The S&P/ASX 200 (INDEXASX: XJO) has been faring relatively well over the past 3 months. Since the lows we saw on 23 March, the ASX 200 has recovered more than 32%. Even though the ASX 200 is still down around 9.8% since the start of the year, considering all that has gone on with the coronavirus pandemic, ASX investors may be feeling a slight sense of relief.

But after the run of the past few months, many investors are now asking “where to from here?”. After all, the outlook for the broader Australian economy and the ASX shares that dwell within it is still very uncertain. 

One ASX fund manager is taking a big bet on this question and the direction of this bet should at least cause some angst for investors today.

Enter the ultra-bear

Chris Mackay is the fund manager of MFF Capital Investments Ltd (ASX: MFF). MFF Capital is a Listed Investment Company (LIC) that used to be part of the Magellan Financial Group (ASX: MFG), which Mr Mackay was a co-founder of. There are still some links between the 2 companies, but they are more-or-less independent of each other these days.

Mackay has proved himself as one of Australia’s best fund managers in my view. Over the past 10 years, Mackay has grown MFF’s value by a cumulative 350% (an average of 16.21% per annum). This figure excludes dividend payments.

MFF Capital primarily invests in US-listed shares like Visa, Mastercard, Microsoft and Home Depot, forming the lion’s share of the company’s portfolio.

But MFF’s largest position these days is in cold, hard cash. In an update yesterday, Mr Mackay informed the market that the company’s portfolio is sitting at 44% in cash as of 30 June 2020.

Having 44% of your fund’s assets in cash is another way of saying you’re bearish over shares in the short-term.

So, what has Mr Mackay spooked?

Well, here is some of what he had to say to his investors in the ASX update:

“Cash is MFF’s largest holding. We prefer not to hold significant amounts of cash for long periods. Cash is a wasting, non earning asset… We far prefer significant holdings in sustainably advantaged businesses on sensible terms. Cash and savers fare badly under inflation and financial repression. However, cash is usually valuable in crises for managing advantaged purchases when asset prices fall significantly in relative and absolute terms. Our investment approach has benefited from past market cycles, when purchases were possible at low prices but near term economic and business outlooks were terrible.

Assessment of successful longer term investments looks beyond short term marks to meet market and comparisons with indices and other investors. So far this time we have retained cash rather than risk permanently destroying capital with overpriced purchases or seeking to trade for prices in the market recovery in recent months.”

Should ASX investors follow MFF into bearish territory?

As an investor of MFF myself, I have a lot of respect for Mr Mackay. Therefore, I find his bearish insights troubling.

In my view, having a 44% cash position isn’t just having a foot in both camps; it’s an all-out bearish bet on lower share prices in the near future. It’s not too hard to read between the lines of what Mr Mackay had to say; he clearly is expecting some kind of correction or crash on the horizon.

I myself have been trying to increase my portfolio’s cash position recently (though not to the extent of Mr Mackay). None of us knows what will happen in the markets next year, next month or even tomorrow. But I do think the current circumstances warrant a lot of caution.

So, if you agree with Mr Mackay, looking at your own cash position might be a good idea. Remember, the worst time to sell a share and increase your cash is when the market is already crashing.

More reading

• Should you buy ASX gold shares like Saracen Minerals in July?
• Why I would buy and hold a2 Milk and this ASX 200 share until 2030
• Top brokers name 3 ASX 200 shares to sell right now
• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity
• Fund managers have been snapping up Sonic and these ASX 200 stocks

Sebastian Bowen owns shares of Magellan Flagship Fund Ltd, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard and Visa. The Motley Fool Australia has recommended Mastercard. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I like to keep a close eye on the small cap side of the market. This is because many of the most popular shares on the market at the moment such as Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX) were small caps once.

And anyone that was lucky enough to have picked up their shares at that point, will have generated mouth-watering returns over the last few years.

With that in mind, I thought I would look to see if there are any small cap shares which could follow in their footsteps in the 2020s.

