Tag: Motley Fool Australia

It is another positive trading day for the S&P/ASX 200 Index (ASX: XJO), up by 1.8% at the time of writing. This follows yesterday’s strong share price gains across the board.

Australia’s technology sector performed particularly strongly with few tech shares in the red today. This is likely driven by hopes the Australian economy can return to normal quicker than anticipated.

Here we examine three ASX tech shares which have performed particularly strongly so far today: Bigtincan Holdings Ltd (ASX: BTH), Audinate Group Limited (ASX: AD8) and Wisr Ltd (ASX: WZR).

Bigtincan

Bigtincan operates in the fast-growing sales enablement niche within the IT software market. Bigtincan provides organisations and their sales teams with a platform to access and collaborate on content and improve customer engagement.

It also leverages artificial intelligence through features which enable users to personalise and recommend content. Its core offering is accessible to users on a range of desktop and mobile platforms through devices like iPads.

Bigtincan’s was caught up in the wider market selloff on the ASX over the past few months, triggered by the coronavirus crisis. Its share price declined from $1.02 in mid – February to $0.265 in mid – March, a massive 73% decline. Since then, its share price has recovered a large part of that loss and is up another 6% today to currently trade at $0.795.

Audinate

Audinate’s uses its audio networking solutions in the production of a range of professional audio equipment. Its core networking solutions improve audio quality using ethernet or fibre optic cables. This ultimately reduces the need for extra cabling and installation.

A recent market update showed that Audinate believes it is in a relatively strong position to navigate through current economic challenges. This is supported by a very healthy $30.9 million cash on hand and is underpinned by a strong balance sheet. This shows the ability to deliver solid revenue growth in the March quarter.

Like Bigtincan, Audinate has seen a strong bounce back in its share price since mid-March. This rally in its share price continued further today with a strong 10.6% gain at the time of writing.

Wisr

Online fintech lender, Wisr has also seen a rally in its share price since mid-March. Wisr is up another 8% today, although its market rally is not as strong as either Bigtincan’s or Audinate’s. Its current share price of $0.162 is still 49% below its February high of $0.315.

Wisr’s loans are used for a range of purposes such as debt consolidation, buying a vehicle, home renovations, wedding and travel. With discretionary spending dramatically reduced during the coronavirus, it’s not surprising its share price has been hit hard in recent months. However, renewed optimism in the Australian economy has helped to drive its share price higher today.

More reading

• 3 stellar ASX tech shares to buy and hold for decades
• Got $10,000 to invest? I would buy these ASX shares right now
• Why Aristocrat Leisure, Bigtincan, Clover, & Megaport shares are dropping lower
• 3 small cap ASX tech shares that could be stars of the future
• These small cap ASX shares could be stars of the future

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and BIGTINCAN 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.

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ASX 200 tech shares have offered great returns to shareholders over recent years. This comes as the marketplace moves from brick-and-mortar businesses to online, and more and more people are using technology in almost every area of life. Technology companies are often known for their ability to deliver huge earnings growth, something that companies in other sectors cannot always provide.

While the S&P/ASX 200 Index (ASX: XJO) is down 19.69% from highs reached in February, the S&P/ASX Information Technology Index (ASX: XIJ) is down just 5.67% in the same period. The newcomer, S&P/ASX All Technology Index (ASX: XTX), is down 2.17% since it launched in late February. This reflects the positive market sentiment towards technology companies and their ability to continue their growth during difficult economic times.

Technology companies often rely on changing consumer trends to drive their growth. Frequently, as a technology gains traction it has a rapid uptake by consumers and can quickly achieve huge market penetration. These technology shares have proven their capabilities and made it into the index of Australia’s biggest 200 companies. They also offer great value to shareholders.

Afterpay Ltd (ASX: APT)

Afterpay is a financial technology company offering payment solutions to consumers. It operates in the United States, the UK, Australia and New Zealand. Afterpay recently hit new highs as it announced that it had reached 5 million US customers, a proud boast for any Australian company. This takes the total customers signed onto Afterpay’s platform to nearly 9 million worldwide. The company has an average transaction value of $150. This suggests that there is plenty of room for Afterpay to derive profits from transactions. Its net margin from payments sits at around 2.1% (this is the amount Afterpay derives from its transactions after paying the costs of those transactions).

