Tag: Motley Fool Australia

The Osteopore Ltd (ASX: OSX) share price surged over 30% around lunch time today before being rapidly sold down to a more modest gain of just 2.4% (at time of writing). The ASX medical share rallied following an announcement from the company regarding its development of a new 3D printed bone implant. 

What did Osteopore announce?

In a release to the market shortly after midday today, the company announced it has signed an Exclusive Option to licence novel 3D printed modular bone implant technology being developed at the Queensland University of Technology (QUT). 

The technology has shown encouraging early stage results for regrowth of long bone defects in patients who have lost more than six centimetres of bone to injury or disease. Additionally, the technology has the potential to disrupt the supply chain model of customised implants. 

Osteopore and QUT will collaborate to generate sufficient clinical data to support regulatory submissions to the Therapeutic Goods Administration (TGA), United States Food and Drug Administration (FDA) and European regulators. As a result, the evaluation of the technology could potentially lead to an opportunity to acquire it. 

The agreement between the parties will progress through two stages. The first stage is to gather clinical data and stage two is regulatory approval and commercialisation. In stage two, Osteopore could have exclusive worldwide licence to commercialise the technology. 

However, the company has advised that this project has a long development pathway and commercialisation of any product could take years. Worst case scenario, there may not be a product at all.

Terms of the agreement and potential market opportunity

Ostopore will provide $40,000 in cash, plus in-kind support and has secured a $100,000 non-dilutive grant from QUT. Under any future commercial agreement with QUT, the company would need to provide a market entry fee of $100,000 and provide royalties with a potential range of 2-6%. 

The market has significant growth potential according to a Boston Consulting Group report published in 2015. In a more recent publication released in March 2018, Boston Consulting reported the compound annual growth rate (CAGR) for reconstructive implant in orthopaedic and spine as being 5.1%. As a result, the global market potential is expected to be $30 billion by 2022. 

About this ASX medical share

According to its website, Ostepore specialises in the production of 3D-printed, bioresorbable implants that are used in conjunction with surgical procedures to assist with the natural stages of bone healing. 

Since the announcement, and following its considerable but short-lived rally, the Ostepore share price has settled at 64 cents at the time of writing.  

More reading

• 2 breakthrough ASX healthcare shares
• 3 innovative ASX shares to buy
• Osteopore share price storms 270% higher on distribution deal

Motley Fool contributor Matthew Donald 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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I think one of the best ways for investors to grow their wealth is to make long term investments in quality shares with strong business models and positive outlooks.

Three shares that tick a lot of boxes for me are listed below. I think they could provide outsized returns for their shareholders and potentially allow investors to retire rich. Here’s why I like them:

Appen Ltd (ASX: APX)

Appen is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence. It has a team of 1 million+ crowd-sourced workers spread out across the globe. Its sizeable team allows the company to collect and label high volumes of image, text, speech, audio, and video data used to build and improve artificial intelligence models. Given the growing importance of artificial intelligence and machine learning and Appen’s leadership position in its field, I feel it is well-placed to continue growing its earnings at a strong rate long into the future.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Another growth share to consider buying is Domino’s. I think the pizza chain operator could be a long term market beater thanks to its strong market position, positive sales targets, and its bold expansion plans. Domino’s is aiming to grow its global store network by 7% to 9% per annum for the next 3 to 5 years. It is also targeting same store sales growth of 3% to 6% per annum over the same period. If the company is able to at least maintain its margins, this should lead to strong earnings growth over the coming years and drive the Domino’s share price higher.

ResMed Inc. (ASX: RMD)

A final growth share to consider buying is this medical device company. ResMed has a portfolio of cloud-connected devices which care for people with sleep apnoea, chronic obstructive pulmonary disease, and other chronic diseases. The sleep treatment market is tipped to grow strongly over the next decade, which I believe puts ResMed in a position to continue growing its earnings at an above-average rate for some time to come.

