It was a reasonably disappointing week for the S&P/ASX 200 Index (ASX: XJO) last week. The benchmark index lost 0.6% of its value over the period, ending it at 6,073.8 points.

While a good number of shares dropped lower, some fell more than most. Here’s why these ASX 200 shares were the worst performers on the index last week:

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price was the worst performer on the ASX 200 last week with a 29.7% decline. The coal miner’s shares were sold off following the release of its full year results. Due to weak coal prices and labour shortage issues, Whitehaven reported a massive 95% decline in underlying net profit after tax to $30 million in FY 2020. As a result of its poor performance, the company cut its dividend down from 50 cents per share to just 1.5 cents per share.

Bravura Solutions Ltd (ASX: BVS)

The Bravura Solutions share price was the next worst performer on the index with a 15.6% decline. Investors were selling the fintech company’s shares after the release of its FY 2020 results. Although Bravura reported a 6% increase in revenue to $274.2 million and a 22% increase in net profit after tax to $40.1 million, its outlook for the year ahead underwhelmed. Due to the negative impacts of the pandemic, management warned that its profits could be flat in FY 2021.

Blackmores Limited (ASX: BKL)

The Blackmores share price was out of form last week and recorded a disappointing 14.5% decline. This was driven by the release of a disappointing = full year result. In FY 2020 the health supplements company posted a 3% decline in revenue to $568 million and a 66% drop in net profit after tax to $18.1 million. And although the company is forecasting a return to profit growth in FY 2021, management warned that it would come predominantly in the second half.

Appen Ltd (ASX: APX)

The Appen share price wasn’t far behind with a 13.6% decline over the five days. The artificial intelligence services company’s shares came under pressure following the release of its half year results. Although Appen delivered strong sales and statutory earnings growth, investors appear to have been disappointed that management didn’t upgrade its guidance. It continues to expect full year underlying EBITDA to be in the range of $125 million to $130 million. This guidance also means a sizeable skew to the second half.

More reading

• Brokers name 3 ASX shares to buy right now
• The Appen share price is down 9% today. Here’s why
• ASX shares are on track for new record highs. Here’s why…
• ASX 200 down 0.9%: Costa impresses, Harvey Norman profits grow, Appen downgraded
• Why a2 Milk, Appen, Huon, & Newcrest shares are tumbling lower

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

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2020 continues to be a wild ride for investors in ASX tech shares. The Afterpay Ltd (ASX: APT) share price continues to surge towards the $100 per share mark.

That’s an incredible feat for a buy now, pay later company that listed in June 2017 for just $1.00 per share with a market capitalisation of $165 million.

As at Friday’s close, Afterpay now has a market capitalisation of [$25.6] billion and is trading just shy of an all-time high. However, it’s one of many ASX tech shares that I think could be worth a look despite lofty valuations.

Why I’d buy ASX tech shares at all-time highs

I think you really have to believe in the growth story and macroeconomic environment to buy ASX tech shares right now.

It’s true that the relative valuation metrics look bad. For instance, the Xero Limited (ASX: XRO) share price has a price to earnings (P/E) ratio of [4,791].

However, that hasn’t stopped investors from buying into the accounting software provider. The Xero share price is up [27.6%] this year and is steaming ahead of the S&P/ASX 200 Index (ASX: XJO).

It’s the same story for the Afterpay share price, up nearly 200% this year, and data centre operator Nextdc Ltd (ASX: NXT).

However, for all of the share price surges and lofty valuations, these ASX tech shares continue to climb higher.

I think the availability of cheap and easy credit is one factor. Companies are able to borrow cheaply and generate strong earnings despite current challenges.

There’s also the explosion of online demand which has been accelerated by the coronavirus pandemic. Afterpay has benefitted from strong retail sales, NextDC from offsite data storage demand and Xero from cloud accounting.

Strong earnings have followed which has convinced investors that ASX tech shares have further to run.

Foolish takeaway

I think there are plenty of challenges ahead for the global economy. I see the big test being when the extensive central bank and government stimulus support falls away.

However, it’s clear that the tech sector is continuing to kick goals. It’s true that some of these shares are trading at lofty valuations but I think the momentum factor will carry them higher.

Having shown promising signs in the August earnings season, I think the next big test will be in February as those economic supports are wound back.

