Tag: Motley Fool Australia

Can strong earnings push the CSL Limited (ASX: CSL) share price above $300 in August? That’s what I’m wondering ahead of the Aussie biotech’s full-year results announcement.

Can the CSL share price crack $300?

I’m reasonably bullish on the CSL share price and its prospects in August.

Shares in the Aussie biotech hit a new record high of $342.75 per share as recently as mid-February.

However, the coronavirus pandemic impacts various industries in different ways. I think we could see a decline in blood plasma revenue in August but that will be more than offset across the company’s other business lines.

One potential barrier is the strengthening Aussie dollar, which could lead to hedging losses for CSL. However, healthcare and biotechnology are in high demand right now, which could help boost CSL’s earnings.

That may be all that’s needed to push the CSL share price beyond $300 once again.

What are CSL’s key service areas?

The key areas of focus for CSL are broadly split into plasma collections, commercial, and research and development (R&D).

The company’s April trading update flagged a decrease in plasma collections due to the pandemic.

However, the economic downturn could boost collections in the medium-term due to the payments system in key markets like the USA.

Positively, CSL reported no ‘stock-outs’, which means supply chains have been uninterrupted in 2020. The Aussie biotech’s Wuhan facility recommenced operations in April and CSL’s activities have hummed back to life.

I think much of the CSL share price value depends on the success of the company’s research and development activities.

That R&D has pivoted slightly with the advent of COVID-19. For example, CSL is partnering with the University of Queensland in the hunt for a vaccine.

However, I think R&D activities have largely continued on their planned course.

What else is driving the CSL share price?

CSL has also pursued inorganic growth opportunities through various recent acquisitions.

That includes the takeover of biotech company Vitaeris in June and purchasing a new late-stage gene therapy candidate from uniQure.

Both of these acquisitions represent further strategic avenues for the Aussie biotech company to explore.

If CSL can post a strong earnings result in August and demonstrate strategic integration and execution, I think the CSL share price can climb beyond $300 in August.

More reading

• 3 unloved ASX growth shares that could make you rich
• 3 junior ASX healthcare shares with explosive growth potential
• ASX 200 Weekly Wrap: ASX has week of high volatility
• Should fixed-interest investments be part of your ASX share portfolio?
• Where to invest $100,000 into ASX shares

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL 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.

The post Will the CSL share price crack $300 in August? appeared first on Motley Fool Australia.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing the benchmark index is up 0.3% to 6,040.7 points.

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

The Bubs Australia Ltd (ASX: BUB) share price is down 2.5% to 99.5 cents following the release of its fourth quarter update. During the fourth quarter of FY 2020, Bub reported gross revenue of $13 million. This was a 5% decline on the prior corresponding period. It also burned through $10 million of cash. One positive was that it has announced its entry into the children’s vitamins market. The company also revealed that it has appointed Jennifer Hawkins as its global ambassador.

The Insurance Australia Group Ltd (ASX: IAG) share price has fallen 4% to $5.11. This may have been driven by a broker note out of Macquarie this morning. According to the note, the broker has retained its neutral rating but cut the price target on the insurance giant’s shares to $5.50. This follows the release of its FY 2020 update and cancellation of its final dividend last week.

The Star Entertainment Group Ltd (ASX: SGR) share price is down 2.5% to $2.70. Investors may be concerned by news that New South Wales has reported another rise in coronavirus cases. There may be fears that the casino operator’s doors will be forced to close if the outbreak is not kept under control.

The Webjet Limited (ASX: WEB) share price has dropped 3% to $2.99. Investors continue to sell travel shares after coronavirus cases spike in Australia. There are concerns that the recent increase in cases could delay the recovery of the domestic travel market and lead to travel companies requiring additional funding. This could mean further dilution for shareholders in the future.

More reading

• Bubs share price sinks lower on Q4 update and new product launch announcement
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: ASX has week of high volatility
• My 5-minute bull case for the Bubs share price
• Here are easy ways to diversify your ASX portfolio

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

The post Why Bubs, IAG, Star Entertainment, & Webjet shares are dropping lower appeared first on Motley Fool Australia.

