Savvy investors who picked the right time to buy ASX gold miners will be laughing all the way to the bank. But it’s another group of market participants who are wearing the biggest grins.

Gold is one of the hottest trades on the market as it powers through the COVID-19 mayhem. The precious metal may have pulled back from its record high of US$2,064 an ounce but it’s still holding firm over US$1,900 and is still up nearly 30% since the start of 2020.

ASX stocks sailing on rivers of gold

ASX gold producers like the Evolution Mining Ltd (ASX: EVN) share price and Saracen Mineral Holdings Limited (ASX: SAR) share price may have joined the bull run, but it’s the smaller cap miners that have really outperformed.

For instance, the Chalice Gold Mines Limited (ASX: CHN) share price and De Grey Mining Limited (ASX: DEG) share price have surged around 400% each over the past six months.

Biggest gold winners are outside the ASX

But these may not be the biggest winners from the gold run. It’s the gold Exchange Traded Fund (ETF) providers that could be making the biggest killing, according to Bloomberg.

These funds, which offer investors direct exposure to gold through a security that trades like a stock, have bought US$50 billion ($70.4 billion) worth of bullion this year. ETFs now hold more gold than every central bank with the exception of the US Federal Reserve.

These funds have struck the motherlode in terms of generating fees as fees are usually set as a percentage of their assets. The rush of retail investors into gold ETFs (it’s a lot easier to buy and sell an EFT than the physical metal), gives these EFT providers a double windfall.

Unvirtuous cycle

It’s almost incestual! Experts say the meteoric rise in ETFs is a big reason for the big jump in gold. And the big jump in gold is feeding demand for ETFs. ETF providers are having their cake and eating it twice.

“At these times, it’s a very good business to be in,” George Milling-Stanley, chief gold strategist at State Street Global Advisors told Bloomberg. “There’s no question in my mind that ETF demand is driving gold right now.”

State Street is the marketing agent for the largest gold ETF, SPDR Gold Trust (NYSEARCA: GLD).

Big fees up for grabs

Bloomberg calculated the top 10 gold ETFs have collects around US$610 million in total fees a year, based on current prices and holdings.

The big jump in gold is also infecting silver, which has also surged in recent months. Bloomberg estimated that investors have bought more silver through ETFs since the start of 2020 than was produced by the world’s 10 largest miners combined last year.

Should you be worried?

Why investors should care is because ETFs can distort markets and even feed asset bubbles, in my view. The situation is made worst because not all ETFs actually buy the underlying asset but use financial instruments to mimic the exposure.

This introduces counter-party risks. As the GFC showed us, when market are in a meltdown, the backers of these financial instruments could collapse, leaving ETFs (and their investors) holding “assets” that aren’t worth the paper they are printed on.

Gold is meant to be safe haven asset. ETFs may challenge this long held belief.

More reading

• Is it still the time to be greedy for ASX gold shares?
• ASX 200 up 0.2%: Afterpay expansion, Fortescue’s monster dividend, NIB disappoints
• 2 ASX 200 bargains to buy this week
• Boral cops $1.3bn body blow to profits could signal impending cap raise
• Are Webjet and other ASX travel shares taking off?

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited. 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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This reporting season has been all about the retail shares. Despite the economic downturn, some ASX retail shares have outperformed with significant increases in sales and profit. The banks, on the other hand, have seen profits and dividends shrink as COVID-19 impairments take a chunk from bottom lines. It’s been a mixed bag for healthcare shares which have proven they are not immune to the impacts of the virus, while the miners have seen results boosted by strong iron ore and gold prices.

We take a look at the highlights of this reporting season so far. 

Retailers smash expectations

ASX retailers have seen strong sales as consumers spending more time at home upgrade their surroundings. Home offices have been equipped, entertainment options upgraded, and furnishings updated.