More reading

• Bulls versus bears – two experts face off on where share prices are going
• Brokers name 3 ASX shares to buy right now
• ASX 200 down 0.9%: Costa impresses, Harvey Norman profits grow, Appen downgraded
• 5 things to watch on the ASX 200 on Friday
• NEXTDC share price on watch after hitting the high-end of its guidance in FY 2020

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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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A number of ASX shares continue to rise this year, whilst others present golden opportunities.

In my view, one of the most effective investment strategies is to actively research and find undervalued businesses that have the potential to grow materially in the future.

Below, I have selected my top 5 ASX shares to buy in 2020 that I think will outgrow the S&P/ASX 200 Index (ASX: XJO) over the next 5 years.

CSL Limited (ASX: CSL)

One of the most popular shares on the ASX is global giant CSL. This biotech company manufactures and distributes life saving medicines for people suffering from serious and rare diseases, as well as providing influenza vaccinations to the public.

The CSL share price has been rising thanks to the company appeasing market concerns about its plasma collections through its FY20 results. The CSL share price is currently going for $289.89, a gain of more than 23% in the past year.

While trading below its all-time high of $342.75 (reached in February), the slight pullback presents an opportune time for bargain hunters to swoop in on this quality ASX share.

Polynovo Ltd (ASX: PNV)

Polynovo recently announced its FY20 results and it did not disappoint. Sales of its NovoSorb BTM doubled and the company is looking to continue its revenue growth trajectory in FY21.

The Polynovo share price leapt 13.4% today to $2.28, and is 78% ahead of its March low of $1.28. Over the past 24 months, the Polynovo share price has increased by more than 300%.

Investing in medical companies should always be a minimum 5-year plan, as product development and entrance to new markets can be time consuming but potentially very rewarding.

In light of this, coupled with yesterday’s share price rise, I would class Polynovo a buy and hold for the long-term.

Bingo Industries Ltd (ASX: BIN)

The waste management and recycling company surprised the market a few days ago with a number of positive achievements in its FY20 results release. The company reported solid performance with net profit jumping 196% from FY19.

The news sent the Bingo share price surging higher on the day by as much as 15%. Today, Bingo shares can be bought for $2.30. The Bingo share price is hovering around 56% above its 52-week low of $1.47.

In my opinion, the strong domestic waste services market puts Bingo in a favourable position for more growth, post-COVID-19.

For investors seeking a mid-cap company that is exposed to a booming market in the near term, Bingo shares could be a timely investment.

Newcrest Mining Limited (ASX: NCM)

Australia’s largest gold mining company has again been gaining traction over the past year. In the midst of economic uncertainty, the gold spot price has been surging near its all-time high, reached early this month.

The Newcrest share price fell to $20.70 during the onset of the pandemic, and has now recovered to $31.37, an increase of 51.5% in the space of 5 months.

I think that every portfolio should have some gold exposure to safeguard against extreme market volatility. Thus, now could be a good time to join the gold run before it reaches new highs.

WiseTech Global Ltd (ASX: WTC)

WiseTech is a leading global provider of software solutions to the logistics industry. The company has enjoyed tailwinds recently, thanks to the re-opening of global markets and strong demand for its CargoWise platform.

The WiseTech share price fell heavily in March to a low of $9.97, a drop of 74% from its all-time high reached in late 2019. Currently the WiseTech share price is fetching $28.14, up 18% year to date.

After reporting strong FY20 results this month, I believe WiseTech is poised for greater future growth and now could be an opportune time to pick up some shares in this quality company.

More reading

• Polynovo share price rockets higher on insider buying news
• Why Costa, Flight Centre, Polynovo, & Pointsbet shares are storming higher
• Why a2 Milk, Appen, Huon, & Newcrest shares are tumbling lower
• 2 top ASX tech shares to buy and hold beyond 2025
• 5 things to watch on the ASX 200 on Friday

Aaron Teboneras owns shares of CSL Ltd. and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., POLYNOVO FPO, and WiseTech Global. 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 S&P/ASX 200 Index (ASX: XJO) fell by 0.86% today to 6,074 points.

There were a number of interesting reports and announcements today:

Costa Group Holdings Ltd (ASX: CGC)

Horticultural giant Costa reported its FY20 half-year result to 28 June 2020.

