As you are no doubt already aware, the buy now, pay later (BNPL) sector has tremendously outperformed the market this year. Industry leaders Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have surged around 750% and 460% respectively from their lows in March and are currently trading near all-time highs.

Despite the huge interest in these BNPL service providers, the FlexiGroup Limited (ASX: FXL) share price is actually trading just over 30% lower for the year. So, given it is the sector’s oldest and most profitable player, why is the FlexiGroup share price lagging its peers and should you buy?

Positive trading update

In a recent trading update, FlexiGroup reported that the company had exceeded 2.1 million customers after adding 380,000 new users in the past 11 months. In comparison, Afterpay had 3.2 million customers on 31 March and Zip had 2.1 million on 31 May.

Over the past 11 months, FlexiGroup also reported that $2 billion in transactions were processed through its ‘humm’ platform, with a 282% surge in online volumes for the 5 months to May 2020. The company attributed this growth to the transformation of its digital offering which has seen over 600,000 app downloads.

Flexigroup also cited the continued expansion of humm and the company’s strategic partnership with Mastercard as key growth drivers. FlexiGroup’s platform now boasts more than 55,000 retailers, including notable brands such as IKEA, Myer Holdings Ltd (ASX: MYR), National Dental Plan and Smiggle.

Has the coronoavirus pandemic impacted operations?

Unlike Afterpay and Zip, Fleixgroup’s platform differentiates itself by offering BNPL services for larger expenses such as home renovations, dental treatment and fertility services. The company provides interest-free repayment options for transactions up to $30,000 over 10 weeks to 60 months.

In late April, FlexiGroup provided a trading update on its operations during the coronavirus pandemic. The company assured investors that 75% of its customers were over the age of 35 with many being homeowners. In addition, Flexigroup highlighted that consolidating over 20 of its brands into 3 offerings has provided the company with additional strength and flexibility.

Flexigroup noted that although BNPL volumes were reduced for discretionary spending, there was a shift towards spending on solar, health and furniture during the lockdown period.

Foolish takeaway

FlexiGroup has operated in the BNPL sector for the past two decades under the brands Ezi-Pay and Oxipay. Last year the company rebranded and consolidated its various platforms into one brand (humm). The strategy behind the rebranding aims to lift the company’s visibility in the sector and increase its accessibility to customers and partners.

In my opinion, despite pioneering the BNPL space, the Flexigroup share price is lagging behind the likes of Afterpay and Zip because it will take time to rebrand and refocus its operations. However, I think there could be long-term value for investors in the company if its focus on larger purchases and new strategic direction prompts a re-rating of the share price.

More reading

• Are Afterpay shares the next Visa?
• ASX 200 falls 0.7%, Qantas and Afterpay make a partnership
• 2 ASX shares I would buy for growth and income
• Afterpay share price pushes higher on Qantas partnership
• ASX 200 edges higher: Afterpay and Qantas join forces, big four banks push higher

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup 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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Although the United States is the undisputed leader when it comes to technological innovation, it is worth noting that a number of ANZ companies are making their mark in the world of technology.

Three exciting tech companies that I think are definitely worth considering as long-term investments are listed below. Here’s why I would buy them:

Altium Limited (ASX: ALU)

The first tech share to consider buying is Altium. It is an award-winning printed circuit board (PCB) design software provider which has over 30 years of continuous research and development in PCB design. The company is aiming to leverage this experience to achieve market dominance in PCB design by 2025. Given the quality of its offering, I feel confident Altium will achieve this and generate above-average earnings growth over the next few years. Supporting the core business will be its growing Nexus and Octopart businesses. The latter is a search engine for electronic and industrial parts and has a significant market opportunity.

Appen Ltd (ASX: APX)

Another ASX tech share which I think would be a fantastic long-term option is Appen. It is a global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence (AI). The company estimates that the AI market will grow to be worth between US$169 billion and US$191 billion per annum by 2025. This is great news for Appen, as an estimated 10% of this spending is expected to relate to the data labelling that Appen is a leader in. If the company can maintain its leadership position, then I expect it to lead to above-average profit growth for a long time to come. This could mean there is still significant upside for the Appen share price over the 2020s.

Xero Limited (ASX: XRO)

A final tech share to consider buying is Xero. I believe the cloud-based business and accounting software provider is capable of growing its sales at an above-average rate over the 2020s. This is thanks to the quality and growing popularity of its software and its massive global market opportunity. Another positive is the favourable industry tailwinds. A recent study shows that the Cloud Accounting Software market is predicted to grow at a 6.8% compound annual growth rate through to 2025. I feel this bodes well for the Xero share price over the coming years.

More reading

• 2 ASX shares I would buy for growth and income
• 3 ASX tech shares to buy and hold
• Cochlear and these ASX 200 shares could be fantastic buy and hold investments
• Altium and 2 more ASX 200 shares to watch this week
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000

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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The Carbonxt Group Ltd (ASX:CG1) share price closed yesterday’s trade up 32.43% for the day, thanks to the completion of a successful $2 million capital raising.

What happened?

Yesterday morning, Carbonxt announced it has received firm commitments to raise approximately $2 million (before costs) from leading institutions and investors. Despite the issue price of 16 cents for the 13 million new ordinary shares in the company, the Carbonxt share price closed yesterday at 24 cents. This follows a large increase of 19% last Monday.

The company reported that the placement received very strong support both from new and existing investors. The placement will be used to strengthen Carbonxt’s balance sheet and position the company to accelerate growth into FY21.

