Tag: Motley Fool Australia

The S&P/ASX 200 Index (ASX: XJO) fell by 0.6% today to 5,919 points.

The alarming COVID-19 spread continues in Melbourne with Victoria reporting 288 new cases today. However, two new infections in NSW that seemingly came from a Sydney pub last weekend may cause more concern for the market next week if there is still community transmission occurring in Sydney.

Afterpay Ltd (ASX: APT) share price hits a new record

Just after midday the Afterpay share price rose to above $76.50, hitting a new record.

The ASX 200 buy now, pay later business has been unstoppable over the past few months as it recovered from the March 2020 share market selloff.

Over the past month alone the Afterpay share price has gone up by almost 39%.

Brokers have been increasing their share price targets for Afterpay with the company continuing to generate strong underlying sales growth each month.

Avita Therapeutics Inc (ASX: AVH) share price drops 7.5%

The healthcare company gave a business update for the fourth quarter of its FY20 and also for the full year.

In the fourth quarter, sales for the RECELL system in the US was US$3.79 million, an increase of 0.2% from the third quarter. Total global net revenue for the fourth quarter was US$3.88 million, a decrease of 1.6% compared to the previous quarter.

For the full year the ASX 200 company’s total sales were approximately US$14.3 million, which was an increase of 160% compared to the previous year. FY20 RECELL system sales were US$13.8 million, up 213% compared to last year.

Polynovo Ltd (ASX: PNV) share price drops 0.4%

Polynovo provided a trading update today and also updated the market about the Pivotal trial protocol.

The US FDA has given formal feedback to the company, including a request for some additional information including a formalisation of the review points through the trial.

The company is working through a response to the FDA, which may delay the commencement of the trial recruitment.

In terms of the trading update, June 2020 was a record sales month in the US. The company has opened seven new hospital accounts. Over the past 12 months there has been a 67% increase in hospital accounts in the US. PolyNovo was able to achieve this growth despite the COVID-19 impacts on many businesses.

The ASX 200 company also announced its first sale in the UK. There have been six operations in England and Scotland, therefore the company is expecting additional new term sales.

In the EU there have been numerous applications of the BTM in the DACH countries of Germany, Austria and Switzerland. Sales are growing as PolyNovo gains traction across the region.

FY20 product sales are likely to be at least twice as high compared to FY19. Sales in the quarter to 30 June 2020 were 33% greater than the previous quarter.

Chorus Ltd (ASX: CNU) share price falls 7.5%

The ASX 200 New Zealand telco suffered a fall after telling the market that the lockdown period had a significant impact on its fourth quarter.

Restrictions on non-essential activity reduced fibre installations by around 15,000 and halted the UFB2 rollout.

The lockdowns also reduced fibre installations and constraints on door to door marketing saw Q4 fibre connection growth drop to 27,000 from 32,000 in the third quarter.

Chorus provided $5 million of financial support to service companies to assist with reduced field force workflow and revenue and help retain the workforce for rapid resumption of work in ‘alert level 3’.

Total fixed line connections declined by 4,000 to 1,415,000 and broadband connections returned to the second quarter level of 1,206,000 with growth of 4,000.

More reading

• Short sellers are betting US$20bn against the skyrocketing Tesla share price
• The Openpay share price is surging today. Is it the next Afterpay?
• The Treasury Wine share price and this ASX 200 stock are the latest to be hit by broker downgrades today
• Fund managers have been buying Costa and this ASX 200 share
• Brokers name 3 ASX 200 shares to buy today

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 Avita Medical Limited and POLYNOVO FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Avita Medical 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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2020 has been a tough year for ASX dividend shares. Former dividend heavyweights like Transurban Group (ASX: TCL), Ramsay Health Care Limited (ASX: RHC) and Sydney Airport Holdings Pty Ltd (ASX: SYD) have slashed, deferred or cancelled their shareholder payments. And let’s not even mention the fallen angels of the dividend world, the ASX banks.

So here are 2 ASX shares that currently offer grossed-up dividend yields of over 9% per annum. Furthermore, I think both will continue to fund said dividends throughout 2020 and beyond.

Fortescue Metals Group Limited (ASX: FMG)

This iron ore giant has been making headlines throughout 2020 as it defies the coronavirus pandemic to hit new, all-time highs. At today’s close, the Fortescue share price was sitting at $14.85 after reaching as high as $15.25 a month ago. The company’s current share price puts it nearly 38% up for the year so far. The sky-high price of iron ore is the main driver behind this surge, with production issues in the Brazilian iron industry causing a supply squeeze in 2020.

