The Advanced Braking Technology Ltd (ASX: ABV) share price is currently trading more than 44% higher today after announcing a new licencing agreement.

Who is the new licencing agreement with?

Advanced braking announced that the company has entered into a technology licencing agreement with VEEM Ltd (ASX: VEE) to provide braking solutions for the Hawkei PMV-L project. The Hawkei PMV is a light 4-wheel drive vehicle that is designed to meet the standards of the defence sector. The agreement will see Advanced Braking manufacture and supply 1,100 park brake mechanisms for the project.

The licence agreement involved 2 phases. Phase 1 will see Advanced Braking design and test a prototype and phase 2 will see the manufacturing and supply of the mechanisms. According to Advanced Braking, the contract value across phase 1 and 2 is approximately $760, 000. In addition, Advanced Braking will supply spare parts and consumables for the life of the product.

The company’s management acknowledged that the contract will allow Advanced Braking to achieve its strategic objective of diversifying its client base. As a result, the licencing agreement may provide Advanced Braking with a competitive advantage to offer customised solution services to other international fleet providers. These include vehicles for military, humanitarian and emergency services.

What does Advanced Braking do?

Advanced Braking is an Australian-based company that designs, manufactures and distributes innovative braking solutions. The company services a diverse range of industries who emphasise and require high safety standards. These include mining, defence, civil construction and waste management industries. Advanced Braking’s products offer unparalleled safety, improved productivity, zero emissions and durability.

During the coronavirus pandemic, Advanced Braking’s operations continued to function with the company maintaining its service levels. In addition, the company’s primary base remained in the mining and civil construction industries which continued to operate during the pandemic.

In an operational update released in late April, Advanced Braking reported a 29% increase in operating sales for FY20. The company also achieved positive EBITDA for Q3 FY20, resulting in 4 consecutive quarters with positive EBITDA.

The Advanced Braking share price

At the time of writing the Advanced Braking share price is trading 44% higher for the day. The company’s share price soared more than 400% from Thursday’s close to the high of 13 cents earlier today.

More reading

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• Mobilicom share price soars 43% on shift to volume manufacturing
• Why the BNK Banking share price has surged 37% today
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Motley Fool contributor Nikhil Gangaram 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 Mobilicom Ltd (ASX: MOB) share price has shot up by 43.75% on Friday to be trading at $0.12 per share. Mobilicom’s share price gains come off the back of an announcement the company is scaling up an existing project and shifting to volume manufacturing. 

What was in the announcement?

Mobilicom reported it has completed the development stage of a ground controller station for a leading drone supplier it started working with in 2019. Additionally, the project has been scaled up by $240,000 from its original $2 million contract.

Mobilicom provided two series of prototype units to the customer and completed integration with the drones and unmanned aerial vehicles of the customer. Following a successful review by the customer, Mobilicom is now commencing commercial manufacturing of the product with the first commercial batch planned for delivery in quarter 3 of the 2020 calendar year.

The customer intends to offer Mobilicom’s ground control solution with all of its drones and small unmanned aerial vehicles worldwide. It has chosen Mobilicom as its vendor of choice in supplying ground control stations for these technologies. Mobilicom reports that it expects to receive additional orders from the customer in due course.

According to the announcement, the customer has revenues of more than $3.6 billion. It is an international high tech company engaged in a wide range of defence, homeland security and commercial programs around the world. The customer is one of the largest drone, small unmanned aerial vehicle and robotics suppliers outside the United States.

Mobilicom CEO Oren Elkayam indicated the company is now preparing for high volume production of its ground control stations. 

“We are pleased this highly regarded company in the drone and unmanned systems sector has defined our solution as its building block for all future small UAV and drone projects, and demonstrates our capacity to meet the high specification needs of our clients,” he said.

About the Mobilicom share price

Mobilicom is a technology company that designs, develops and delivers remote private mobile networks that can operate without existing infrastructure. Mobilicom’s solutions have been deployed worldwide. 

The company released its results for the March quarter in April. Mobilicom had cash receipts of $1.5 million in the first quarter of 2020, a 169% increase on the first quarter of 2019. At that time, the company reported it had a backlog of products to deliver, with invoices exceeding $2.1 million. 

At the end of the March quarter, Mobilicom had a cash balance of $4.1 million with its cash balance declining $0.7 million during the quarter. Employees accepted a salary cut of 10–20% and the founders took a salary cut of 35%.