JB Hi Fi Limited (ASX: JBH) reported an 11.6% increase in total sales which reached $7.9 billion. The electronics retailer reported increased sales momentum in the fourth quarter as customers spent more time working, learning, and seeking entertainment at home. Gross profit increased 11.7% to $1.17 billion, despite a drop in sales in New Zealand where stores were temporarily closed. 

Wesfarmers Ltd (ASX: WES) saw accelerated sales from its Bunnings and Officeworks brands. Bunnings’ sales were up 13.9% in FY20 as consumers turned to DIY during lockdowns. Officeworks sales increased 20.4% as consumers equipped themselves to work and learn from home. Surprisingly, Kmart sales only increased 5.4% despite increased demand for homewares during lockdown, with significant availability issues emerging in June. 

The Reject Shop Ltd (ASX: TRS) saw sales growth of 3.4% in FY20 with total sales of $820.6 million. During the second half, the Reject Shop experienced a material increase in sales driven by strong customer demand for ‘essential’ products. Strong performance was seen in categories such as cleaning, groceries, toiletries, and pet care. However, some categories that traditionally perform strongly during the period saw a decline in sales thanks to COVID-19 restrictions. These include Easter-related products, luggage, and party supplies. 

Banks slash dividends as earnings dive 

The big banks have been big disappointments this reporting season, with results infected by COVID-19. Commonwealth Bank of Australia (ASX: CBA) reported an 11.3% decline in cash profits due to high loan impairment expenses. Net profit after tax (NPAT) fell to $7,296 million and dividends were slashed – CBA paid full year dividends of $2.98 a share, a 32% decrease on FY19.

Westpac Banking Corp (ASX: WBC) scrapped its previously deferred first half dividend entirely as it delivered its third quarter trading update. The bank said approximately $30 billion in mortgages were currently being deferred and booked an $826 million impairment charge for the quarter. 

Australia and New Zealand Banking GrpLtd (ASX: ANZ) reported a mixed third quarter result last week. The bank generated $1.3 billion in statutory profits for the quarter but took another $500 million provision charge, following a $1.674 billion charge in the first half. ANZ announced an interim dividend of 25 cents a share after previously deferring the dividend. This was down from 80 cents a share in 2019.

National Australia Bank Ltd (ASX: NAB) surprised on the upside with a $1.5 billion quarterly profit as revenue increased by 10%. NAB raised billions in capital earlier this year and slashed its interim dividend by 64% to 30 cents per share. 

Mixed results for medical shares 

In the medical sector, Cochlear Limited (ASX: COH) showed that healthcare shares are not immune to the impacts of coronavirus – the medical device company saw sales revenue decline 22% in the second half. Efforts to control the spread of coronavirus meant many cochlear implant surgeries were delayed with implant units falling 26% in the second half. Cochlear reported a net loss of $283.3 million for FY20. Nonetheless, it says it remains committed to market growth activities and R&D programs to enable the business to emerge from the pandemic in a stronger competitive position. 

CSL Limited (ASX: CSL) saw its shares surge back above the $300 mark with the release of its FY20 results. CSL reported a 9% increase in revenues as management noted they had not yet seen a material impact from coronavirus. NPAT grew by 17% to US$2,247 million with earnings per share also up 17% to US$4.951. CSL did, however, guide modestly lower growth in FY21 with a forecast NPAT of between US$2,100 million and $2,265 million. 

Sonic Healthcare Limited (ASX: SHL) shares hit a fresh high after posting full-year results. The medical diagnostics company reported revenue of $6.8 billion, up 11.5% on FY19. Underlying net profit grew 6.5% to $552 million as the company performed millions of COVID-19 tests globally. Sonic reported dramatic falls in business patient volumes from mid-March to May, however this was offset by COVID-19 testing volumes enabling the company to report modest earnings growth for the year. Sonic reported that revenue growth rates have been substantially higher than usual since financial year end, boding well for FY21. 