Thankfully, Fortescue’s dividend is still extremely lucrative, despite the share price’s massive surge this year. On current prices, it’s worth a 6.73% trailing yield, which grosses-up to 9.61% with full franking credits. If iron ore prices stay around the US$100 per tonne mark, I fully expect this dividend to be maintained in 2020 and beyond.

WAM Research Limited (ASX: WAX)

WAM Research is a listed investment company (LIC) that invests in the small to mid-cap space of the ASX, with a particular focus on ‘industrial’ shares. This company’s modus operandi is to find companies it believes are undervalued or have significant growth catalysts ahead of them. Once this pricing opportunity or catalyst has been realised, the shares are sold and the profits banked in the company’s reserve. The LIC then uses this reserve to pay out a stream of fully franked dividends. Some of WAM Research’s current holdings include REA Group Limited (ASX: REA), Cleanaway Waste Management Ltd (ASX: CWY) and Adairs Ltd (ASX: ADH). 

Speaking of dividends, WAM Research has a doozy. On current prices, the company is offering a trailing yield of 7.04%, which grosses-up to 10.06% with full franking. The best thing? WAM Research’s latest dividend came in a 4.9 cents per share, but the company has 26.2 cents per share left in its profit reserves. That should ensure this dividend can be maintained for at least the next couple of years.

Foolish takeaway

I love a good ASX dividend share. If you’re looking to add some long-term, income producing shares to your portfolio, I think both those mentioned represent great options. 

More reading

• 3 ASX dividend shares growing their payouts fast
• 3 quality ASX dividend shares to buy today
• Broker tips on how to invest for the August ASX reporting season
• Why I see good value in the BHP share price today
• 5 things to watch on the ASX 200 on Monday

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

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The Tesla Inc (NASDAQ: TSLA) share price is making a meal out of short-sellers as it surges to a record high, but the bears are biting back by upping their bets against the tech darling.

Shares in the electric car maker jumped by nearly five-fold over the past year to hit an all time high of US$1,394.28 a share yesterday. It’s now the world’s largest automaker with a market cap of US$258.5 billion ($373 billion).

This prompted its eccentric and divisive founder Elon Musk to sell bright red short-shorts to mock the doubters. If you thought of buying a pair, you are too late. They sold out in minutes, reported the New York Post.

Playing chicken with the Tesla share price

But instead of retreating, the short-sellers are fighting back with short-interest in the stock rising to US$19.95 billion ($28.78 billion), reported the Australian Financial Review.

This amount is likely to hit US$20 billion, and if that happens, Tesla will be the first company in history to have such a large bearish bet levelled against it, according to S3 Partners which was quoted in the AFR.

Short-sellers are those who borrow a stock to sell it on-market with the aim of buying it back at a lower price later to profit from the difference.

While growing short-interest suggests these bearish traders are on the attack, they are nursing large losses too.

Doubling-down in high stakes poker

Based on S3’s calculation, short-sellers have suffered a whopping US$18.1 billion year-to-date net-of-financing mark-to-market loss. Of this staggering amount, 43% of the losses occurred within the last five weeks.

While short-sellers can put downward pressure on a stock, they can also give it a big boost. S3 believes that the Tesla share price is popping in more recent times because short-sellers who can’t weather the pain are forced to buy the stock to close their position.

This is called a short-squeeze. But as some bears are throwing in the towel, others are stepping in on the belief that the Tesla share price has overshot fundamentals.

Will the Tesla share price fall?

This could well be the case as even Elon was recently jawboning the Tesla share price even as supporters point to its huge potential in China.

Counting on the Chinese to support making a US company super rich sounds like a dangerous gamble in this day and age, but that isn’t likely to turn off Tesla’s army of fervent worshippers.

The closest thing the ASX has to this is the gravity-defying Afterpay Ltd (ASX: APT) share price, which is also winning over many sceptics as it blasts off into the stratosphere.

However, there is a lot of room for the Tesla share price to fall given its outperformance that puts other US tech darlings to shame.

The mighty Apple Inc. (NASDAQ: AAPL) share price is “only” up 90% over the past year, while the Netflix Inc (NASDAQ: NFLX) share price and Alphabet Inc Class C (NASDAQ: GOOG) share price are ahead by 30%-plus each.

