Jun.15 — Retail outlets in England selling non-essential items are opening today for the first time since March, as the government eases restrictions put in place to curb the coronavirus. Kyle Monk of the British Retail Consortium assesses the outlook for the sector in an interview on “Bloomberg Markets: European Open.”
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Jun.15 — EasyJet Plc Chief Executive Officer Johan Lundgren discusses the low-cost airline’s return to service, health measures inside cabins and the outlook for load factors. He speaks on “Bloomberg Markets: European Open.”
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Investing in great ASX growth shares can make you a fortune over the next 10 years. Starting with $3,000 can compound into a much larger number if you invest well.
Take A2 Milk Company Ltd (ASX: A2M) for example. At the end of 2015 the A2 Milk share price was around $1. Today the share price is $17. That would have turned $1,000 into $17,000. I think A2 Milk still has plenty of growth left, but it’s now a pretty large business. Good growth gets harder as businesses increase in size.
Here are two ASX shares that I think could potentially make very good returns over the next decade:
Bubs is an ASX growth share that’s following in the footsteps of A2 Milk. It’s an infant formula company that specialises in goat milk products.
The company has successfully expanded its domestic distribution network. Bubs is now sold at Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL) and Baby Bunting Group Ltd (ASX: BBN) stores. It’s also sold on important Asian ecommerce sites. I like how Bubs has secured its supply chain with acquisitions, which includes the largest goat herd in Australia.
I think that the growth Bubs is delivering is excellent. In the FY20 third quarter to 31 March 2020, Bubs achieved record quarterly revenue of $19.7 million, up 67% on the prior corresponding period and up 36% on the previous quarter.
In the last quarter the ASX share’s infant formula range saw a 137% rise in revenue year on year and a 33% rise quarter on quarter. Chinese revenue more than doubled compared to the prior corresponding period. ‘Other markets’ revenue rose by almost 20 times.
The positive quarterly operating cashflow of $2.3 million was a pleasing surprise.
Rising profit margins and exciting international growth are key for this ASX share making a fortune for your portfolio.
Pushpay is another ASX growth share that has a very exciting future. The electronic donation business is targeting a US$1 billion annual revenue opportunity from the large and medium US church sector.
In its recent FY20 result the ASX growth share achieved US$129.8 million of revenue. This represented growth of 32%. Excluding the Church Community Builder acquisition, the Pushpay operating revenue rose by 28% to US$123.1 million.
The difficult circumstances caused by COVID-19 has led to more electronic donations and Pushpay management expect this trend to continue in FY21. Earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) is expected to come between US$48 million to US$52 million – this would be approximately double FY20’s figure. I think that would be impressive growth.
I believe the growing profit margins are very attractive. The ASX share’s gross margin rose from 60% to 65% in FY20. Total operating expenses only increased by 5% in FY20, compared to the 33% increase in operating revenue. This slow expense growth saw the ratio of total operating expenses to operating revenue improve by 13 percentage points from 65% to 52%.
The company is becoming increasingly profitable as it scales. Economies of scale is a key feature for some ASX growth shares generating big returns for investors.
Pushpay is now comfortably cashflow positive. In FY20 its operating cashflow improved by US$26.3 million to US$23.5 million. FY19 saw negative operating cashflow of US$2.8 million. Becoming cashflow positive is an important step for a growth share.
If Pushpay can be successful in another not-for-profit sector, outside of US churches, then it could open another exciting growth runway.
I think both of these ASX growth shares have exciting prospects over the next decade. I’d probably go for software-based Pushpay over Bubs today, but I’d love to have both of them in my portfolio.
Some other top quality ASX growth shares to consider investing in are these leading picks…
One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.
Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!
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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 BUBS AUST FPO and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended BUBS AUST FPO and PUSHPAY FPO NZX. 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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Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy?
ANZ’s share price has been on a bit of a rollercoaster in recent months. During the first COVID-19 share market crash it fell by 48% to $14.10 in March. It then rose 49% to peak at $21 last week. Interestingly, the ANZ share price has fallen 12% from that post-crash high last week.
ASX investors may have pushed the ANZ share price a little too far. There is certainly a lot of positive news around. Australia’s coronavirus, infection numbers are very low. The cost of jobkeeper was overestimated by $60 billion, which means the economy didn’t need as much support as first feared.
ASX banks like ANZ are an important part of the Australian economy. A good economy is important for the performance of the banks. The other large ASX banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) are also key parts of keeping Australia’s economic cogs turning.
ANZ recently announced its initial estimation of the expected effects on COVID-19 on its profit. The ANZ share price has fallen so hard because of the fears about the coronavirus impacts.