While Afterpay is currently turning a loss, this is not abnormal for a technology company in its growth phase. Currently, customer growth is soaring. For the first half of financial year 2020, customer growth was up 134% compared to the first half of 2019. Underlying sales were up a massive 109%.

In Q3 of the 2020 financial year, however, Afterpay processed $2.4 billion in sales for merchants. This was a massive 354% increase over the same period in 2019. Its payment platform is now offered or in the process of being offered by more than 15,000 brands and retailers. If Afterpay can continue to grow at this rate, it will soon be a well-established international market leader in consumer financing.

Altium Limited (ASX: ALU)

Altium is a software company that provides solutions for engineers in circuit board design. Demand for Altium’s cloud-based design software is growing rapidly. The company boasts that its software allows engineers to work from anywhere and connect to anyone.

Altium is fast becoming a market leader in engineering software and has a solid balance sheet with healthy cashflow. The company previously announced that it expects earnings of around US$200 million in financial year 2020. It has since stated that weakness in the final quarter of the financial year will partly reduce expectations.

Altium also announced that it is moving toward high volume online sales, which will support revenue. It is also offering lower pricing and extended payment terms to customers during the current economic downturn. The company aims to attract 100,000 subscribers by 2025, which will provide revenue of an estimated US$500 million. In FY19, revenue was US$171.8 million and the company paid a dividend of 34 Australian cents.

Xero Limited (ASX: XRO)         

Xero is a New Zealand-based software company listed on the ASX. It provides cloud computing accounting software for small to medium size businesses. As at 31 March 2020, the company had 2.285 million subscribers with a life time value of $2,422 per subscriber. This equates to a total of $5.53 billion for current subscribers. Additionally, the company’s subscriber base is growing quickly with an increase of 467,000 during the 2020 financial year. Xero is working hard to increase the revenue earned from customers. In the 2020 financial year, it saw a 27% increase in the lifetime value of subscribers.

The company earns a gross margin of 85.2% from customers. This means that a massive 85.2% of the company’s revenue forms its gross profit. In the 2020 financial year, Xero then invested a significant amount in marketing, product development and paid administration expenses. It earned a net profit after tax of $3.3 million. This was the first time the company posted a full year net profit and reflects the growth of the company.

These numbers are just the beginning, with Xero boasting in its annual report that it has the opportunity to reach the entire global small business community.

More reading

• 3 timeless investing lessons from 2020 (so far!)
• Up over 100% in 2 months. Are Nearmap shares still a buy at current prices?
• How to pick better shares and earn better returns
• 4 reasons the Afterpay share price just hit $50
• Leading brokers name 3 ASX 200 shares to sell today

Motley Fool contributor 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 Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and Altium. 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’re looking to add some dividend shares to your portfolio in June, then the three listed below could be great options.

Here’s why I think they are among the best on offer right now:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust that invests in and manages commercial assets. These assets tend to be large format retail properties, which are predominantly leased to home improvement giant, Bunnings Warehouse. At the end of the first half of FY 2020, its weighted average lease expiry (WALE) stood at 4.3 years. While this isn’t the longest WALE you’ll find on the ASX, I don’t think there is any real danger of Bunnings packing up and moving to other properties. This is because Bunnings is owned by Wesfarmers Ltd (ASX: WES), which also own a ~23.6% stake in BWP. In light of this, I expect modest and predictable rental income growth over the next decade. Based on this, I estimate that its units offer a forward 5% yield.

Dicker Data Ltd (ASX: DDR)

Another dividend share to consider buying in June is Dicker Data. It is a wholesale distributor of computer hardware and software which has consistently grown its earnings and dividends at a solid rate for many years now. The good news is that this positive trend has continued in 2020 despite the pandemic. The company recently released a first quarter update which revealed very strong profit growth. As a result, management advised that it plans to lift its full year dividend by 31% to 35.5 cents per share. This represents a 4.55% fully franked dividend yield.

Telstra Corporation Ltd (ASX: TLS)

A third option to consider buying in June is Telstra. I think the telco giant’s shares are very attractively priced at present for a patient investment. Especially as I believe Telstra is well-positioned for a return to growth in the coming years thanks to the T22 strategy and the easing of the NBN headwind. In the meantime, as I covered  here, I believe its dividend is sustainable at 16 cents per share for the foreseeable future. This equates to a fully franked 5% dividend yield.