Costa reported its revenue rose 6.8% to $612.4 million.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 13.7% to $93.7 million and the international segment saw underlying EBITDA growth of 98%.

This helped underlying net profit increased 12% to $45.8 million. Statutory profit was $43.4 million.

Net debt was $181.7 million and the board decided to declare a fully franked 4 cents per share dividend.

The ASX 200 share said that its Australian operations has now recovered from weather and drought challenges over the past year. The financial impact of the drought in this reported first half was $15 million at the underlying EBITDA level for tomatoes and berries. Crops recovered to ‘full yield’ by May. The company said it has excellent forward security across the regions it operates.

There was strong mushroom demand throughout the half and this was helped by the fully improved Monarto facility.

There is positive momentum for the second half with good market conditions and the company expects its core product portfolio to do well against the prior period. The company thinks the rest of its FY20 looks very promising. 

Whilst the citrus volume is lower and quality has been impacted, there is strong citrus export and domestic demand and pricing with encouraging expectations for the rest of the season.

Costa was one of the best performers in the ASX 200. The Costa share price went up 11.8%.

Pointsbet Holdings Ltd (ASX: PBH)

Investors were really excited by Pointsbet today. The Pointsbet share price soared by 86.7% after reporting its FY20 result and announcing a deal. 

The betting business announced a five-year media partnership with NBC Universal. Pointsbet will become the official sports betting partner of NBC sports in the US.

Management said that this was a transformational partnership and it will provide access to national and regional television and digital assets, with the largest sports audience of any US media company with 184 million viewers.

There is a total committed marketing spend of US$393 million allocated in progressively increasing amounts over the five-year media partnership, as well as incentives payable to NBCUniversal for customer referrals.

Pointsbet announced that this alignment has been reinforced with NBCUniversal buying 4.9% of Pointsbet shares and 66.88 million options maturing in five years (conditional on shareholder approval).

The combined value of the shares and options will offset and reduce the total cash payments under the media spend (subject to terms).

Pointsbet said it has exclusive right to certain pre-game, post-game and in-game promotional enhancements and integrations on certain of NBC Sports’ national and regional television and digital platforms.

Harvey Norman Holdings Limited (ASX: HVN)

Harvey Norman is another retail business that has reported impressive growth in FY20, though investors sent the share price down 1.6%. 

The company said that its ‘offshore company-operated Harvey Norman retail sales revenue’ grew by 3.7% to $2.07 billion. Its ‘aggregated headline franchisee sales revenue’ went up by 8.9% to $6.16 billion.

Total aggregated company-operated and franchisee sales revenue grew by 7.6% to $8.23 billion.

Harvey Norman’s EBITDA grew by 37.2% to $944.67 million, reported profit before tax (PBT) went up 15.1% to $661.29 million and underlying PBT rose 26% to $635.6 million.

Reported profit rose 19.4% to $480.54 million and underlying profit grew 30.9% to $462.16 million.

The Harvey Norman board decided to declare a final dividend of 18 cents per share.

Harvey Norman chair Gerry Harvey said: “Pleasingly, customers continued to engage strongly with our brands and importantly, as we are in the lifestyle and home retail space, the customer was appreciative of the shopping experience, spaciousness and easy parking at the physical franchised complexes and stores, whilst embracing the ease of connection to our brands digitally and the important convenience of home delivery and click and collect. The results achieved in 2020, are a testament to the strength of our model.”

More reading

• ASX Stock of the Day: Pointsbet share price surges 77% on NBC deal
• ASX shares are on track for new record highs. Here’s why…
• ASX 200 down 0.9%: Costa impresses, Harvey Norman profits grow, Appen downgraded
• Harvey Norman share price drops despite record FY20 results
• Why Costa, Flight Centre, Polynovo, & Pointsbet shares are storming higher

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Tesserent Ltd (ASX: TNT) share price soared today as the company announced yet another acquisition. By the close of trade, the Tesserent share price was up 8% to 27 cents on the news. It is the second acquisition the company has announced in three days.

Tesserent provides enterprise-grade cyber security and networking solutions targeted at the mid market. Its customer base spans Australia, the United Kingdom and Korea. The company’s flagship offering is its ‘Cyber 360’ strategy which includes solutions such as identification, protection and 24/7 monitoring to combat the growing risk of cyber security threats.

