Don’t let the August reporting season go to waste, fellow Fools. This bi-annual event is an opportunity to evaluate and adjust your ASX portfolio, and the nearly completed profit season has taught us plenty.

The 2.5% rise in the S&P/ASX 200 Index (Index:^AXJO) is hint enough that the results have been better than expected.

ASX stocks that have bested expectations during this period tend to continue to outperform over the next few months. There’s no reason to think this time will be any different and there’s two stocks that I believe have a bright outlook for FY21.

Big Wow from reporting season

The first is the Woolworths Group Ltd (ASX: WOW) share price, which is lagging behind its rival Coles Group Ltd (ASX: COL) share price.

Coles may have produced a slightly better profit figures for its supermarket business, but I think Woolies stole the show.

It’s not the performance of Woolworths supermarkets that caught my attention, but its embattled Big W department store.

Faster than expected turnaround

I had low expectations for the department store chain, which suffered from falling comps (sales growth from stores opened at least a year).

But Big W hit it out of the ball park with a 32% increase in comps for the June quarter. The store benefited from stuck at home consumers snapping up IT, education and entertainment products during COVID-19.

The big jump in sales may not be sustained but the result is boosting confidence in the turnaround of the group’s Achilles’ heel.

No one will call the Woolworth share price cheap. But with a much brighter FY21 outlook for Big W and ongoing tailwinds from the pandemic, I believe there’s more room for the stock to climb.

Low hanging fruit

Another stock well placed to outperform in the current financial year is the Costa Group Holdings Ltd (ASX: CGC) share price.

Shares in the fruit grower surged 11.8% to $3.31 on Friday after it posted its half year results. To be honest, the numbers weren’t that great for its local operations, which accounts for over 70% of group sales.

But investing in shares is all about the future and not the past, and the outlook for the rest of 2020 is looking sweet.

Bright outlook to support Costa’s share price

The group’s international business is going gangbusters as sales surged 43% to just under $120 million compared to the first six months of 2019.

Some analysts thought the international business could be the weak link for the group and this explains the re-rating on Friday.

The outlook for the local division is also improving thanks to more favourable weather. The drought lobbed around $15 million from group earnings in the Tomato and Berry categories. But crops have fully recovered in May.

This is one stock that is unlikely to be impacted by the COVID-19 uncertainty. And assuming the weather remains favourable, the stock is likely to remain well supported over next six months, if not longer.

More reading

• 5 things to watch on the ASX 200 next week
• 5 top ASX dividend shares you should never sell
• ASX 200 drops 0.9%, Costa reveals healthy result
• Is the Woolworths share price in the buy zone following its FY 2020 results?
• Why Coles is a top ASX dividend share for a post-COVID world

Motley Fool contributor Brendon Lau owns shares of Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia owns shares of 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.

The post ASX reporting season heroes to buy for FY21 appeared first on Motley Fool Australia.

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Many investors don’t think about investing more in super. It’s easy to just consider buying ASX shares within your taxable brokerage accounts. However, buying your favourite companies directly or indirectly through your retirement accounts can have some powerful benefits.

Investing more in super to lower your tax bill

The most obvious benefit about investing more in super is paying less tax. Using a simple tax calculator, an individual with $100,000 of taxable income would pay an estimated $24,497 in tax.

Let’s assume that this investor receives the 9.5% p.a. Superannuation Guarantee, or $9,500, from their employer. By maxing out their concessional contributions at $25,000 per annum, that investor would lower their taxable income by $15,500 to $84,500.

That means the FY20 tax bill would be lowered to $19,172, representing a 21.7% reduction. Those additional contributions to super will be taxed at 15%, but that could be much lower than the marginal tax rate paid on your income. Clearly, investing more in super can have some powerful advantages when it comes to tax time.

Generate stronger after-tax returns

The favourable tax treatment also happens within the portfolio. If you buy ASX shares like Afterpay Ltd (ASX: APT) within your super, any capital gains are taxed at the marginal level. For the super fund, that’s likely to be 15% compared to 19% to 45% if it was in your brokerage.

Here’s a quick example. Let’s say you want to buy a broad market index like Vanguard Australian Shares Index ETF (ASX: VAS). If you purchased 5 years ago, you’d be sitting on a tidy 16.0% gain before including dividends. However, you then need to realise that gain at some point by selling your units in that fund.