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• What ASX investors can do before 30 June to save tax
• Leading brokers name 3 ASX 200 shares to buy right now
• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers 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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It is hard to believe that we are only halfway through 2020! The year has been such a rollercoaster that historians are probably racing to write the first books about it. There are certainly enough investing lessons we can take from the last 6 months to fill a book. In fact, I think there are 3 timeless investing lessons that are worth highlighting.

1. Always prepare for the unexpected

There have been plenty of ‘oh crap’ moments so far this year. Not only did we get hit by plunging share markets, negative oil prices, job losses and social isolation, but we faced a run on the one thing we rely on even more than a good hug; toilet paper. Talk about being caught short!

It goes to show how hard it is to forecast low probability events. As investors, we need to stay vigilant and stay ready. Preparing for the unexpected can be as simple as having a diversified portfolio, keeping debt under control and considering how exposed your wealth would be to an unexpected shock.

2. The benefits of automating investing

It hurts when we lose money. It’s often said that we feel the pain of a loss twice as much as the joy of an equivalent gain. So when the market plummeted in March, a natural reaction would be to sell everything and hide under the bed.

The investing lesson here is that by systematically buying shares throughout, even as share prices tumbled, investors could have dodged the pitfalls of emotional investing and scooped up beaten-down shares like Afterpay Ltd (ASX: APT) and Nearmap Ltd (ASX: NEA) at bargain prices.

3. Find companies that can endure

Some of the best-performing companies of the last six months are those with the capacity to endure. These are companies that had strong balance sheets, robust demand and wide economic moats. An example is A2 Milk Company Ltd (ASX: A2M) which seized the opportunity to deploy some of its huge cash pile and increase its stake in key supplier Synlait Milk Ltd (ASX: SM1).

We’ll come back stronger

I think we have all been tested on our capacity to endure so far in 2020. By reflecting on these experiences and understanding the investing lessons, we can grow and come back stronger in the years ahead.

More reading

• Why these 3 ASX 200 tech shares offer great value
• Up over 100% in 2 months. Are Nearmap shares still a buy at current prices?
• 4 reasons the Afterpay share price just hit $50
• Leading brokers name 3 ASX 200 shares to sell today
• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory

Motley Fool contributor Regan Pearson owns shares of A2 Milk.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of A2 Milk and 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.

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The S&P/ASX 200 Index (ASX: XJO) is up around 25% from its March lows. Nearmap Ltd (ASX: NEA), however has far outpaced the index, increasing by more than 125% over the same period. So are Nearmap shares still a buy at their current price?

Nearmap at a glance

Nearmap is an aerial imagery company which uses a subscription as a service model. It provides imagery which is much higher in resolution than satellite imagery and shows changes over time. It has a multi-year advantage over its closest competitors with a profitable Australia and New Zealand (ANZ) segment as well as a fast growing North America (NA) segment. The NA segment also includes Nearmap’s newest market addition, Canada.

Supplementing the imagery, Nearmap’s software provides a range of product features including orthogonal (2D) imagery, oblique cardinal direction imagery and 3D online and AI content. Its customer base is diverse, as shown below, with the product’s primary appeal being the cost and time savings delivered through reduced reliance on site visits.

Data Source: Nearmap 1H FY20 analyst pack. Chart by author.

The market opportunity

Nearmap has a number of leavers to pull for growth. By expanding into new markets, growing its average revenue per subscription (ARPS), increasing gross margins and of course by growing its number of subscriptions. It appears there is a huge runaway potential.

The growth Nearmap is experiencing in its NA segment has accelerated past that of its more mature ANZ market. The NA portfolio offers a denser and larger market with an ARPS around double that of ANZ. However, the NA segment is not yet profitable since the company is still investing strongly there for future growth. Consequently, this means the company’s current gross margin is only 17% for its NA segment. Compare this to the ANZ segment which delivered a gross margin of 88% for 1H20.

Nearmap’s share price now

Nearmap’s share price began dropping lower mid last year and was also heavily sold off prior to the market crash after updating its guidance. In addition, along with most growth shares, it was again significantly sold off during the coronavirus-led market crash. This left it sitting almost 80% lower within 12 months. Putting the recent 125% rise in perspective, it would still need to gain 120% to reach last year’s high. 

