Tag: Motley Fool Australia

Australian retail sales surged 16.3% in May to $4.03 billion. This is the largest month-on-month rise in 38 years. The release by the Australian Bureau of Statistics showed a surge in sales right across the retailing industry. This is good news for retail ASX shares and the broader economy. 

However, does this mark a turning point that ASX retailers had been dreaming about? Let’s begin with a dive into the impact on retail shares and the economy.

Impact on retail ASX shares

Wesfarmers Ltd (ASX: WES) will benefit as hardware, building and garden supplies, clothing, electronic goods and footwear experienced large increases in sales. This is good news for its Bunnings, Target, Kmart and Officeworks brands. 

Similarly, JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) will benefit from sales increases in household goods. Products such as furniture, floor covering, houseware, textile goods, electrical and electronic goods saw an increase in turnover. 

In addition, there is positive news for supermarkets owned by Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Metcash Limited (ASX: MTS) with food retailing rising solidly. 

Impact on the economy

A rise in retail sales is good news for the broader economy as it illustrates consumers are feeling more optimistic about their finances. Government intervention in terms of Jobkeeper and Jobseeker could also explain the spark for retail sales. Increased foot traffic to retailers is also marked by the easing of restrictions. Also, strong retail sales is a positive development for jobs in the industry.

Does this mark a turning point for Australian retail?

Many retailers are hoping so. Unfortunately, the 16.3% increase in May follows a 17.7% fall in April.  More light will be shed on whether there is a recovery playing out in the industry as retail data is released over the coming months.   

The shift in how we work and study could also explain the surge in retail sales.  Working and studying from home has prompted a sharp rise in demand for office-related furniture and equipment. Furthermore, the reduction in time travelling to work meant we have more time to do DIY projects at home. This may shift with a return back to the office.

While the strong rebound in retail sales is excellent news for the ASX retailers mentioned above, cautious optimism is needed. Jobkeeper has an estimated expiry date of September which will be a hit to consumers discretionary income and Jobseeker payment is set to revert back to levels pre-crisis. As a result, the consumer’s optimism may quickly evaporate and tighten their wallets. 

More reading

• Temple & Webster shares continue to grow despite coronavirus restrictions
• 5 ASX dividend shares that could potentially smash term deposits
• Where to invest for reliable dividend shares
• Why the Wesfarmers share is beating the ASX 200
• How the ASX 200 can help first home buyers save for a deposit

Motley Fool contributor Matthew Donald owns shares of Harvey Norman Holdings Ltd. and Wesfarmers Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths 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.

The post Australian retail sales up 16.3% in May appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2UXRQeG

Despite some relaxation of coronavirus restrictions, travel remains largely off the cards. This is impacting the ASX travel shares, which have seen mixed recoveries since the market meltdown in March. 

Borders were closed in late March in an effort to combat coronavirus. According to the Australian Bureau of Statistics (ABC), overseas arrivals in March fell 60%, with just 331,900 short term visitors arriving in Australia. Overseas arrivals to Australia collapsed in April following the border closures, with ABS data revealing that overseas visitors decreased 99.3% to just 2,200 trips (compared to March). The Australian tourism industry, which was already hurting from the summer bushfires, began to sustain heavy economic damage. 

ASX travel shares fell out of favour with investors in late February as the scope of the pandemic became clearer. While there is hope Australians will be able to travel between states in the coming weeks, international travel may be off the cards until next year. Some estimate it may take up to 3 years for international travel to return to pre-COVID levels.

With this in mind, we take a look at how the ASX travel shares are travelling. 

Corporate Travel Management Ltd (ASX: CTD)

The Corporate Travel Management share price has bounced over 160% from its March low, but remains 44% down from its 2020 high. The travel agent is one of the few that has not yet raised capital to shore up the liquidity. 

Corporate Travel benefits from its business  model in which a high proportion of costs are variable. With a small physical footprint, the business saves on rent with about 70% of costs people-related. This enabled a swift resizing of the business. 

When the crisis hit, Corporate Travel Management embarked on a comprehensive cost reduction program. The company’s cost base has been reduced to $10–$12 million a month, down from $27–$27 million a month. This has been achieved through a combination of retrenchment, temporary stand downs, government initiatives such as JobKeeper, the elimination of non-essential expenditure and reduced capex. 