At the time of the quarterly announcement, the company continued to gain new customers with orders from Australia, the UK, France, Denmark and Israel.

In June, Mobilicom was granted a new patent from the US patents office for technology used in mobile and scalable ad hoc networks. It was also awarded a research project with Space Florida with a first year budget of $770,000.

The Mobilicom share price is up 263% from its 52 week low of $0.033 and it has returned 38.55% since this time last year. Since the beginning of 2020, the Mobilicom share price has dropped by 11.54%.

More reading

• Why I would buy Appen and this ASX growth share right now
• Fund managers have been buying these ASX 200 shares
• Advanced Braking share price soars more than 40% with licence agreement
• Why the BNK Banking share price has surged 37% today
• Lovisa share price up 5% as retailer provides business update

Motley Fool contributor Chris Chitty 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 BNK Banking Corporation Ltd (ASX: BBC) share price has surged 37.63% so far today, as investors react to a COVID-19 trading update the bank released to the market this morning.

BNK is a digital bank that offers home and personal loans, insurance, term deposits, everyday and saving accounts. 

What did BNK Banking announce?

BNK provided the market with a trading update for the months of April and May 2020. One of the highlights included growth in its total loan book to $47.3 billion, which represents a year-on-year (YoY) increase of 18%.

In addition, BNK’s deposit growth was up 36% YoY to $363 million and transaction accounts grew to $109 million, which is up 100% YoY. The group has $108 million of cash and liquid holdings and a capital adequacy ratio of 20.97%. 

As a result of strong growth, BNK reported that it is operating profitably in the 2020 calendar year to date. 

Interim CEO Don Koch said:

BNK as a group has navigated the COVID disruption well, continuing to grow profitability over the period. Finsure has been a star out-performer achieving record volumes over the period and growing market share. The group remains well capitalised with a strong balance sheet and has made significant progress with diversification of funding over the period.

The BNK-owned Finsure is a nationwide network of independent mortgage brokers. The brokerage has reported strong settlement volumes of $1.35 and $1.45 billion in April and May 2020, respectively, up 32% YoY. Finsure’s aggregation loan book of $44.7 billion is up 20% YOY. 

BNK also reports that requests for relief packages (which include loan payment deferrals) because of COVID-19 have remained very low, with only 2 requests received in June 2020.

About BNK Banking

BNK has two key operating divisions in banking and mortgage broking aggregation. The group seeks to become a challenger bank and is looking to grow its network and partner opportunities. 

It has operated as an APRA-regulated authorised deposit-taking institution (ADI) for over 38 years. As a result, customers are covered for deposits up to $250,000 by the Australian government deposit guarantee scheme. Additionally, it plans to offer a new range of products later this financial year and keep developing its digital platform. 

Finsure is the bank’s aggregation division, which provides insights that assist BNK with product development. The group disclosed in its update it has 1,716 mortgage brokers that manage a loan book of $44.7 billion (as at 31 May 2020). 

The BNK Banking share price is currently trading for 64 cents, which is down 3.03% on this time last year but up 3.2% since the start of 2020. 

More reading

• Why I would buy Appen and this ASX growth share right now
• Fund managers have been buying these ASX 200 shares
• Advanced Braking share price soars more than 40% with licence agreement
• Mobilicom share price soars 43% on shift to volume manufacturing
• Lovisa share price up 5% as retailer provides business update

Motley Fool contributor Matthew Donald 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 Lovisa Holdings Ltd (ASX: LOV) share price climbed over 5% in today’s early trade after the retailer released a business update last night. Lovisa was forced to close stores globally as a result of the COVID-19 pandemic but has now re-opened and reported a surge in online sales during Q4 FY20.

What does Lovisa do?

Lovisa is a fast-fashion jewellery and accessories retailer with over 400 stores globally. The company has a target customer base of fashion-conscious females aged 25-45. Operating a vertically integrated business model, Lovisa develops, designs, sources, and merchandises 100% of its Lovisa-branded products. Founded in 2010, Lovisa expanded rapidly, opening store No. 51 on the company’s first year of operation.

What did Lovisa report?

Lovisa announced that stores have now re-opened in all company-owned markets, with the company trading from 434 stores at the end of FY20. Store closures significantly disrupted Q4 FY20 sales. Lovisa’s sale revenue (excluding franchise revenue) was $237 million for the full year ended 28 June 2020 compared to $249 million in FY19.