More reading

• 2 five star ASX healthcare shares to buy in July
• Why Kogan and these popular ASX shares just hit record highs
• 5 things to watch on the ASX 200 on Wednesday
• Why Morgans thinks the Afterpay share price could be a reporting season hero
• ResMed share price rockets to record highs

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and ResMed 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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I like to keep an eye on the substantial shareholder notices that are released to the ASX. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye this week are summarised below. Here’s what these fund managers have been buying:

iSelect Ltd (ASX: ISU)

A change of interests of substantial holder notice reveals that Thorney International and its subsidiary Thorney Technologies Ltd (ASX: TEK) have been buying more of this comparison website operator’s shares. According to the notice, the fund manager has recently added a further ~4.2 million shares to its holding, lifting its total to just under 24.1 million shares. This represents an 11.04% stake in iSelect.

The iSelect share price fell to a record low earlier today and is now down by a massive 74% since this time last year. Judging by its purchases, it would appear as though analysts at Thorney believe this selloff has been overdone and left its shares trading at an attractive level.

Kogan.com Ltd (ASX: KGN)

According to a notice of initial substantial holder, FMR LLC, better known as Fidelity Investments, has been buying this ecommerce company’s shares. The notice reveals that Fidelity has been adding to its existing position since 23 June and now owns a total of 5,353,238 shares. This is the equivalent of a 5.08% stake in the company.

Over the last 30 days, Fidelity picked up a total of 2,559,265 shares. It was buying as low as $14.80 in June and as high as $17.94 last week. Given that the Kogan share price is currently changing hands for $17.41, it would appear as though this fund manager still sees value in the company’s shares at the current level.

More reading

• Where to invest $20,000 into ASX shares right now
• Why Kogan and these popular ASX shares just hit record highs
• ASX 200 jumps 2.6% on vaccine hopes and jobkeeper
• These ASX eCommerce shares are riding the online shopping wave
• Kogan share price rockets higher after delivering impressive Q4 growth

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

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The federal government may have written off the chances of a snap-back for the economy, but this doesn’t mean a V-shape recovery is off the table for all.

If anything, the sharp rebound is already unfolding for some miners with Citigroup noting a big rebound in demand for copper from China.

Australia is lucky to enjoy China’s unrelenting love for our commodities as the Morrison government extended its six-month wage support programs yesterday till the end of 2020, if not beyond.

It’s an admission that the government’s initial expectations for a rapid reinflation of our COVID-19-stricken economy was way too optimistic.

Copper miners outperforming the ASX 200

At least our copper miners have something to cheer about with the OZ Minerals Limited (ASX: OZL) share price jumping 2.8% to a nine-year high of $13.34 during lunch time trade.

Its fellow copper producer isn’t doing too badly too. The Sandfire Resources Ltd (ASX: SFR) share price climbed 0.5% to $5.57 when the S&P/ASX 200 Index (Index:^AXJO) tumbled 1.2% at the time of writing.

The preliminary read on Citigroup’s China copper end-use tracker (CCET) jumped 5.5% year-on-year (y/y) for June – the highest growth rate since May 2018.

Chinese metal demand

“This is the second positive y/y growth print this year, following +2.5% y/y in May 2020, pointing to a ‘V’ shaped recovery in Chinese end-use copper demand, having bounced back from -28% y/y growth in February 2020 (the steepest monthly y/y decline on record),” said the broker.

“The construction, automotive, and electronics sectors have been particularly strong in recent months.

“The broad based nature of end use improvement in China means demand should be similarly strong for other metals.”

These other metals include aluminium, zinc, nickel, silver and platinum group metals (PGMs). The data bodes well for other ASX miners too like the South32 Ltd (ASX: S32) share price and Alumina Limited (ASX: AWC) share price.

Australia’s V-shape recovery dream

Given the strong recovery in key sectors of the Chinese economy, one has to wonder if Australia can follow a similar path out of the coronavirus shutdown.

Australia is a few months behind China as the Asian giant appeared to have contained the virus outbreak in Wuhan around March.

But it isn’t realistic for us to think about the road to recovery when Victoria hasn’t yet seen a turning point in COVID-19 cases. The state recorded 484 new cases in the last 24 hours – its highest daily toll since the pandemic.