Miners benefit from commodity prices 

BHP Group Ltd (ASX: BHP) shares have slid lower since the release of the miner’s full-year results last week. BHP missed analysts expectations, reporting a 5% drop in earnings which fell to US$22.1 billion. Iron ore was the stand out performer, accounting for nearly two thirds of earnings before interest, taxes, depreciation and amortisation (EBITDA). The iron ore price has been on the rise since May thanks to increased demand from China. This is expected to continue with the Chinese Government recently pledging to increase spending on infrastructure construction.

Gold prices have also been on the rise in 2020, which benefitted gold and copper miner Oz Minerals Limited (ASX: OZL). The miner recorded an 82% increase in NPAT, which reached $80 million driven by higher gold volumes and the strong gold price. 

Foolish takeaway

This has been the first coronavirus reporting season, but may not be the last. Changes to spending patterns driven by the pandemic have lifted results for some ASX shares but seen earnings fall for others. Retailers have dominated this season, but economic recovery should see benefits spread more broadly. 

More reading

• This healthcare share could be a COVID-19 bargain
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• 2 of the best ETFs for investing in ASX shares
• Why I would buy CBA and this top ASX dividend share
• Top brokers name 3 ASX shares to buy next week

Kate O’Brien owns shares of BHP Billiton Limited, Cochlear Ltd., CSL Ltd., and OZ Minerals Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Cochlear Ltd. and Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a small gain. At the time of writing the benchmark index is up 0.15% to 6,119.6 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The G8 Education Ltd (ASX: GEM) share price has fallen 9% to 88.5 cents. The childcare operator’s shares have come under significant pressure today after it posted a half year loss of $239 million. This was driven largely by the impact of the pandemic and subsequent restrictions on the early childhood industry.

The Monash IVF Group Ltd (ASX: MVF) share price is down 9% to 57.5 cents following the release of its full year results. During FY 2020, the fertility treatment company’s revenue was impacted by the disruption caused by the pandemic and the departure of key specialists in Victoria. Monash IVF reported a net profit after tax of $11.7 million, which was down 40.9% on the prior corresponding period.

The NIB Holdings Limited (ASX: NHF) share price is down 7.5% to $4.45. Investors have been selling the private health insurer’s shares after releasing a weaker than expected full year result. For the 12 months ended 30 June 2020, NIB posted a net profit after tax of $89.2 million. This was down 40.3% on the prior corresponding period and fell short of the market consensus estimate of $95.02 million.

The Uniti Group Ltd (ASX: UWL) share price has tumbled 6.5% lower to $1.53. Investors have been selling the telco challenger’s shares despite it announcing the quadrupling of its sales in FY 2020. While this was predominantly driven by a series of major acquisitions during the year, it did record organic growth in the second half. Investors appear to have been expecting an even stronger result.

More reading

• ASX 200 up 0.2%: Afterpay expansion, Fortescue’s monster dividend, NIB disappoints
• Monash IVF share price drops 10% on annual result
• Uniti share price drops lower despite quadrupling its FY 2020 sales
• G8 Education share price on watch after $239 million loss
• NIB share price in focus following FY 2020 results release

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings 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 world of exchange-traded funds (ETFs) has been one of the highest-growth areas of the share market over the past decade.

ETFs were barely around a decade ago, with only a handful of offerings available back then. But fast forward to today, and the Australian ETF sector is estimated to be worth more than $65 billion, according to reporting in the Australian Financial Review (AFR). Investors can’t seem to get enough of low-cost index funds as well as thematic ETFs that offer easy exposure to entire industries in one single investment.

VanEck is a provider of ETFs in Australia and has several popular funds that ASX investors might be familiar with. These include the VanEck Vectors Australian Equal Weight ETF (ASX: MVW), the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) and the VanEck Vectors Gold Miners ETF (ASX: GDX). The latter has recently made headlines after appreciating more than 35% in 2020 so far.

But VanEck has just announced that it’s stable of ETFs is about to expand with 4 new offerings.

