Tag: Motley Fool Australia

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Video-streaming veteran Netflix (NASDAQ: NFLX) is trading near all-time highs right now, currently fetching $440 per share. Jefferies analyst Alex Giaimo sees more gains ahead. Giaimo opened coverage of Netflix on Thursday with a buy rating and a price target of $520 per share.

The investment thesis

The analyst cited three main reasons to own Netflix shares today:

• This company’s addressable market is “vastly underappreciated.”
• Improving profit margins will lead to sustainable free cash flows over time.
• Netflix has proven its “ability to create value” in a rapidly changing market.

Giaimo expects year-over-year subscriber growth to remain in double-digit percentages until 2023 alongside a relatively stable penetration of the domestic market. His model assumes Netflix will widen its international household penetration from 18% to 28%, addressing a global market of roughly 850 million broadband households. Meeting the analyst firm’s targets would give Netflix approximately 285 million subscribers in 2023, up from 183 million paid memberships today.

The financial background

Netflix has been consuming a lot of cash in recent years due to the high up-front costs of producing a lot of original content. Management has said that 2019 should be the peak of Netflix’s cash burn, topping out at $3.1 billion. Since content production efforts have ground to a halt under COVID-19 lockdown policies, Netflix expects to consume roughly $1 billion of free cash in 2020, followed by larger content production expenses in 2021.

The key to unlocking positive cash flows is indeed found in wider profit margins. Here’s how Netflix’s operating margins and cash profit margins have developed over the last three years:

NFLX Operating Margin (TTM) data by YCharts

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• 5 things to watch on the ASX 200 on Friday

Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix. The Motley Fool Australia has recommended Netflix. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Will Netflix Be a $520 Stock? appeared first on Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) remains on course to end the week on a high. At the time of writing the benchmark index is up 0.8% to 5,372.5 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Boral Limited (ASX: BLD) share price is down 3% to $2.50. Investors have been selling the building products company’s shares following the release of a trading update. Boral revealed that revenues are down in most businesses in the first four months of the second half relative to the prior corresponding period. This is largely due to volume and cost pressures associated with bushfires in Australia in January followed by COVID-19 impacts more broadly. EBITDA margins for the period January to April 2020 are tracking ~3-5% lower than in the first half.

The Corporate Travel Management Ltd (ASX: CTD) share price is down 3% to $10.31. This decline may have been driven by comments out of the International Air Transport Association. It estimates that passenger traffic won’t rebound to pre-crisis levels until at least 2023.

The United Malt Group Ltd (ASX: UMG) share price has fallen 7% to $3.99. United Malt’s shares have come under pressure after completing a $140 million institutional placement. The malt business raised the funds at $3.80 per share, representing an 11.4% discount to its last traded price. The proceeds will be used to strengthen its balance sheet and provide financial and operational flexibility.

The Xero Limited (ASX: XRO) share price is down 4.5% to $76.32. This decline may have been driven by a broker note out of Macquarie this morning. According to the note, the broker has downgraded the accounting software provider’s shares to a neutral rating and cut the price target on them to $75.00. It made the move due to the uncertainty being caused by the pandemic.

More reading

• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• ASX construction shares feel impacts of COVID-19 shutdowns
• Where growth, income, and value investors can invest $5,000 today
• Is the Xero share price a buy?
• ASX 200 drops 1.7%, Xero reports a profit

Motley Fool contributor James Mickleboro 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 owns shares of Xero. 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 Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower appeared first on Motley Fool Australia.

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The Australian share market saw particularly strong gains during April, with the S&P/ASX 300 Index (ASX: XKO) up by 9.0%.

Investment fund manager Perennial commented in its latest monthly report that the ASX market rally in April was across a broad industry base, with the resources sector performing particularly strongly.

Energy, Gold and Mining Services sectors rally strongly

Energy was the best performing sector during April, up by an impressive 25%, driven by strong optimism in relation to the outlook of the oil price. Leading the charge in this sector included: Santos Ltd (ASX: STO) shares up by 44% during the month, Woodside Petroleum Limited (ASX: WPL) up by 23% and Origin Energy Ltd (ASX: ORG) up by 27%. These strong rises were on the back of a strong sell-off in the energy sector during March due to a sharp fall in demand.