Two small cap shares that I think have a lot of potential are listed below:

Bigtincan Holdings Ltd (ASX: BTH)

I think this growing provider of enterprise mobility software could have a very bright future. Its software allows sales and service organisations to increase their sales win rates, reduce expenditures, and improve customer satisfaction. This is achieved through mobile worker productivity improvements provided by the Bigtincan Hub platform. It has a sizeable market opportunity, which management currently estimates will be worth US$5 billion by 2021. Incidentally, the Bigtincan share price jumped higher today after signing a contract with Red Bull.

ELMO Software Ltd (ASX: ELO)

Another small cap which I think has a lot of potential is ELMO. It provides businesses with a cloud-based human resources and payroll software platform. Demand for the platform has been very strong, leading to ELMO delivering stellar sales and earnings growth in recent years. Pleasingly, ELMO still only has a very small share of an addressable ANZ market estimated to be worth $2.4 billion per year. It also has the option to expand its addressable market further by expanding internationally in the future. If this is a success, then I suspect the ELMO share price could be heading a lot higher from here.

More reading

• Why Afterpay, Bigtincan, Dicker Data, & NIB shares are racing higher
• Bigtincan share price jumps 18% on Red Bull deal
• These 2 ASX tech shares show stellar growth prospects
• These exciting ASX shares could help you smash the market in the 2020s
• Are these small cap ASX tech shares future stars?

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 Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BIGTINCAN FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO and Elmo Software. 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 February/March bear market and general investor pessimism has been pushing ASX gold shares higher in 2020.

As such, leading Aussie producers like Saracen Minerals Holdings Limited (ASX: SAR) and St Barbara Ltd (ASX: SBM) have seen their values rocket this year.

In fact, the Saracen share price has climbed 72.7% while St Barbara shares are up 20.6%. So, as we enter a new financial year, could July be a good time to buy ASX gold shares?

Is July the time to buy?

ASX gold shares tend to do well when the S&P/ASX 200 Index (ASX: XJO) is doing poorly. This seems to fit the narrative at the moment with the benchmark index being down nearly 10% in 2020 and all.

I also think this makes Saracen’s recent decision to expand its operations a wise one in hindsight. The company is now a joint venture partner with fellow gold miner Northern Star Resources Ltd (ASX: NST) in the Kalgoorlie Super Pit gold mine.

That acquisition has helped to ramp up operations and maybe even put both ASX gold shares back in the buy zone. 

In fact, Saracen recently moved into the S&P/ASX 100 Index in the most recent rebalancing along with NextDC Ltd (ASX: NXT).

Of course, no one knows exactly where the economy or the share market are headed in the next 12 months. However, this uncertainty is perhaps what makes shares like Saracen attractive to some investors looking for a potential downside hedge.

Will ASX gold shares deliver strong gains?

Personally, I’m not a big believer in using ASX gold shares to hedge against a potential downturn.

I do think gold generally has good inflation hedging properties as a real asset. However, investing in companies doesn’t get you pure gold exposure given you’re still exposed to idiosyncratic company risk.

Instead, I believe a diversified strategy of investing in a basket of ASX shares is still the best, long-term option for portfolio gains. Diversification means you weather the ups and downs with your investments in the long run without stressing in the short-term.

I’m reasonably optimistic that Saracen and St Barbara could hold their gains and even push higher in 2020 given current sentiment. However, if I’m investing for 30 years into the future, I don’t have a strong enough conviction to buy in at their current prices.

More reading

• Why I would buy and hold a2 Milk and this ASX 200 share until 2030
• Top brokers name 3 ASX 200 shares to sell right now
• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity
• Fund managers have been snapping up Sonic and these ASX 200 stocks
• This leading broker thinks the NEXTDC share price can go higher

Motley Fool contributor Ken Hall 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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I believe one of the best ways to generate market-beating returns and grow your wealth is to make long-term investments in high quality companies with strong business models and positive outlooks.

With that in mind, I have picked out two top ASX 200 shares that I think would be great buy and hold investments:

a2 Milk Company Ltd (ASX: A2M)

I think that a2 Milk Company would be a great buy and hold investment option. It is a rapidly growing a2 protein-only infant formula and fresh milk company. Cow’s milk will traditionally contain two main types of beta casein proteins, A2 protein and A1 protein. As you might guess from its name, a2 Milk Company’s milk comes only from cows selected to naturally produce the A2 protein type. It believes this protein is better for people who experience challenges drinking conventional cow’s milk.