They will be:

1. A Video Gaming and eSports ETF, with the proposed ticker code of ESPO
2. A Global Healthcare Leaders ETF, with the proposed ticker code of HLTH
3. A Morningstar World ex Australia Wide Moat ETF, with the proposed ticker code of GOAT
4. A Morningstar Australian Moat Income ETF, with the proposed ticker code of DVDY

4 new VanEck ETFs to hit the market

The Video Gaming and eSports ETF will be an interesting addition, as (to my knowledge) there is no equivalent fund yet listed on the ASX. It will likely include US-based gaming shares like Activision Blizzard, Take-Two Interactive and EA Games. It might also include the US-listed giant Microsoft, which owns the Xbox brand of consoles. Japanese-listed gaming giants Sony (maker of PlayStation) and Nintendo (owner of the Pokemon and Mario brands) would also likely be considered. Chinese gaming giant Tencent Holdings is also a possibility.

In contrast, there are already a few ETF options to choose from that cover the global healthcare sector. These include the iShares Global Healthcare ETF (ASX: IXJ) and the BetaShares Global Healthcare ETF – Currency Hedged (ASX: DRUG). Both of these funds own global healthcare giants like Johnson & Johnson, Roche and Pfizer. It will be interesting to see if this new VanEck fund will follow a similar mould. According to VanEck, the new fund will differentiate itself by only holding companies that were “world selected for their financial fundamentals focused on ‘growth at a reasonable price’”.

The Morningstar World ex Australia Wide Moat ETF looks to be modelled on VanEck’s successful MOAT ETF. It only holds US-based companies that display characteristics of a ‘moat’ or a sustainable competitive advantage. The new GOAT ETF will likely expand this framework for shares outside the US and Australia.

Finally, the new DVDY fund looks to join the likes of the Vanguard Australian Shares High Yield ETF (ASX: VHY) and the iShares S&P/ASX Dividend Opportunities ETF (ASX: IHD) in selecting only high dividend payers for the ETF. Like MOAT and GOAT, DVDY will rely on analysis from Morningstar to determine which shares to hold. These will apparently be selected for their “quality, financial health and high dividends”.

Foolish takeaway

I think when it comes to ETFs, the more choice and competition, the better. The variety gives ASX investors the ability to select funds that might be tailored to their specific circumstances. It will also assist with keeping fees low across the board. Thus, I’m happy to see some new VanEck EFTs join the ASX space. I look forward to seeing how these funds go at launch.

More reading

• Where to hunt for ASX dividend share income in 2020
• Why I would buy and hold these ASX healthcare shares until 2040
• 3 ASX dividend shares offering generous yields
• 2 ASX dividend shares to buy with $5,000 today
• These ASX healthcare shares could be fantastic long term options

Motley Fool contributor Sebastian Bowen owns shares of VanEck Vectors Morningstar Wide Moat ETF and Vanguard Australian Shares High Yield Etf. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat 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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This S&P/ASX 200 Index (ASX: XJO) healthcare share could be a bargain as long as COVID-19 remains in the community.

The Sonic Healthcare Limited (ASX: SHL) share price could be poised to boom in 2020 and beyond. With most people resigned to the fact that the pandemic will remain in the community until a vaccine is developed, testing facilities are going to continue being in high demand. As a result, companies like Sonic could benefit as testing for COVID-19 becomes a normal way of life.  

Sonic’s role in the COVID-19 pandemic

Sonic Healthcare is the third largest provider of clinical laboratory services in the world. The company operates pathology and radiology services in Australia and seven other countries including the United States.

Sonic has played a key role in helping countries combat the COVID-19 pandemic. In the company’s recent FY20 report, Sonic highlighted that it had performed approximately 6 million COVID-19 PCR tests globally. The company noted that testing capacity will be increased in order to meet growing community needs.

In the US, Sonic noted that approximately 3 million COVID-19 tests had been performed with market leading turnaround times. In Australia, the company has conducted around 1 million tests, reflecting 20% of national testing.

How has Sonic performed in FY20?