With so many events contributing to Nearmap’s share price decline, its tough to decipher just how much of this fall has been justified. Pleasingly, the current trading conditions appear not to be materially impacting Nearmap. The company is also continuing to invest in growth initiatives. 

In addition to annual contract value growth and segment performance, I will be looking to see a reduction in churn when Nearmap next updates the market. This has historically been low but recently doubled after the company lost a couple of significant customers in the autonomous vehicle industry. Nearmap has noted, however, potential future upside as the industry recovers.

Foolish takeaway

I like Nearmap shares and have been an owner for a number of years, holding through the crazy ride it has been of late. I believe in the company’s future and can see Nearmap’s NA segment following the same path its profitable ANZ segment took. Not to mention the potential for continued global growth Nearmap has cited. Think Singapore, the UK, Asia and Europe. Who knows where this ASX 200 tech could be in 5 or 10 years. I would be happy being a buyer today, provided you have the stomach to hold on and find out.

More reading

• Why these 3 ASX 200 tech shares offer great value
• 3 timeless investing lessons from 2020 (so far!)
• Leading brokers name 3 ASX 200 shares to sell today
• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• What ASX investors can do before 30 June to save tax

Motley Fool contributor Michael Tonon owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap 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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I have tried a lot of different approaches to picking good shares to invest in over the last ten years. From buying shares in small-cap growth companies to ‘bargain’ commodity producers.

The most successful approach I’ve found when picking shares has actually been one of the simplest: looking for companies with strong economic moats.

What is an ‘economic moat’?

An ‘economic moat’ is another name for a competitive advantage. It is a feature that is hard to replicate which protects a company’s earnings from the onslaught of competition. Just like a moat protects a castle.

Companies with economic moats can be an investors’ best friend. By being insulated from competition companies, they are able to generate above-average returns on capital. By reinvesting that cash, these companies can compound and grow dramatically over time. 

Many of the best-performing ASX-listed companies have strong economic moats. If we pick these companies as a core part of our portfolio, we stand a good chance of earning better returns.

The 4 types of economic moat

In his book ‘The Little Book That Builds Wealth’ author Pat Dorsey outlines four categories of economic moat to look for when picking a company to invest in:

• Intangible assets
• Customer switching costs
• The network effect
• Cost advantages

Intangible assets can include brands and patents. Blood product company CSL Limited (ASX: CSL) is an example of a company which, through years of research and acquisitions, has created a valuable portfolio of patents and product licences.

Accounting platform Xero Limited (ASX: XRO) is an example of a company with high customer switching costs. Because there is a lot of time and hassle involved with changing to a new accounting system, the cost to switch can be prohibitive.

Despite the rise of Linkedin, jobs platform Seek Limited (ASX: SEK) has proved to be a robust example of the network effect where growing additional users creates more value for other users.

While JB Hi-Fi Limited (ASX: JBH) is an example of a company that has thrived using cost advantages to reduce prices for consumers and win market share.

Growing your money with great companies

I think economic moats are useful criteria for picking decent companies that will earn high share returns. However, to really get the best result we need to have patience; the patience to buy shares at bargain prices and the patience to let returns compound for long periods. That is the hard part.

More reading

• Where to invest $10,000 into ASX shares immediately
• CSL shares have underperformed the ASX 200 over the past month. What’s going on?
• 3 stellar ASX tech shares to buy and hold for decades
• Which is the best ASX entertainment media share?
• 2 ASX shares in the fight against coronavirus

Regan Pearson owns shares of Xero. You can follow Regan on Twitter @Regan_Invests.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Xero. The Motley Fool Australia has recommended 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.

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This morning the Afterpay Ltd (ASX: APT) share price continued its sensational run and broke through the $50 mark for the first time.

What a turnaround this has been for the payments company over the last couple of months.

It was around this time in March that Afterpay’s shares hit a 52-week low of $8.01. Now they are trading 525% higher than this level!

Why has the Afterpay share price rebounded and broken through $50?

Below are four key reasons why its shares have just reached this milestone:

Strong third quarter update.

At the height of the pandemic there were some in the market that feared Afterpay would struggle with lower sales and higher bad debts. How wrong they were. Afterpay’s third quarter update not only revealed incredibly strong sales and customer growth, but bad debt levels that were in line with pre-pandemic levels. The company’s flexible business model has helped play a key role in this. Users of its service may have noticed that you have to pay the first instalment of an online purchase upfront now, with three fortnightly payments to follow. This has reduced the overall risk of each transaction and doesn’t appear to have stifled its growth.