This unique selling point has gone down well with consumers. It has also seemingly created sticky revenues, with consumers reluctant to switch products lest they upset their stomachs. I believe this bodes well for its future growth and expect further market share gains in China and its expanding distribution footprint in North America to drive strong earnings growth over the next decade. This could mean the a2 Milk share price still has plenty of upside over the coming years. In addition to this, there is speculation that the company may soon put its sizeable cash balance to work with new product launches or acquisitions.

Cochlear Limited (ASX: COH)

Another ASX 200 share that I think investors ought to consider buying and holding is Cochlear. I’m a big fan of the hearing solutions company and believe it has a very positive long term outlook. This is thanks to the quality of its products, its sizeable market opportunity, and its high level of investment in research and development.

I think the latter will be key to keeping its products at the front of the pack and growing its market share in the future. And in respect to its market opportunity. The company estimates that less than 10% of people who would benefit from an implantable hearing solution are treated. I feel this gives the company a long runway for growth in the coming years and could be the catalyst to driving the Cochlear share price notably higher over the 2020s.

More reading

• Should you buy ASX gold shares like Saracen Minerals in July?
• Top brokers name 3 ASX 200 shares to sell right now
• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity
• Fund managers have been snapping up Sonic and these ASX 200 stocks
• Down 32% in FY20, is the NAB share price a buy this year?

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 owns shares of A2 Milk. The Motley Fool Australia has recommended Cochlear 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.

The post Why I would buy and hold a2 Milk and this ASX 200 share until 2030 appeared first on Motley Fool Australia.

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The Sensera Ltd (ASX: SE1) share price is charging 37% higher today on the back of its trading update.

It’s a leading end-to-end senor and wireless communications company in the internet of things (IoT) space. The sensors use wireless networks to provide customers with critical information.

Trading update highlights

In an ASX announcement released today, the group saw Q4 revenue of US$2.3 million resulting in FY20 revenue of US$11.7 million. This represented year-on-year (YOY) growth of 15%.

Pleasingly, the cash position of Sensera also improved in Q4 from US$0.3 million to US$1.3 million. 

Its COVID-19 sensor is expected to be deployed in significant volumes in FY21 with early orders of US$2 million. 

Sensera is expecting continued growth in gross margins in the second half of FY20. In a further positive development, gross margin performance for FY20 will attain 48% in comparison to 41% in FY19.

The group says the product mix shift, manufacturing changes and model changes have had the planned impact of improving margins and the last 2 quarters delivered gross margins of the 60% target model. 

Products – IOTS and MD

Internet of things solutions (IOTS)

Despite a slowdown in mining and manufacturing, the group shipped products to an additional 8 customers. 

Revenues have remained resilient and pleasingly, progress has been supported by recent design wins. 

Both the US military application with Triton Systems Inc, announced last month, and the European rail safety project have made progress. The company will likely see a material revenue increase in FY21 as a result of the partnerships.

MicroDevices (MD)

MicroDevices has continued growth with FY20 revenues totalling US$4.7 million. The Woburn, Massachusettes facility is an essential service through the medical markets the group serves and, therefore, continued operating over recent months.

The biggest impact for the MD business was an application made for one of the sensors used to detect COVID-19. Over US$2 million worth of orders has been obtained over the past 2 months. However, these sensors are still in pre-production and full production is expected in FY21. 

Outlook 

Management believes it is building a sustainable business through a cost reduction focus to increase margins. In addition, the group has been able to move multiple customer opportunities to FY21. The Sensera share price currently sits at 3 cents and it will be interesting to see where it goes after the company releases a detailed update at the end of July. 

More reading

• 2 exciting small cap ASX shares that could be destined for big futures
• Should you buy ASX gold shares like Saracen Minerals in July?
• Why I would buy and hold a2 Milk and this ASX 200 share until 2030
• Afterpay share price hits $67! Are BNPL shares in a bubble?
• Lendlease share price jumps 6% after being given conviction buy rating

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.

The post Why the Sensera share price is up 37% today appeared first on Motley Fool Australia.