New South Wales is also desperately trying to gain control as a small outbreak of the disease is threatening to snowball.

Perhaps it’s all the more reason to be overweight on ASX miners as they aren’t exposed to the local economy.

More reading

• QBE share price rises despite expected half year loss
• Are ASX tech shares in a bubble?
• Top brokers name 3 ASX 200 shares to buy today
• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades
• Kanye West – ASX shares for his US presidential campaign

Motley Fool contributor Brendon Lau owns shares of OZ Minerals Limited and South32 Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The QBE Insurance Group Ltd (ASX: QBE) share price rose 2.8% this morning before being sold off to now trade at a modest 1.7% gain. This was despite the insurer announcing it expects to report a net loss for the half year to 30 June 2020. QBE has forecast a statutory loss after tax of around $750 million for the half year. 

Impacts of COVID-19 

COVID-19 is expected to have an underwriting impact of $335 million. This includes $150 million of net incurred claims, $115 million in additional risk margin, $50 million in premium concessions and $20 million of expenses including motor vehicle premium refunds. The pandemic has impacted multiple lines of business including property (business interruption), reinsurance, workers’ compensation, trade credit, and lenders mortgage insurance. 

The benefit of reduced personal motor claims frequency was returned to customers through premium refunds. While the landscape remains uncertain, QBE currently estimates total COVID-19 related costs will be around $600 million pre-tax. This includes $265 million of potential further net claims that could emerge over the next 12 – 18 months, as well as a net investment loss of around $125 million as a result of extreme market volatility. 

Catastrophe and prior accident claims 

Catastrophe claims increased to $310 million during the half, up from $180 million in 1H FY19. This exceeded QBE’s $250 million allowance and reflected the devastating impacts of the bushfires in Australia coupled with east coast storm and hail activity. The half year result will also include adverse net prior accident year claims development of around $120 million. Lower risk-free rates used to discount net outstanding claims are expected to impact the underwriting result by around $335 million. 

How has the QBE share price been performing? 

The QBE share price fell from a February high of over $15 to a low of $7.32 in March. It has since recovered 34% to currently trade at $9.83. This is slightly ahead of the broader S&P/ASX 200 (ASX: XJO) which has recovered 33% from its March low. QBE conducted an $825 million capital raise in April in order to lift its regulatory capital. This provided the company with the capital strength to navigate a range of severe economic scenarios. 

Despite the disruption caused by the pandemic, insurance trading conditions have strengthened, with renewal rate increases averaging 8.7% during the half compared with 4.7% during 1H FY19. QBE Group CEO, Pat Regan, said, “Despite the impact of COVID-19, I am encouraged by the strong underlying trends evident in the result. Notwithstanding significant uncertainty surrounding the enduring impact of the COVID-19 pandemic, our greatly strengthened capital base positions us well to capitalise on accelerating pricing momentum and emerging organic growth opportunities”.  

More reading

• The ASX sector that’s heading for a V-shape recovery
• Are ASX tech shares in a bubble?
• Top brokers name 3 ASX 200 shares to buy today
• Why Baby Bunting, Beach Energy, QBE, & Resolute shares are pushing higher
• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades

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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ASX tech shares have been dominating the S&P/ASX 200 Index (ASX: XJO) news lately.

Whether it’s Zip Co Ltd (ASX: Z1P) or Xero Limited (ASX: XRO) making new all-time highs, or Afterpay Ltd (ASX: APT) teaming up with Chinese tech giant Tencent Holdings, there has certainly been a lot of buzz in this sector.

This wouldn’t have been hurt by the fact that ASX tech shares have been amongst some of the best performers since the ASX 200 bottomed out in late March. For example, Afterpay shares have risen more than 800% since 23 March. The Zip share price is also up around 400% over the same period.

We saw a similar pattern over on the US markets. Growth and tech stocks like Tesla, Amazon, Apple, Microsoft and Square have soared since March. Tesla is up around 333% in the last 4 months, whilst Amazon has gained nearly 90% (an incredible move for a US$1 trillion+ company) and Square is up ~233%.