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A 10-bagger share is one that will return 10 times the initial investment. Over the past decade, there have been many growth shares on the ASX that have multiplied their initial share price 10 times or even 100 times. Unfortunately, while it is always easy to see the signs in hindsight, it is far harder to spot them beforehand.

Right now, investors are looking at payments companies, buy now, pay later (BNPL) companies and tech startups for tomorrow’s 10-bagger shares. This includes undeniably great companies like EML Payments Ltd (ASX: EML), Afterpay Ltd (ASX: APT), and Whispir Ltd (ASX: WSP).

However, I think some of tomorrow’s growth shares are in the innovation and science space. Australia has always been an innovative country. This is a different area of growth than fintech or technology, and doesn’t always come with the same headline-stealing rate of growth as we’ve seen in the BNPL space. For instance, CSL Limited (ASX: CSL) multiplied its original share price only 5 times in the first 11 years.

The 3 ASX growth shares I have listed below have a few characteristics in common. First, their innovation is very advanced. In fact, in 2 cases they are already generating revenue. Second, they have diversified their management away from the founders, instead handing over the corporate management to people with expertise in product commercialisation.

Growth shares for the environment

The market values Phoslock Environmental Technologies Ltd (ASX: PET) at $171.88 million at the time of writing. The company is commercialising a unique product also called Phoslock, which cleans polluted waterways. I am a very big fan of companies and technologies that improve our environment, particularly those that can survive without government subsidies and deliver practical and measurable results. Phoslock is one of these products.

CSIRO originally developed Phoslock in the early 2000s. It is a patented, one of a kind technology. Phoslock permanently binds to phosphate in waterways, therefore reducing or eliminating algal blooms. These produce toxins that affect either aquatic life, such as fish, or even human health. 

The company recently announced new project sites in Washington State and New Jersey, USA. In addition, it has extended a project in Brazil and has ongoing applications in both Italy and the Netherlands. Furthermore, the company has historic applications throughout Austria, Canada, the UK, Germany and Australia. 

I think this growth share could easily multiply its share price several times over the next 2–5 years, given its ongoing international applications. 

A world-changing technology

Recce Pharmaceuticals Ltd (ASX: RCE) is a medical research company that is developing a range of products in a revolutionary area of medical science. Once complete, I believe the company’s products will irreversibly change the treatment of superbugs and viral infections. 

The Recce (pronounced recky) share price caught fire recently on the back of news that 2 of the company’s products had been selected for a CSIRO trial for an antiviral to treat Covid-19. An antiviral is not a vaccine, rather it is a treatment for a viral infection. Shortly thereafter, it was also selected for a trial in the USA for the same purpose.

Recce is developing a new type of synthetic antibiotic, one that is bactericidal. Therefore, it doesn’t work to inhibit bacteria, but kills and eliminates it. In addition, repeated use will not reduce its impact.

The company’s initial target was to find a successful treatment for sepsis or blood poisoning. Sepsis is a life threatening reaction the body sometimes has to infection. In 2017, according to The Lancet, sepsis killed 11 million people globally amid 48.9 million reported cases, yet still there is no treatment for it. I find this to be a mind-boggling statistic.

To illustrate the level of momentum this growth share has outside of the Covid-19 trials, it has already secured fast track designation from the FDA in the US for one of its products, RECCE 327, in addition to 10 years of post-approval market exclusivity.

So, while the Covid-19 trials are welcome news, the company was already well advanced in building a first-of-its-kind treatment for several global health problems. 

The future is now

Artificial intelligence (AI) is a technology that learns from experience. Brainchip Holdings Ltd (ASX: BRN) is the world’s only listed pure-play AI company. It already has existing products which it has found a market for. So, like Phoslock, the company is earning revenue. However, like Recce, the company spends its earnings developing a first-of-a-kind technology.