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We’ve had news today that WAAAX high-flyer, buy now, pay later (BNPL) pioneer and ASX growth market darling Afterpay Ltd (ASX: APT) has hit yet another record high. The Afterpay share price started trading today at $64.20 before reaching a new high of $67.34 (at the time of writing). It’s now up nearly 130% year to date and around 740% off the lows we saw in March. Holy Macaroni!

The Afterpay share price isn’t alone

It’s not just Afterpay that has been exploding in value in recent weeks. The entire BNPL sector has been on a tear. It seems to me (much like the dot-com bubble of the early 2000s) that all a company needs to do to attract a frenzy of investors is to have the word ‘pay’ in its company name or modus operandi.

Let’s look at Zip Co Ltd (ASX: Z1P). Zip shares are up ~62% year to date and up 448% from their March lows.

Openpay Group Ltd (ASX: OPY)? Up nearly 85% year to date and 622% since March.

How about Splitit Ltd (ASX: SPT)? It’s up 90.9% year to date and over 500% since its March lows

Pushpay Holdings Ltd (ASX: PPH)? Up 126% year to date and 269% since March.

Sezzle Inc (ASX: SZL) is up 157% year to date and more than 1,000% since March. Yowza!

You get the idea…

Are we in BNPL bubble territory?

Whenever I see numbers like these, I’ll be honest and tell you that alarm bells ring for me. I can’t conceivably accept that the real value of all these companies has doubled, tripled or more since March. Sure, the market may have tilted in the BNPL sector’s favour with shifts to online shopping and ‘cash flow management’ of purchases as a result of the coronavirus pandemic. But these numbers are bordering on ridiculous for me.

And apparently, I’m not the only one. According to reporting in the Australian Financial Review (AFR) yesterday, fund manager Investors Mutual is also shunning the BNPL sector. The AFR quotes Investors Mutual senior portfolio manager Simon Conn:

“We’ve seen an increased level of retail activity in the market and there’s not a lot of fundamental analysis going on but a lot of momentum. The small-cap market is particularly prone to fads and bubbles. You remember the dotcom boom, with stocks trading in excess of $1 billion with no profits and then falling apart.”

Mr Conn references the Afterpay share price as well as those of Zip, Splitit, Sezzle and Openpay. He points out that, together, these companies have combined market capitalisations of over $20 billion, but not a dollar of profits between them. “There’s very extreme valuations and a lot of risk in that sector,” said Mr Conn.

It’s hard to argue with cold, raw data like that.

Foolish takeaway

I think there is a lot of potential in the payments and buy now, pay later sector to be sure. We’re moving towards a cashless society and these kinds of companies stand to benefit the most. But right now, there’s no way I could regard the Afterpay share price, or any of the companies discussed above, as ‘fairly valued’. I do think the market is getting a little bubbly and carried away with these shares, and I’ll be sitting on the sidelines until things return to some semblance of rationality.

More reading

• Why the Afterpay share price zoomed to a new record high today
• Why Afterpay, Bigtincan, Dicker Data, & NIB shares are racing higher
• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity
• What’s next for WAAAX shares?
• Can the Afterpay share price climb another 150% in FY21?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PUSHPAY FPO NZX and Sezzle 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.

The post Afterpay share price hits $67! Are BNPL shares in a bubble? appeared first on Motley Fool Australia.

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The Lendlease Group (ASX: LLC) share price has been among the best performers on the S&P/ASX 200 Index (ASX: XJO) on Thursday.

In afternoon trade the international property and infrastructure company’s shares are up over 6% to $12.99.

Why is the Lendlease share price jumping higher today?

Investors have been buying Lendlease’s shares on Thursday after analysts at Goldman Sachs retained their conviction buy rating on them.

Although the broker acknowledges that its FY 2020 net profit after tax is going to fall well short of consensus expectations, it believes it is worth sticking with the company.

Its analysts expect the company’s profits to rebound strongly in FY 2021 and notes that its shares were changing hands at just 10.6x FY 2021 earnings prior to today’s gains.

In light of this, it has put a $16.55 price target on Lendlease’s shares, which implies further upside of 27% over the next 12 months.

