Tag: Motley Fool Australia

The Kogan.com Ltd (ASX: KGN) share price has been a very strong performer in recent weeks but won’t be going anywhere on Wednesday.

This morning the ecommerce company requested a trading halt prior to the market open.

Why is the Kogan share price in a trading halt?

Kogan has taken advantage of the recent surge in its share price to raise capital via a placement and share purchase plan.

The company revealed that it is aiming to raise a total of $115 million. This comprises a $100 million fully underwritten placement at $11.45 per share and a non-underwritten share purchase plan to raise up to $15 million.

The placement price represents a 7.5% discount to its last close price.

Why is Kogan raising funds?

The company revealed that it intends to use the proceeds from the placement and share purchase plan to provide the financial flexibility to act quickly on future value accretive opportunities that broaden the company’s offering, expand its customer base, or enhance its operating model.

Last month Kogan announced that it had acquired replica furniture and homewares retailer Matt Blatt for $4.4 million. But judging by this capital raising, it doesn’t plan to stop there.

In fact, the company notes that multiple opportunities are presenting themselves. Though, it will focus only on opportunities that it believes add value.

Kogan’s CEO, Ruslan Kogan, commented: “Kogan.com is committed to making the most in-demand products and services more affordable and accessible. Our long-term strategy has enabled us to thrive in the current challenging environment, and we are now in a better position than ever to take advantage of growth opportunities. Our low cost of doing business and digital expertise have put us in the driver’s seat to capture market share as the retail industry undergoes significant change.”

More reading

• ASX winners and losers from last week’s rally
• Can Kogan.com survive Amazon?
• The Kogan share price makes it 5 times bigger than Myer
• Why I’d buy Appen and these ASX growth shares for the 2020s
• How I would invest $50,000 into ASX shares right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com 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.

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There is a belief that to invest in S&P/ASX 200 Index (ASX: JXO) shares you need to be a part of the ‘rich person’s game’ and that it’s out of reach for the average Joe on the street.

It’s easy to understand why. In popular culture, the only investors we hear about are rich scoundrels. Think about it: Gordon Gekko, Jordan Belfort… these guys were hardly model citizens.

Up until recent years, it was quite difficult to start investing. You had to find a stockbroker, pay them through the nose, and try and find winners in the pages of your daily newspaper.

Now, it’s a different world. You can literally buy shares in under a minute through an online broker, all without having to pay usurious brokerage fees and commissions. Anyone can access a company’s annual report with the click of a button and read 100 different investor’s opinions about a share without leaving their desk.

This might not have been great for the finance industry, but it has undoubtedly been for the average Australian. Democracy has come to the share market.

Why it’s important to invest in ASX 200 shares

But with this power has come responsibility. In days of yore, investing wasn’t really necessary. The government promised to fund everyone over 65s retirement through the Age Pension. Sure, you could top this up with some cash. But with a bank account or term deposit typically paying real interest rates, you didn’t really need to ‘take a punt’ on the share market.

As comfortable as that world might sound, we live in a different one today. With interest rates at close to zero, cash instruments like term deposits don’t really cut the mustard as a real investment anymore. Job security is more or less a thing of the past. Most of us won’t be working with a single employer for our whole lives. And the Age Pension has moved from a ‘universal income’ to a ‘safety net’. Considering our ageing population, I have severe doubts over its long-term viability.

That’s why, in my view, investing is no longer optional. And investing in ASX 200 shares are a great place to start. Now, there are other ways of building wealth, such as property. But ASX shares have several advantages making them an ideal pathway for wealth creation in my opinion.

You can start with as little as $500, for one.

Shares are liquid, which means (unlike a house) you can buy and sell them easily for another.

And many shares will pay you tax-advantaged income (in the form of fully franked dividends) along the way.

So if you haven’t already started to invest in 2020, why not take the plunge? Your future self will undoubtedly thank you for not putting it off. And in this brave new world we live in, I don’t think any of us can afford not to.