Domestic travel restrictions are likely to ease prior to international restrictions. This will benefit Corporate Travel, which is leveraged to the domestic market – about 60% of its total transaction volumes are domestic in nature. Domestic activity is highly profitable for Corporate Travel, particularly in Australia/New Zealand and Europe. 

Corporate Travel Management is positioning itself for a domestic recovery. It says it has the ability to operate a high performing domestic only business with a reduced cost base until international recovers. Staff capacity in each region is ready to be deployed back to full time as required. 

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is up 55% from its March low but remains down 65% from 2020 highs. The travel operator closed stores and raised emergency funds in the wake of the pandemic. It raised $700 million in equity to provide liquidity during the coronavirus crisis. 

Flight Centre is aiming to reduce its cost base to $65 million per month by the end of July 2020. Prior to COVID-19, the cost base was around $226 million a month. CEO Graham Turner says the equity raising and cost saving initiatives will enable Flight Centre to trade through the current period of global disruption to the travel industry. 

To reduce costs by 70%, Flight Centre is closing half its stores and reducing its workforce. The cost saving measures will themselves cost the company $210 million in redundancies, lease breakages and the like. 

Travel shutdowns meant Flight Centre’s total transaction value fell to a low of 20% of normal levels in March. Uncertainty around how long travel restrictions will remain in place means Flight Centre will want a buffer of funds to protect its business in the interim. 

The equity raising and additional funding lines give Flight Centre around $1.6 billion in additional liquidity. This should fund the company well into 2021 with minimal revenues before a significant uplift in business will be required. 

Qantas Airways Limited (ASX: QAN)

The Qantas share price has risen 107% from its March low but remains nearly 40% down from its earlier highs. The airline has extended flight cancellations from May through to the end of July. Capacity can be added back if domestic and Trans-Tasman restrictions ease. 

Qantas raised $1.05 billion in debt funding secured against seven Boeing 787-9s in March. It has now secured an additional $550 million in funding secured against three wholly owned 787-9s. Net debt is $5.8 billion, which is in the middle of the airline’s target range. Qantas has no financial covenants on its debt facilities and no significant debt maturities until June 2021. 

Qantas says it has sufficient liquidity to respond to a range of recovery scenarios, including where conditions persist until December 2021. It also has $2.7 billion in unencumbered aircraft assets and can raise funds against these if required. 

Qantas acted quickly to slow cash burn early in the crisis. This was achieved through employee stand downs, revised agreements with suppliers, and pauses on virtually all capital and operating expenditures based on current conditions, Qantas expects to reach a net cash burn rate of $40 million per week by the end of June 2020. 

The airline is currently operating around 5% of its pre-crisis domestic passenger network and 1% of its international network. 

Regional Express Holdings Ltd (ASX: REX)

Regional Express Holdings shares are trading on par with levels pre-coronavirus. Shares in the airline operator were boosted by speculation it could start flying between capital cities. This would see Regional Express compete with Qantas and Virgin Australia. 

Regional Express said it is considering the feasibility of commencing domestic airline operations. This would involve flying between capital cities and not just to them. The airline has been approached by several parties interested in providing the equity needed for it to start regional operations in Australia. 

The airline estimates it would need $200 million to expand its operations. According to the Australian Financial Review (AFR), the business plan would involve leasing 10 narrow-bodied jets. With airlines globally struggling due to the travel downturn, Regional Express should be able to access aircraft at distressed prices. 

With a sufficient capital injection, the Regional Express board believes, “there is a confluence of circumstances which render the start of domestic operations by Rex to be a particularly compelling proposition.” If the board decides to proceed with the expansion, domestic operations are expected to commence on 1 March 2021. 

More reading

• Millennials be warned! Signs of dangerous ASX share trading grow
• Next phase of bull market could see ANZ Bank outperform Afterpay
• 2 ASX shares to buy for increased Australian travel
• ASX 200 jumps almost 4%, Webjet share price soars
• 3 essential checks to do before buying ASX shares

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Flight Centre Travel 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.

The post What’s next for these 4 ASX travel shares? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3hK8TdY

A surprising success story to come out of these uncertain economic times is the rise of ASX online homewares and furniture retailer, Temple & Webster Group Ltd (ASX: TPW). Despite falling to almost $1.50 during in late March, shares in the company have now surged back up well over $5. This means they’ve gained almost 100% so far this year.