BrainChip has successfully developed products that use its existing neural technology to generate revenue. For example, video security in casinos is one of the company’s core verticals. The technology automatically detects dealer errors by monitoring the video streams from standard surveillance cameras. It recognises the cards played, winning hands, the rules of the game and the payout.

In addition, airports have deployed the technology for facial recognition of known terrorists, along with several unnamed subway systems in Europe for recognition of wanted criminals.

The company is moving very quickly to create something called neuromorphic technology. This is several magnitudes of advancement from existing AI technology and mimics the human brain and nervous system. Consequently, the applications are truly next level concepts. One of the areas where advanced AI could be deployed is to move from unmanned drones to autonomous drones and field robots. 

Foolish takeaway

These cutting-edge ASX growth shares are all well under way in their innovative processes. They have either developed a revenue stream already, or they are very close to doing so. Most importantly, the technological genius behind each of these organisations has recently stepped aside, in the case of Phoslock, or has deliberately moved into the research and development area. Consequently, people who know how to make money and grow a business are running each company.

Personally, I will probably invest a small amount into Recce Pharmaceuticals shares in the near future. Nonetheless, I think each one is very likely to see strong growth over the next 2–3 years. 

More reading

• Will the CSL share price crack $300 in August?
• 3 junior ASX healthcare shares with explosive growth potential
• ASX 200 Weekly Wrap: ASX has week of high volatility
• Is now the time to sell your ASX shares?
• Should fixed-interest investments be part of your ASX share portfolio?

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

The post 3 unloved ASX growth shares that could make you rich appeared first on Motley Fool Australia.

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The Australian tech sector is small and immature when compared to the much larger United States tech market. However, a broad range of exciting ASX tech shares is now emerging. Some have a fast growing international presence.

Here, we look at two ASX tech shares I believe would make worthy additions to your ASX share portfolio.

2 ASX tech shares to buy and hold

Nearmap Ltd (ASX: NEA)

Nearmap is an Australian aerial imagery and location data company. It provides geospatial map technology for businesses and government customers across Australia, New Zealand, the US, and Canada.

The Nearmap share price was hit harshly during late January and during the early phase of the coronavirus pandemic. It fell from $2.71`in mid January to 86 cents in late March. That’s a massive decline of 68%. The Nearmap share price has, however, risen fairly strongly since then, helped by two positive business updates during April and May. In late May, Nearmap revealed that its customer base has been growing strongly over the prior few months. Also, average subscription revenue continues to climb higher, which is lifting Nearmap’s operating margins.

I believe that this ASX tech share is well placed for strong growth over the next five years, driven in particular by its US operations.

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan operates in a fast-growing niche in the IT software market that is known as ‘sales enablement’. Organisations and their sales teams are provided with a platform to customise and collaborate on content and improve customer engagement. Bigtincan’s customers are located in over 50 countries. It operates in diverse industries and market segments. An aspect of its product that I find particularly appealing is that it leverages artificial intelligence through features such as the ability for users to personalise and recommend content.

Despite a temporary decline during the early phase of the coronavirus pandemic, the Bigtincan share price has risen very strongly from 27 cents in late March to now be trading at 92 cents. That’s an increase of over 240%.

Although Bigtincan is yet to achieve profitability, I believe it is well placed to achieve this goal over the next few years. Its customer base is growing quickly. Also, it operates under a software-as-a-service (SaaS) business model that is highly scaleable. Therefore, the addition of each new customer improves the company’s overall operating margin.

Foolish takeaway

Nearmap and Bigtincan are two small-cap ASX tech shares that are in my buy zone right now. I believe both have strong growth potential over the next five years, driven by expanding international markets.

More reading

• These are the 10 most shorted shares on the ASX
• 4 ASX tech shares to buy that aren’t BNPL shares
• 3 stellar ASX tech shares I would buy in August
• 3 exciting small cap ASX shares to watch in FY 2021
• Got $10,000 to invest? I would buy these ASX shares

Phil Harpur owns shares of Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO and 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.

The post 2 ASX tech shares to buy and hold beyond 2025 appeared first on Motley Fool Australia.