If you’re a high-income earner on $200,000 per annum, that means 50% of those capital gains will be taxed at 45%. However, by investing more in super, those gains will be taxed at just 15% for the super fund which represents more money in your pocket come retirement.

On top of that, accessing super after 60 as either a super income stream or lump sum could be tax-free. Of course, there are strict eligibility criteria around this sort of stuff and its best to check with a qualified professional beforehand.

Nevertheless, there are some tasty tax breaks on offer for those willing to invest more in super.

Foolish takeaway

Investing more in super is not for everyone. It’s important to make all investment decisions in the context of personal financial circumstances, goals, age and many more factors.

Super does have its drawbacks like regulatory risk and significant lock-up period. However, if it fits your strategy, super could be a useful tool for a good retirement.

More reading

• Why I’d buy Afterpay and other ASX tech shares at record highs
• Bulls versus bears – two experts face off on where share prices are going
• Brokers name 3 ASX shares to buy right now
• ASX 200 rises 0.2%, Afterpay reports FY20 result
• Afterpay reckons this 1 number shows its ‘moat’

Motley Fool contributor Ken Hall owns shares of Vanguard Australian Shares Index. 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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Last week the S&P/ASX 200 Index (ASX: XJO) was out of form and tumbled lower. The benchmark index lost 0.6% over the five days to end it at 6,073.8 points.

Earnings season may draw to a close on Monday, but that doesn’t mean there won’t be another busy week ahead.

Here are five things that I think investors should be watching next week:

ASX futures pointing lower.

The ASX 200 looks set to start the week as it finished it. According to the latest SPI futures, the benchmark index is poised to open the week a disappointing 40 points lower. This is despite Wall Street finishing the week strongly on Friday. The Dow Jones climbed 0.6%, the S&P 500 rose 0.8%, and the Nasdaq pushed 0.6% higher.

IOOF results and potential major acquisition.

The IOOF Holdings Limited (ASX: IFL) share price will be in focus on Monday when the financial services company announces its full year results. According to CommSec, the market is expecting a net profit after tax of $132.6 million. The company is also planning to announce a potential significant transaction. There is speculation the company could be interested in acquiring AMP Limited (ASX: AMP).

Reserve Bank meeting.

The Reserve Bank of Australia will be meeting on Tuesday to discuss the cash rate. According to the latest cash rate futures, the market is pricing in a 56% probability of a rate cut to zero. While this means a cut is possible, it appears unlikely. The Westpac Banking Corp (ASX: WBC) economic team expects the cash rate to stay on hold at 0.25%.

Fortescue to trade ex-dividend.

The Fortescue Metals Group Limited (ASX: FMG) share price is likely to tumble lower on Monday when its shares trade ex-dividend. The iron ore producer is paying shareholders a final fully franked $1.00 per share dividend. This equates to a 5.3% dividend yield, which could mean its shares fall by a similar margin.

Other shares trading ex-dividend.

Fortescue isn’t the only share trading ex-dividend next week. On Monday there’s Ansell Limited (ASX: ANN), on Tuesday there are Super Retail Group Ltd (ASX: SUN) and Woolworths Group Ltd (ASX: WOW), on Wednesday there is Medibank Private Ltd (ASX: MPL), on Thursday there is BHP Group Ltd (ASX: BHP), and on Friday there is Bravura Solutions Ltd (ASX: BVS).

More reading

• Is the Woolworths share price in the buy zone following its FY 2020 results?
• Why Coles is a top ASX dividend share for a post-COVID world
• ‘Ethical’ share investors sell too quickly after bad news
• ASX 200 jumps 0.7%: Afterpay reaches 9.9 million customers, Woolworths strong sales growth
• Why the IGO share price is outperforming the ASX 200 today

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of 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.

The post 5 things to watch on the ASX 200 next week appeared first on Motley Fool Australia.

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Fortunately for growth investors, the ASX is home to a good number of companies capable of growing their earnings at a strong rate over the next decade.

Perhaps the hardest thing for investors is deciding which growth shares to buy above others.