This share price performance is especially impressive when compared to more established competitors in the homewares space. Competitors like Harvey Norman Holdings Limited (ASX: HVN) and Myer Holdings Limited (ASX: MYR). Both companies have lost significant ground this year. The Harvey Norman share price is down 12% in 2020, while for embattled Myer, the loss is closer to 50%. Even the share price of ASX retail darling JB Hi-Fi Limited (ASX: JBH) is only up around 7% this year.

In a business update released to the market on Thursday, Temple & Webster reported year-to-date May revenues of $151.7 million. This is an increase of 68% over the prior comparative period. That strong momentum doesn’t seem to be letting up with the company declaring revenue for the month of June 2020 on track to double that of June 2019.

What is the secret behind Temple & Webster’s success?

Temple & Webster operates an online drop shipping business with no physical furniture showrooms. This business model meant that it was uniquely positioned to succeed during even the worst of the coronavirus. Operationally, the company was able to transition to remote working arrangements far more easily than its rivals. It also proved itself to be more adept at meeting the needs of consumers during the pandemic.

With many retailers closing their doors and the population forced to stay home, consumers moved to shop online. At the same time, demand for home furniture and other homewares spiked. Naturally, with people spending more time indoors, they were purchasing products to improve their homes and make their lives in lockdown more comfortable. Additionally, those working from home purchased home office furniture and other accessories.

In many ways, it makes sense that Temple & Webster outperformed competitors in this market. The lockdowns hit large brick and mortar retailers like Myer and Harvey Norman the hardest. In these uncertain times, the costs involved in maintaining a physical retail presence can drag on a company’s already shrinking profits. The market is clearly viewing growing digital companies operating off a lower cost base to be safer bets in the current climate.

Should you invest?

Given the surge in Temple & Webster’s share price over the last few months, now might not be the best time to buy. This is especially when the economic forecast is for rocky conditions ahead. However, Temple & Webster should definitely be one to add to your watchlists as a potential long-term growth opportunity.

Even as retail stores open up, the coronavirus crisis could have forced a permanent change in the way people shop. Consumers who may have never shopped online for homewares and furniture before have been doing so for the first time. And while that is bad news for malls and local shopping precincts, it’s great for e-commerce.

This could precipitate a radical reshuffling of the retail market share away from the traditional big players and towards the next generation of newcomers like Temple & Webster.

More reading

• Australian retail sales up 16.3% in May
• Why the Wesfarmers share is beating the ASX 200
• Why A2 Milk, Afterpay, Mesoblast, and Temple & Webster are pushing higher
• Temple & Webster share price jumps 10% after reporting bumper sales growth
• These are the 10 most shorted ASX shares

Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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 Temple & Webster shares continue to grow despite coronavirus restrictions appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Yft0t5

The Cardinal Resources Ltd (ASX: CDV) share price is flying higher today following news that a subsidiary of China’s largest gold producer is making a play for the ASX miner.

Cardinal Resources is a gold-focused exploration and development company that holds interests in tenements within Ghana, West Africa.

What’s the deal?

This morning, Cardinal announced a takeover bid from Shandong Gold at an offer price of 60 cents per share, valuing the company at around $300 million. This represents a 29% premium to Cardinal’s last closing price of 46.5 cents, and a 31.1% premium to a takeover proposal from Nord Gold SE announced in March.

The offer from Shandong Gold is subject to certain conditions, including 50.1% minimum acceptance by Cardinal shareholders and regulatory approval. On the regulatory front, Shandong Gold will need to obtain approval from the Foreign Investment Review Board, along with various regulatory bodies from the People’s Republic of China.

Cardinal’s board are in favour of Shandong Gold’s offer, recommending that all Cardinal shareholders accept the offer in the absence of a superior proposal.

“The Board of Directors of Cardinal has negotiated what we consider a strong offer for our shareholders and one which delivers a significant premium to Cardinal’s market price, at a time of considerable volatility and uncertainty in global markets,” said chief executive Archie Koimtsidis.

Interim financing

In conjunction with the transaction, Shandong Gold has also agreed to provide Cardinal with interim funding of $11.96 million by way of a placement. In the absence of a competing proposal, the placement will be completed at an issue price of 46 cents per share and is not subject to shareholder approval.