More reading

• ASX 200 drops 0.6%, Afterpay hits a new record
• The Openpay share price is surging today. Is it the next Afterpay?
• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• Zip share price surges 30% in a week. Are we calling bubble yet?
• 5 things to watch on the ASX 200 on Friday

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors.

Brendon Lau has no position in any of the stocks mentioned. Follow me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (C shares), Apple, Netflix, and Tesla. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (C shares), Apple, and Netflix. 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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Buying your first ASX shares as a beginner can be a scary thing to do. It’s also something I believe too many people put off for far too long. But investing doesn’t and shouldn’t have to be scary. In fact, it will probably be one of the best things you ever do for your financial security.

Here at the Fool, we think everyone should eventually get to the stage of trying to beat the market with a diversified portfolio of well-chosen ASX shares. But getting to that point requires a lot of experience and emotional regulation. That’s why I think the best shares for beginners to start out with are passive or managed investments that don’t require too much research or hard decision making. So, in this light, here are the 2 ASX shares I would recommend to a beginner:

2 ASX shares for beginners

1) Magellan High Conviction Trust (ASX: MHH)

The Magellan High Conviction Trust is a listed investment trust (LIT) – which basically means it holds a bunch of shares. This particular LIT aims to hold between 8 and 12 global companies (mostly United States shares) that the management team views as being ‘the best in the world’. Right now, MHH holds companies like Alphabet, Facebook, Microsoft and Tencent Holdings — all unarguably top-tier, global businesses. MHH is well-suited for a beginner in my view because the management team will buy and sell shares on your behalf, without you having to give any thought to the process whatsoever.

This trust also aims to pay a 3% cash yield in the form of a dividend distribution every year. You can either choose to receive this payment as cash or reinvest it back into the fund at a 5% discount.

2) iShares Global Consumer Staples ETF (ASX: IXI)

This exchange-traded fund (ETF) is one of the ASX’s best-suited investments for a beginner, in my view. That’s because it only holds companies in the consumer staples sector. A consumer staple is any product that can more or less be considered a ‘need’ rather than a ‘want’. Think food, drinks, household essentials and personal hygiene products, as well as ‘vices’ like alcohol and tobacco.

These companies are hardly exciting and won’t make you rich overnight. But they are, in my opinion, also some of the safest share market investments you can make, due to the ‘essential’ nature of their products. Some of the companies that IXI holds include Nestle, Unilever, Procter & Gamble, Walmart, Coca-Cola, PepsiCo and Philip Morris International.

IXI also pays a dividend distribution, which right now is worth a trailing yield of 2.1%.

Foolish takeaway

I believe both of these ASX shares are perfect for a beginner investor. Both investments are managed on your behalf, which means that you can easily just buy them and put them in the back drawer (for a while at least). As such, I think they are a great way to take your first steps in the market and start a (hopefully) long and successful investing career!

More reading

• Where to invest $10,000 into ASX shares right now
• These 3 ASX ETFs are yet to recover from the market crash
• What are the best ASX shares for dividends?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet (A shares), Coca-Cola, Pepsico, Procter & Gamble, Philip Morris International, Facebook, and Magellan High Conviction Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia owns shares of iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Alphabet (A shares) and Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In an article released by top fund manager Firetrail Investments yesterday, analyst Scott Olsson discusses the Australian banks and the current economic outlook.

What is the outlook for the Australian Banks?

According to Olsson, the banks’ recovery from the current crisis will happen slowly, as they face headwinds such as coronavirus-induced bad debts, a slow economy and low interest rates. These factors combined will lead to a lower return on equity for the banks.

However, he believes that the days of the big four offering 5–6.5% dividend yields will return, given their “formidable franchises”.

Olsson also suggests that while the banks have made provisions for bad debts, there is likely to be additional bad debts for the next 1–2 years. He believes that bad debts will return to mid-cycle levels in 2022 to 2023, which will drive an earnings recovery.

He suggests that he would be a buyer of banks in a scenario that was more favourable, with much lower bad debts than anticipated. However, he stated that even in a more favourable scenario, other sectors and other stocks will be better performers than the banks. 

Which bank would the analyst buy?

According to Olsson, of the major banks Firetrail Investments prefers National Australia Bank Ltd. (ASX: NAB). This is for a number of reasons, including the current management team.