To help narrow things down for you, I have picked out three ASX growth shares I would buy right now:

Altium Limited (ASX: ALU)

The first growth share to look at is Altium. It is one of my favourite growth shares and one which I think could generate strong returns for investors over the next decade. This is due to its award-winning printed circuit board (PCB) design software which is benefiting from the Internet of Things (IoT) and Artificial Intelligence (AI) booms. In addition to this, supporting its growth are its other businesses such as the Octopart search engine for electronic and industrial parts and the NEXUS workflow solution.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

I think this pizza chain operator would be a great growth shares to own. I’m a big fan of Domino’s due to the popularity of its pizzas and its ongoing expansion. And while this expansion is likely to be impacted by the coronavirus lockdowns, I expect its store rollouts to accelerate once conditions return to normal. At the end of FY 2020, Domino’s had a store network of 2,668 stores, but is aiming to grow this to 5,500 stores by 2033. If it delivers on this and continues delivering same store sales growth, the future will be very bright for the company.

Pushpay Holdings Ltd (ASX: PPH)

A final ASX growth share to buy is Pushpay. It is a fast-growing donor management system provider to the faith sector in the United States, Canada, Australia, and New Zealand. Pushpay has been growing very strongly in recent years thanks to increasing demand for its platform. In fact, demand has been so strong the company posted a ~1,500% increase in EBITDAF in FY 2020. Pleasingly, demand remains very strong and the company is expecting to double its EBITDAF in FY 2021. I expect more strong growth in the coming years thanks to its quality platform, recent acquisitions, and the shift to a cashless society.

More reading

• How to turn $20,000 into $350,000 in 10 years with ASX shares
• Domino’s share price gain of 17% in August a good slice of news for shareholders
• How to become rich by investing $1,000 into ASX shares
• 2 top ASX tech shares to buy in September
• Where to invest $5,000 into ASX shares immediately

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 and recommends Altium. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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.

The post 3 stellar ASX growth shares to buy right now appeared first on Motley Fool Australia.

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I believe that one of the best ways to set yourself up for a comfortable retirement is by having a passive income stream that is both reliable and has the potential to grow over time.

In my opinion shares that pay dividends are the best way to achieve this in the current environment.

The good news is that the ASX is home to a number of quality companies that I believe could be great additions to a retirement portfolio.

Three that I like are listed below:

Collins Foods Ltd (ASX: CKF)

Collins Foods is a quick service restaurant operator with a large network of KFC restaurants in Australia and Europe. While the company still has a lot of room to grow in Australia, it is the European market that I believe will be the key driver of growth over the next decade. This is because the KFC brand is under-represented in Europe and has a significant runway for growth. In addition to this, the company’s plan to the roll out the Taco Bell brand across several Australian states should also support its earnings and dividend growth over the coming years.

Goodman Group (ASX: GMG)

Another ASX share to consider buying for a retirement portfolio is Goodman Group. This integrated commercial and industrial property group owns a high quality portfolio of assets across several countries and industries. Given that many of its assets have exposure to structural tailwinds such as ecommerce, I believe they will be in demand for a long time to come. In light of this, I believe it is well-placed to continue delivering strong rental income and distribution growth over the next decade and beyond.

Rural Funds Group (ASX: RFF)

Finally, I believe Rural Funds would be a great addition to a retirement portfolio. This is due to the quality of the agriculture-focused real estate property trust’s assets and their long term tenancy agreements. Another positive is that these agreements have built-in rental increases. I feel this has positioned the company to deliver on its target of growing its distribution by 4% per annum over the long term. 

More reading

• How to turn $20,000 into $350,000 in 10 years with ASX shares
• 5 top ASX dividend shares you should never sell
• 3 defensive ASX shares I’d buy for safety
• 2 quality ASX dividend shares to buy
• Why I would buy these blue chip ASX shares for the long term

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended Collins Foods 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 potential for a second stock market crash is likely to remain in place over the coming months. It is currently unclear how the coronavirus pandemic will progress, while political risks such as Brexit and the US election could weigh on investor sentiment.

If a second crash does occur, it could be a buying opportunity for long-term investors, rather than a reason to panic. By following Warren Buffett’s advice and focusing on high-quality businesses that trade at low prices, you could add stocks to your portfolio that produce excellent returns in the coming years.

Buying stocks with wide economic moats

A second stock market crash could be prompted by a weak economic outlook. As such, following Warren Buffett’s lead and buying stocks with wide economic moats could be a sound move. An economic moat is essentially a competitive advantage that a business has over its rivals. For example, it could be a unique product, strong brand loyalty or a lower cost base that ultimately produces greater profitability in the long run.

Companies with wide economic moats may be better able to survive a period of difficult operating conditions. This may mean that they are less risky than their sector peers. They may also produce higher capital returns in the long run as their competitive advantage allows them to occupy an increasingly dominant position within their sector. This could enhance your portfolio’s returns, while reducing its risk of loss during a period of decline for the stock market.