More reading

• These ASX shares could defy the market sell-off this morning
• Is the Woodside Petroleum share price cheap today?
• 5 things to watch on the ASX 200 on Wednesday
• Why you should be buying the dip in ASX gold stocks
• Why the CSL share price continues to trail the ASX 200

Motley Fool contributor Sebastian Bowen 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 Harvey Norman Holdings Limited (ASX: HVN) share price is trading flat on Wednesday after releasing a sales update.

At the time of writing the retail giant’s shares are changing hands for $3.55.

What did Harvey Norman announce?

Today’s update reveals that Harvey Norman’s Australian business has been on form during the pandemic.

During the crisis, only two franchised stores in Tasmania were closed for two weeks due to a mandated closure of the region by the Tasmanian State Government.

All other Australian franchised stores remained open. This was because, like supermarkets, Harvey Norman was seen as an essential service by the Australian Government during the crisis.

In light of this and increasing demand for many of its products, as of 31 May 2020, the Harvey Norman franchise network has delivered a 17.5% increase in sales in the second half.

This compares to just a 0.1% increase in sales during the first half and means that its year to date sales are up 7.4% on the prior corresponding period.

What about the rest of the business?

Things weren’t quite as positive for its overseas operations, where the vast majority of its stores were forced to close for certain periods during the pandemic.

In Australian dollar terms, New Zealand company operated sales are down 7.3% during the second half. It was a similar story in Slovenia and Croatia, with sales down 5.5% half to date.

Things were much worse in Northern Ireland and Singapore. Second half sales were down 38.2% and 21.7%, respectively, as of 31 May.

Positively, its Ireland and Malaysia stores were still growing their sales. Ireland sales are up 25.4% during the second half and Malaysia sales are up 1.3%.

Special dividend.

In April, Harvey Norman revoked its decision to pay shareholders a 12 cents per share interim dividend due to the pandemic.

It appears as though things haven’t turned out as bad as it first feared. As a result, it has decided to pay a special dividend to shareholders later this month.

Harvey Norman will pay a 6 cents per share fully franked dividend on 29 June 2020. To be eligible, you will need to be a registered shareholder at the close of business on 23 June 2020.

More reading

• How to build a $20,000 passive income with ASX shares
• Can ASX 200 retail shares outperform this year?
• ASX retail shares best placed to benefit from wall of industry bankruptcies
• How to be an ASX 200 share millionaire in 15 years
• The Aussie dollar just hit an 8-week high. Here’s how it affects your ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Commonwealth Bank of Australia (ASX: CBA) share price has lagged behind the other major banks since the market turned on 22 May. Since then, CommBank’s share price has risen by 22%. While impressive, all of the remaining major banks saw increases of over 30% across the same period. This includes Australia and New Zealand Banking Group Limited (ASX: ANZ) which saw a 36% rise in its share price. Even the out of favour Westpac Banking Corp (ASX: WBC) has seen greater share price rises than the largest Aussie bank.

The Commonwealth Bank has, however, been moving forward in preparing itself for the future. This includes by selling off distracting assets not focused on its core business of banking, as well as entering the buy now, pay later market via a deal and 5% stake in Swedish company Klarna. 

So, what is holding back the CBA share price?

CommBank was the first Aussie bank to signal its intention to cut back on Covid-19 support by 30 June. Principally via assessing all claims for loan deferrals on a case by case basis, rather than automatic acceptance. This means customers with ongoing hardship as a result of the coronavirus crisis will have to contact the bank for alternative support. I believe this move is weighing heavily on the CBA share price. 

While this approach seems fiscally prudent at face value, it creates two problems. First, there are issues related to auditing.

Most loans deferred from 20 March, the date the conditions were commenced, would be 90 days overdue. After 90 days default, notices are required to be sent by auditors. A default notice demands payment of the overdue amount plus the current repayment. Debtors can apply for a hardship variation at this stage. With the other banks, when the period finishes on (say) 30 September, customers will just start paying again at that time.

Second, CommBank will likely be the first of the majors to start to see loan defaults for those customers unable to pay who do not qualify for whatever the ‘alternative’ support may be.