The funds will be used to ensure Cardinal continues advancing the Namdini Project towards development. Namdini is a gold project located in Ghana which has a published ore reserve of 5.1 million ounces.

At the time of writing, the Cardinal Resources share price has soared 27.31% to 59.2 cents after rallying as much as 31% in early trade.

More reading

• Australian retail sales up 16.3% in May
• What’s next for these 4 ASX travel shares?
• Temple & Webster shares continue to grow despite coronavirus restrictions
• 3 ASX shares I think are super cheap right now
• Grow your wealth with these 3 ASX fintech shares

Motley Fool contributor Cathryn Goh 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 Cardinal Resources share price rockets 27% on $300 million takeover bid appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2CmeJCm

Cheap ASX shares anyone?

With the S&P/ASX 200 Index (ASX: XJO) on track for another day of gains today, it’s certainly feeling like a good time to own ASX shares. Although we’re still not at the levels the ASX 200 touched last week (over 6,100 points), the momentum seems to have been regained by the bulls out there.

While this is all well and good for those of us who already own substantial positions, it’s not so rosy for anyone who is looking to add to their investments right now.  It can be very painful looking back on the prices we saw in March and April compared with those on offer today!

But there’s no point crying over spilt milk, as they say. So here are 3 cheap ASX shares that I think are still offering compelling value today.

A cheap ASX retailer

The Premier Investments Limited (ASX: PMV) share price is up more than 3% today after some positive sentiment from a brokering firm earlier this week. Even so, this ASX retailing giant remains substantially below the highs of over $21 we saw in February. Premier Investments is one of my favourite Aussie retailers. It owns the Smiggle, Peter Alexander, Just Jeans, and Jay-Jays chains, all stores with unique and compelling product lines. This company has no doubt been hurt by the coronavirus pandemic and the associated lockdowns and might be hurting for some time yet. But I still think Premier’s future is bright and I believe its current share price is pretty fairly valued.

An REIT income opportunity

Scentre Group (ASX: SCG) is another ASX share I think is offering a nice buy price today. Make no mistake, this real estate investment trust (REIT) has been hit hard by the pandemic. Scentre owns the Westfield shopping centre brand across Australia and New Zealand. March and April were dire months for this REIT as shops closed and customers deserted shopping centres. However, there are strong signs of life right now as restrictions are lifting and customers are returning to the shops. For a long-term income opportunity, I think Scentre shares are a great option to examine today.

An ASX ETF with global exposure

The Vanguard MSCI Index International Shares ETF (ASX: VGS) is my final cheap ASX share to consider today. This exchange-traded fund (ETF) tracks the largest companies across the advanced economies of the world. Its largest weightings are in United States shares like Apple and Microsoft, but it also has significant exposure to European, United Kingdom, Canadian, and Japanese companies as well. Back in February, units of this ETF would have set you back around $89, but today, they are going for $78.28 (at the time of writing). I believe this ETF is a no-brainer for a long-term, diversified and passive investment. As such, I think today’s price presents a great opportunity to stock up.

More reading

• Brokers just upgraded these ASX 200 stocks to “buy” today
• ASX 200 up 0.9%: Big four banks rebound, Appen hits record high
• Is the Downer EDI share price in the buy zone?
• Looking to buy ASX technology shares? Here are 4 to consider
• Why I would buy Telstra and these ASX 200 blue chip shares

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Scentre Group and Vanguard MSCI Index International Shares 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.

The post 3 ASX shares I think are super cheap right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Ycdq1k

The ASX Fintech shares have been in the spotlight lately due to the recent growth the industry has experienced. This growth has, therefore, resulted in share prices rising.

‘Fintech’ is short for financial technology and is thought by many to be the future of finance. This comes as people’s lives are becoming increasingly more digital. But one thing is for sure, and that is fintech shares have made a lot of people huge returns, especially in recent months. People have largely moved towards online alternatives as a result of the coronavirus.

When analysing fintech companies, we can usually base our findings on customer numbers and revenue. If the company has a substantial number of both, it can become of value to a major company as a takeover target or, it can convert these figures into profits and later pay dividends.

While fintech solutions have become popular with consumers, it’s possible they are still in their early stages and have a lot of market penetration left to cover. Although the companies below have reached a substantial number of customers, their volumes are small when considering the number of consumers within their operating markets. This leaves room for huge growth.