Tencent Holdings becomes a substantial shareholder.

Another driver of its strong share price performance has been the arrival of Tencent Holdings on its share registry as a substantial shareholder. Tencent is a US$500 billion Chinese conglomerate and the owner of the massively popular WeChat app. It is being seen by investors as the company that could help Afterpay expand into the Asian market in the future.

Impressive U.S. update.

Investors were also buying Afterpay’s shares after the recent release of an update on its operations in the United States. That update revealed that there are now more than 5 million active customers in the United States using its buy now pay later service. The company also revealed that more than one million new customers started using its platform in the country during a 10-week period at the height of the pandemic. Afterpay also noted a significant jump in brands and retailers using its platform. Not bad after just two years operating in the country.

Index inclusion.

A final catalyst to its strong share price gain has been its upcoming inclusion in the MSCI Australia index. The MSCI Australia Index is designed to measure the performance of the large and mid cap segments of the Australia market and has 69 constituents. Its strong performance over the last 12 months gives it a market capitalisation that is more than sufficient to be included at the rebalance on Friday. Inclusion in this index tends to bring a company onto the radar of fund managers globally and also leads to increased buying from index-tracking funds.

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• 5 ASX 200 10-bagger shares of the decade
• Why Afterpay and these ASX shares just zoomed to 52-week highs
• ASX 200 jumped higher, rises more than 2%

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.

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The Senex Energy Ltd (ASX: SXY) share price is charging higher today on the back of a trading and earnings update. After sitting as much as 17.5% higher before midday, Senex shares have slightly pulled back to be up by 15% at the time of writing at 23 cents per share.

Senex Energy is an independent Australian oil and gas exploration and production company. It has a portfolio of onshore oil and gas assets in Queensland and South Australia, with access to the nation’s east coast energy market.

What did Senex announce?

The highlight of this morning’s announcement was upgraded FY20 guidance.

Following strong production performance across the company’s Surat Basin assets, Senex has increased its full-year FY20 production guidance to between 2.0 and 2.1 million barrels of oil equivalent (mmboe). This is up from the previously guided range of 1.8 to 2.0 mmboe. 

In addition, Senex also increased its full-year FY20 guidance for earnings before interest, tax, depreciation and amortisation (EBITDA). The company now expects EBITDA in the range of $45 million to $55 million, up from previous guidance of between $40 million and $50 million.

These upgraded figures assume continued normal operations in the current COVID-19 environment.

Atlas drilling campaign update

Senex also revealed that natural gas production continues to outperform at both Roma North and Atlas in the Surat Basin. As a result, production now exceeds 34 terajoules (TJ) per day.

Given the continued production and reservoir outperformance, the company announced it will further reduce the number of wells to be drilled at Atlas from 50 wells to 45 wells.

The company expects to complete the current drilling campaign in the coming weeks, with final wells to be brought into production during June 2020. Additionally, Atlas water infrastructure is on schedule to commence commissioning and water intake in June. The completion of all works is expected in early FY21.

Roma North gas production update

Also detailed in today’s announcement was the agreement between Senex and GLNG to re-direct around 1 petajoule of natural gas from Roma North to the domestic market.

Following currently lower LNG offtake requirements at GLNG, the two parties have agreed to re-direct these volumes to the Wallumbilla natural gas supply hub over the period of June to August 2020.

Senex will market this natural gas, along with higher than expected production from Atlas, to east coast gas customers as part of the company’s supply portfolio.

Management commentary

Commenting on today’s update, CEO Ian Davies said:

“In October 2018, Senex reached the Final Investment Decision for our $400 million capital program in the Surat Basin. Less than two years later, the transformational Roma North and Atlas natural gas development projects have established Senex as an important producer of gas for the east coast market.”

“Our announcement today of an increase in full year FY20 production and EBITDA guidance further reinforces the underlying strength of our transformed east coast natural gas business and our ability to adapt and grow in the current lower oil price environment,” he added.

More reading

• How to pick better shares and earn better returns
• 4 reasons the Afterpay share price just hit $50
• 2 ASX shares to buy with $5000 today
• Leading brokers name 3 ASX 200 shares to sell today
• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory

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.

