38 properties owned by Rural Funds are undergoing development improvements with the aim of improving future income potential. It also should lead to valuation increases. Rural Funds only pays out about 80% of its cash net rental profit each year, allowing the other 20% to be reinvested into productivity improvements.

Rural Funds has guided that the FY21 distribution will be 11.28 cents per unit. At the current Rural Funds share price, this equates to a FY21 distribution yield of 5.7%.

I think there’s a lot of income visibility considering Rural Funds has a weighted average lease expiry (WALE) of 11.5 years.

There is potential for further growth if Rural Funds can identify any acquisitions, particularly ones which may benefit from productivity improvements or conversion to higher and better use.

Time to buy shares?

I think at this share price Rural Funds is a very good pick for income investors with a solid starting distribution yield.

In terms of total returns, I like to buy shares when they’re trading at close to the net asset value (NAV) or even a discount.

The Rural Funds adjusted NAV, which includes water entitlements at market value, was $1.84 at 31 December 2019. That means the share price is at a 7.6% premium, but I think the NAV will have risen since then, particularly with how low the RBA interest rate is. Who knows when we’ll see interest rate rises again?

Rural Funds looks like it’ll be a solid long-term buy today, particularly for income investors.

More reading

• 3 top ASX dividend shares I would buy next week
• Is the Vanguard Property ETF a good long-term investment?
• Replace your term deposits with these ASX dividend shares
• 10 FY21 ASX share picks revealed by Bell Potter
• 3 top ASX dividend shares to buy for FY21

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates 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 Ora Banda Mining Ltd (ASX: OBM) share price is up by 15.69% so far today at the time of writing, after the small cap ASX miner successfully completed its placement and institutional entitlement offer bookbuild.

The Ora Banda share price is up to 30 cents today, which isn’t far off its yearly high of 34 cents and puts it up over 200% since its March low point of 9.4 cents.

The company (formerly Eastern Goldfields) is a gold exploration and development company, and 100% owner of the Davyhurst Gold Project in the eastern goldfields region of Western Australia.

What did Ora Banda announce?

Ora Banda announced today that it has successfully completed its placement and institutional entitlement offer bookbuild.

The entitlement offer bookbuild was completed for $51.7 million, with a fully underwritten retail entitlement offer to raise $3.3 million opening on 10 July 2020. The offers were supported by both existing and new investors, domestically and internationally.

Ora Banda confirmed that the proceeds from the capital raising, together with existing cash, will see it fully funded for both capital and working capital requirements of recommencing production at its gold mine in Davyhurst. The raising also provides funding to ensure the miner’s minimum ongoing exploration programs across its 1,350km2 prospective landholding are met.

Ora Banda managing director David Quinlivan commented that “the capital raising ensures that Ora Banda remains debt-free as it proceeds towards gold production in January 2021.”

About the Ora Banda share price

The small cap ASX miner has been on a solid run since March this year. The company currently has an existing gold resource base and a fully refurbished gold processing plant in the gold mining region to the northwest of Kalgoorlie in Western Australia. 

The Ora Banda share price has returned 145% since this time last year, and its current price of 30 cents per share puts its market capitalisation at $174.13 million. 

More reading

• I think the Rural Funds share price is a buy after insider buying
• Phoslock share price rockets 30% yesterday
• Afterpay’s founders are selling shares. Should you?
• CML Group share price up 16% on business update
• Why retirees should buy Coles and Telstra shares for income

Motley Fool contributor Daniel Ewing 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 Phoslock Environmental Technologies Ltd (ASX: PET) share price jumped up by more than 30% yesterday. This was on the back of a positive market update and possibly the fact the company has suffered minimal impact of the effects of COVID-19.

PET provides global water technologies and solutions to remediate polluted waterways. It also provides design, engineering and contracting services. The company’s lead product, also called Phoslock, was developed by the CSIRO in the early 2000s. Phoslock permanently binds to phosphate in waterways, transforming it to a new mineral. This new mineral then becomes part of the natural sediment in the waterway, reducing the growth of harmful algae that can result from excess phosphate . 

The product is certified for use in drinking water in North America, Europe, Brazil, Australia, and China .

What moved the Phoslock share price?

PET announced new projects in Washington State and New Jersey. It also announced a project extension in Brazil as well as continuing projects in Italy and The Netherlands. 

USA

In Washington State, PET has secured a deal for a new application of Phoslock at the 240-hectare Kitsap Lake. In addition, Princeton Hydro in New Jersey awarded the company with a contract to treat harmful algal blooms (HABs) in Lake Hopatcong.

Dr. Fred Lubnow, Director of Aquatic Resources at Princeton Hydro, stated:

“If this technology is deemed successful and cost-effective in Lake Hopatcong, we could set the precedent for large-scale HABs prevention in other lakes throughout New Jersey, and even across the nation”.

South America

In Brazil, PET’s contract to treat Lake Pampulha in the State of Minas Gerais has been renewed for its third year. At the same time, the initial application to a major drinking water reservoir in Rio De Janeiro has also been successful. 

Furthermore, additional treatments on drinking water reservoirs in both northern and southern Brazil will occur in the second half of 2020. 

Europe

Later this year, Phoslock will be applied to small lakes in Italy and The Netherlands. Furthermore, the company is continuing conversations for several other potentially large projects across Europe.