Comparable sales for the period since stores have re-opened were down 32.5% on the previous year. Performance has been strongest in Australia and New Zealand where stores have traded the longest after an ease in restrictions. Lovisa reported online growth of 256% during Q4, with trading websites now operational in most of its markets.

How is the Lovisa share price performing?

The Lovisa share price dived 80% from a high of $12 in February to a low of $2.45 in March. Since then the Lovisa share price has gained 160% with shares currently trading at $6.40. Lovisa took action to manage the cost structure of its business following the temporary closure of the store network. This included temporary stand-downs and redundancies, as well as discussions with landlords in relation to rent subsidies and abatements. As a result, the balance sheet remains strong with current net cash of $21 million, compared to $11 million at June 2019.

In 1H FY20 Lovisa opened a net 49 stores, growing revenue by 22% and net profit after tax by 9.1%. With the trade disruptions taking place in 2H FY20, it’s unlikely Lovisa can replicate these results over the full year. Nonetheless, the company is well-placed to invest in future opportunities as the economy emerges from the coronavirus.

More reading

• Why Lovisa, PointsBet, Transurban, & WiseTech shares are racing higher
• Lovisa share price on watch after full year sales update
• A great ASX small-cap share for your watchlist
• Coronavirus second wave potential could drive investment portfolio changes
• Here are 3 Australian share market trends to watch this week

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Coles Group Ltd (ASX: COL) share price has been behaving rather strangely of late.

Coles shares have been on a pretty rewarding run over the last month or two. Since 22 May, Coles is up nearly 14%, whilst the S&P/ASX 200 Index (ASX: XJO) is up around 10% over the same period.

But before that, Coles shares appeared almost to be doing the opposite of what was happening with the ASX 200. Between 12 February and 19 March, Coles shares were essentially flat, albeit with a brief dip in between. Meanwhile, the ASX 200 lost around 32% over the same period.

But then, between 19 March and 22 May, Coles shares were down around 12% whilst the ASX 200 gained around 15%.

So what on earth is going on with the Coles share price?

Coles shares on a rollercoaster

I think the volatility we have seen in the Coles share price is a function of conflicting sentiment over the supermarket giant. In the depths of the coronavirus crisis lockdowns, Coles seemed like a safe haven. Widespread stories of panic buying of essential goods, and images of bare supermarket shelves, caused investors to flock to Coles shares whilst seemingly selling everything else in their portfolios. Some time after, investors probably realised that Coles wasn’t going to enjoy this bounty forever. Furthermore, investors may have been starting to think that additional expenses associated with increased cleaning and safety measures would likely add to Coles’ long-term costs.

And then, when the market recovery came, suddenly Coles looked boring and overbought. Investors seemed far more excited over growth shares like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), which went on to deliver investors triple-digit returns over a month or three.

Are Coles shares a buy today?

Looking at the Coles share price today, and it’s a mixed bag for me. At the time of writing, Coles is trading at $17.11, which gives the stock a price-to-earnings (P/E) ratio of 19.25 and a trailing dividend yield of 2.45% (or 3.5% grossed-up with full franking).

This looks at least ‘fairly valued’ to me. The primary attraction of a company like Coles is the dividend yield. And whilst Coles has one of the safest dividends on the ASX in 2020 in my view, I don’t think 2.45% is anything to write home about. Yes, it’s better than what (at least) half of the ASX big four banks are offering in 2020, but I think there are better income opportunities elsewhere.

Foolish takeaway

I think Coles is a useful ASX dividend share to have as part of an income-focused portfolio. Its defensive qualities and robust dividend do lend the share some advantages in the dividend-deprived year we are in. But for anyone who doesn’t focus on income as the primary objective of investing, I think don’t think Coles has too much else in its trolley to offer.

More reading

• Why you can expect further gains for ASX shares this quarter
• Brokers name 3 ASX 200 shares to buy right now
• ASX 200 up 0.55%: Cochlear jumps on FDA approval, Adbri crushed on contract loss
• Risk to supermarkets is rising but is Woolworths share price still a buy?
• Will the Afterpay share price break $100 in 2020?

Sebastian Bowen 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 and COLESGROUP DEF SET. 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 market bulls will be emboldened by predictions that equities will add to their strong gains from the June quarter.

History is on the side of the optimist. Whenever the S&P 500 Index (INDEXSP: .INX) records a big jump in the previous quarter, the market has always made gains in the following three months.