Perennial noted that gold shares also performed very strongly, driven by further increases in the gold price, with Evolution Mining Ltd (ASX: EVN) shares up by 34% during April, and St Barbara Ltd (ASX: SBM) and Northern Star Resources Ltd (ASX: NST) both up by 22%. Mining services companies Perenti Global Ltd (ASX: PRN) and Seven Group Holdings Ltd (ASX: SVW) also both saw strong gains.

Early signs of a post-coronavirus recovery could provide further share price boost

The Australian Government’s quick response (and that of many other countries) to the crisis, including monetary easing and fiscal stimulus, will no doubt lessen the blow of the crisis on both the local and global economy.

Also, Perennial pointed out that it is growing increasingly more apparent that the steps taken to limit the spread of the coronavirus in Australia have been more successful than in most other developed nations. This provides Australia with the opportunity to fire up its economy sooner than most. It also positions Australia well to lead other nations in terms of this return to normal economic activity.

Further buying opportunities for long term investors

The federal government’s 3-step plan to reopen Australia last week, which aims to see the majority of Australian businesses re-opened by the end of July, will lead the path forward in this respect and I feel this could lead further share price growth in the ASX in the months ahead.

On a further positive note, with the recent share price falls since February, a significant amount of the downside in the market has now already been factored into current market prices. Also, despite the strong rally in April, there are still opportunities for long-term investors to buy quality companies at more attractive prices.

More reading

• 6 ASX shares driving the Australian gold boom
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Why Kogan, Macquarie, Newcrest, & Santos shares are zooming higher
• Big bounce in these ASX stocks may be over before it began
• Got $2,000? Here are 2 ASX 200 energy shares to buy today

Motley Fool contributor Phil Harpur 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 the gold boom continues, Australia is set to overtake China as the world’s top gold-producing nation, according to a report by Resources Monitor. Additionally, a separate report by Fitch Solutions, as reported by Australian Mining, predicted an increase in national gold output to 13.3 million ounces by 2029. 

Australian gold miners are cost-effective producers. Evolution Mining Ltd (ASX: EVN) touted the potential reduction of the all-in sustaining cost (AISC) when acquiring Red Lake.  

Projects driving growth

The Fitch Solutions report ranked Australia second after Canada in terms of growth projects and developments. 

For several reasons, Cadia mine is the jewel in the crown for Newcrest Mining Limited (ASX: NCM). For instance, it was the largest gold producer of 2019 with a full-year production of 871,246 ounces. The company is planning to push its plant to 33 million tonnes total throughput per year. And then to 35 million tonnes.

The company has an AISC of US$827 and a recently announced gold streaming acquisition will help keep AISC low. I believe Newcrest will be one of the great historic gold companies within the decade. Newcrest is trading at a price-to-earnings (P/E) ratio of 26.61.

Saracen Mineral Holdings Limited (ASX: SAR) is upgrading its Carouse Dam from 2.4Mtpa of mill throughout to 3.2Mtpa. In addition, Saracen has shown it is a well-managed company. It is consistently one of the largest-traded gold shares on the ASX by volume. Saracen has an AISC of $1,133 and it is trading at a P/E ratio of 36.77 at the time of writing.

Regis Resources Limited (ASX: RRL) is bringing on the McPhillamys project. The company claims this is Australia’s largest remaining orebody via open pit technology. Regis has an AISC of $1,174 and it is currently trading at a P/E of 14.69.

Further gold boom prospects

Current planned expansions are not the only Australian gold boom prospects. The gold industry also has a number of high prospect exploration projects and feasibility studies underway.

This includes the Havieron Pilbara exploration by Newcrest, the Yamarna Terrane of the eastern Yilgarn by Gold Road Resources (ASX: GOR), the Red 5 Limited (ASX: RED) King of the Hills gold deposit, and the high-grade 2.2 million ounce deposit by Bellevue Gold Ltd (ASX: BGL).

Foolish takeaway

The gold miners of Australia have worked hard to earn a reputation as efficient producers. The gold price in Australian dollars remains at all-time high levels and it appears likely to stay that way for the medium term. I do not think the COVID-19 pandemic, economic uncertainty and global trade issues are likely to subside soon.

More reading

• Leading fund manager sees good ASX buying opportunities
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Why Kogan, Macquarie, Newcrest, & Santos shares are zooming higher
• 5 things to watch on the ASX 200 on Friday
• Why Breville, Graincorp, Mesoblast, & Newcrest shares are charging higher

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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The Graincorp Ltd (ASX: GNC) share price is rallying for the second day and is topping the charts!