PET Managing Director, Lachlan McKinnon stated:

“The additional resources we are investing in growth outside of China is now being reflected in a stronger pipeline of new contracts and, over time, will help ensure we have a more balanced spread of revenue generating opportunities”.

Phoslock share price

The Phoslock share price rocketed up by 30.36% on Monday to end the day at 36 cents. In today’s trade, it has edged slightly lower and is currently sitting at 34 cents (at the time of writing). This values the company at just under $210 million with a price to earnings ratio of 63.21. In conclusion, this company has been growing consistently and, with its increasing focus on global expansion, I believe it looks set to continue this trend into the future.

More reading

• ASX stock of the day: Phoslock share price surges 21% on business update
• Why AusCann, Phoslock, Kogan, & Village Roadshow are dropping lower

Motley Fool contributor Daryl Mather 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 investors are today taking a break from trading Afterpay Ltd (ASX: APT) shares. After an incredible month where the Afterpay share price rose by more than 34%, you might be forgiven for thinking that investors might just want to take a breath and calm down a little. But no, it’s because Afterpay is today, at the company’s request, in a share trading halt.

Afterpay is hoping to raise $800 million from investors at $61.75 a share, which is around a 9% discount to the most recent share price of $68. Bargain, right?

Well, it might be for you if you’re bullish on this company’s long-term future. But the fact that Afterpay only reached $61.75 a share for the first time ever last week hardly makes it a deal for the ages in my view.

But I digress.

Also included in the announcement of this trading halt and capital raising was an interesting side note. While asking investors for an additional $800 million for the business, Afterpay also told us that its co-founders Anthony Eisen and Nicholas Molnar are planning to offload 4.1 million of their own shares (2.05 million each). That’s a nice ~$250 million retirement fund right there.

So if Eisen and Molnar are selling shares right now, should Afterpay investors take the hint and follow suit? ‘You should buy shares even if we’re selling’ is something of a conflicting message from management, to say the least. 

Should Afterpay investors read between the lines?

Having a set of co-founders selling shares in their company is never really a good sign. But I also don’t think it’s necessarily a bad thing either. Last week, I wrote an article about why investors shouldn’t always worry about insider selling. The same principles are in play in this situation.

The co-founders’ sale represents around 10% of both Eisen and Molnar’s total position in Afterpay. Both of these gentlemen will retain around 18.4 million shares each (each worth approximately $1.25 billion), which is still a large enough stake to conclude (in my view) that both still have significant ‘skin in the game’ for Afterpay going forward.

Eisen and Molnar are likely to be pursuing diversification of their own wealth with these sales. I won’t blame them for this financial prudence — diversifying your assets away from one single investment is usually a wise thing to do.

So overall, I don’t think Afterpay investors should be too concerned with this insider selling right now. If I were Eisen or Molnar, I would find it difficult to say no to the current sale price offering myself. If you’re already an Afterpay investor, your next choice is whether to buy Eisen’s and Molnar’s shares off them!

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• ASX 200 up 0.1%: Afterpay announces capital raising, big four banks lower ahead of RBA meeting
• Does Afterpay have a competitive advantage?
• Sezzle share price rockets 20% higher on record Q2 result
• Afterpay expects sales to double to $11bn and launches $800m cap raise

Motley Fool contributor Sebastian Bowen 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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The CML Group Ltd (ASX: CGR) share price has raced 16% higher today after releasing a positive business update to the market this morning.

The company provides cashflow solutions for businesses, including a range of equipment financing, invoice factoring, and trade finance for purchasing stock in advance. 

What lifted the CML Group share price?

In today’s update, CML Group reported strong monthly growth in volumes as business restrictions eased. In addition, it confirmed there have been no material defaults or losses, despite the circumstances of the coronavirus lockdown. 

CML Group reported that June saw its core invoice finance business post its biggest monthly increase in the past 12 months, as a result of net growth in client numbers. Moreover, existing client volumes began to lift from reduced activity in April and May as a result of COVID-19.

June 2020 saw 14% growth in invoicing on May 2020, as well as a 10% increase on June 2019. In 2020, even with the impact of the COVID-19 crisis, the company financed over $1.7 billion in invoices compared with $1.6 billion for FY19.

The company expects to post FY20 earnings before interest, taxes, depreciation, and amortisation of $19.5 million–$20.5 million, and a net profit after tax and before amortisation of $7.5 million–$8 million.

It also expects to pay a dividend in the range of 1.75 cents to 2 cents per share, fully franked. 

Outlook for CML Group

Management expects to see demand for invoice financing continue to increase in FY21. This demand is driven by businesses considering the working capital needed to manage the costs of business disruption.

CML reduced its invoice finance cost base by $2.5 million on an annualised basis during the COVID-19 period by permanently removing management layers from the organisational structure and addressing over-capacity of staffing in other areas of its business.

In the company’s H1 FY20 report, it announced a strategy to move up the credit curve to target larger clients, which will increase the average facility size and earnings per client, and extend average client tenure.

The CML Group share price jumped as high as 18% in early trading and is up by 16.67% at the time of writing. This values the company at $68.54 million, with a trailing 12 month dividend yield of 7.62%.

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Motley Fool contributor Daryl Mather 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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