In the interview, Olsson stated:

We really like the CEO and Chairman combo of Ross McEwan and Phil Chronican – they bring a lot of experience which you want going through a crisis like this…The new CEO, I think he’s going to bring a lot of accountability to the business and pull out a lot of unnecessary costs. And when you’re looking medium-term, I think there’s an opportunity for him to improve the retail franchise. So we like the NAB story.

Olsson did suggest that NAB is “very overweight” on small to medium enterprises and will have higher bad debt losses than the other banks. However, he believes that following its capital raising, NAB now has the capital position to deal with these debts.

About the NAB share price 

NAB was formed via a merger in 1982 and is now Australia’s third largest bank by market capitalisation.

In May, NAB raised $1.25 billion from investors through a share purchase plan at a price of $14.15 per share. It raised $3 billion from institutional shareholders at the same price in April.

In the half year to March 2020, NAB had net profit after tax of $1.31 billion and net interest income of $6.89 billion.  

The NAB share price is down 1.33% on Friday to $17.82. It is up 35% from its 52 week low of $13.20 reached in March. The NAB share price is down 27% since the beginning of January.

More reading

• ANZ said there will be another wave of Victorian businesses collapsing
• The hidden risk to early superannuation withdrawal that no one told you about
• The embattled ASX 200 stocks that could deliver a dividend surprise
• 3 large cap ASX shares primed for expansion and M&A activity
• Why NAB and Telstra shares could be top options for income investors

Motley Fool contributor Chris Chitty 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 Pushpay Holdings Ltd (ASX: PPH) share price has rocketed over the past few months, hitting highs of over $9 in June. This represents a whopping 19% increase for the month, and a 211% leap from its lows of $2.64 in March.

Since the end of June, Pushpay’s share price has continued its strong growth, sitting at $8.70 at the time of writing. The Pushpay share price is up 122% for the year, which is a huge gain particularly when compared to the 9.2% drop in the S&P/All Ordinaries Index (ASX: XAO) over the same period.

What does Pushpay do?

Pushpay is a New Zealand-based company that provides a digital donor management system to the faith sector, non-profit organisations and education providers. It operates in the US, Australia, New Zealand and has had a meteoric rise since listing in late 2016.

What drove the Pushpay share price higher in June?

Pushpay’s share price rise has seen its market cap soar to $2.37 billion as the company has continued to post impressive growth. In June, strong tailwinds and reports from the company’s AGM saw its share price rise.

On 18 June, Pushpay released details of its annual meeting for 2020, which included a recap of its FY20 results and saw the Pushpay share price increase by 9.9% that day alone. Highlights from the AGM presentation included:

• Solid total revenue growth of 32% for the year ended 31 March 2020 (FY20)
• Expanding operating margins with gross profit margin for FY20 increasing by 5% to 65%
• Impressive growth in the company’s FY20 operating cash flow, which went from negative US$2.8 million to US$23.5 million, an increase of 953%
• A strengthened value proposition through the strategic acquisition of leading US-based church management system, Church Community Builder
• Confirmation Pushpay achieved or exceeded all guidance provided to the market over the year, including operating revenue, gross margin, EBITDAF and total processing volume.

What now for the Pushpay share price

Pushpay has set guidance for the year ending 31 March 2021 to between US$50 million and US$54 million – an increase of roughly 100% from last year.

At the time of writing, the Pushpay share price is up 1.05% to $8.70.

More reading

• 2 fantastic ASX growth shares to buy with $2,000
• Are these the best ASX tech shares to buy for market beating returns?
• How to beat the market with 2 kids and no time
• 2 fantastic ASX tech shares to buy and hold
• 3 of the best ASX growth shares to buy for the 2020s

Daniel Ewing 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. The Motley Fool Australia has recommended 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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If you have space in your portfolio to add a few growth shares, then I think the two listed below could be great options.

I believe these growth shares can deliver above-average earnings growth over the next few years and potentially strong returns for investors.

Here’s why I would invest $2,000 across their shares:

Bubs Australia Ltd (ASX: BUB)

Bubs is a goat’s milk-focused infant formula and baby food company which I believe has enormous potential. This is due to the expansion of its footprint across supermarkets and pharmacies in Australia and its growing presence on Chinese ecommerce platforms. Another positive is its recent expansion into cow’s milk infant formula, which could be a big boost to its earnings growth in FY 2021. But perhaps the biggest positive of all is that after years of cash burn, Bubs now appears to have reached a scale that makes its operations profitable. This should mean the days of dilution from capital raisings are now over.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is a donor management platform provider for the faith sector. It has been growing at an explosive rate in recent years thanks to increasing demand for its platform in a church market that is rapidly embracing digital transformation. And although the Pushpay share price has been a very strong performer this year, I don’t believe it is too late to invest. After all, the company still has a very long runway for growth. Management is aiming to capture a 50% share of the medium to large church market in the future. This represents a US$1 billion revenue opportunity, which is many times FY 2020’s revenue of US$127.5 million. Given the quality of its offering, I believe there is a strong probability of the company achieving its target.