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With interest rates looking to stay at historic lows for some time to come, investing your money in a bank account or term deposit can actually negatively impact your long-term wealth. This is because, after you have factored in the impact of inflation, your investment can actually be going backwards. By comparison, ASX shares have returned on average around 9% to 10% per annum over the past few decades.

Here we look at two quality ASX shares to consider adding to your portfolio. Both are in my buy zone right now.

Two ASX shares I think are solid buys right now

JB Hi-Fi Limited (ASX: JBH)

Electronics retailer JB Hi-Fi has performed solidly in recent months, despite the challenges posed by the coronavirus crisis. The JB Hi-Fi share price saw a sharp decline during the early phase of the pandemic. It dropped from $44.71 in early February, to $23.50 in late March. The retailer however, subsequently recovered all of those share price losses and is currently trading at $44.91.

JB Hi-Fi reported strong revenue growth during 2H20 in the period up to early June. Demand has been particularly strong in recent months for technology products, such as laptops, used in remote working, learning and communication.  

Over the past decade, JB Hi-Fi has been one of Australia’s stronger performing ASX shares, with its share price up by over 137% during this time. JB Hi-Fi also pays a strong annual dividend yield of 3.6%, fully franked.

Wesfarmers Ltd (ASX: WES) 

The trend in the Wesfarmers share price during the coronavirus pandemic has followed a very similar path to that of JB Hi-Fi. The Group’s share price was significantly impacted initially during February to March, however since then it regained nearly all of those share price losses.

The recent rally in the Wesfarmers share price has been partly driven by  strong demand for its online retail offerings during the pandemic. Like JB Hi-Fi, demand for remote learning products has been strong in its Officeworks division. Bunnings also has experienced strong growth.

I am particularly attracted to Wesfarmers right now as it is a highly diversified business. This diversification provides a buffer to various parts of the economic cycle, especially during challenging economic times like we are currently facing.

In addition, Wesfarmers currently pays a strong annual dividend yield of 3.3%, fully franked.

Foolish takeaway

JB Hi-Fi and Wesfarmers are two quality ASX shares that I would be happy to own as part of my investment portfolio. Both have recently benefited from the changes in consumer behaviour resulting from coronavirus. But, equally as important, I believe both are well positioned for long-term growth. In addition both companies pay attractive fully franked dividends.

More reading

• 3 ASX dividend shares I like ahead of the August earnings season
• ASX 200 Weekly Wrap: ASX has week of high volatility
• Buy these blue chip ASX dividend shares for income
• 2 off the grid ASX retail shares for higher returns
• Which ASX 200 shares are the safest?

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. 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.

The post JB HiFi and 1 other quality ASX share to buy right now appeared first on Motley Fool Australia.

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Unlike a large proportion of shares on the ASX, the Treasury Wine Estates Ltd (ASX: TWE) share price has failed to bounce substantially from its post-pandemic lows. However, a recent deal negotiated by the federal government could turn the fortunes for Australian wine companies and the industry.

Why has the Treasury share price failed to bounce?

The Treasury Wine share price has only managed to bounce around 30% from its mid-March lows and is currently trading down more than 28% for 2020. This recovery dulls in comparison with the double and triple-digit recovery we have seen in other shares on the ASX.

Earlier this year, Treasury materially reduced market expectations citing an unexpected decline in profits from its US operations. The owner of famous brands like Wolf Blass, Lindemans and Penfolds was not spared during the COVID-19 pandemic, with Treasury acknowledging a decline in demand from China for its luxury wines.

In the company’s most recent trading update, Treasury informed investors that the COVID-19 pandemic and global lockdowns in major markets has reduced on-premise and cellar door sales. The company now expects earnings before interest, tax and accounting in FY20 to be between $530 million and $540 million. This compares to management’s guidance of $716–750 million at the interim result, which was then withdrawn on 25 February.

What deal has the federal government made?

According to a recent article in the Australian Financial Review, the federal government recently negotiated a deal that has lifted Canadian restrictions on Australian imports. Previous restrictions on Australian imports included a variety of taxes, markups and sales requirements. The new deal will lift these restrictions, allowing Australian wine producers and exporters like Treasury to take advantage of a market worth approximately $200 million per year.