In its capital raising presentation, Carbonxt advised that its anticipated FY20 growth did not eventuate, due to a number of factors including extended payments impacting revenue growth. The company provided revised FY20 guidance, with revenue now expected to come in at $16 million, $2 million down on its earlier forecast.

The release also forecast strong revenue growth of 40% or more in FY21, as customers return to levels similar to that of pre-COVID-19. The company expects to be profitable and cashflow positive from 2QFY21.

What does Carbonxt do?

Carbonxt is a cleantech company that specialises in the production of powdered and pelletised activated carbons for use in industrial pollution and emission control.

Carbonxt has recently released a new pellet aimed at removing phosphate from streams. The development of these pellets would eliminate any reliance on third-party and foreign-sourced input materials, contributing to significant margin expansion expected in FY21.

About the Carbonxt share price

The Carbonxt share price fell from its 54 cent high earlier this year down to 12 cents in March. Despite yesterday’s gains, the Carbonxt share price is still down 52% year to date, and 19% lower than this time last year.

More reading

• The FlexiGroup share price is lagging its BNPL peers. Should you buy?
• 3 of the best ASX tech shares to buy in July
• 5 things to watch on the ASX 200 on Tuesday
• Why you should watch these exciting small cap ASX healthcare shares closely
• Why NEXTDC and these high flying ASX shares just hit record highs

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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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week in a disappointing fashion. The benchmark index fell 0.7% to 6,014.6 points.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch

ASX 200 expected to rebound.

It looks set to be a more positive day of trade for the ASX 200 on Tuesday. According to the latest SPI futures, the benchmark index is expected to open 29 points or 0.5% higher this morning. This follows a very positive start to the week on Wall Street, which saw the Dow Jones rise 1.8%, the S&P 500 climb 1.6%, and the Nasdaq jump 2.2%. Tech shares played a key role in driving these indices higher.

Reserve Bank meeting.

This afternoon the Reserve Bank of Australia will hold its monetary policy meeting and decide whether to cut the cash rate down to zero. According to the latest cash rate futures, the market is pricing in a 62% probability of a rate cut today. This means that a cut is far from certain, but is definitely in play. A rate cut would arguably be a negative for Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four.

Oil prices mixed.

Energy producers including Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) will be on watch after a mixed night of trade for oil prices. According to Bloomberg, the WTI crude oil price is flat at US$40.65 a barrel and the Brent crude oil price is up 0.6% to US$4307 a barrel. Positive supply data was supporting oil prices.

Gold price rises.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could be on the rise after the gold price strengthened. According to CNBC, the spot gold price rose 0.25% to US$1,794.80 an ounce. The gold price climbed higher on the back of surging coronavirus case numbers.

QBE added to conviction buy rating.

The QBE Insurance Group Ltd (ASX: QBE) share price could be on the rise on Tuesday after Goldman Sachs added the insurance giant to its conviction buy list with an $11.26 price target. The broker believes QBE has two medium term opportunities to create value for shareholders. These are upside from putting (potential) excess capital to work and margin expansion from operating leverage.

More reading

• Kogan and 1 other ASX share to buy and hold beyond 2025
• 2 ASX shares I would buy for growth and income
• 2 five-star ASX shares for strong long-term growth
• The most popular US shares that Aussies are buying includes a few surprising names
• Is the Woodside share price a better buy than its ASX energy peers?

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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One area of the market which I think is home to a lot of exciting shares is the healthcare sector.

Two that I feel are standouts at the small end of the sector are listed below. Here’s why I think they are worth watching very closely:

Mach7 Technologies Ltd (ASX: M7T)

The first small cap healthcare share to look at is Mach7. It is a medical imaging data management solutions provider which uses software to create a clear and complete view of the patient. This software helps to inform diagnosis, reduce care delivery delays and costs, and, importantly, improve patient outcomes.

While this product alone has a sizeable market opportunity, the company has recently expanded its offering via the acquisition of Client Outlook. The acquisition of this leading provider of an enterprise image viewing technology has increased Mach7’s total addressable market from US$0.75 billion to a sizeable US$2.75 billion. Given that Mach7 generated revenue of $9.1 million in the first half, it clearly has a long runway for growth over the next decade. This could make Mach7 shares a great long term option.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a healthcare technology company which uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. It has been growing its market share in the United States at a rapid rate in recent years and currently has an installed software base covering over 27% of U.S. women screened for breast cancer. The sizeable increase in its installed base has led to very strong revenue growth, with the company more than doubling its subscription revenues in FY 2020.

The good news is that Volpara still has a very long runway for growth and is aiming to increase its average revenue per user (ARPU) materially in the future. Management is looking to grow its ARPU to upwards of US$10 per user, up from US$1.04 per user at present. It feels it can achieve this by having radiologists utilise its full product suite during screening sessions. If it delivers on this, then I suspect the Volpara share price will be materially higher at the end of the decade.

More reading

• 10 more top broker ASX share picks for FY21
• Top ASX Stock Picks for July 2020
• 3 exciting small cap ASX shares to add to your watchlist
• Why ResMed and these ASX shares have just hit new highs
• Fund managers have been buying these ASX 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 MACH7 FPO and VOLPARA FPO NZ. The Motley Fool Australia has recommended MACH7 FPO and VOLPARA FPO NZ. 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.

The post Why you should watch these exciting small cap ASX healthcare shares closely appeared first on Motley Fool Australia.

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