This may be specific to the US index, but given the correlation between the S&P 500 and the S&P/ASX 200 Index (Index:^AXJO), this bodes well for the ASX too.

September quarter looking strong

This trend was highlighted in a report by Keith Lerner, chief market strategist at SunTrust Private Wealth Management, according to Bloomberg.

He looked at the quarterly performance of the US benchmark since 1950. Whenever the S&P 500 rallied 15% to 22% in a quarter, it will rise again in the next quarter by an average of 8.4%. The index jumped 20% in the June quarter.

That’s reassuring as investors are fretting over what this quarter could bring. A resurging wave of COVID-19 infections around the world, geo-political tensions with China, the nail-biting August reporting season and the end of government wage subsidies will give us plenty to fret about.

Climbing the wall of worry

At least having history on our side will provide some comfort even though the next few months is thick with uncertainty.

Can the ASX 200 continue to build on gains even in this fog of war? The answer is “yes” as share markets have climbed walls of worry many times before.

It helps that stocks are the “least dirty shirts” in the drawer. The fundamentals for this asset class are better than most others, leading some market commentators to call stocks the new “safe haven” assets.

Why ASX shares can still outperform

I wouldn’t necessarily go that far, but I do believe equities will outperform the other major asset categories in FY21.

But this isn’t a call to indiscriminately buy the market. I think the relatively positive tailwinds for stocks need to be balanced with the multiple risk factors that are on the horizon.

In such an environment, quality defensive stocks with a successful management track record of delivering value to shareholders will be favoured.

ASX stocks to watch

I am not passing judgement on the record breaking Afterpay Ltd (ASX: APT) share price, but it doesn’t fit into what I am referring to.

I prefer stocks that are profitable and have businesses that are well placed to remain so even if the headwinds build.

Some of my favourite picks as we head into the next phase of the coronavirus crisis include the BHP Group Ltd (ASX: BHP) share price, Ansell Limited (ASX: ANN) share price and Austal Limited (ASX: ASB) share price – just to name a few.

If you are looking for other buy ideas, the experts from the Motley Fool have named some stocks that are expected to outperform in this financial year.

Follow the link below to find out for free what they are.

More reading

• What’s going on with the Coles share price?
• Will the Afterpay share price break $100 in 2020?
• Why Afterpay and this ASX share just hit record highs
• Afterpay share price hits $67! Are BNPL shares in a bubble?
• Why the Afterpay share price zoomed to a new record high today

Brendon Lau owns shares of Ansell Ltd., Austal Limited, and BHP Billiton Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Ansell 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

Lendlease Group (ASX: LLC)

According to a note out of Goldman Sachs, its analysts have retained their conviction buy rating on this international property and infrastructure company’s shares and put a $16.55 price target on them. Although Goldman was disappointed to see that Lendlease’s net profit after tax will fall well short of expectations in FY 2020, it believes the company’s profits will bounce back strongly in FY 2021. So much so, it estimates that the Lendlease share price is trading at just 11x FY 2021 earnings. I agree with Goldman Sachs and would be a buyer of its shares.

Telstra Corporation Ltd (ASX: TLS)

Analysts at UBS have retained their buy rating and $3.70 price target on this telco giant’s shares. According to the note, the broker expects Telstra’s mobile business to deliver solid EBITDA growth over the coming years. This follows its recently announced mobile plan changes. In light of this, it believes Telstra will be able to maintain its dividend at 16 cents per share until at least FY 2023. I think UBS is spot on and believe Telstra shares would be a great option for income investors.

Webjet Limited (ASX: WEB)

Another note out of UBS reveals that its analysts have retained their buy rating and lifted the price target on this online travel agent’s shares to $5.35. The broker believes Webjet’s outlook has improved greatly in recent months and has been factoring this and potential market share gains into its estimates. However, given the uncertainty in the travel market, it has warned that its shares are likely to remain volatile in the near term. Although I’m a fan of the company, I’m not convinced that the Webjet share price represents good value just yet. As a result, I intend to wait to see how its performance fares in FY 2021 before considering an investment.

More reading

• What’s going on with the Coles share price?
• ASX 200 up 0.55%: Cochlear jumps on FDA approval, Adbri crushed on contract loss
• Risk to supermarkets is rising but is Woolworths share price still a buy?
• Why I think these ASX dividend shares are strong buys
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Webjet 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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