Ludus Cyber Security acquisition

This morning, Tesserent announced the acquisition of Ludus Cyber Security with the signing of a share purchase agreement executed between both parties.

Ludus, headed by cyber security expert, George Stewart, will be absorbed by Tesserent’s  North Security. This will further enhance the company’s strong government offering, backed by the federal government’s recently announced $1.67 billion bill. 

This acquisition rounds out Tesserent’s standing as the largest cyber security services provider in the Canberra market with over 180 locally based cyber security specialists. It also follows the previous acquisitions of Seer Security, North Security and Pure Security, all of which service Australian Government departments and agencies.

Geoff Lord, Tesserent Chairman, commented: “Ludus, whilst modest in size, has a solid operating record and is immediately earnings and cash flow accretive to the Group. Ludus achieved in excess of $1.2M revenue and $350K in sustainable earnings in FY20, with strong revenue and earnings forecast for FY21.”

Airloom acquisition

On Wednesday, the Aussie cyber security provider also announced an acquisition that pushed the Tesserent share price 9% higher. Airloom kicked off phase two of Tesserent’s acquisition program.

Airloom is a Sydney-based cyber security firm with a focus on security architecture and supporting organisations’ journeys to the cloud. The firm has a strong management team and an excellent operating record, with FY20 gross revenue in excess of $27 million. Airloom is immediately earnings and cash flow accretive to the Tesserent group, having achieved in excess of $2.7 million earnings before interest, taxes, depreciation and amortisation (EBITDA) in FY20. Strong revenue and earnings are expected to continue into FY21. The firm’s financial position is underpinned by multiple locked-in, recurring annuity-based contracts.

The acquisition is fully funded through Tesserent’s debt funding facility with Pure Asset Management announced earlier in the year. The consideration for the acquisition of Airloom is a mix of cash and Tesserent shares, being $6 million cash and 40 million shares.

What now for the Tesserent share price?

Post completion of the acquisitions, Tesserent now has a strong earnings base and is targeting a revenue run rate of $80 million. The Tesserent share price has been on a tear this year gaining a huge 575%. It is currently trading at 27 cents.

More reading

• Why the BNK Banking share price jumped 14% today
• Why investors have sent Stockland’s share price up 23% in August
• Why the Electro Optic share price rose 5% today
• This data out of Perth means Transurban’s share price could receive a big bounce
• Looking for dividends? Buy these ASX ETFS in September

Motley Fool contributor Daniel Ewing owns shares of Tesserent Limited. 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 closed 13.79% higher today after delivering strong FY20 results despite the challenging operating environment.

The company is a digital diversified financial services company with two key operating divisions in banking and broking aggregation. 

What did the company announce?

BNK Banking Corporation had growth in every business unit which delivered a statutory net profit after tax of $5.3 million, up 47.3% on the prior corresponding period (pcp). This represents a significant increase on the prior year on a statutory and pro-forma basis.

Earnings per share (EPS) was up 19% year-on-year (YoY) to 6.14 cents per share. 

Revenue from operations was up 53.8% to $315.59 million compared to $205.23 million in the prior corresponding period.

Additionally, the company delivered strong growth in its total loan book up 18% YoY to $48.1 billion. BNK Banking on balance sheet loans increased 33% YoY to $285 million. 

BNK Banking’s aggregation division, operating as Finsure, had record settlement volumes of $15.6 billion in FY20 processed through its platform. It had a record month in June 2020 of $1.7 billion resulting in a run rate of over $18 billion going into FY21.

Net interest margin came in at 1.61% which is down from 1.95% in the prior corresponding period.

The capital adequacy ratio was 21.22% and deposit growth was up 20% YoY to $346 million.

Management comments

BNK Banking’s Interim CEO, Don Koch said:

BNK is pleased to have delivered a sound result for FY20 in light of the impact of COVID-19 on the broader economy in FY20, underpinned by $16.1 billion of settlements across the year. FY20 represented the first full year of the merged group and the net profit of $5.3 million represents a significant increase on the prior year on a statutory and proforma basis.