Buying cheap shares in a stock market crash

A second stock market crash could provide buying opportunities for value investors such as Warren Buffett. Certainly, valuing companies can be tough in a period where the prospects for the economy mean that the financial performances of businesses could materially change versus the recent past. However, comparing the values of businesses to their peers may provide an indication as to whether they offer a wide margin of safety.

Although it can take time for cheap stocks to recover after a downturn, the past performance of equity markets shows that a recovery is very likely. After all, the stock market has always recovered from its previous downturns to produce new record highs. A similar outcome to future bear markets therefore seems likely.

Cash holdings

Warren Buffett holds a significant amount of cash at all times. This enables him to more easily capitalise on a stock market crash, since he has significant liquidity through which to take advantage of lower prices during a bear market.

With the outlook for the economy being uncertain, it may be a good idea for you to hold some of your portfolio in cash now, and also refrain from being fully invested in shares should a second market downturn occur. A future bear market may be prolonged, and could provide even more attractive opportunities further down the line. Therefore, by taking your time to pick and choose the most attractive investing opportunities, you may be able to build a stronger portfolio as a result of a second stock market crash.

More reading

• Attention all value investors – here’s one key ratio to help you value a company
• How to turn $20,000 into $350,000 in 10 years with ASX shares
• These were the best performing ASX 200 shares last week
• The Corporate Travel share price has nearly doubled in August
• 5 top ASX dividend shares you should never sell

Motley Fool contributor Peter Stephens 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.

The post I’d use Warren Buffett’s tips to capitalise on a second stock market crash appeared first on Motley Fool Australia.

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Are you a value investor?

Maybe you wouldn’t call yourself that specifically, but most investors are looking for a good deal.

A key element of investing is understanding value. Determining whether the current share price represents an over or undervalued proposition can really help with decision making. Furthermore, understanding value can help remove some emotion (I said some, we love what we love!)

How do you determine this value?

Analysts use financial ratios to determine value compared to the market. Once you understand financial ratios, you can use them to compare a company not only to the market, but to its competition.

One ratio that can help you to do this is the price-to-earnings (P/E) ratio. 

I should note here that analysts use many ratios to determine value. This is the one I would personally go to first.

Let’s dive in.

Price-to-earnings ratio

The P/E ratio is one of the most widely used ratios in financial analysis. Not only does it reveal whether a stock is over or undervalued, it can also be used as a benchmark. Measuring a company against its competitors, the industry or an index is very useful. 

What does it mean?

This ratio tells us what the market is willing to pay today for a share, based on its past or future earnings. High P/E ratios tend to indicate overvaluations. Low P/E ratios can represent a buying opportunity or an undervalued company. This is a broad definition.

When it comes to shares, we need to consider the type of company we are looking at, the industry it’s in and how fast it’s growing.

For example, a tech share might be growing rapidly with with huge future potential, so the P/E ratio can seem high. However if you were to dig a little deeper, you might find the reason for the high ratio. This company may be the next Facebook, Inc (NASDAQ: FB) or Afterpay Ltd (ASX: APT). If investors think this might be the case, they may be willing to pay more than ‘market value’ in the anticipation that future value will be much higher. In other words, they don’t want to miss the boat.

Calculation

The P/E ratio is calculated by dividing the market value per share by the company’s earnings per share (EPS).

P/E = share price/EPS

Example

Commonwealth Bank of Australia (ASX: CBA)

EPS – $4.31 

Share price – $69.09

P/E = 69.09/4.31

P/E = 16.03

CommBank is trading at roughly 16.03 times earnings.

Meaning and comparison

Now we have this ratio for Commonwealth Bank, we can use it to compare the banking giant to its competitors, the industry and the market.

I have done some calculations in the background.

1. National Australia Bank Ltd (ASX: NAB) – P/E = 15.3
2. Australia and New Zealand Banking Group Limited (ASX: ANZ) – P/E = 11.1
3. Westpac Banking Corp (ASX: WBC) – P/E = 12.8
4. Average of big four publicly listed banks – P/E = 13.81
5. Average of top 10 Australian publicly listed banks – P/E = 10.89

As an investor looking to buy banking shares, you now have the first indication of value.

We can see from the list above that Commonwealth Bank has a much higher P/E ratio than its major competitors and also the industry.