Commenting on the new financial year, Goldman said: “LLC has executed agreements to sell a 25% stake in the first tower of One Sydney Harbour to Mitsubishi Estate, locking in a A$100m post-tax gain for FY21 and reducing its future funding requirements for the A$2bn project. The Group also confirmed that PSP Investments has signed on as LLC’s partner for the A$4bn Milano Santa Giulia project.”

“More broadly, management noted continued strong demand from capital partners for new opportunities and highlighted Melbourne Quarter (Commercial), the Google Bay Area project, 30 Van Ness (San Francisco), International Quarter London, Silvertown Quays and Milan Innovation District as likely drivers of near-term development origination profits,” it added.

The broker is also pleased to see that the exit of its Engineering business is on track to complete in the near future.

Its analysts said: “Management confirmed again today that LLC expects the sale of the Engineering business to complete early this financial year. In our view, LLC’s decision to bring all remaining estimated exit costs to account in FY20 increase the likelihood that completion of the sale is imminent.”

Should you invest?

I agree with Goldman Sachs on Lendlease and see a lot of value in its shares. Especially, now the bad news is out of the way.

Furthermore, I think it could be top option if you’re an income investor. Goldman Sachs estimates that Lendlease’s shares currently offer a FY 2021 dividend yield of 4.4%.

More reading

• Australian businesses are running out of cash

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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Medical technology is a broad field covering areas like biotechnology, pharmaceuticals, and information technology. Advancements in medical technology improve the way doctors diagnose and treat patients, leading to better health outcomes. The global medical technology industry is worth some US$430 billion and growing. I believe the below 3 ASX medical technology companies have promising futures in the sector.

Pro Medicus Limited (ASX: PME)

Pro Medicus provides imaging software to hospitals, diagnostic imaging groups and healthcare entities. The company currently operates across Australia, Europe and the United States. Its solutions provide medical accounting, clinical reporting, appointment scheduling, and management information applications. The Pro Medicus share price has largely recovered from the March market correction and is trading at $26.57. This is back on par with levels seen in early 2020. Pro Medicus recently signed a $22 million deal with Chicago-based Northwestern Memorial HealthCare which will implement its Visage 7 technology.

MedAdvisor Ltd (ASX: MDR)

MedAdvisor is behind an innovative software that puts a virtual pharmacist on customer smartphones, tablets, and PCs. The software reminds users when to take medications, fill recurring scripts, and even manage the medication of other family members. It connects with local pharmacies, allowing customers to order prescriptions from their phones for collection. The MedAdvisor share price is up 86% from its March low, currently trading at 54 cents. This week MedAdvisor announced a strategic alliance with NASDAQ-listed HMS Holdings Corp  (NASDAQ: HMSY) under which MedAdvisor will integrate with HMS’ health engagement platform. This will enable healthcare organisations to proactively communicate with patients, with MedAdvisor to generate revenue from each digital message sent on behalf of HMS’ clients.  

Respiri Ltd (ASX: RSH)

Respiri produces medical devices designed to monitor asthma symptoms for use in hospitals and at home. A respiratory eHealth software-as-a-service (SaaS) company, Respiri is seeking to improve the management of asthma, which impacts some 340 million people worldwide. The Respiri share price has increased by 60% to 9 cents a share from a low of 6 cents in May. Last week Respiri announced an agreement with the University of Edinburgh to partner on a new data research centre. The centre will use data collected using Respiri devices to develop innovations in the delivery of care for people with asthma, chronic obstructive pulmonary disease, and respiratory infections. The ASX medical technology company plans to enter the European market in 2021 following its Australian commercial launch in the fourth quarter of the calendar year 2020.

More reading

• Where to invest $5,000 into ASX shares in July
• Could one of these ASX shares be ‘the next Afterpay’?
• 3 ASX growth shares to buy with $3,000
• 3 exciting small cap ASX healthcare shares to watch
• ASX 200 jumps almost 4%, Webjet share price soars

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 and recommends Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MedAdvisor. The Motley Fool Australia has recommended MedAdvisor and Pro Medicus 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.

The post Add these 3 ASX medical technology companies to your watch list appeared first on Motley Fool Australia.

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