The below ASX fintech shares have been stellar performers and show strong potential for further growth:

Afterpay Ltd (ASX: APT) 

Afterpay is likely Australia’s most famous and successful fintech solutions provider. The ASX fintech provides a platform that allows online shoppers to ‘buy now’ and ‘pay later’. Since June last year, the Afterpay share price has returned 182%. This is the kind of annual return that even Warren Buffet would rarely get from a single investment.

Afterpay’s success has come following its growth in Australia and especially in the US. In May, Afterpay was used by more than 8.4 million active customers internationally with 5 million active customers in the giant US market. The company is now offered by more than 15,000 brands and retailers. In Q3 FY20, Afterpay processed $2.4 billion in transactions, a massive 354% increase from Q3 Fy19.

Additionally, the Afterpay share price has been boosted by buying from China’s Tencent Holdings Ltd. In April, Tencent bought shares on market and built a 5% holding in Afterpay.

Zip Co Ltd (ASX: Z1P)

Zip Co listed on the ASX in 2015 and has seen considerable success since that time. Since its IPO price of $0.20 cents, Zip Co’s share price has increased by 3075%. This means that every dollar invested in Zip Co 5 years ago is worth over $30 today.

Zip Co is accepted by more than 18,000 retailers in Australia and offers 2 products; Zip Pay and Zip Money. Both of these products allow purchasers to buy now and pay later online and in-store with participating retailers. 

In May, Zip Co’s monthly revenue was $15.6 million. This was a huge 78% increase year on year from May 2019. Zip Co has 2.1 million customers in Australia and New Zealand and it processed $189.3 million in transactions in May. Further, customers repayment rates were higher or on par with pre coronavirus levels.   

Zip Co recently entered the US through its acquisition of QuadPay. The company estimates the US retail market to be worth over US$5 trillion per year. At the end of March, QuadPay had more than 1.5 million customers and there were 3,500 merchants accepting payment through its platform. Given that rival Afterpay has seen such significant success in the US, there appears to be huge potential for Zip Co to grow in the US market. 

Sezzle Inc (ASX: SZL)

Sezzle is another buy now pay later platform for online shoppers. It is headquartered in the US and has exposure to the giant US retail market. Since April, the Sezzle share price has increased by 859%. This is a huge return over a 3 month period and reflects the recent success of the group as more people have moved towards online shopping. 

Sezzle has 1.3 million customers and its platform is offered by almost 15,000 merchants. Sezzle is developing innovative products, including online payment cards to attract lucrative Gen Z and millennial generations. It estimates that the Gen Z US consumer population will reach 84 million in 2020 and that the US millennial consumer population will reach 69 million in 2020. Additionally, it estimates that a huge 25% of spending power will belong to Gen Z this year. Further, Sezzle has estimated that 67% of Millenials have a sub or non-prime credit score. This may make Sezzle a great choice for them and provide a sustainable alternative to credit cards.

According to Sezzle, 53.7% of its consumers are millenials. 

This ASX fintech share has experienced triple-digit revenue growth year on year since 2018 and, as reported, continued this trend in the first quarter of 2020. In April, Sezzle achieved underlying merchant sales of US$119.4 million, a record for the company.

More reading

• Splitit’s share price surges higher. Up 135% in two days
• Brokers name 3 ASX 200 shares to buy today
• ASX tech shares: 2 exciting small caps to watch closely
• Why a2 Milk, Afterpay, and Pushpay shares just hit record highs
• ASX 200 falls 0.9%, Afterpay share price hits new record

Chris Chitty 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 Grow your wealth with these 3 ASX fintech shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37J4LGK

The share price of buy now, pay later (BNPL) provider Splitit Ltd (ASX: SPT) is up by a massive 27% so far in trading today. This follows on from a whopping 108.3% share price rise yesterday.

The BNPL market has really being heating up over the past year, with rivals Afterpay Ltd (ASX: APT) and Openpay Group Ltd (ASX: OPY) all vying for a piece of this rapidly expanding market.

New deal with Mastercard

So, what has been behind this rapid increase in the Splitit share price over the past two days? It all appears linked to the company’s deal with Mastercard announced yesterday.

The new agreement will enable Splitit to work in partnership with Mastercard by integrating its instalment solution with Mastercard’s own technology platform. The deal is likely to further assist Splitit in its quest to globally rollout its offering.