More reading

• Why the Pushpay share price soared 19% in June
• 3 ASX shares I’d invest $1,000 into right now
• Are these the best ASX tech shares to buy for market beating returns?
• How to beat the market with 2 kids and no time
• 3 ASX shares I’d buy with $6,000 today

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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia has recommended 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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Australia and New Zealand Banking Group (ASX: ANZ) has said that there is going to be another wave of business collapses in Victoria.

ANZ head of retail and business banking Mark Hand thinks the new lockdown will cause more loan deferrals and business failures according to the Australian Financial Review.

Before COVID-19 came along Victoria was one of the most popular states for migration, which has currently stopped. Mr Hand said that Victoria’s outlook was already not as good as other states. He thinks Melbourne will have higher defaults than the rest of the country.

Is there hope for Victorian businesses?

APRA recently said that banks can give borrowers an extension for the loan payment holidays for another four months. This could be very important for the economy because the end of September was looming where both jobkeeper is scheduled to end and the payment holidays were due to stop.

However, Mr Hand said that some businesses may have to face reality and liquidate their asset or close the business rather than wait another four months. It seems that ANZ will only be lenient with businesses where it seems there is genuinely light at the end of the tunnel.

According to ANZ data, around two thirds of customers who have deferred their loan repayments should be able to make some form of repayment. However, he also said: “Some of that will be driven by customers who look at their circumstances and say it’s time to do something different. I would expect to see a rise in distressed loans and loan defaults at the back end of the year.”

He’s particularly worried about Melbourne’s restaurants, bars and cafes which won’t see the required level of earnings for some time yet.

The OECD has previously warned that Australia’s economy could fall by 6.3% in 2020 if there’s a second wave of COVID-19 and lockdowns. Hopefully the rest of the country can stay COVID-19 free until a healthcare solution is created.

What does this mean for ASX banks?

As the second biggest city in Australia, Melbourne is an important part of the economy. It’s understandable that investors may lower their expectations for earnings over the rest of 2020. The ANZ share price has dropped 5% since 2 July 2020. Over that same time period the National Australia Bank Ltd (ASX: NAB) share price is down 5%, the Commonwealth Bank of Australia (ASX: CBA) share price is down 0.5% and the Westpac Banking Corp (ASX: WBC) share price is down 5%.

With the rest of the country in a good COVID-19 position, national businesses like ASX banks don’t face the same level of impacts as the initial nationwide lockdown.

If COVID-19 has sneaked into NSW from Victoria over the past fortnight then that would be a different (and worse) situation.

I think the US situation could cause the biggest worry for markets over the next few weeks. There are rising COVID-19 numbers across a number of economically important American states, the country just set a new one-day record of over 60,000 cases.  

If ASX shares do sell off over the next few weeks due to domestic or international reasons then I plan to buy more shares. In hindsight, the March 2020 selloff was a clear, cheap buying opportunity. I think lower share prices would be another buy signal with how low interest rates are these days. The RBA interest rate is just 0.25% at the moment, and could be that low for years!

Some of the share ideas I’m interested in at the moment are: Brickworks Limited (ASX: BKW), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Bubs Australia Ltd (ASX: BUB), PM Capital Global Opportunities Fund Ltd (ASX: PGF) and MFF Capital Investments Ltd (ASX: MFF).

More reading

• Why one top fund manager likes NAB shares, despite preferring other sectors
• Why I would buy CBA and this high yield ASX dividend share
• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• The hidden risk to early superannuation withdrawal that no one told you about
• The embattled ASX 200 stocks that could deliver a dividend surprise

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd, PM Capital Global Opportunities Fund Ltd, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, BUBS AUST FPO, and Washington H. Soul Pattinson and Company 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 Openpay Group Ltd (ASX:OPY) share price has latched onto the momentum of the buy now, pay later (BNPL) sector and soared more than 10% higher in today’s trade. It has since pulled back to be up 3.93% to $2.91 at the time of writing.