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Are you wanting to buy ASX shares today but are unsure where to look? Below are two ASX shares I would consider placing $5000 in for the next 3–5 years.

Medical Developments International Ltd (ASX: MVP)

Familiarity is a great place to start when looking at what shares to buy. On the other hand, investing in an esoteric business can make you feel disconnected from the company. This can easily lead to a panic sale from a bump in the road. While Medical Developments may not be a household name, there’s a chance you’ve either used or heard of its products.

Medical Developments’ flagship product is the ‘green whistle’. Less commonly known as the drug Penthrox. Penthrox has been reining superior over other pain relief drugs as it’s fast-acting, non-addictive and self-administered. Its growth has, therefore, exploded in Australia and overseas, being used by paramedics, medical practitioner the defence force and more.

Medical Developments announced that it expects any negative impact caused by COVID-19 to be limited. In the last month alone it announced the approval for the sale of Penthrox in Thailand, Netherlands, Bosnia-Herzegovina and Hungary.

The list of countries where Penthrox is sold is growing fast, while sales are continuing to grow strongly in its first market, Australia. However, Penthorx only accounts for a little over half its revenue with the remaining coming from its medical devices segment. This segment accounts for medical devices including Space Chambers, masks and Breath-Alert Peak-Flow meters. These are also growing strongly in Australia with 1H20 up by approximately 45% compared to the prior corresponding period.

Its share price has rebounded strongly over the past two months following the market low at the end of March. However, it still has some 39% to go to reach its share price high prior to the market crash.

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat Leisure is a gaming technology company which operates in over 90 countries. Its land-based business serving a range of products including electronic gaming machines and casino management systems saw revenue fall 6% in its recent half-year results. However, its digital portfolio which offers a range of apps is still growing strongly and was up 19% for the 6 months to 31 March 2020.

Aristocrat’s shares are trading at just over half of what they were in February. This is after another fall following the release of results which were short of consensus expectations. However, North America and New Zealand venues plan to open again through a phased approach in May and June while the larger Australian states look to re-open in July.

The steady re-opening will see its land-based businesses begin to return to somewhat normal. Although, there’s no knowing how long this may take. While this plays out, I believe Aristocrat’s digital business can continue to grow strongly, making this, in my eyes, a great time to buy shares and open a position in the company.

More reading

• Why didn’t Warren Buffett buy more shares in the recent bear market?
• Top brokers name 3 ASX shares to buy next week
• Here’s how I would put $10,000 to work on the ASX
• Top brokers are urging you to buy this slumping ASX 200 stock next week
• Brokers name 3 ASX 200 shares to buy right now

Michael Tonon owns shares of Medical Developments International Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX 200 shares:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating but lifted their price target on this payments company’s shares slightly to a lowly $14.00. The broker made the revision to its price target after factoring in Afterpay’s recent U.S. update this month. While it acknowledges that the pandemic could accelerate positive structural changes for Afterpay, it has warned investors not to extrapolate the magnitude of recent growth in online sales. The Afterpay share price broke through the $50.00 mark earlier today.

Vicinity Centres (ASX: VCX)

Analysts at Morgan Stanley have retained their underweight rating and $1.25 price target on this shopping centre operator’s shares. According to the note, the broker believes that Vicinity will experience a material drop in rent rates once the crisis is over. And while it believes Vicinity has some high quality assets, there are other assets in its portfolio which it is less enamoured with and fears could struggle. The Vicinity share price is trading at $1.67 this afternoon.

Wesfarmers Ltd (ASX: WES)

A note out of Citi reveals that its analysts have retained their sell rating but lifted the price target on this conglomerate’s shares to $36.60. The broker was pleased to see the company take action on its underperforming Target business. And while it has lifted its earnings estimates for FY 2020 and the coming years to reflect stronger than expected sales growth, it still has issues with its current valuation. As a result, it appears to see better value elsewhere and has retained its sell rating. The Wesfarmers share price is fetching $40.27 on Tuesday.

More reading

• 4 reasons the Afterpay share price just hit $50
• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• What ASX investors can do before 30 June to save tax
• The ASX 200 stocks in the tax-loss selling firing line
• 2 unbelievable ASX 200 value shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers 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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