This ASX 200 healthcare share recently reported an impressive performance for FY20. Sonic’s full-year result was highlighted by an 11.5% increase in underlying revenue of $6.8 billion. The company also reported a 6.5% increase in underlying net profit of $552 million and noted underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $1.1 billion for FY20.

The company noted that revenue from COVID-19 testing had offset initial falls in base revenue. In addition, Sonic highlighted strong growth in organic sales across the board. Sonic’s US revenue was the highlight, surging 21% on a constant currency basis. The company’s earnings in the region received an extra boost following the acquisition of Aurora Diagnostics.

Should you buy this healthcare share?

Initially, the coronavirus pandemic saw a drastic fall in Sonic’s base revenue. With many people avoiding a visit to the GP, traditional pathology and diagnostic volumes declined.

In my opinion, the revenue that Sonic is generating from COVID-19 testing is a band-aid solution. This is because routine pathology and diagnostic services offer greater margins and are bigger profit drivers for the company. As long as Sonic continues to augment some of this lost revenue in the short term, however, the company should fare well. Sonic did not provide any annual earnings guidance for FY21 in its full year report. The company cited that the outlook is dependent on fluctuations in base business and COVID-19 testing revenues.  

In addition to continued demand for COVID-19 testing, Sonic could also benefit from a vaccine for the virus. The company’s pathology labs could see a boom in demand as people test themselves for COVID-19 antibodies.

Overall, I believe the long-term outlook for Sonic remains promising and I would probably advocate buying shares in the company. However, the Sonic share price has rallied hard since March, so a prudent strategy would be to wait for a substantial pullback before investing.

In the mean time, another healthcare share to keep an eye on is Healius Ltd (ASX: HLS). 

More reading

• Here are the highlights of this ASX reporting season
• Sonic share price surges to record high as its profit results defy sceptics
• Why Afterpay, Codan, IDP Education, & Sonic shares are charging higher
• Warren Buffett is buying gold shares and top fundies assess ASX share price moves
• Top brokers name 3 ASX shares to sell next week

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

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The Opthea Ltd (ASX: OPT) share price bounced up 5% then crashed this morning after the biotech company announced plans for a listing in the United States. At the time of writing, Opthea shares had dropped back down to $2.52 after opening trade this morning at $2.64. Opthea plans an initial public offering (IPO) of American depositary shares (ADSs) in the United States. This means Opthea ordinary shares would remain listed on the ASX with a concurrent listing of ADSs on the Nasdaq. 

What does Opthea do? 

Opthea is a biotechnology company that develops treatments for retinal eye diseases. The company’s product development programs focus on developing its OPT-302 therapy to treat wet age-related macular degeneration (Wet AMD) and diabetic macular edema.

OPT-302 is a soluble molecule that blocks the activity of two proteins which cause blood vessels to grow and leak, contributing to retinal diseases. A study of the OPT-302 therapy in wet AMD patients found participants who received it demonstrated superior vision gains. Phase 3 trials of OPT-302 are on track to be initiated in early 2021. 

Why the US listing?

Opthea says the potential US listing was intended to support its product development activities. This includes Phase 3 trials of OPT-302 for the treatment of wet AMD. The company said that no final decision had been made on the listing, and the price and timing of the offering had yet to be determined. Listing on the Nasdaq would provide Opthea with access to a much larger capital market. While Australia has a mature investment market, it represents just a small fraction of the global equity market. 

How did the Opthea share price perform in FY20? 

The Opthea share price has gained 110% from its March low but remains below highs recorded last year. Opthea’s share price boost saw it join the S&P/ASX 300 Index (ASX: XKO) in the most recent quarterly rebalance. Despite this, the company is not yet profitable, reporting a $7.6 million loss for 1HFY20.

This was a decrease on the prior corresponding period, mainly due to a reduction in research and development spending thanks to the completion of the Phase 2b trial of OPt-302 in wet AMD. As at 31 December 2019 Opthea had a cash position of $75 million, having raised some $48 million in a capital raising late last year. 