He added:

Credit quality continues to be sound with the bank incurring nil loan losses in FY20, whilst credit losses provisions increased to 26 basis points reflecting prudent risk management, whilst the 5% of the bank’s loans on repayment deferral arrangements is half of that experienced by the industry.

Outlook

BNK Banking Corporation is well-positioned for further growth in FY21 despite economic uncertainty. Additionally, the digital bank is focused on building stronger momentum across each of the businesses with continued investment in technology and scalability, whilst managing costs effectively.

The company says the completion of a capital placement of $7 million in February 2020 and the recent approval of a Tier 2 hybrid equity instrument, sets the bank up for strong growth targets in FY21.

At the time of writing, the BNK Banking share price is trading at 66 cents per share. The strong gains today have helped boost its market capitalisation to $63.65 million.

More reading

• Tesserent share price soars 8% on acquisition
• Why investors have sent Stockland’s share price up 23% in August
• Why the Electro Optic share price rose 5% today
• This data out of Perth means Transurban’s share price could receive a big bounce
• Looking for dividends? Buy these ASX ETFS in September

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 Stockland Corporation Ltd (ASX: SGP) share price has gained 23% so far in August, with the share price closing 1.04% higher today.

Stockland’s share price reached its highest level in more than a decade on February 20, when it was trading for $5.42 per share. But as you’d expect with a property developer and manager, the COVID-19 market selloff that gripped most ASX shares hit Stockland particularly hard. From February 20 through to March 23 Stockland’s share price crashed 67%.

It has rebounded strongly from there, with the share price up 118% from the March low. But that hasn’t been enough to erase its earlier losses, with Stockland’s share price down 16% year-to-date.

By comparison, the S&P/ASX 200 (INDEXASX: XJO) is down 9% in 2020.

What does Stockland do?

Stockland develops, owns and manages retail, logistics, office and residential properties.

As at June 30 the company had 30 retail town centres in Australia, with an ownership interest valued at $6 billion. Stockland’s 31 logistics properties span 1.3 million square metres, with an ownership interest valued at $2.9 billion. In addition, it has 4 office properties valued at $1 billion.

Stockland’s residential footprint is by far its largest. The company focuses on master-planned communities and medium density housing in growth areas across Australia. Its portfolio consists of 51 communities, with 74,000 lots remaining. Stockland estimates the end value is worth approximately $19.8 billion.

Stockland’s shares began trading on the ASX in 2005.

Why has the Stockland share price gained 23% in August?

Stockland’s share price has been in a solid uptrend all month.

Investors appear to be increasingly looking beyond the short-term impacts of the coronavirus and towards the company’s longer-term prospects. Prospects that will only be aided by recent affirmations from the world’s leading central banks that interest rates are likely to remain at record lows for a long time yet.

Stockland is also reducing its exposure to some of its retail holdings as it increases its focus on logistics.

The company’s full year 2020 financial results, released this Tuesday 25 August, also came in better than many analysts had expected. For the year ending June 30, Stockland reported an 8% drop in funds from operations. But, thanks to strength in its residential settlements, the company had a net operating cashflow of $1.1 billion in FY20. And it paid a full year dividend of 24.1 cents per share.

Stockland’s share price is up 8% since the release of its full year results.

More reading

• Stockland share price jumps over 6% following solid FY 2020 result
• 2 ASX shares to buy and 2 to avoid as deflation bites

Motley Fool contributor Bernd Struben 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 Electro Optic Systems Holdings Limited (ASX: EOS) share price has risen 5.44% today compared to the S&P/ASX 200 Index (ASX: XJO) which is down 0.81% for the day. By the close of trade, the Electro Optic share price had risen to $6.20 after closing yesterday’s session at $5.88.

Over the past 12 months, the Electro Optic share price has shot more than 28% higher. As global tensions begin to escalate, the defence contractor could be a major beneficiary of future government spending.

What does Electro Optic Systems do?

Electro Optic Systems is Australia’s largest aerospace entity and the largest defence exporter in the southern hemisphere. The company focuses on defence, space, and communications technology.

Let’s take a closer look at exactly what Electro Optic Systems specialises in:

Defence:

Battle-proven technology includes remote weapon stations and ancillary products such as gimbal mounts, fire control systems and sensor units for gaining strategic advantages in land warfare.

