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Nio Completes $428M ADS Offering, Stock Now Up 70% YTD
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Why I would buy CSL and these ASX blue chip shares
Are you looking to add some blue chip shares to your portfolio this month? Then you could do a lot worse than the three ASX shares listed below.
Here’s why I think these are blue chip shares to buy:
CSL Limited (ASX: CSL)
The first blue chip share I would buy is this biotherapeutics company. I believe a recent pullback in its share price has created a buying opportunity for investors. Especially those that are interested in making a long term investment. I believe CSL has an extremely bright future ahead of it thanks to its strong portfolio of therapies and its pipeline of lucrative products. Should some of the latter products hit the market in the future, I believe they have the potential to underpin strong sales and profit growth.
Macquarie Group Ltd (ASX: MQG)
Another blue chip ASX share I would buy is Macquarie. I’m a big fan of the investment bank due to the quality and diversity of its operations and its talented management team. And although its near term performance is likely to be impacted by the pandemic, I expect the company to bounce back once the crisis passes. This is just like it has done in the past through similar events like the global financial crisis. Another bonus is that the company’s shares offer a decent estimated forward yield of 3.75%.
Transurban Group (ASX: TCL)
A final blue chip share to consider buying is this toll road operator. Transurban owns a number of key toll roads roads in Australia and North America. As you would expect, the pandemic has had a negative impact on its performance this year, with traffic volumes falling heavily. However, with restrictions easing, I expect volumes to start to normalise over the coming months and for its earnings to rebound in 2021. I believe this makes it a good time to pick up its shares with a long term view.
And here are more highly rated shares to consider adding to your portfolio in June…
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- The ASX winners and losers from the latest S&P index shake-up
- 2 ASX blue chip shares I think every portfolio should hold
- Got $5,000 spare? Consider Wesfarmers shares and these 2 other ASX companies
- Is the Transurban share price a secret bargain?
- ASX 200 Weekly Wrap: ASX bears take control as market volatility returns
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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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.
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UAE Says OPEC+ Deal Will Soon Restore Oil Prices to ‘Normal’
(Bloomberg) — Oil-production limits adopted by a group of major crude suppliers will soon bring prices back to “normal,” according to the energy minister of the United Arab Emirates.When markets were collapsing as the coronavirus pandemic crushed demand in March and early April, the idea that crude could rise again to $40 a barrel was “a dream,” the UAE’s Suhail Al Mazrouei said during a conference call on Monday. That was before the OPEC+ alliance agreed unprecedented cuts in output.Prices could return to “normal” within a year or two as curbs approaching 10 million barrels a day drain excess barrels from the market, Mazrouei said during the call hosted by the Atlantic Council, a Washington-based research institute.“We have seen very good signs of demand picking up,” Mazrouei said. “We have seen numbers of driving vehicles are picking up,” he said, citing demand growth in China, India and Europe.Hinging on LockdownsStill, the direction of oil prices will hinge to a large extent on whether a second round of infections forces economies into lockdowns once again, he said.“Are we going to have a second wave or not?” he said. “I hope not. I hope we’re not going to limit travel and we will go back to at least a consumption level that is reasonable. Now we are back to the consumption level of 2013, believe it or not.”Mazrouei didn’t specify what he meant by “normal” prices. However, benchmark Brent crude averaged about $64 a barrel last year. OPEC+ producers negotiated cuts in April to counter the pandemic’s impact and this month extended the reductions through July.Led by Saudi Arabia and Russia, the group aims to support a rally that’s seen Brent more than double to around $40 a barrel since late April, paring its loss this year to 40%. For that success to continue, all OPEC+ members must adhere to their production quotas, while other suppliers must refrain from resuming output too quickly, Mazrouei said.“In previous deals we had countries cheat because there was no rule. Now there is a rule, so countries are coming and stating their commitments,” Mazrouei said. The OPEC+ agreement has effectively created a “permanent” group of nations — one bigger than the Organization of Petroleum Exporting Countries — that will coordinate to manage crude markets, he said.(Updates from fifth paragraph with quotes.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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2 ASX healthcare shares to buy for long-term growth
I believe that healthcare is an excellent sector to invest in and the ASX is home to a number of exciting healthcare shares.
The world’s population continues to age, which will help drive growing demand for additional healthcare services over the next few decades. Alongside this, the cost of healthcare services continues to rise.
Here we look at 2 ASX healthcare shares that I believe have strong long-term growth potential: Ramsay Health Care Limited (ASX: RHC) and ResMed Inc (ASX: RMD).