What next for the Opthea share price? 

Current treatments for wet AMD and and diabetic macular degeneration generated revenues of more than US$10 billion in 2019. Despite this, many patients respond sub-optimally meaning  large commercial opportunity remains for therapies that can address unmet medical needs. With the benefit of funds from last year’s capital raise, Opthea is fully funded to progress Phase 3 preparatory activities.

More reading

• Opthea share price surges higher on FDA news
• What’s driving Arena REIT’s huge weekly share price gain?
• Earnings: Genworth share price plunges 6% after $90 million half-year loss
• Results: Marley Spoon share price surges 40% on market update

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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New Energy Solar Ltd (ASX: NEW) posted its half year results after the close of trading on Friday. The renewables fund provides solar powered electricity production via two solar plants in Australia and 14 in the United States. The company derives its income from power purchase agreements (PPA). These are long-term contracts to provide solar energy with prices fixed at the time of signing.

New Energy Solar has had a mixed year so far, due largely to the impact from coronavirus. Nonetheless, it has already paid out an interim dividend of 3 cents per share in August. Based on the New Energy Solar share price at the time of writing, this represents an unfranked interim dividend yield of 3.6%. Moreover, the company has a trailing, 12-month dividend yield of 7.26%.

The principal issue for this fund over the first half of 2020 has been lower energy prices. This is more collateral damage from the oil price feud between Saudi Arabia and Russia. As a result, this is likely to be a long-term trend within the sector. Fortunately for the fund, 96% of its current output is under existing PPAs, which have an average remaining term of 15.4 years. However, the price drop impacts the company in various ways.

Financial forecasts

PPAs largely insulate the renewables fund from a drop in prices for the periods that the agreements are in place. However, for the period beyond the life of these agreements, there is little pricing stability. Consequently, independent valuers take into account forecast prices over the assets’ useful life, including the uncontracted period. 

As a result, New Energy has recorded a decrease on net asset value per security of 12.6%. Moreover, coronavirus has also led to a tightening of capital markets based on the uncertainty of the pandemic.

Operating results

During the 6-month period ended 30 June 2020, New Energy Solar’s portfolio generated over 748.1 GWh of electricity. This production is equivalent to an annual CO2 displacement of 1,000,000 tonnes of emissions. Accordingly, powering 126,000 US and Australian equivalent homes, or removing 102,000 cars from the road.

However, actual plant output was less than guidance for the first half. This was due mainly to higher than anticipated rainfall in North Carolina and parts of New South Wales. In addition, the fund faced commissioning issues at two of its new power plants. One of which has resulted in a warranty claim. Lastly, on 17 June 2020, several plants at California sustained damage following a grass fire. This has reduced their availability to approximately 68% of name plate capacity until mid 2021.

Earnings of the renewables fund

The fund recorded total underlying revenues of US$33.8 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) of US$23.8 million. Because of the capital structure of the renewables fund, $16.4 million is attributable to New Energy Solar. This is clearly a very profitable enterprise. Even more so because of the long-term pricing protection of the PPAs. 

Nevertheless, as an investment trust, it has to account for any change in valuation in its profit and loss statement. Hence, the company registered a statutory net loss of $52.7 million. The devaluation of the company’s assets also had an impact on gearing, which now sits at 62.1%. New Energy Solar aims to have this at 50% over the long term. The company’s weighted average debt maturity is 7.4 years, and refinancing this debt is not possible due to coronavirus uncertainty.

Foolish takeaway

The fund’s business model insulates it from low energy prices on current assets for at least the next 15 years. On that issue alone, I believe the ongoing dividend payments are likely to be secure. However, as a weather dependent asset, there are always unknowns that can impact the company.

The clear challenges here are reducing the gearing of the fund, and looking for growth options that will preserve operating margins. Lastly, the market treats New Energy Solar as a dividend share. Therefore, the price builds up closer to the ex-dividend date, and then falls sharply. 