The new solution with Mastercard will provide connected merchants the ability to deliver customers a seamless and secure customer checkout experience, whether in store or via online channels.

So how does the Splitit instalment solution work?

Splitit is cleverly carving out a very interesting niche in the BNPL market. Splitit does not extend credit to customers like its main and much larger rival Afterpay. Instead, Splitit’s payment solution enables customers to pay with their existing debit or credit card. It does this by splitting the cost into monthly payments. Also, since the purchase is made with an existing card, approval of the transaction is immediate.

Previous deal with Visa

The deal announced with Mastercard yesterday, follows on from another agreement announced with Mastercard‘s rival Visa, back in March.

Through this deal, Splitit is able to leverage the Visa Developer Platform to further expand into the instalment payments market. Splitit now offers Visa Instalment Solutions to its merchant network.

A rocky ride for the Splitit share price

The Splitit share price has been quite volatile over the past 12 months. Although it has shot up significantly over the last two trading days, prior to this it was failing to even reach its early 2019 levels. The Splitit share price grew very strongly in early 2019, shooting over $1.50 at that time, but since lost ground up until two days ago. It fell as low as 24 cents per share in March this year.

At the time of writing, the Splitit share price is trading at $1.75. Time will tell whether or not it can maintain share price momentum this time around.

More reading

• Grow your wealth with these 3 ASX fintech shares
• Brokers name 3 ASX 200 shares to buy today
• ASX tech shares: 2 exciting small caps to watch closely
• Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher
• Why a2 Milk, Afterpay, and Pushpay shares just hit record highs

Motley Fool contributor Phil Harpur owns shares of AFTERPAY T FPO. 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.

The post Splitit’s share price surges higher. Up 135% in two days appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/30WQ69m

The Nick Scali Limited (ASX: NCK) share price leapt 21% this morning following stronger than expected sales. Despite the closure of stores during lockdown, sales orders have grown 7% over the second half to date and 20.4% over the quarter to date.

As a result of continued strong sales despite the coronavirus pandemic, the Nick Scali share price has more than doubled from its March low of $3.08 and is now trading at $7. 

What does Nick Scali do? 

Nick Scali is a furniture retailer which has been trading in Australia for over 50 years. Expanding into New Zealand in 2017, Nick Scali imports over 5,000 containers of furniture per year. Prior to the pandemic, the company sold predominantly through physical stores, but has launched an enhanced digital offering as a result of the lockdown. 

What did Nick Scali report?

Nick Scali forecast strong profit growth in the second half, with net profit after tax (NPAT) expected to be up 15% to 20% on 2H FY19. Full year revenue is expected to be in the range of $260 million to $263 million. The retailer is expecting full year underlying NPAT of $39 million to $40 million. 

The retailer closed showrooms on 30 March 2020, and began reopening in April, with all stores open by the end of the month. Since reopening, all showrooms have traded strongly with positive sales order growth. Nick Scali responded to store closures by improving its digital offering, allowing customers to purchase its entire range of products online. 

What is the outlook for Nick Scali?

Nick Scali experienced a significant decline in sales orders during the period of store closures. This means that around $9 million to $11 million of sales were unable to be recorded in the current half of the financial year. Nonetheless, profits are set to increase in 2H FY20 compared to 2H FY19. This is thanks to a range of cost reduction initiatives across marketing, employment, and property, alongside government assistance. 

The company saw a significant rebound in customer activity in May and the first half of June. Sales orders over May and June are expected to be up 54% on the prior corresponding period. This surge has been driven by the easing of government restrictions and a reallocation of consumer spending toward furnishings and homewares. 

Nick Scali has benefitted from people spending more time at home. As a result, many consumers are choosing to upgrade their domestic environments with new furniture and accessories. Given the current increase in sales orders, Nick Scali expects sales growth of 30% in Q1 FY21, which will underwrite profit growth for 1H FY21. 

More reading

• Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher
• Westpac tips the Australian dollar to continue rising

Motley Fool contributor Kate O’Brien 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 ASX stock of the day: Nick Scali share price leaps 21% on sales numbers appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2YQTgZI

Brokers are still finding stocks to upgrade on the ASX even as the S&P/ASX 200 Index (Index:^AXJO) reattempts to break above 6,000.