Space:

Sensors and systems for space domain awareness to detect, track, classify and characterise objects in space. Other areas of the company’s space portfolio consist of missile defence, optical communications, and space products such as telescopes, laser devices and electronics.

Communications:

Electro Optic Systems provides global satellite communications services and systems.

What’s moving the Electro Optic share price?

A possible catalyst for the rising Electro Optic share price could be the company’s much anticipated FY20 results release on Monday next week.

Electro Optic Systems’ defence peers registered strong earnings for the full-year. Austal Limited (ASX: ASB), for example, reported a solid FY20 scorecard thanks to the recent increase in defence spending by Australia and the United States. Over half of Austal’s revenue came from US Navy contracts.

In June, the Australian Government committed to a contract to purchase 251 remote weapon stations from Electro Optic Systems, valued at close to $100 million. As COVID-19 restrictions begin to ease, global logistics has started to resume which will benefit the defence contractor. This will include the fulfilment of a $410 million delivery to an unknown overseas customer.

Investors are expecting Electro Optic Systems to post a net loss after tax of $12.7 million for the fiscal year ending 30 June. However, the outlook for the second half is more positive with the company actively processing its $620 million order backlog and $3 billion in pipeline projects.

Foolish takeaway

I think today’s Electro Optic share price would be a great buy-and-hold option for years to come. The company has positioned itself as an integral part of the defence community, developing and manufacturing advanced weaponry and communications to trusted military forces.

I am confident that the Electro Optic share price will again reach its all-time high of $10.80 achieved at the start of the year.

More reading

• New to investing? Here’s how I would make my first $100,000
• 3 ASX shares to buy and hold through COVID-19
• Here’s the best mid-cap growth share to buy on the ASX
• 4 ASX shares leading the way in drone technology
• Short-sellers are targeting these ASX stocks ahead of the reporting season

Aaron Teboneras owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited and Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems 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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Transurban Group (ASX: TCL) shareholders haven’t had much to cheer about this year. Transurban’s share price is still down 18% since February 19.

Transurban’s share price took a big hit from the COVID-19 market selloff, falling 39% from February 19 through to March 19.

Since the low, the company’s shares have regained 34%, but that wasn’t enough to recover February’s highwater mark.

There’s good reason for that, of course. When a pandemic sees you ordered to stay inside, or at least not travel more than a few kilometres from your home, you’re pretty unlikely to get onto one of Transurban tollways in New South Wales, Victoria or Queensland.

What does Transurban do?

Transurban is one of the world’s largest toll road operators. As well as collecting toll payments from road users the company also designs and builds new road projects. Transurban is Australian owned and active in Melbourne, Sydney and Brisbane. It also operates toll roads in Montreal, Canada and the wider Washington DC area in the United States.

Transurban first listed on the ASX in 1996, and today is part of the S&P/ASX 200 (INDEXASX: XJO).

Why this data points to a bounce in Transurban’s share price

As the company revealed in its full year financial results on August 12, the coronavirus took a big bite out of its FY20 revenues.

Earnings before interest, tax, depreciation and amortisation (EBITDA) declined 6.4%. The company reported a fall in daily traffic across all its operations of 8.6%. Now that’s for the entire 12 months, mind you. While virus lockdowns have only been in place since March.

For Transurban’s share price to rebound it needs to see more vehicles back on its toll roads. It’s not rocket science.

And the latest mobility data from Apple shows the company can not only expect a return to pre-COVID levels of traffic, but potentially a big increase.

Apple’s Mobility Trends map the change in routing requests since January 13, 2020. And the data shows a 14% increase for drivers requesting directions in Perth. Meanwhile, public transit searches in the city are 29% down.

Now Transurban doesn’t operate in Western Australia. But it does operate in Melbourne, where driving searches are down 54% since January 13 and transit searches are down a whopping 87%.

Victoria remains largely shuttered as it fights to control the second wave of infections. But if Perth is any example, once those restrictions lift, drivers will return to the roads in hoards. While public transport will likely stumble as people continue to maintain social distancing.

This outlook hasn’t filtered into Transurban’s share price today (it’s down 1.3%). But at the current price of $13.30 per share, Transurban’s shares could look like a huge bargain as we head into next year.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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 This data out of Perth means Transurban’s share price could receive a big bounce appeared first on Motley Fool Australia.

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