But these kinds of moves tend to get investors’ blood boiling – and not in a good way. According to reporting in the Australian Financial Review (AFR), money is pouring into tech-themed exchange-traded funds (ETFs), both in Australia and around the world.

Are tech stocks in a bubble?

This has been fuelled by the FOMO-inducing performances of the companies above and others – and investors have noticed. For example, the ASX tech-tracking BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) is up nearly 90% from 23 March, largely due to the Afterpay share price.

The ASX ETF that tracks the US tech-heavy NASDAQ index – the BetaShares Nasdaq 100 ETF (ASX: NDQ) – has also been a winner for ASX investors, climbing 27% since 23 March to a new record high of $25.97 just yesterday.

As has the more globally focused ETFS Morningstar Global Tech ETF (ASX: TECH), also up 27% over the same period.

This stellar and rapid performance has got some investors worried though.

This is some of what the AFR had to say:

“If history is any guide, the tech ETF boom has two inevitable consequences: retail investors joining the tech party too late and getting burned, and issuers launching tech funds to meet demand.”

The AFR also quotes Chris Brycki, CEO of Stockspot:

“History shows the worst time to buy a thematic ETF is when a lot of products get issued in a hot market. Investors want tech and issuers are happy to ‘feed the ducks when they are quacking’… With hindsight, tech ETFs were a great investment a decade ago. It is hard to argue they are as attractive now. Apple and other trillion-dollar tech giants might maintain their growth rates, but it is much harder from here. Most people buying tech shares today are doing so because they have done well in the recent past, which is not a sound strategy.”

Foolish takeaway

It’s hard to argue with these sentiments in my view. There will be some exceptions of course, but I do think that most tech stocks are getting into ‘exuberant’ territory at their current pricing levels. No one wants to call time on a raging party, but it has to end at some point. And you don’t want to be left without a seat when the music does stop.

More reading

• The ASX sector that’s heading for a V-shape recovery
• QBE share price rises despite expected half year loss
• Top brokers name 3 ASX 200 shares to buy today
• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades
• Kanye West – ASX shares for his US presidential campaign

Sebastian Bowen owns shares of Tesla. 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 BETANASDAQ ETF UNITS, ETFS Morningstar Global Technology ETF, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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Transurban Group (ASX: TCL) shares are well known among ASX dividend investors. Before the coronavirus pandemic struck, Transurban was often regarded as having one of the ‘safest’ dividends on the ASX. That’s because the company is a toll-road operator and owns many of the major arterial routes in the capital cities of Sydney, Melbourne and Brisbane, among others.

Toll roads are highly defensive assets because they are often unavoidable in the travels of individuals and businesses. Or so it seemed. Transurban shares were smashed in March as lockdown orders came into effect. The company was commanding a share price of more than $16 in February. By late March, the Transurban share price was under $10. Restrictions on travelling directly translated into far fewer cars and trucks on the road. And that meant less toll revenue for Transurban.

Last month, the company announced its final dividend/distribution for FY2020, which will come in at 16 cents per share. That’s a substantial drop from the last 2 dividends Transurban has paid (31 and 30 cents per share respectively).

But both the company’s business model and the Transurban share price are on the mend as we speak. At the time of writing, Transurban shares are asking $13.82.

Transurban could be expanding

Transurban’s portfolio of toll roads is already bulging. It owns 16 motorways in Australia and 4 in North America. Sydneysiders would be very familiar with the M2, M4, M5 East, M7, Cross City Tunnel and Eastern Distributor roads that the company owns. Similarly, Melburnians would know the Western Link, Southern Link and West Gate Tunnel (under construction). Brisbanians might be familiar with the Gateway Motorway, Logan Motorway and AirportLink.

As you can see, Transurban has a massive footprint in the transportation networks of our major cities.

But it looks like the company’s grip could expand even further which could be good news for the Transurban share price. According to an article in Monday’s Australian Financial Review (AFR), Transurban is in the running to acquire the remaining 49% of Sydney’s new WestConnex project. WestConnex is the brand name of a series of new tolled roads currently or recently under construction. It involves the duplication and extension of the M4 and M5 motorways, as well as a tunnel under Sydney’s Inner West that will connect the two upon completion.