That level is a psychologically important mark for the ASX, and if successful, will be a bullish development for our market.

The ASX 200 jumped 1% in morning trade to 5,998 points as investors brushed aside their COVID-19 fears and focused on the big jump in retail sales for May.

Shopping for a good buy

This positive sentiment partially explains the 6.3% jump in the Premier Investments Limited (ASX: PMV) share price to $17.35 at the time of writing.

The other reason why the stationery and clothing retailer is outperforming is because Macquarie Group Ltd (ASX: MQG) upgraded the stock.

The broker changed its recommendation on Premier to “outperform” from “neutral” with a $20.11 price target.

The bullish turn comes on the back of the surge in online sales across the sector due to the coronavirus lockdown.

“Online trends within PMV’s portfolio highlight strength within the key brands despite the recent setback of physical store shutdowns,” said Macquarie.

The group’s cost base is also likely to fall, which will pad margins. Premier is pushing shopping mall landlords to cut rents and is eligible for wage subsidies in Australia and some of the other countries it operates in.

However, as Macquarie highlights, quantifying wage subsidies, like JobKeeper, is difficult. There is also a risk that Premier’s aggressive move to force rental cuts can backfire.

Seeking a bargain

Another stock that’s outperforming today is the SEEK Limited (ASX: SEK) share price, which rallied 4.5% to $21.74 at the time of writing.

The jump comes as UBS upgraded the online jobs classifieds group to “buy” from “neutral” today and upped its price target to $23 from $15.25 a share.

There are four driving the broker’s decision. First, UBS thinks the worst for the jobs market is over with its weekly trackers showing sustained improvement in job volumes.

Next, Seek is recommencing its dynamic pricing for recruiters and corporates from next month, which could see yield growth reaccelerate.

Further, the broker thinks the group’s recent temporary cuts to operating costs could be in place for the longer-term.

Finally, UBS economists have revised up their forecast peak in Australian unemployment to 8% from 10%.

There is also an additional factor why investors should buy the stock. Seek’s valuation stands favourably when compared to peers like REA Group Limited (ASX: REA) and Carsales.Com Ltd (ASX: CAR).

More reading

• Brokers name 3 ASX 200 shares to buy today
• ASX 200 up 0.9%: Big four banks rebound, Appen hits record high
• Is the Downer EDI share price in the buy zone?
• ASX tech shares: 2 exciting small caps to watch closely
• Top fund manager reveals some of the best ASX shares to own

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Premier Investments Limited. The Motley Fool Australia has recommended carsales.com Limited, REA Group Limited, and SEEK 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.

The post Brokers just upgraded these ASX 200 stocks to “buy” today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2N7W933

Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Afterpay Ltd (ASX: APT)

According to a note out of Ord Minnett, its analysts have retained their buy rating and lifted their price target materially on this payments company’s shares to $64.70. The broker has been looking through recent data and has made positive revisions. It now believes Afterpay could report almost 10 million active customers by the end of FY 2020. This will be more than double the 4.6 million active customers it had at the end of FY 2019. While it is a high risk option due to its valuation, I agree that Afterpay is a buy.

SEEK Limited (ASX: SEK)

A note out of UBS reveals that its analysts have upgraded this job listings company’s shares to a buy rating with a $23.00 price target. UBS made the move on the belief that the worst is now behind the company and that job volumes have started their recovery. The broker also notes that SEEK’s shares look good value in comparison to other online listings companies. I agree with UBS and feel SEEK would be a great buy and hold investment.

Woodside Petroleum Limited (ASX: WPL)

Analysts at Goldman Sachs have reaffirmed their buy rating and $33.85 price target on this energy producer’s shares. According to the note, the broker believes that Woodside is well-positioned in this low oil price environment due to its low cost operations and its strong balance sheet. Based on its last close price, Goldman’s price target implies potential upside of 55.6% for its shares over the next 12 months. I think this could certainly make it worth considering.

More reading

• Brokers just upgraded these ASX 200 stocks to “buy” today
• ASX tech shares: 2 exciting small caps to watch closely
• Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher
• 3 quality ASX shares to buy now to get rich later
• Why a2 Milk, Afterpay, and Pushpay shares just hit record highs

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

The post Brokers name 3 ASX 200 shares to buy today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2UXGabT