Ramsay
Ramsay has evolved significantly over the past few decades. It has transitioned from a small Australian operation to become Australia’s largest private healthcare provider, with operations in 11 countries including the United Kingdom, France and Italy. The company is also significantly larger than the number two hospital operator in Australia, Healthscope Limited.
Ramsay’s size and scale enable it to spread its operating costs. This also provides it with a competitive advantage in negotiations with health insurers. Although Ramsay’s overall debt position is relatively high, in my opinion it appears to be manageable.
This ASX healthcare share has been impacted by the ban on non-essential surgeries. As a result, its share price was hit hard in the early phase of the crisis. However, elective surgeries are now beginning to recommence in Australia with other markets set to follow. Therefore, Ramsay may emerge from its current issues faster than first anticipated.
Also, Ramsay has successfully closed a number of key government deals in Australia and the United Kingdom during the pandemic. These deals will ensure that the company’s hospitals do not run at a loss during the current period.
ResMed
ResMed manufactures devices and cloud-based software solutions for the treatment of sleep apnoea and other chronic respiratory illnesses.
ResMed has grown to become one of the world’s leading sleep treatment companies and is now a major US-based global company. The company employs more than 7,000 people worldwide.
It provides end-to-end connected health solutions that can be used in the home, reducing the financial and resource burden of in-hospital treatment.
The global potential market for sleep apnea is huge. It is estimated that there are one billion people impacted by sleep apnoea worldwide and more than 80% undiagnosed cased globally.
New product launches and successful targeted acquisitions have all helped drive revenue growth during the past few years. This growth has continued recently, with Ramsay recording a very strong 47% increase in net income during the third quarter of FY 2020.
For more shares set for bumper growth, don’t miss the free report below.
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- 3 fantastic ASX 200 shares to buy right now
- Ramsay Health Care and 1 other ASX share I would buy for both growth and income
- Insiders have been buying these ASX 200 shares
- Why the Healius share price will be in the spotlight tomorrow morning
- You could beat the market in the 2020s with these ASX healthcare shares
Motley Fool contributor Phil Harpur owns shares of ResMed Inc. The Motley Fool Australia has recommended Ramsay Health Care Limited and ResMed Inc. 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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Top brokers just upgraded these ASX 200 shares today
The wild gyrations on the market are throwing up some opportunities for ASX investors with leading brokers upgrading a few ASX shares today.
The S&P/ASX 200 Index (Index:^AXJO) recorded its best gain in two months as it surged by over 4% on Tuesday.
That’s a marked turnaround from the recent heavy sell-off due to worries of a second COVID-19 wave of infections.
I doubt we have seen the last of the big swings in the market but those looking to buy well-priced ASX stocks during the turmoil might want to put the following two upgraders on their watchlist.
More left in the tank
The first is the Super Retail Group Ltd (ASX: SUL) share price. Never mind that the outdoor and auto accessories retailer’s shares jumped a whopping 9.9% on Tuesday to $8.58.
Morgans thinks there’s more upside as it upgraded its recommendation on Super Retail to “add” from “hold”.
The change in rating comes after management’s trading update and a $203 million capital raising.
“We think SUL can now attract a higher market rating given the resilience its businesses have shown throughout COVID and the restructured balance sheet,” said the broker.
“Its businesses also look well placed to benefit from some key thematics including: increased domestic tourism and leisure activities, home-based fitness and a general acceleration in online consumption.”
Morgans upped its price target to $9.25 from $7.84 a share.
Good medicine
The Healius Ltd (ASX: HLS) share price also got a boost after Credit Suisse upgraded its call on the stock to “outperform” from “neutral” today.
The broker’s bullish recommendation comes on the back of the sale of Healius’ medical centres to private equity outfit BGH Capital for $500 million.
That’s more than what Credit Suisse thought the assets were worth but that isn’t the only thing that got Credit Suisse excited.
Revenues from the group’s pathology and radiology divisions have also improved significantly in recent weeks.
The divestment allows management to focus on growing these businesses and to play catch up with rival Sonic Healthcare Limited (ASX: SHL).
“HLS is currently trading on 10.6x FY21 EBITDA, which is relatively in line with the multiple paid for Medical Centres, the least attractive & lowest return generating business unit,” said Credit Suisse.
“In our view, Pathology and Imaging deserve to trade at higher multiples.”
The broker’s 12-month price target on Healius is $3.25 a share.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- 3 ASX 200 shares to buy for income and growth
- Why I think this ASX 200 rally is fake
- UBS picks the best ASX retail stocks for the post COVID-19 world
- 3 fantastic ASX 200 shares to buy right now
- Leading brokers name 3 ASX 200 shares to sell today
Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. 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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2 unloved ASX shares that could stage a big turnaround
The two unloved ASX shares in this article could stage a big turnaround if things go their way.