How much higher can the Openpay share price go and is it too late to buy?

What is fuelling the Openpay share price?

Following today’s price action, the Openpay share price has surged more than 38% since the start of July. Considering the company has not released any price-sensitive news within that time, it’s fair to assume that investors and traders are jumping on Openpay shares as the BNPL sector soars.

Fuelled by the raging Afterpay Ltd (ASX:APT) share price, other companies in the BNPL sector have performed strongly over the past few weeks. Zip Co Ltd (ASX:Z1P) and Sezzle Inc (ASX:SZL) are also both trading at all-time highs after seeing monster share price gains recently.

What does Openpay do?

Openpay is yet another payment solutions company that services the fast-growing BNPL sector. In comparison with other operators, Openpay offers larger payment plans, financing purchases up to $20,000, and offers payment ranges between 2 and 24 months with no interest.

Openpay services a range of specialised industries such as automotive, healthcare and home improvements, boasting notable brands such as UltraTune, Total Tools and Bunnings. The company services customers in Australia, the UK and New Zealand.

How has Openpay performed during the pandemic?

In early March, Openpay released a response to the COVID-19 pandemic, assuring investors that the company remained in a strong financial position with $45.7 million cash on hand. The company also highlighted that its established online presence and strong technology will allow it to adapt to increased demands in online trading.

The company completed a $33.7 million capital raise in early June. According to Openpay’s management, proceeds from the placement will be used to support the company’s future growth strategies. These include growing the company’s presence in its core markets, investing in product development and facilitating strategic growth partnerships.

Is it too late to buy shares in Openpay?

Apart from surging in the past month, the Openpay share price has rocketed more than 800% since late March. In my opinion, the short-term trajectory of the price action is unsustainable. Therefore, I can’t advocate buying shares in Openpay after such a phenomenal rally.

I think a more prudent strategy would be to wait until the August reporting season to get a better idea of how companies in the BNPL have fared during the pandemic and how they’re positioned for the future.  

More reading

• Why Kogan, Netwealth, Silver Lake, & Zip Co shares are storming higher
• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• These ASX fintech shares are tackling COVID-19 head on
• Sezzle share price halted as it undertakes $86.3 million capital raising
• Zip share price surges 30% in a week. Are we calling bubble yet?

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended 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 The Openpay share price is surging today. Is it the next Afterpay? appeared first on Motley Fool Australia.

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In the mid cap side of the Australian share market, I believe there are a number of shares that have the potential to become much larger companies in the future.

Two mid cap shares that tick a lot of boxes for me are listed below. Here’s why I think they could grow significantly over the next decade:

Kogan.com Ltd (ASX: KGN)

I think that this ecommerce company could be a great long-term investment. Over the last few years it has been benefiting greatly from the structural change that is happening in the retail industry. Pleasingly for the company and its shareholders, this change has been accelerated by the pandemic. In fact, Adobe estimates that the pandemic has accelerated ecommerce growth by 4 to 6 years. This looks set to underpin exceptionally strong earnings growth for Kogan in FY 2020 and FY 2021. Which could yet be boosted further inorganically. Last month the company announced a $115 million capital raising (which was later revised to $120 million). It intends to use the funds to acquire businesses that will add value and drive further growth.

Megaport Ltd (ASX: MP1)

Another exciting tech share to look at is Megaport. It is a provider of elastic interconnection services across data centres globally. This service allows its users to increase and decrease their available bandwidth in response to their own demand requirements. The benefit of this is that it means they don’t need to be tied to fixed service levels on long-term and expensive contracts. Instead, they can just use what they need, when they need it. Thanks to the quality of its service and the cloud computing boom, demand for its services has been growing very strongly and has driven further strong revenue growth in FY 2020. Pleasingly, with the migration to the cloud expected to accelerate because of the pandemic, Megaport appears well-placed to continue its growth for many years to come.

More reading

• Why Kogan, Netwealth, Silver Lake, & Zip Co shares are storming higher
• A surprise ASX share that’s doubled since March
• Why the Kogan share price soared 38% in June
• Kogan share price hits record high after upsizing share purchase plan
• Why Coles, Kogan, Northern Star, & Splitit are charging higher

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 Kogan.com ltd and MEGAPORT FPO. The Motley Fool Australia has recommended Kogan.com ltd and MEGAPORT 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.

The post 2 exciting ASX tech shares with enormous potential appeared first on Motley Fool Australia.

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