Shares in the grain handler jumped 8.5% to $3.98 in morning trade. This makes it the best performer on the S&P/ASX 200 Index (Index:^AXJO) with gold miner Silver Lake Resources Limited. (ASX: SLR) a distant second.

Graincorp’s gains comes on top of yesterday’s near 12% run after it posted a better than expected first half profit result.

The brightening outlook for agribusinesses is also giving Elders Ltd (ASX: ELD) a lift with the stock jumping 5% to $9.52 at the time of writing. Elders is expected to report its earnings on Monday.

The question facing investors is whether it’s too late to buy Graincorp shares.

Bumper growth

The good news is there is quite a bit of space for the stock to climb before hitting fair value, according to the analysts at Macquarie Group Ltd (ASX: MQG).

Graincorp’s interim net profit from continuing operations of $27 million is well ahead of Macquarie’s estimates of $18 million.

What’s more, all the group’s divisions, including its processing business, were performing better than the broker expected.

Firing on all cylinders

“Processing reported EBITDA of $23m, stronger than our $11m forecast,” said Macquarie.

“Oilseed crush margins have recovered strongly due to increased ECA canola supply and stronger oil and meal demand/pricing.”

The good times may continue to roll on into the second half, thanks in no small part to the recent wet weather along the east coast.

Trade war misses mark

Even the diplomatic spat between China and Australia doesn’t faze Macquarie. China threatened to buy fewer Australian exports in retaliation to Prime Minister Scott Morrison’s call for an independent investigation on the origins of COVID-19.

Tensions escalated when China formally threatened to slap a 80% tariff on Australian barley and suspended the import licenses of four of our abattoirs.

But Graincorp may not be as impacted by the potential barley tariff as some investors might have thought.

This is because 88% of Aussie barley exports come from Western Australia and Graincorp is an east coast centric business, explained Macquarie.

Clearer skies ahead

“GNC is planning for higher grain exports in 2H20 (exports generally higher margin vs domestic),” said the broker.

“Oilseed crush margins are expected to remain favourable in the second half due to prevailing canola oil and meal values.

“Favourable soil moisture levels across large parts of eastern Australia have supported widespread planting for the FY21 crop.”

What’s more, Graincorp is tipped to restart paying dividends in FY21 after a three-year break.

Macquarie is urging investors to buy the stock and its price target is set at $4.79 a share. This leaves Graincorp with a 23% potential upside over the next 12 months, if forecast dividends are included.

More reading

• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares
• Got $2,000? Here are 2 ASX 200 energy shares to buy today
• These ASX 200 shares just crashed to multi-year lows
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders 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 Why the best performing ASX stock might have more room to run higher appeared first on Motley Fool Australia.

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At lunch the S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is pushing higher. The benchmark index is currently up 0.8% to 5,370.2 points.

Here’s what has been happening on the market today:

Bank shares push higher.

Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks are pushing higher on Friday. This follows a strong night of trade on Wall Street for U.S. banks. The best performer in the group today has been the Westpac Banking Corp (ASX: WBC) share price with a 1.1% gain.

Tech shares dropping lower.

The tech sector is having another off day on Friday. At lunch the S&P/ASX 200 Information Technology index is down 1.7% and acting as a drag on proceedings. Payments company Afterpay Ltd (ASX: APT) and cloud-based accounting software provider Xero Limited (ASX: XRO) are amongst the worst performers with 1% and 5% declines, respectively.

Gold miners charge higher.

One area of the market performing particularly strongly today has been the gold mining industry. At lunch the S&P/ASX All Ordinaries Gold index is up a solid 3.2% after the gold price hit a three-week high overnight. Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) shares have been positive performers with gains of 4% each.

Best and worst ASX 200 performers.

The best performer on the ASX 200 today has been the Graincorp Ltd (ASX: GNC) share price again with an 8% gain. This morning analysts at Macquarie retained their outperform rating and lifted the price target on its shares to $4.79. The worst performer has been Graincorp’s spun off malt business, United Malt Group Ltd (ASX: UMG). Its shares are down 7% after completing a $140 million institutional placement. The new shares were issued at $3.80 per share, representing an 11.4% discount to its last traded price.

Returns as of 7/4/2020

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. 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.

More reading

• Where growth, income, and value investors can invest $5,000 today
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares
• Got $2,000? Here are 2 ASX 200 energy shares to buy today
• These ASX 200 shares just crashed to multi-year lows
• Forget CBA and buy these top ASX dividend shares

The post ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. In late morning trade the benchmark index is up 0.7% to 5,365.2 points.