COVID-19 caused most shares to crash during February 2020 and March 2020. Many of those shares have since recovered. Some of them have even gone on to hit new highs like Afterpay Ltd (ASX: APT).
But some ASX shares are still lagging behind. They are seemingly unloved by the market. But I think they could stage a big turnaround around if things go their way:
Share 1: Challenger Ltd (ASX: CGF)
At the time of writing the Challenger share price is still down around 50% from where it was just before the COVID-19 share market crash.
This ASX share is the leading annuity provider in Australia. An annuity provides a guaranteed source of income for people from their capital. It sells annuities under its own name and it also offers a white label product for a number of other financial institutions.
The low interest rates across the world is definitely a problem for Challenger. The RBA has pushed Australia’s interest rate down to just 0.25%. Challenger needs to generate a return to pay for the annuities that it issues. It’s much harder to make a decent return from fixed interest investments when interest rates are almost 0%.
However, I think the ASX share is priced too cheaply for the long-term. Interest rates could rise again and sales remain robust. In the third quarter of FY20 Challenger reported total life sales of $949 million, up 9% compared to the prior corresponding period. Total annuity sales were down 10% to $593 million but other life sales were up 71% to $356 million.
COVID-19 and the Hayne Royal Commission has caused disruption for financial advisers. But I believe these effects will dissipate as time goes on and life goes back to normal.
One of the most important things in my opinion is that Challenger is still guiding for normalised net profit before tax of $500 million to $550 million in FY20. I think this would be a solid result under the circumstances.
Don’t forget, Challenger didn’t cut its dividend during the GFC. So the grossed-up dividend yield of 9.6% could be the ongoing dividend payment. The dividend alone could be a solid return from this ASX share.
Share 2: Brickworks Limited (ASX: BKW)
The Brickworks share price is still down 22% from the 20 February 2020 level.
Brickworks is a diversified building products business with two additional asset divisions. It owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares which provides reliable earnings and growing dividends.
The ASX share also owns a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG). The rise of ecommerce is helping increase the demand for industrial properties. The new industrial estate at Oakdale in New South Wales will materially increase the value of the property trust and its rental income once the project is completed.
Investors have rightly identified that construction in Australia faces a difficult time in the shorter-term because of the economic impacts caused by COVID-19.
However, I don’t think that demand for bricks, masonry, roofing and so on has been reduced forever. Construction is known for being cyclical. I believe that construction will return to somewhat normal once the economy has completely opened up and normal immigration can restart. The $25,000 HomeBuilder scheme could also help Brickworks in the shorter-term.
I’m excited by the potential of the recent US acquisitions that Brickworks has made because of how large the market is in North America. The US is also dealing with the impacts of COVID-19, but again, it won’t last forever.
The ASX share also happens to be one of the best dividend shares on the ASX in my opinion. It hasn’t cut its dividend in over four decades. It currently offers a grossed-up dividend yield of 5.3%.
Foolish takeaway
Both of these ASX shares look cheap to me. They have fallen on hard times but I think they could bounce back nicely as Australia continues its recovery from COVID-19. Out of the two I’d prefer to go for Brickworks because it’s hard to say how long interest rates will still at these ultra-low levels.
But compelling turnaround shares aren’t the only place to go looking for big returns. I also think these top growth shares could also deliver very good results…
3 “Double Down” stocks to ride the bull market higher
Motley Fool resident tech stock expert Dr. Anirban Mahanti has identified three stocks he thinks can ride the bull market even higher, potentially supercharging your wealth in 2020 and beyond.
Doc Mahanti likes them so much he has issued “double down” buy alerts on all three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- 2 ASX blue chip shares I think every portfolio should hold
- My ASX share for the week
- If I won the lottery I’d buy these 6 ASX shares
- 12 top ASX dividend shares to buy in June 2020
- ASX shares I’d buy if this decline is a second COVID-19 crash
Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Challenger Limited, and Washington H. Soul Pattinson and Company Limited. 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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3 high yield ASX dividend shares for income investors
Due to all the suspensions, deferments, and cancellations, estimating the average dividend yield of the Australian share market is difficult right now.
However, traditionally, the local share market would generally yield an average of approximately 4% each year.
While this is a fantastic yield in comparison to term deposits and savings accounts, you don’t have to settle for that.
Listed below are three top dividend shares which offer very generous yields. Here’s why I would buy them for income:
Commonwealth Bank of Australia (ASX: CBA)
I believe this banking giant would be a good option for income investors. Although the bank will almost certainly cut its dividend significantly in FY 2021, I believe it will still offer an above-average yield. At present I believe a dividend of $3.70 per share is possible next year. This equates to an attractive fully franked 5.3% yield.