Buying this week will preserve high dividend yields into the future. The company currently has a share price that is 36.3% lower than its net tangible asset value per share.

More reading

• Reliable ASX dividend shares still exist

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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5G Networks Ltd (ASX: 5GN) is a telecommunications carrier operating across Australia, engaged in the supply of cloud-based solutions, managed services and network services. 

The company is a small cap ASX share with a market capitalisation of ~$160 million. It might be on the more speculative and volatile end of town, but I believe there are many reasons why 5G Networks could be the ASX share to buy right now. 

FY20 financial results 

5G Networks delivered a solid FY20 performance with a focus on delivering shareholder value through its strong earnings before interest, tax, depreciation and amortisation (EBITDA) performance this year, which has grown by 96% from FY19. 

Its success has been underpinned by a number of key developments, highlighted by the introduction of key strategic acquisitions and new platform capabilities. This included new data centre locations in both central Sydney and North Sydney, which has enabled greater market opportunities.

In April, the 5GN Cloud Federation was launched, which is an innovative multi-cloud platform to support the growing demand for cloud services in Australia. Demand for the platform remains strong and the organisation is now forecasting solid growth for the approaching year. 

5G Network’s focus for acquisitions this year has been on data centre services. After completing the Melbourne Data Centre purchase in FY19, it then acquired the Pyrmont data centre and St Leonards (both in Sydney). In July 2020, it announced the acquisition of Colocation Australia, a specialist in wholesale data centre sales which also has interstate and international network capacity. 

On a broader level, Australia’s demand for cloud services has been fast-tracked in 2020 with the growing impact of COVID-19. It has been well documented that the shift to the cloud is a key objective for many organisations seeking to manage their business risk and support remote work during this pandemic.

ASX shares in the cloud-solutions space such as NextDC Ltd (ASX: NXT) and Megaport Ltd (ASX: MP1) have experienced significant success this reporting season. I believe 5G Networks may be reminiscent of these large-cap providers in their early days. 

FY21 guidance 

5G Networks has forecasted revenue between $60 million and $65 million and EBITDA between $8 million and $8.5 million, before material acquisitions. The company has a strong cash position of $23.5 million, as at June 2020, which should allow it to pursue accretive acquisitions to increase revenue and tap into new markets. 

Foolish takeaway

The 5G Networks share price ran more than 60% between 21 July and 28 July. Following the run up, the share price has consolidated around the sub $2 level. This ASX stock is in a compelling space and certainly one to watch for growth-orientated investors. 

At the time of writing, the 5G Networks share price is sitting at $1.86 per share, down 1.84% for the day.

More reading

• 5G Networks share price falls 6% on FY20 results
• Why 5G Networks and these ASX shares just hit record highs

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. The Motley Fool Australia has recommended MEGAPORT 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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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has fought back from an early decline and is pushing higher. The benchmark index is currently up 0.2% to 6,123.5 points.

Here’s what has been happening on the market today:

Afterpay expands into mainland Europe.

The Afterpay Ltd (ASX: APT) share price hit a new record high this morning after announcing its expansion into mainland Europe. Rather than starting afresh in the market, Afterpay has decided to expand into it through the acquisition of Pagantis. It is a Spanish buy now pay later provider which currently offers a range of buy now pay later and traditional credit services across Spain, France, and Italy. It also has regulatory approval to operate in Portugal. Management notes that the addressable ecommerce market in these four countries exceeds 150 billion euros or $247 billion.

Fortescue declares monster dividend

The Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher today after announcing a monster dividend with its full year results. In FY 2020 the iron ore producer achieved record shipments, revenue, earnings, and cashflow. In respect to its profits, over the 12 months the mining giant’s net profit after tax lifted an impressive 49% to US$4.7 billion. This was driven by record shipments, lower costs, and a jump in the average realised price of its iron ore. As a result of this strong form, Fortescue will pay a fully franked full year dividend of $1.76 per share. This is an increase of 54% on the prior corresponding period.