Transurban already owns the initial 51% in WestConnex, but according to the AFR, the company might be keen to shell out around another $10 billion for the remaining ‘rump stake’ and is currently involved in negotiations between the NSW government and several potential buyers.

Is the Transurban share price a buy if the company wins WestConnex?

If Transurban is successful in acquiring the remaining stake of WestConnex, it will almost literally have a monopoly on the tolled roads of Sydney. Monopolies are pretty nice to have in one’s share portfolio. Of course, toll roads are heavily regulated, and Transurban isn’t exactly able to charge whatever it likes for using them. But most of the company’s contracts are very generous, allowing the company to raise its tolls by 4% per year or the rate of inflation, whichever is higher. Given that inflation is currently almost non-existent, that’s a pretty good deal in my view.

Foolish takeaway

I’ve always liked Transurban. It’s a strong company, with a portfolio of vital infrastructure assets that I don’t see being disrupted for at least the next few decades. As such, I think it’s a great share for an ASX dividend portfolio.

More reading

• TPG and 1 other quality ASX 200 share to buy right now
• I would buy Coles and these ASX dividend shares right now
• Should infrastructure be part of your investment strategy?
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• These ASX dividend shares are better than term deposits

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban 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.

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

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of UBS, its analysts have retained their buy rating and NZ$22.00 (A$20.50) price target on this infant formula company’s shares. The broker believes that the company’s market share on Chinese ecommerce platforms has increased strongly over the last 12 months. It expects this to underpin further strong earnings growth in FY 2021. I agree with UBS on a2 Milk Company and would be a buyer of its shares.

Santos Ltd (ASX: STO)

Analysts at Morgans have retained their add rating but trimmed the price target on this energy producer’s shares slightly to $6.00. This follows the announcement of write downs relating to its GLNG operation. In addition to this it notes that Santos has reduced its oil price forecast for 2020 and 2021. Nevertheless, the broker still sees value in its shares at this level and Santos remains its top pick in the industry. While I think Morgans makes a valid point about its valuation, I would like to see oil demand strengthen before considering an investment.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and $6.57 price target on this airport operator’s shares following its traffic update. The broker expects the spike in coronavirus cases to delay the recovery in the domestic travel market and has suggested a full recovery in passenger volumes could take a few years. However, it sees value in its shares and growth opportunities from developments and acquisitions. I agree with Macquarie and feel Sydney Airport shares would be a good long term option for investors.

More reading

• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades
• Kanye West – ASX shares for his US presidential campaign
• ASX 200 drops 1.1%: Big four banks fall, Resolute rockets, Afterpay tumbles
• Are you ready to invest in ASX shares?
• Should you buy ASX retail shares in July?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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 of midnight tonight, Victoria will become the first state to make the wearing of masks mandatory in coronavirus lockdown regions. In addition, the Australian Medical Association has also called for the national cabinet to establish a nationwide mask policy.

As a result of these measures, the demand for face masks has gone through the roof. Over the weekend, it was reported that Chemist Warehouse stores in Victoria sold 1.5 million masks.

Here are some ASX shares that have exposure to face masks and which could benefit from the surge in demand.  

ASX shares that could benefit from mandatory face masks 

Australian Pharmaceutical Industries Ltd (ASX: API)

According to an article in yesterday’s The Australian, Australian Pharmaceuticals (API), which operates the Priceline Pharmacy chain, saw a 30-fold increase in demand for face masks. In order to ease the panic buying, the company assured customers that there are sufficient masks in stock to meet demand.

In late April, the company released its half year results for FY20, with API highlighting increased demand as a result of the pandemic. Despite the surge in demand, the API share price is still trading nearly 18% lower for the year.

Wesfarmers Ltd (ASX: WES)

Wesfarmers could be another ASX share to watch as the company’s subsidiary Bunnings experiences a surge in demand for face masks. As a result of the soaring demand, Bunnings has placed a purchase limit on the product with customers only allowed to purchase a maximum of 50 masks.