Rio Tinto Limited (ASX: RIO)
Another dividend share to look at buying is this mining giant. Thanks to its strong balance sheet, sky high iron ore prices, and the expectation that prices will stay higher for longer, I believe Rio Tinto is likely to reward shareholders handsomely in FY 2020 and FY 2021. I estimate that its shares offer a forward fully franked dividend yield of at least 5%.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final dividend option is the Vanguard Australian Shares High Yield ETF. If you’re looking for high yield dividend shares, then you can’t go wrong with this exchange traded fund. It provides investors with low-cost exposure to 62 companies that have higher forecast dividends relative to other ASX-listed companies. This includes many of the most popular dividend options such as the banks and miners. I estimate that its units offer a forward dividend yield of at least 5%.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
- Why I would buy Wesfarmers and these ASX dividend shares
- Can ASX big banks generate an attractive sustainable dividend yield from FY21?
- ASX 200 down 0.3%: Big four banks mixed & Healius rockets on medical centre sale
- ASX 200 Weekly Wrap: ASX bears take control as market volatility returns
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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ASX tech shares are soaring – these are my top 3 today
It has been a great day for the ASX with the S&P/ASX 200 Index (ASX: XJO) up by a staggering 4.28% at the time of writing. While all sectors have performed well, ASX tech shares, in particular, have seen strong share price gains.
Here we look at 4 companies that were among the standout performers.
Wisr Ltd (ASX: WZR)
Small-cap fintech provider, Wisr has seen its share price soar by a massive 32% so far today. It provides online loans for services including debt consolidation, car loans, home renovations, and travel.
Its strong share price rise appears to be linked to a market announcement earlier today. Wisr revealed that new loan originations grew 48% in May 2020, compared to April 2020. This was despite the company maintaining much tighter credit policies during March in response to the coronavirus outbreak.
The company was able to deliver a total of $23.1 million in new loans during the months of April and May. Overall growth during May resulted in loan originations returning to levels before the coronavirus pandemic. It also reported that customer support requests have returned to pre-COVID-19 levels.
EML Payments Ltd (ASX: EML)
EML Payments has seen its share price by 10.3% so far today. The company is an electronics technology solutions provider offering gift and reward cards, pre-paid cards and supplier payments. It manages more than 1,200 card programs across North America, Europe and Australia.
EML payments have diversified its business model via the acquisition of Prepaid Financial Services.
Its share price was hit hard in the early part of the coronavirus crisis. Prior to this period, this tech share been growing strongly for several years.
Easing national lockdown restrictions is starting to stimulate consumers to spend more. This is helping overall demand for card services get back to pre-COVID 19 levels.
The third strong ASX tech share rising today: Openpay Group Ltd (ASX: OPY)
Openpay is a small-cap buy now, pay later (BNPL) provider. Its share price has risen strongly by 13% today. This comes after a wild ride on the ASX over the past week. It suffered heavy share price falls late last week.
This tech share only recently launched on the ASX at the end of 2019. If offers payment plans that range anywhere between 2 and 24 months. Loans provided are for amounts up to the $20,000 mark.
Openpay targets the 3 key markets of automotive, healthcare and home improvement. In comparison, Afterpay Ltd (ASX: APT) targets the retail sector.
If you’re not gung ho on tech shares, take a look at the other shares we suggest through our report below.
3 “Double Down” Stocks To Ride The Bull Market
Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.
He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- Why the Wisr share price is surging 32% higher today
- The Zip Co share price is up 500%. Too late to invest?
- Why Afterpay, Super Retail, Uniti, & Viva Energy are charging higher
- ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
- Afterpay and Zip shares are rocketing higher today: Can they go even higher?
Phil Harpur owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants 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 Treasury Wine share price is up 13% in a month: Is it too late to invest?
The Treasury Wine Estates Ltd (ASX: TWE) share price has been in fine form on Tuesday.
In afternoon trade the wine company’s shares are up over 5% to $11.10.
This latest gain means that Treasury Wine’s shares are now up over 13% since this time in May.
Is it too late to buy Treasury Wine shares?
While I see value in its shares for investors that are prepared to make a long term investment, I’m not convinced its shares will go much higher in the short term.
The latter is a view I share with analysts Goldman Sachs. This morning the broker reiterated its neutral rating and $10.30 price target on the wine giant’s shares.
Goldman has been looking at industry data and, although home consumption trends remain strong, it doesn’t see any real reason to get excited.