In the recent ANZ half-year result the major ASX bank announced that statutory profit was down 51% compared to the prior corresponding period. The decline was driven by credit impairment charges of $1.674 billion, which included increased credit reserves for COVID-19 impacts of $1.031 billion. In that same result ANZ reported that its (continuing) cash profit dropped by 60% to $1.4 billion.
The large decline in profit and uncertainty caused by COVID-19 caused the ANZ board to defer the decision about the dividend to a later date. This may mean there is going to be a large dividend cut later, particularly as APRA wants banks to manage their capital this year.
The ANZ share price is currently trading at a level we saw during some parts of the GFC, though ANZ went as low as $12 in early 2009.
Warren Buffett once said some wise words for times like this: “Be fearful when others are greedy and greedy when others are fearful.” The market seems to be fearful with the ANZ share price, so perhaps it is a medium-term opportunity?
However, I’m not totally convinced that it is a good opportunity. It seemed like a more obvious bet at under $15.
The RBA interest rate is now 0.25%. The lower the official interest rate, the harder it is for banks to maintain their net interest margin (NIM). Transaction accounts are a good example of this effect. Banks aren’t likely to charge customers for keeping cash in the bank, so a reduction of the official rate by 0.25% means less margin for the bank if it reduces the loan interest rate for borrowers.
The dividend was an alluring reason for income-focused investors to buy ANZ shares. But it’s hard to say what the bank’s dividend policy will be going forward. More cash profit retained should translate into more earnings growth and a higher ANZ share price. However, large fully franked dividends are a good way to reward shareholders. It’ll be interest to see what the ANZ board does.
If I were part of the bank’s leadership I’d consider a 50% dividend payout ratio. That could be a fair balance between dividends and future growth.
I don’t think the ANZ share price is a bargain right now. But I don’t think it’s expensive either. Pleasingly, Australia’s economy seems to have moved into the recovery phase now, so hopefully the worst of the COVID-19 effects has passed. However, I believe the best way to growth your wealth could be to pick shares with better growth prospects. ANZ is already a large, mature business with a big market share of the mortgage market.
Instead of ANZ, I’m thinking about ASX shares like these top hot picks to produce good returns…
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.
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Motley Fool contributor Tristan Harrison 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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Here’s why the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) is my favourite ASX exchange-traded fund (ETF).
ETFs come in all shapes and sizes. The cheapest and most popular tend to be plain Jane index funds like the Vanguard Australian Shares Index ETF (ASX: VAS). Most investors would be fine just sticking to these kinds of funds for simple and cheap passive investing.
But I like to think outside this box when it comes to ETF investing. And VanEck’s MOAT delivers a unique combination of active and passive investing that I think will continue to deliver for investors.
MOAT is slightly different from your average ETF in that it tracks an ‘actively managed’ index rather than a market-weighted passive index like the S&P/ASX 200 Index (ASX: XJO). This index is managed by Morningstar, which chooses a basket of US-listed shares that display characteristics of a ‘wide moat’.
A moat is a term first coined by Warren Buffett and refers to the concept of an intrinsic competitive advantage that a company can have that protects it from the competition (much like a moat protects a castle).
Think about how Apple’s brand enables the company to charge more than its competitors for its iPhones. Or how Coca-Cola is the most popular cola drink, as well as the most expensive. Or how some people will only fly on Qantas Airways Limited (ASX: QAN) planes.
MOAT aims to only hold companies with this kind of pricing power. On its most recent update, this ASX ETF names Amazon.com, Nike, Facebook, Pfizer and American Express as among its top holdings. When we look at these companies, they all have some unique advantage over any potential competition – whether it be branding, monopolistic market share or exclusive drug patents.
Having these unique advantages increases the chances of a company outperforming other shares in the market over time in my view.
Talking the talk is all well and good, but does MOAT walk the walk?
Well, over the past 5 years, MOAT has delivered an average annual return of 15.69% per annum. By comparison, the ASX 200 has delivered just 4.2% per annum over the past 5 years. Even the US S&P 500 Index has returned 12.91% per year.
I like those numbers, and it gives me confidence that MOAT will continue to bring home the bacon. This fund has a winning, market-beating strategy and will continue to sit in its well-deserved place in my portfolio as long as it keeps it up. That’s why MOAT is my favourite ASX ETF and one that I think merits consideration for any ASX investor.
For some more shares that I’m looking to add to my portfolio, check out the 5 named below!
One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.
Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks 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
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of American Express, Coca-Cola, Facebook, Nike, Pfizer and VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook and Nike. The Motley Fool Australia has recommended Facebook, Nike, and VanEck Vectors Morningstar Wide Moat ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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