In addition to face masks, Wesfarmers also has exposure to other trends seen during the pandemic. The company’s Officeworks stores have seen a surge in demand as consumers establish home offices, whilst Bunnings has also benefitted from the increased interest in home improvements and DIY projects.

Ansell Limited (ASX: ANN)

Ansell is a global leader in manufacturing and distributing health and safety protection solutions. The company operates in the industrial and healthcare sectors and could see continued growing interest in its personal protective equipment.

In its market update in late March, Ansell informed investors that the company had seen very strong demand for its AlpahaTec hand and body protection products, whilst also seeing a surge in demand for single-use and surgical gloves.

Keep an eye on these ASX shares

The mandatory order to wear masks in Victoria comes as the state recorded its highest daily number of COVID-19 cases earlier today. With fears of a second wave of infections spreading across the country, the demand for facial masks and other protective equipment could see a renewed surge.  

Although the demand for face masks won’t turn the companies listed here into automatic market darlings, it does highlight the essential nature of their products and also reflects the changes in consumer behaviour. As a result, I think it’s important for investors to keep an eye on these defensive companies and create a watchlist of other auxiliary services.

More reading

• These ASX 200 consumer discretionary shares are bucking the economic cycle
• You probably shop at these 7 ASX retailers. Should you buy shares in them too?
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• Cash rate on hold until 2022? Buy these ASX dividend shares
• Top ASX dividend shares to buy in July 2020

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Ansell 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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The ASX fintech sector has been on fire in recent months, driven in particular by the booming buy now, pay later (BNPL) shares. The number of ASX listings in this segment only continue to grow.

Here we take a closer look at three fintech shares that I believe have strong potential for growth over the next few years.

3 ASX fintech shares to consider adding to your portfolio

Sezzle Inc (ASX: SZL)

BNPL provider Sezzle is listed on the ASX, however its operations are based in the United States. The Sezzle share price has surged in recent months, increasing from 37 cents in late March to now be trading at $7.54.

Sezzle’s rapid recent growth continued during the second quarter. The company reported underlying merchant sales (UMS) of A$272.3 million during the quarter. That’s a 58% increase quarter on quarter and a whopping 349% year on year. The coronavirus pandemic has actually assisted, not hindered the BNPL sector, due to a surge in online shopping.

Sezzle continues to raise capital to support its rapid expansion strategy. In mid-July, it raised $79.1 million via the issue of 14.9 million shares.

Tyro Payments Ltd (ASX: TYR) 

ASX fintech share, Tyro Payments, provides payment solutions for credit and debit card transactions to Australian businesses. The Tyro share price was hit hard during the early phase of the coronavirus pandemic. It fell from $4.49 in February to 97 cents in late March. Since then, it has regained most of those losses, driven by the easing of lockdown restrictions.

Tyro saw a 15% increase in transactions during FY 2020 compared to FY 2019. Overall, transactions fell during April and May, but were back in positive territory in June.

EML Payments Ltd (ASX: EML)

EML Payments is an electronics technology solutions provider. It initially offered just gift cards and pre-paid cards. However, its product range now extends to salary packaging, digital banking products and gaming.

Revenue for the nine months ending 31 March increased by 20% on the prior corresponding period to $87.1 million. EBITDA also grew strongly by 24% during this period.

The EML Payments share price grew very strongly during 2019 and early 2020, but was hit hard during the first wave of the pandemic. Since then, its share price has partially recovered but is still trading significantly lower than the $5.66 we saw in mid-February. Business activity is likely to pick up in the months ahead as the economy comes back to life, which could see the EML share price recover further.

Foolish takeaway

In my view, Sezzle, Tyro Payments and EML Payments are 3 ASX fintech shares that all have strong future growth prospects over the next few years. The provider that I would pick as having the fastest growth trajectory is Sezzle, due to the current rapid growth of the BNPL sector.

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Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia owns shares of and has recommended Emerchants Limited. 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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