Should you invest?

In my opinion, although the federal governments deal is a great win, I think that Treasury and the Australian wine sector in general faces multiple headwinds in the short term. Earlier this year, Treasury announced that it was considering a demerger of its flagship Penfolds business into a separate company listed on the ASX, which has further clouded the outlook for the company.

Despite the uncertainty, Treasury has reported positive signs of recovery in its major markets, which could see the company’s share price recover in the longer term. Instead of jumping the gun and buying shares in the company, I think a prudent strategy would be to wait until Treasury releases its full-year report in the August reporting season to get a better idea before investing.

In addition to Treasury, another listed wine company you might want to keep an eye on is Australian Vintage Limited (ASX: AVG).

More reading

• Why the Digital Wine Ventures share price is surging today
• How you can take advantage of the surging Australian dollar
• 2 ASX shares to buy during ‘Dry July’
• ASX 200 jumps 1.3%: Big four banks drop lower, Afterpay up after U.S. update
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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 Is the Treasury Wine share price a buy? appeared first on Motley Fool Australia.

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As the economic outlook grows increasingly gloomy, many investors may be thinking of diversifying into defensive companies as a way of strengthening their portfolios. Generally, healthcare companies provide a good defence against a downturn as demand for health services tends to remain robust regardless of the prevailing economic conditions. However, many investors may want to look beyond the big name companies like Cochlear Limited (ASX: COH) or CSL Limited (ASX: CSL) to find pockets of higher growth in the sector. Here are three up-and-coming ASX healthcare companies that may offer explosive growth potential at bargain prices.

Polynovo Ltd (ASX: PNV)

Polynovo is a junior healthcare company that develops biodegradable medical devices for skin tissue repair. Its flagship medical technology is called NovoSorb, a synthetic polymer that clinicians can use to treat serious burn and skin trauma patients. It can be used in surgical procedures and will safely biodegrade and be excreted by the body.

The company recently announced it had secured US$15 million in funding from the Biomedical Advanced Research and Development Authority (BARDA), an office of the United States Department of Health and Human Services. The money will help finance a clinical trial to evaluate whether NovoSorb technology can apply to be an approved treatment for ‘full thickness burns’ in US hospitals. Full thickness burns are severe burns that destroy both the epidermis and dermis layers of skin.

The trial’s chances of success are relatively high, as NovoSorb is already used to treat these types of burns outside of America. This could cap off a surprisingly successful year for Polynovo. The company recently reiterated its FY20 guidance for sales to at least double FY19’s numbers.

Mesoblast Limited (ASX: MSB)

Mesoblast is an emerging pharmaceutical company that uses stem cell technology to develop treatments for a range of inflammatory diseases. The company’s shares have skyrocketed in recent months after one its treatments showed promising results in COVID-19 patients suffering from acute respiratory distress syndrome.

It was also recently announced that Mesoblast’s treatment for graft versus host disease – a potentially lethal condition affecting some cancer patients – had been accepted for priority review by the US Food and Drug Administration (FDA). If approved, the product has the potential to be made available in the US as early as September.

Revenues for the first nine months of FY20 were US$31.5 million, a 113% increase over the same period in FY19. A successful capital raise in May also means the company now has close to US$150 million in cash, which it is hoping to use to launch new treatments in the US, as well as scale up its manufacturing potential.

Medical Developments International Ltd (ASX: MVP)

Medical Developments International is a pharmaceutical and medical device company which specialises in pain management and the treatment of respiratory conditions like asthma. Its flagship product is a non-opioid analgesic named Penthrox.

Prior to the COVID-19 pandemic, the Medical Developments International share price had surged to an all-time high of $11.78. Excitement around the company was justifiably high: clinical trials of Penthrox were underway in China, and a US launch also seemed imminent.

However, the pandemic meant Chinese trials were put on hold, while talks with the US FDA don’t seem to have progressed markedly. Many impatient investors jumped ship, sending the share price tumbling – and even despite some recent gains, MVP is still trading at just $6.34.