Four shares that have climbed more than most today are listed below. Here’s why they are zooming higher:

The Kogan.com Ltd (ASX: KGN) share price is up 4% to $8.91 after announcing a new acquisition. The ecommerce company has bought the intellectual property and goodwill of replica furniture and homewares retailer Matt Blatt for $4.4 million. Kogan will relaunch the business as an online-only offering. It expects the acquisition of Matt Blatt to give it a springboard from which to expand its reach in the furniture and homewares market.

The Macquarie Group Ltd (ASX: MQG) share price is up 2% to $105.10. The banking sector is on course to end the week on a high after their U.S. counterparts stormed higher overnight. In addition to this, investors may have been buying Macquarie’s shares before they trade ex-dividend on Monday. To be eligible for its upcoming final $1.80 per share dividend, investors need to be on the share registry at the close of play today.

The Newcrest Mining Limited (ASX: NCM) share price is up 3% to $29.85. Investors have been buying Newcrest and other gold miners after the price of the precious metal hit a three week high overnight. Traders were buying gold amid concerns that a trade war is brewing between the U.S. and China. The S&P/ASX All Ordinaries Gold index is up 3.2% at the time of writing.

The Santos Ltd (ASX: STO) share price is up 2% to $4.65. Santos and other energy shares have been performing strongly today after a spike in the oil price overnight. Oil prices pushed higher after data revealed that U.S. inventories had fallen more than expected last week.

More reading

• Big bounce in these ASX stocks may be over before it began
• Broker tips 10 ASX 200 shares for a post-coronavirus recovery
• 3 ASX shares to buy for growth and income
• Kogan.com share price on watch following acquisition news
• ASX small-cap sector rallies strongly during April

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 and Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australian building industry is feeling the combined effects of the summer bushfires and coronavirus. While construction has continued to operate as an essential business throughout COVID-19, disruptions have been inevitable. ASX building suppliers such as Boral Limited (ASX: BLD) and CSR Limited (ASX: CSR) are feeling the effects. 

Boral experiences disruptions 

Boral has continued to operate and supply customers in most jurisdictions, albeit with additional health and safety measures in place. In some jurisdictions, however, stricter mandates have resulted in temporary closures and substantial disruption. 

This morning, Boral reported that for the 4 months ended April 2020, Australian concrete volumes were down 16% and revenue down 6% compared to the prior corresponding period (pcp).

In the North American division, around 25% of the workforce has been placed on furlough. 4 operations are in full or partial shutdown as a result of government mandates and around 70% of building product plants have been impacted. 

For the 4 months from January to April 2020, revenue for Boral North America decreased by around 5% on the pcp. Production volumes across the roofing, stone, and fly ash businesses were also down. CEO Mike Kane said, “the impacts of COVID-19 measures on our people and our markets have been significant and will be for some time.”

Debt financing extended to maintain liquidity

Boral has extended its debt facilities with a new US Private Placement note of US$200 million. It has also secured new loan facilities of A$365 million and approved an extension of US$665 million in existing facilities. This has increased Boral’s liquidity and extended its debt maturity. 

The company is taking action to preserve cash through shift reductions and temporary plant closures to align production with current and expected lower levels of activity. Capital expenditure has been reduced by 15% to 20% to ~$330 million in FY20. 

CSR sees declining revenues 

Earlier this week, CSR reported a 5% reduction in revenue for the full year ended March 2020. Net profit after tax (NPAT) from continuing operations fell 10% to $125 million, although total NPAT rose 61%. This was because total NPAT in the previous year was impacted by impairment charges relating to the Viridian Glass business. 

CSR reports it hasn’t experienced a significant drop in activity since the end of March, although building product revenue was down 3% compared to the pcp. CSR nonetheless anticipates there will be an impact on activity in key markets this year. The company has declined to provide earnings guidance due to the uncertainty from COVID-19. 

Foolish takeaway

The construction sector may see a pullback this year as economic contraction takes hold. This will put pressure on sales for ASX construction shares like CSR and Boral until building markets recover.  

More reading

• What happens to ASX shares if Australian house prices do fall 30%?
• The latest ASX shares upgraded by brokers to “buy”
• Why CBA, CSR, Fortescue, & Northern Star shares are pushing higher
• Safe dividend stocks to buy today for the COVID-19 world
• ASX 200 drops over 1% at the market close

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.