Does this mean that you shouldn’t buy Commonwealth Bank shares now? No it doesn’t. It means you know that they are valued higher than the relative market.

Where to find information

The ASX website is the most official source of company ratio information. However, this is a case in point worth noting. At the time of writing, the ASX website listed the P/E ratio of Commonwealth Bank to be 12.68. Upon checking the data, I discovered the correct ratio was 16.03. The ASX website may not update daily, so it’s valuable to understand the mathematics behind a ratio in case you prefer to check it manually. Many websites and software platforms readily provide ratios at the touch of a button as well.

Related ratios for determining value

The P/E ratio is the number one ratio I personally start with to determine value, however there are a number of other ratios worth exploring if you are mathematically inclined. These include:

• Price earnings growth ratio – PEG
• Next year projected P/E ratio – FPE
• Price-to-sales ratio – P/S
• Price-to-book ratio – P/B

Foolish takeaway

Ratios are by no means the only way to value a company. So many things need to be taken into consideration, however they are a great place to start. Numbers don’t lie (well, most of the time) and they can help investors to make unemotional decisions.

Comparing this process to property investment, ratios are like bench marking with price comparisons. If you love a 3-bedroom house for sale at $800,000, but every other 3-bedroom house in the area is listed at $500,000, you are going to want to know what makes this house so special.

Companies are no different. The more assessment you can do for a potential investment, the better!

More reading

• What Prospa’s share price reaction and profit results mean for ASX banks
• ANZ share price lower after announcing the retirement of Chairman David Gonski
• New to investing? Here’s how I would make my first $100,000
• Why the CBA share price could surge this morning
• ASX giants say cutting staff hours will save jobs

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. glennleese 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 Facebook. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Facebook. 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 Attention all value investors – here’s one key ratio to help you value a company appeared first on Motley Fool Australia.

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I’m a big advocate of buy and hold investing and firmly believe it is the best way for investors to grow their wealth.

To demonstrate how successful it can be, every so often I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

With that in mind, here’s how $20,000 investments in these ASX shares in 2010 would have fared:

Cochlear Limited (ASX: COH)

Cochlear shares have been a good place to invest over the last decade. Thanks to growing demand for hearing solutions products due to the ageing populations boom, Cochlear has consistently grown its sales and earnings at a solid rate. This has led to the shares of the manufacturer and distributor of cochlear implantable devices for the hearing impaired providing investors with an average total return of 12.3% per annum over the last 10 years. This would have turned a $20,000 investment into ~$64,000 today.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Over the last 10 years the Domino’s share price has absolutely smashed the market with an average total return of 33% per annum. This outperformance has been underpinned by the pizza chain operator’s store expansion and the ongoing popularity of its pizzas. In 2010 the company had 823 stores and was generating annual sales of $694.3 million. In its recently released FY 2020 results, Domino’s revealed that its store network was now 2,668 stores and its sales had reached $3.27 billion. If you had invested $20,000 into Domino’s shares in 2010, you’d have approximately $350,000 today. The good news is that Domino’s looks like it could be a market beater again over the next 10 years. It is aiming to grow its store network to 5500 stores by 2033.

Goodman Group (ASX: GMG)

Another strong performer over the last decade has been the Goodman Group share price. This integrated commercial and industrial property group owns, develops and manages industrial real estate in 17 countries. Thanks to some smart investments and its exposure to the ecommerce boom through relationships with Amazon and DHL, among others, its shares have generated a total average return of 21.1% per annum since 2010. This would have turned a $20,000 investment into ~$136,000.

More reading

• Domino’s share price gain of 17% in August a good slice of news for shareholders
• Why I would buy these blue chip ASX shares for the long term
• Here are the highlights of this ASX reporting season
• Top brokers name 3 ASX shares to sell next week
• WiseTech and 2 more ASX shares outperforming this earnings season

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and Domino’s Pizza Enterprises 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.

The post How to turn $20,000 into $350,000 in 10 years with ASX shares appeared first on Motley Fool Australia.

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Last week the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped lower. The benchmark index lost 0.6% of its value over the period to finish it at 6,073.8 points.

Thankfully, not all shares dropped lower with the market. Here’s why these were the best performing ASX 200 shares last week:

Reliance Worldwide Corporation Ltd (ASX: RWC)

The Reliance Worldwide share price was the best performer on the ASX 200 last week with a massive 32.8% gain. Investors were buying the plumbing parts company’s shares following the release of its FY 2020 results. As expected, Reliance delivered a soft result. Net sales were up 5% to $1.16 billion but reported net profit after tax fell 33% to $89.4 million. However, what got investors excited was its trading update. It advised that sales were strong in the United States in July, with other regions also performing well. This continued during the first three weeks of August.