Commonwealth Bank is by far the largest of any Aussie bank in the mortgage market with 14.75% market share, according to a report by Australian Finance Group Ltd (ASX: AFG). Therefore, it is exposed to the greatest economic impact of both loan deferrals and potentially loan defaults. 

Alan Kohler opined in The Australian this week that the total amount of the deferred loans is equal to 90% of the market capitalisation of the big four banks. In fact, it is $224 billion across mortgages and business loans. This is a frighteningly large amount of money. Even a small percentage is a frighteningly large amount of money.

Foolish takeaway

CommBank is the country’s largest mortgage lender, a major player in business loans and the country’s largest digital payments institution. As such, Coronavirus is likely to impact the CBA share price more than the other major banks. In response, CommBank has taken the decision to stem the bleeding by cutting short its 6-month coronavirus support measures to finish on 30 June.

At the close of trading on Tuesday, Commonwealth Bank had the lowest price to earnings ratio of the big four banks. It also had the second lowest trailing 12-month dividend yield, even though dividends are presently on hold. The CBA share price remains 9.6% down year to date. 

I would recommend Commonwealth Banks shares to anyone willing to buy and hold over the medium to long term who is prepared to deal with the inevitable bad news to come as the economy normalises.

More reading

• 3 top ASX shares for growth, income, and value investors to buy today
• Is the CBA share price a buy right now?
• 5 things to watch on the ASX 200 on Wednesday
• The ASX bank dividend recovery may be better than what the market thinks
• Not keen on Westpac? Then buy these top ASX dividend shares instead

Motley Fool contributor Daryl Mather 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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As we turn to a new chapter where lockdown measures are being eased and the community slowly returns back to life pre-COVID-19, what are the smartest S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) shares to buy?

Here are 3 industries that are positioned to benefit from the easing restrictions. 

1. Telecommunications 

Smaller ASX telecommunications shares such as 5G Networks Ltd (ASX: 5GN) and Uniti Group Ltd (ASX: UWL) are positioned to benefit from increased levels of working from home, online learning and domestic internet consumption that look set to stick around as a lasting result of the pandemic. While they may represent high risk/high reward investments, I believe both companies may be positioned at the right place at the right time. 

In Uniti’s March 2020 quarter business update it highlighted that increased levels of working and learning from home has “strengthened underlying demand for the company’s superfast fibre-to-the-premises services provided by its wholesale and infrastructure business unit.”

For investors interested in high growth companies, I would certainly place 5G Networks and Uniti shares on the watchlist. 

2. Fintech payments 

ASX fintech shares such as Tyro Payments Ltd (ASX: TYR) and EML Payments Ltd (ASX: EML) both depend in large part on physical retail and hospitality consumption, so they will be looking forward to the return to normal trading. 

Tyro provides more than 32,000 customers with EFTPOS terminals, a vast majority of which are SMEs in the retail, hospitality and health sectors. The company has been providing the market with weekly updates regarding its transaction values. On Tuesday, it highlighted that its transaction values for the week ended 5 June (date-on-date for FY20 vs. FY19) increased by 11%. This has been the first positive increase since April. 

Likewise, EML’s gross debt volume dropped 29% in March on the prior corresponding period, reflecting mall closures across the globe. It expects that the gradual reopening of malls in various countries should see an improvement to its trading conditions. 

3. Airlines and travel 

ASX airline and travel shares have seen eye watering rallies despite domestic and international borders still being closed. On Tuesday, Air New Zealand Limited (ASX: AIZ) saw its share price soar 20% after announcing its plan to return to revenue and profitability.

Qantas Airways Limited (ASX: QAN) has announced that it plans on doubling its existing domestic schedule to more than 300 return flights per week by the end of June. Flights would continue to increase in July, with capacity to reach approximately 40% by month end.

Increasing domestic flights will be positive for the likes of travel agencies including Webjet Limited (ASX: WEB), Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT).