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If you’re looking to invest $5,000 into the Australian share market, then one of the shares listed below could be worth considering whether you’re looking for growth, income, or value.

Here’s why I think investors should buy these ASX shares:

Accent Group Ltd (ASX: AX1)

I think Accent could be a great option for value investors. Although the retail sector is having a very tough time and trading conditions are unlikely to improve quickly, I still think this footwear retailer could prove to be a bargain buy. While its earnings will almost certainly decline this year, I expect a rebound of sorts in FY 2021 before a full recovery a year later. Based on a recent note out of Morgan Stanley, it expects earnings per share of 7 cents in FY 2020 and then 8 cents in FY 2021. Based on the latter, its shares are currently changing hands at just 13x FY 2021 earnings.

Dicker Data Ltd (ASX: DDR)

If you’re an income investor you might want to consider investing $5,000 into Dicker Data’s shares. The wholesale distributor of computer hardware and software has been growing its earnings and dividends at a consistently strong rate for many years. The good news is that this trend has continued during the pandemic. Last month the company released its first quarter update and revealed a 36.3% increase in profit before tax to $18.4 million. Management also advised that it intends to increase its dividend by 31% in FY 2020 to 35.5 cents per share. This represents a 5.1% fully franked dividend yield.

Xero Limited (ASX: XRO)

Xero could be a good long term option for growth investors. Earlier this week the cloud-based business and accounting software provider released its full year results and revealed a 30% increase in operating revenue to NZ$718.2 million. Things were even better further down the income statement, with its margin expansion leading to a 52% increase in EBITDA to NZ$139.17 million. While FY 2021 is likely to be impacted by the pandemic and could stifle its growth somewhat, I believe its long term outlook is as positive as ever. Xero has a significant global market opportunity and, thanks to the quality and stickiness of its product, I expect it to capture a big slice of it.  

More reading

• Is the Xero share price a buy?
• ASX 200 drops 1.7%, Xero reports a profit
• Got $5,000 to spend? Here are 5 ASX shares you can buy today
• 2 exciting ASX tech shares to buy right now
• ASX 200 down 0.9%: Xero posts strong growth & Australian economy loses 594,300 jobs

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. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Accent Group. 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 Where growth, income, and value investors can invest $5,000 today appeared first on Motley Fool Australia.

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One of the simplest and arguably most effective investment strategies is buy and hold investing.

This strategy sees investors buy the shares of quality companies with positive long term outlooks and hold onto them for as long as the investment thesis remains intact.

This is a strategy that has been used by legendary investor Warren Buffett. And you can’t argue with his track record, can you?

With that in mind, here are two top S&P/ASX 200 Index (ASX: XJO) shares that I think would be quality buy and hold options:

Nanosonics Ltd (ASX: NAN)

The first buy and hold option to consider is Nanosonics. It is best-known for its trophon EPR disinfection system for ultrasound probes. It has been growing its installed base at a rapid rate over the last few years and has continued this trend in FY 2020. During the first half it increased 17% on the prior corresponding period to 22,500 units. This is still well short of its addressable market of 120,000 units.

Which is positive for two reasons. As well as benefiting from unit sales, Nanosonics earnings lucrative recurring revenues from the consumable products the system requires. Consumable and service sales were up 40% to $34.1 million in the first half. This represents 70% of its total sales during the period. As its market share grows, so too will these sales. Combined with the impending launch of several new products, I believe the future is bright for Nanosonics.

REA Group Limited (ASX: REA)

I think REA Group would be a great buy and hold option. I’ve been very impressed with the way the realestate.com.au operator can still deliver earnings growth in the toughest of trading conditions. This was evident in its third quarter update which revealed a 1% increase in revenue to $199.8 million and an 8% lift in EBITDA to $119.6 million. This was despite a 7% decline in listings during the quarter.

While listings volumes are likely to remain subdued for the immediate term, when conditions do improve I expect REA Group’s earnings growth to accelerate. So with its shares down 23% from their 52-week high, now could be an opportune time to snap them up.

More reading

• Got $2,000? Here are 2 ASX 200 energy shares to buy today
• These ASX 200 shares just crashed to multi-year lows
• 5 things to watch on the ASX 200 on Friday
• Is this ASX 200 REIT a bargain right now?
• ASX 200 drops 1.7%, Xero reports a profit

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

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