Cleanaway Waste Management Ltd (ASX: CWY)

The Cleanaway share price was some way behind as the next best performer with a solid 15% gain. The catalyst for this was the waste management company’s full year results. Cleanaway was on form in FY 2020 despite the pandemic. It reported an 8% increase in underlying net profit after tax to $152.9 million. This allowed the Cleanaway board to increase its full year dividend by 15.5% to 4.1 cents per share.

Nearmap Ltd (ASX: NEA)

The Nearmap share price was on form last week and surged 14.5% higher over the period. Investors have been buying the aerial imagery technology and location data company’s shares since the release of its full year results a week earlier. The buying was so strong it took the Nearmap share price to a 52-week high of $3.22.

Bingo Industries Ltd (ASX: BIN)

The Bingo share price wasn’t far behind with an impressive 13.3% gain last week. The waste management company’s shares were in demand with investors following its full year results release. Bingo overcame challenging trading conditions to deliver a 21% increase in revenue to $486.7 million and a 40.8% lift in underlying EBITDA to $152.1 million. A full year contribution from its recently acquired Dial a Dump business played a key role in its growth in FY 2020.

More reading

• My top 5 ASX shares to buy in 2020
• Is today’s Nearmap share price a buy?
• New to investing? Here’s how I would make my first $100,000
• ASX 200 drops 0.7%, Zip rises 27.5%
• ASX 200 down 1.25%: Big four banks tumble, Cleanaway impresses, Whitehaven disappoints

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 Nearmap Ltd. and Reliance Worldwide Limited. The Motley Fool Australia has recommended Nearmap Ltd. 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 Corporate Travel Management Ltd (ASX: CTD) share price has nearly doubled in August. Despite nationwide travel restrictions, Corporate Travel shares have been flying this month. After starting the month at around $8, the Corporate Travel share price is now trading more than 90% higher at $15.60.

So, what is fuelling the company’s share price, and should you buy?

What is fuelling the Corporate Travel share price?

Corporate Travel recently reported better than expected results for FY20.

For the full year, Corporate Travel reported a statutory loss of $8 million, down from a profit of $86.2 million the year prior. Despite reporting a loss, the company beat revised market expectations for underlying earnings before interest, tax and depreciation (EBITDA). Corporate Travel reported underlying EBITDA for FY20 of $74.4 million, outperforming revised market expectations of $65 million.

The company attributed the results to a stronger than expected second half, from both a revenue and cost perspective. In addition, Corporate Travel reported that its aggressive cost cutting and provision of travel solutions for essential workers during the pandemic had positively contributed to the outcome.

As a result of Corporate Travel’s beat in expectations, management and investors remain optimistic on the company’s future. This optimism has been reflected by the strong performance of the Corporate Travel share price during August.

What is the outlook for Corporate Travel?

With travel restrictions and border closures still clouding the outlook for travel services, Corporate Travel did not provide formal guidance for FY21. However, the company alluded to its robust capital position.  

In its full year report, Corporate Travel flaunted its strong balance sheet with no debt and $92 million in cash. This has allowed to company to avoid raising emergency capital during the pandemic, unlike rivals such as Flight Centre Travel Group Ltd (ASX: FLT). Furthermore, Corporate Travel has a rich history of making acquisitions and the current, depressed state of the sector could present opportunities for the company.

Should you invest in Corporate Travel?

In my opinion, Corporate Travel is well positioned to survive and potentially outperform in the current environment.

The company has descent exposure to domestic travel, with 60% of its revenue coming from the segment. In addition, Corporate Travel has exposure to essential travel requirements which should provide significant revenue opportunities.

Corporate Travel also operates a lean business model that relies heavily on technology which helps its cost base.

Although I wouldn’t necessarily be rushing to buy at today’s Corporate Travel share price, I think it’s a key pick in a distressed sector. A prudent strategy would be to wait for a significant pullback or more clarity on travel restrictions before investing.

More reading

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• Why Costa, Flight Centre, Polynovo, & Pointsbet shares are storming higher
• Flight Centre share price on watch after FY20 results
• 5 things to watch on the ASX 200 on Wednesday
• Is this ASX 200 market too greedy right now?

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

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