Foolish takeaway

I believe investors should pivot their investment decisions to ASX shares in sectors that are expecting to benefit from pent-up consumer demand, post-COVID-19. 

More reading

• ASX 200 jumps 2.4%, unloved shares keep rising
• Fund managers have been buying these ASX shares
• Why the Air New Zealand share price is up 17% today
• Flight Centre share price and other ASX 200 travel shares look set to continue rising
• Is the Webjet share price a cheap buy today?

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited and Tyro Payments. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Emerchants Limited and 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 The smartest ASX shares to invest $10,000 in right now appeared first on Motley Fool Australia.

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The ELMO Software Ltd (ASX: ELO) share price will be on watch this morning after the company released a business update subsequent to the close of trade yesterday.

ELMO is a cloud-based provider of human capital management software, primarily in Australia and New Zealand. Its integrated product suite covers the entire gamut of an employee’s lifecycle, such as recruiting, onboarding, rostering, payroll, and performance management.

What did ELMO announce?

After the market closed yesterday, ELMO released a trading update in which it provided updated FY20 guidance.

Highlights include the reinstatement of annual recurring revenue guidance to between $55 million and $57 million, and upgraded earnings before interest, tax, depreciation and amortisation (EBITDA) guidance. 

FY20 EBITDA guidance has now been set to between negative $2.5 million and negative $4.5 million. This is up from the previously guided range of negative $4 million to negative $6 million.

Meanwhile, revenue guidance remains unchanged at between $50 million and $52 million.

Along with the updated guidance, ELMO revealed it remains well-capitalised with a cash balance of $140.3 million and no debt as of 31 May 2020. The company’s cash reserves have been boosted by a recently completed $72.8 million capital raising. These funds will be used to support organic growth initiatives and acquisition opportunities.

In terms of operations, ELMO noted that staff have been working remotely since 23 March. As such, its operations have continued without disruption. In line with the easing of lockdown restrictions, the company has commenced the re-opening of offices in Australia and New Zealand.

With a shored up balance sheet, ELMO believes it is well-positioned to take advantage of the current market conditions. Widespread remote-based working has created tailwinds for cloud-based software adoption, and there are increased acquisition opportunities in the ANZ region and the UK. 

More reading

• ELMO Software and 2 other ASX growth companies see businesses adapt to a “new normal”
• 3 small cap ASX tech shares that could be stars of the future
• 2 exciting small cap ASX shares that could have big futures
• 5 exciting small cap ASX shares to watch in June
• Are these exciting small cap ASX tech shares the next Afterpay?

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (Index:^AXJO) is set to tumble this morning but there’s a group of ASX stocks that could buck the downtrend.

The Brent crude oil price staged a late turnaround last night after Libya’s ceased production from its top oil field, according to Bloomberg.

The Brent price jumped 1% to US$41.18 a barrel after falling below US$40 a barrel earlier in the trading session.

Why ASX energy stocks can outperform

This could set the Santos Ltd (ASX: STO) share price, Woodside Petroleum Limited (ASX: WPL) share price and Oil Search Limited (ASX: OSH) share price on a positive footing.

If so, the sector will stand in contrast to the expected broad-based weakness on the ASX as US and European share markets fell overnight.

The weakness stems from concerns that risk assets are overbought with investor optimism running ahead of the COVID-19 reality.

What’s supporting the oil price

But it isn’t only the shutdown of Libya’s main oil field that’s supporting crude. Demand for gasoline is also rising as some major US cities, such as New Jersey end their lockdowns.

The latest data from the Energy Information Administration showed gasoline consumption increased for a second week, reported Bloomberg.

However, other crude products such as diesel and jet fuel declined with the former down 20% and the latter crashing 80% from this time last year.

Diesel rains on gasoline’s parade

No surprises as diesel is tied to industrial production, which is still scraping the floor due to the coronavirus shutdown.

Meanwhile, airlines are still largely grounded and are likely to stay that way for a long while. This is why refineries are switching to producing more diesel.

But some experts believe that low diesel prices will cap any rally in gasoline because refineries cannot limit the production of diesel without negatively impacting on gasoline output.