However, for investors with a long-term outlook, I think this recent pullback in the share price offers the opportunity to pick up Medical Developments shares at bargain prices. Once the effects of the global pandemic subside, I believe the company still has a long growth runway ahead of it.

More reading

• ASX 200 Weekly Wrap: ASX has week of high volatility
• Should fixed-interest investments be part of your ASX share portfolio?
• Where to invest $100,000 into ASX shares
• Why I would buy Ramsay and this ASX blue chip share
• How CSL could save Australia from COVID-19

Rhys Brock owns shares of Cochlear Ltd. and Medical Developments International Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd., CSL Ltd., Medical Developments International Limited, and POLYNOVO FPO. The Motley Fool Australia has recommended Cochlear Ltd. and 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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The Sezzle Inc (ASX: SZL) share price is pushing higher on Monday after the release of its second quarter business update.

At the time of writing the buy now pay later provider’s shares are up 2% to $8.03.

How did Sezzle perform in the second quarter?

During the second quarter, the Afterpay Ltd (ASX: APT) rival delivered underlying merchant sales (UMS) of US$188 million. This was a 57.5% increase on the first quarter and a 348.6% lift on the prior corresponding period.

This was driven by a 28.4% quarterly increase in active consumers to 1,475,235 and a 26.7% quarterly rise in active merchants to 16,112. Both metrics were up over 200% compared to the second quarter of FY 2019.

Sezzle’s merchant fees rose 54.8% over the first quarter and 397.1% over the prior corresponding period to US$10.6 million. As a percentage of UMS, merchant fees improved 55bps year on year to 5.6%, but declined 10bps from the first quarter.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, was pleased with the quarter.

He said: “Our strong 2Q20 performance, improving consumer profile, and successful capital raise, position us to achieve our annualized run rate target of US$1 billion in UMS by the end of 2020. The shift to online retail has positioned Sezzle as a key partner for merchants, as 2Q20 represented the top 3 periods of monthly UMS in the Company’s history.”

“The gains in frequency of purchases by cohorts and repeat customer usage are encouraging to see as our business matures. We are excited about the brand loyalty that is building, as each cohort is outpacing the previous cohort at a similar point in time,” Mr Youakim added.

Strong balance sheet.

Operating cash flows for the quarter were a positive US$4.3 million, leaving Sezzle with US$55.7 million of cash and cash equivalents.

The company’s CFO, Karen Hartje, commented: “Our strong balance sheet at 30 June coupled with our Capital Raise subsequent to quarter end, positions us well to pursue our growth strategies and weather the protracted effects of COVID-19.”

“Additionally, during the pandemic, we continue to see leading loss indicators improve and have been able to leverage our cost structure. These trends combined with our top-line growth are driving positive moves in our Net Transaction Margin,” Hartje concluded.

More reading

• These BNPL shares have blown up since their IPOs
• 3 ASX fintech shares with exciting growth prospects
• Why Nearmap and 2 other ASX tech shares are surging higher today
• Zip and Openpay were among the most traded shares on the ASX last week
• Buy these strong ASX shares for your retirement portfolio

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

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The Bubs Australia Ltd (ASX: BUB) share price is sinking lower on Monday after the release its quarterly update.

At the time of writing the infant formula and baby food company’s shares are down almost 8% to 94 cents.

What did Bubs announce?

During the fourth quarter of FY 2020, Bub reported gross revenue of $13 million. This was a 5% decline on the prior corresponding period.

Management advised that this reduction was due to its strong sales in the third quarter during the height of the pandemic. This was driven by pantry stocking and pulled forward sales from the fourth quarter.

Nevertheless, infant nutrition sales grew 14% on the prior corresponding period during the quarter. These sales now represent 75% of gross sales and were largely driven by demand in China. Direct sales in this key market increased 26% on the same period last year.

This offset a 31% decline in Adult Goat Dairy segment sales, which now make up 24% of total sales. The remaining 1% of sales is attributable to its contract manufacturing business.