Based on Nielsen research, the broker commented: “In continuation of the strong double digit growth seen over the past 2 months, wine sales growth was strong at +31.6% for the 4 weeks ended 16th May with underlying volume growth at 27.4%. Treasury wine sales captured also saw strong growth, but again underperformed vs. the market, growing at +16.4% on a volume basis with +3.6% increase in average selling price.”
What about in China?
The broker notes that the weakness in Chinese wine import data continued into April 2020.
Its analysts explained: “Wine import into China in April was down -48.5% with underlying volumes down -47.8%. Import of wine in containers of less than 2L was down -51.5% from Australia with underlying volumes down -45.1%, marginally below the declines seen in March. On a YTD basis, Australian bottled wine imports were down -19.1% on a value basis and -22.9% on a volume basis.”
And while ecommerce platform sales have been strong and offset some of this decline, Goldman notes that relative pricing of its brands in China remain under pressure.
“Of the 12 products surveyed regularly, average prices on the Chinese e-commerce websites remained unchanged MoM for 6 and reduced for 4 in the month of May. On a yoy basis, average price decline for these products were -7.5%,” Goldman added.
What does this mean?
Essentially, the sum of the above will be a level of growth over the coming years that fails to justify its shares trading at a greater premium to the 22x estimated full year earnings they trade at today.
Though, the broker notes that there is upside risk from a recovery of trading in its US operations and earnings enhancing acquisitions. But until that happens, it will be sitting on a neutral rating.
Not sure about Treasury Wine right now? Then check out the highly recommended shares below…
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- 5 things to watch on the ASX 200 on Tuesday
- Two perspectives and a Buy recommendation
- Not keen on Westpac? Then buy these top ASX dividend shares instead
- Why didn’t Warren Buffett buy more shares in the recent bear market?
- Top brokers name 3 ASX 200 shares to sell today
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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ASX stock of the day: LiveTiles share price surges 15% following shareholder letter
The Livetiles Ltd (ASX: LVT) share price is up 15% today after the founders issued a shareholder letter. The letter provided a positive update to investors amid the COVID-19 situation. According to the Australian Financial Review, LiveTiles is the fastest-growing technology company in Australia and the fifth-fastest growing company across all industries.
What does LiveTiles do?
LiveTiles supplies tools to create dashboards, employee portals, and corporate intranets. Headquartered in New York, LiveTiles has operations across the US, Europe, and Australia. The LiveTiles share price is up more than 116% from its March lows as the increase in remote working promotes interest in its products.
LifeTiles technology extends to underlying Microsoft platforms such as Office365, Sharepoint, and Azure. The company creates value-adds and enhancements to the underlying platforms that address common business needs and priorities. LiveTiles can be accessed and leveraged by customers through channels such as Microsoft Teams and Internet Explorer.
What did LiveTiles report?
LiveTiles reported it has a strong medium and long-term outlook. And it added that COVID played a global role in accelerating digital workplace software adoption. Having secured its first paying customer in 2015, LiveTiles now boasts 1,200 enterprise customers and over 1,000 recurring subscription customers.
Revenue has increased alongside customer numbers. At 31 March 2020, annualised recurring revenue was $55 million. Since inception, LiveTiles has operated as a software-as-a-service (SaaS) business with a recurring subscription model. The implied lifetime value of the recurring revenue pool built by LiveTiles has increased 4.9 times over 2 years. Yet the company believes it has only penetrated a little over 1% of its addressable customer pool. These insights are likely a big reason why the LiveTiles share price jumped so high today.
Impact of COVID
There is no doubt that the increase in remote working due to the coronavirus has pushed interest in digital interaction solutions. The pandemic means solutions like those offered by LiveTiles are moving towards “must-have” status compared to a “nice to have” approach.
While the longer-term outlook is bright, LiveTiles was aware at the start of the pandemic that the lockdown may reduce its cash runway. It wanted to be unquestionably financially stable during and after the pandemic. The company substantially reduced headcount in order to reduce cash burn. This and other initiatives have resulted in $18 million in annualised cost savings.
What’s next for LiveTiles?
LiveTiles vision is to create the world’s foremost intranet software company. Coronavirus has thrown up both opportunities and challenges in the short term. While the global macroeconomic outlook remains highly uncertain, LiveTiles has elected to take a conservative position on cash burn.
Nonetheless, LiveTiles believes COVID-19 will undoubtedly accelerate market adoption of digital workplace software. A recent survey of the US workforce showed 83% of employees were willing to work remotely compared to 37% pre-COVID-19. The company estimates it has a $15 billion market opportunity which remains in the early stages. It is increasingly optimistic about the external forces shaping its future.
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Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES 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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