Oil headwinds aren’t abating

Further, the expended supply curbs by Saudi Arabia is expected to end this month, and that means rising inventories of crude is likely to overwhelm any increase in demand from consumers.

The price of crude is also at a level where US shale oil producers can profitably restart pumping again, assuming that oil stabilises around current levels.  

The oil market is walking a tightrope and its easy to see how the unstable Libyan regime can send prices swinging wildly.

If ASX energy stocks don’t find support when the market opens, it will probably be because the outlook for the market remains too difficult to predict.

More reading

• Why you can’t afford not to invest in ASX 200 shares in 2020
• Is the Woodside Petroleum share price cheap today?
• 5 things to watch on the ASX 200 on Wednesday
• Why you should be buying the dip in ASX gold stocks
• Why the CSL share price continues to trail the ASX 200

Motley Fool contributor Brendon Lau 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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One company that looks likely to profit from the current high gold price is ASX gold miner Silver Lake Resources Limited. (ASX: SLR). On Friday last week, Silver Lake announced an astounding assay result from its recent exploration drive.

Taken from its Deflector Operation in Western Australia, the significant results included an amazing 7 metres at 98.7 grams per tonne. Silver Lake also disclosed an additional 2.6 metres at over 100 g/t. The company’s high grade assays combined with the high gold price make Silver Lake shares a “buy” in my estimation.

For contrast, exploration company Bellevue Gold Ltd (ASX: BGL) is currently a market darling, in part due to its high grade ore bodies. This includes tonnages at 11.8 g/t and 22.0 g/t, albeit for a higher number of gold ounces.

Economics of gold mining

It is often the case that the gold price falls as equities rise, as investors try to reduce the losses across a portfolio. Most gold large caps fell in share price as the stock market rose last week, despite months of good news.  

The ability of a gold mining company to generate good profits on a regular basis reflects two things. Their all in sustaining costs (AISC) and their ability to hedge the market. For example, for the quarter ended 31 March 2020, Newcrest Mining Limited (ASX: NCM) had an ASIC of $827 and a margin of $742. This implies a gold sales price of $1,569 when the spot price was near $2,500. 

With a high grade deposit, Silver Lake is likely to have a very low AISC value. This means it can withstand a large drop in the gold price and still remain very profitable. 

Will the gold price stay high?

The gold price remains at all time highs in US dollars, although it has fallen in recent weeks in Australian dollars. This is because of the high exchange rate. Our successful management of the COVID-19 pandemic, coupled with surging demand for iron ore from our suppliers, has rekindled investor faith in the Aussie dollar.

I think the gold price will remain at high levels. Unlimited quantitative easing, low interest rates and the increasing tensions internationally and domestically for the US will likely see more new money flowing into gold across ETFs and mining shares.

Regardless of the gold price, the point remains. Silver Lake is likely to have a very profitable mining operation due to the high grades of gold, balanced with high grades of copper. 

Foolish takeaway

Australian gold miners are a high productivity sector with very sophisticated sales and hedging practices. The drilling results at Silver Lake are very positive and in my opinion we will see the Silver Lake share price escalate as it edges closer to production. I believe now is a good time to buy into this company for a good medium-term gain. 

More reading

• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points
• 5 things to watch on the ASX 200 on Tuesday
• These were the worst performers on the ASX 200 last week
• 5 things to watch on the ASX 200 on Friday
• Why the Nufarm share price is crashing lower today

Motley Fool contributor Daryl Mather owns shares of Bellevue Gold Ltd. 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 Woodside Petroleum Limited (ASX: WPL) share price rocketed 5.52% higher yesterday, but is the Aussie oil and gas giant in the buy zone?

Why is the Woodside Petroleum share price climbing?

Woodside is Australia’s largest operator of oil and gas production. This means when oil prices move, the Woodside share price usually isn’t far behind.