This ultimately led to Bubs reporting a 32% increase in FY 2020 gross revenue to $62 million.

What about its cash flow?

Unfortunately, the company wasn’t able to make it two consecutive quarters of positive operating cash flow.

Bubs reported an operating cash outflow of $6.9 million for the quarter which, combined with other costs, led to the company burning through $10.3 million of cash. This leaves Bubs with a cash balance of $26 million.

I suspect it is this cash burn that is weighing heavily on the Bubs share price today.

Vita Bubs launch.

In addition to its quarterly update, the company announced that it would be challenging Blackmores Limited (ASX: BKL) in the vitamin and mineral supplements market.

It is launching a range of children’s vitamin and mineral supplements that will be ranged in 400 Chemist Warehouse stores across Australia from October.

Bubs Founder and CEO, Kristy Carr, explained: “The Vitamin and Mineral Supplements category provides Bubs with the opportunity to leverage our unique positioning as a Children’s Nutrition and Australian Goat Dairy specialist with the launch of a complementary brand extension into this material $2.3 billion category.”

Supporting this launch will be its new global brand ambassador, Jennifer Hawkins.

The CEO commented: “Jen is a much loved Australian icon with her work as a popular TV presenter, international model, and successful entrepreneur. As a new mum she is the perfect role model to represent the Bubs brand to new parents everywhere, including among her legion of nearly two million social media followers.”

More reading

• My 5-minute bull case for the Bubs share price
• How to become a millionaire with ASX shares starting with $0
• Why Alcidion, Bubs, IGO, & Next Science shares are pushing higher
• Where I’d invest $9,000 in ASX shares
• Got $1,000? You should buy 1 of these 6 ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and BUBS AUST 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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Another week, another wild ride for ASX 200 shares.

The S&P/ASX 200 Index (ASX: XJO) edged 0.2% lower to 6,024 points despite strong gains from the tech sector.

Last week, I was watching Coles Group Ltd (ASX: COL), Mirvac Group (ASX: MGR) and Northern Star Resources Ltd (ASX: NST).

The continued volatility was good for global gold prices which saw the Northern Star share price close up 3.7% for the week. Coles shares slid 2.0% from an all-time high while Mirvac shares dropped 2.8% lower.

After another volatile week on the markets, find out why I’ve got my eye on HUB24 Ltd (ASX: HUB) and 2 more ASX 200 shares this week.

HUB24 and 2 more ASX 200 shares to watch this week

Any recent share gainer is worth watching in my books. That’s certainly the case for HUB24 shares which are up 46.9% in July alone.

Shares in the wealth management software platform surged after the company reported record annual inflows of $4.95 billion, up 27% from FY19, with funds under administration climbing 34% to $17.2 billion for the year.

I think those strong numbers make the ASX 200 finance share worth watching in the weeks ahead.

While on the subject of numbers, Thursday’s budget update has provided some food for thought.

In particular, I think ASX 200 bank shares are worth watching after the Federal Government announced an $85.8 billion budget deficit for the year. 

With net debt set to balloon to $488 billion by the end of June. That could be good or bad news depending on how that money is spent in 2020.

ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) are so intertwined with the Aussie economy. That means strong government support could be good for the CommBank loan book and earnings quality.

Finally, the Orocobre Limited (ASX: ORE) share price is on my weekly watchlist. The ASX 200 lithium share rocketed 13.2% higher last week on renewed hopes of an electric vehicle boom.

Tesla Inc (NASDAQ: TSLA) shares have continued climbing recently on the back of strong earnings and closed out short positions. Strong production to fulfill demand could make lithium shares like Orocobre worth watching in the weeks ahead.

More reading

• 3 ASX dividend shares I like ahead of the August earnings season
• These are the 10 most shorted shares on the ASX
• These were the ASX 200’s biggest share gainers last week
• These shares were the ASX 200’s biggest losers last week
• ASX 200 Weekly Wrap: ASX has week of high volatility

Ken Hall 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 Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Hub24 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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