NIB full year result disappoints

The NIB Holdings Limited (ASX: NHF) share price is under pressure on Monday after releasing a weaker than expected full year result. The private health insurer posted a net profit after tax of $89.2 million, down 40.3% on the prior corresponding period. According to CommSec, the market was expecting a net profit after tax of $95.02 million.

The best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Reliance Worldwide Corporation Ltd (ASX: RWC) share price with a 19% gain. This follows the release of a better than expected full year result and trading update from the plumbing parts company. The worst performer is the G8 Education Ltd (ASX: GEM) share price with a 9% decline. This morning the childcare operator posted a half year loss of $239 million.

More reading

• Why G8 Education, Monash IVF, NIB, & Uniti shares are dropping lower
• The Reliance share price is rocketing up despite drop in net profit. Here’s why.
• Why Afterpay, Bubs, Fortescue, & Zip Co shares are charging higher
• 2 ASX 200 bargains to buy this week
• Boral cops $1.3bn body blow to profits could signal impending cap raise

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 Reliance Worldwide Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended NIB Holdings Limited and Reliance Worldwide 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 Zip Co Ltd (ASX: Z1P) share price has surged 8.5% higher in morning trade. This follows a trading update on New York-based buy now, pay later (BNPL) provider QuadPay.

QuadPay has evolved to become one of the leading platforms in the United States (US), where the local retail market is estimated to be worth US$5 trillion per year.

Zip reported that it had entered into an agreement to acquire the remaining shares in QuadPay back in early June, as the ASX-listed BNPL provider expands on its global strategy. Zip Co has scheduled an EGM meeting to vote on the proposed acquisition of QuadPay on 31 August 2020.

Record month of July for Quadpay

Zip revealed today that QuadPay had ended the month of July with record monthly transaction volumes – higher than US$70 million, which was 30% up on the June quarter average. The monthly transaction volume is also more than 600% higher on a year-on-year basis.

QuadPay added 133,000 new customers during the month, and the company passed the 2 million customer milestone during August. QuadPay also reported to be continuing to achieve impressive high net transaction margins above 2%.

In addition, QuadPay’s enterprise sales pipeline is reportedly still strong going into the US holiday season.

New strategic partnerships and merchant agreements

QuadPay partnered with a number of Internet Retail 1000 merchants during July, such as Fanatics and Mercari. These partnerships are set to generate a combined US$3 billion in online volume. Also, all are on track to be up and running before the busy fourth quarter US holiday period.

A number of successful strategic partnerships were also finalised during July. These include agreements with Fiserv (NASDAQ: FISV). This will see BNPL services rolled out across QuadPay’s US based merchant base, in conjunction with with Fanatics.

QuadPay has also partnered with MasterCard‘s Vyze financing platform. This will enable BNPL services to be provided within the Vyze platform.

Quadpay secures new debt facility

The US BNPL provider also managed to secure a debt facility provided by Goldman Sachs and Oaktree of up to US$200 million. The new credit facility will be used by QuadPay to further expand its BNPL business throughout the US.

Brad Lindenberg, QuadPay Co-CEO, said:

The momentum we are starting to see is a testament to our product and technology capabilities which are being recognized as market leading. QuadPay is the easiest platform for enterprise merchants to integrate with, both online and in-store. With less than 15% of the Internet Retail 1000 offering an interest free BNPL service, we look forward to joining forces with Zip and rapidly accelerating our growth in market.

At the time of writing, the Zip share price was up by 8.5% to be trading at $7.15.

More reading

• Why Afterpay, Bubs, Fortescue, & Zip Co shares are charging higher
• Fortescue and 2 more ASX 200 shares to watch this week
• 5 things to watch on the ASX 200 next week
• The Afterpay share price is up a massive 700% since March. Is it still a buy?
• This ASX fund manager is going back to value in a post-COVID world. Here’s why.

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 and recommends Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has recommended Mastercard. 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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