The prospect of easing lockdowns around the world boosted oil prices higher on Tuesday. US West Texas Intermediate (WTI) crude futures climbed 1.3% to US$38.69 per barrel while Brent crude futures climbed 1.4% to $41.36 per barrel.

This is largely due to an anticipated increase in demand. When the coronavirus lockdowns kicked off, oil prices plummeted lower. With air travel slowing to a trickle and many businesses shutting their doors, there was limited demand for oil.

That supply-shock was coupled with an oil price war between Saudi Arabia and Russia which led to a glut of production. 

However, the Woodside share price rocketed higher yesterday as the tides begin to turn in global markets.

Is Woodside a cheap buy today?

Shares in the Aussie oil and gas producer closed up 5.52% at $24.65 on Tuesday.

However, the Woodside share price is still down steeply from the start of the year.

I think we will see more volatility in ASX energy shares over the coming months. Woodside is trading at a price to earnings (P/E) ratio of 46.7 right now, but what about its relative value?

Santos Ltd (ASX: STO) is probably the closest listed competitor to Woodside.

The Santos share price rocketed 7.30% yesterday and is trading at a P/E ratio of just 13.3 times.

That could mean that Woodside is massively overvalued right now.

Foolish takeaway

I’m not much of an oil and gas investor myself. At a surface level, the Santos share price does look cheaper than the Woodside share price.

However, there are subtle differences that can cause huge valuation changes so it may not be as clear cut as it seems.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why you should be buying the dip in ASX gold stocks
• Why the CSL share price continues to trail the ASX 200
• The ASX bank dividend recovery may be better than what the market thinks
• ASX 200 jumps 2.4%, unloved shares keep rising

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Kogan.com Ltd (ASX:KGN) share price had a good week last week. It leapt 12% on Thursday after the company released a June trading update. By the end of the week, it had settled lower to remain 10% up for the week. This company is squarely in the line-of-sight of Amazon.com, Inc. (NASDAQ: AMZN) as it continues its growth in the Australian market.

The question every investor should be asking is: can they survive it?

Current performance

The June release painted a picture of a company doing well and growing rapidly. Comparing the fourth quarter to date against the same period last year, the company announced significant improvements in performance. 

The company now boasts over 2 million active customers. It grew gross sales by 100% and, at the same time, grew gross profit by more than 130%. This supports recent reports across buy now, pay later companies showing increases in transactions and users while in lockdown. This is despite Amazon.com already existing in the marketplace. 

Kogan.com also recently announced the purchase of furniture retailer Matt Blatt. The company is planning to relaunch it purely online. Throughout the short history of Kogan.com, it has shown a great understanding of online retail. In 2016 the company purchased electronics retailer Dick Smith, successfully relaunching it as an online retailer.

On my figures, Kogan.com has increased its sales revenues by, on average, around 14% every year during the past three years. This has enabled the company to grow its earnings-per-share by around 65% a year. 

Can Kogan.com compete with Amazon?

Kogan.com has a few competitive advantages. First and foremost, as a company with own-brand products, Kogan.com sells products on Amazon. Second, the company has always had a ‘best price’ guarantee. While Amazon is known for efficient and, often criticised, work practices, Kogan is proudly miserly. Even to the point of running a paperless office. 

Moreover, just as Amazon built the high margin Amazon Web Services to subsidise the entire business. Kogan.com has also grown additional verticals in the financial and telecommunications sectors. The company has services in mobile telephone coverage, nbn services, insurance, home loans and even cars. The company is adept at partnering with industry leaders. 

Foolish takeaway

At least within Australia, I can see Kogan.com holding their own against Amazon or whoever the next challenger is going to be. The company deserves a place on your watchlist at the very least. Given the rate the company is growing its sales and earnings per share, I believe this is a share price with a lot of growth ahead of it.

More reading

• The Kogan share price makes it 5 times bigger than Myer
• Why I’d buy Appen and these ASX growth shares for the 2020s
• How I would invest $50,000 into ASX shares right now
• Could these ASX shares be the future dividend stars that make you rich?
• What ASX shares should you invest in during a bull market?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Amazon. 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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