Tag: Motley Fool

If you own ASX shares in the technology and healthcare sectors, your portfolio is likely looking green around the gills at the moment.

While the general S&P/ASX 200 Index (ASX: XJO) is down more than 6% this year, the S&P/ASX All Technology Index (ASX: XTX) has plunged a shocking 18% while the S&P/ASX 200 Health Care Index (ASX: XHJ) has lost 14%.

And to rub it in, the S&P/ASX 200 Resources Index (ASX: XJR) is actually 4% higher now than when 2022 started!

Now, we know that the brutal falls in January were triggered by fears that interest rates in the US and Australia would head up.

But why is the market picking on specific sectors? Wouldn’t interest rate rises be detrimental for everyone?

When money is more expensive, it’s harder to keep it locked up 

Shaw and Partners portfolio manager James Gerrish this week explained why tech and health have been hit so hard in the recent dip.

Because they are industries that heavily involve innovation, tech and health sectors tend to host growth stocks rather than the more conventional value shares.

And the worth of a growth stock is very much dependent on its future outlook.

“Because they are growing strongly, investors are prepared to pay a higher price for the earnings stream against a company that has solid earnings now but with little growth,” Gerrish told his Market Matters newsletter.

“With specific reference to high-value growth type stocks, the easiest way to think about it is that we are investing a dollar now on the expectation that earnings will grow strongly in the future.”

Therefore, when borrowing costs are low, the opportunity cost of having investors’ money locked up in a company for years is cheap.

“But when rates rise, the opportunity cost also goes up — making it less appealing.”

Snap up those bargains while they’re cheap though

Despite the recent hammering of growth shares, Montgomery Investment Management chief investment officer Roger Montgomery reminded investors that, over the longer term, rising rates have not historically prevented shares from trending upwards.

As an example, he referred to how the S&P 500 Index (SP: .INX) moved from 2015 and 2018.

“Short-term rates were lifted 9 times and yet the market rallied,” Montgomery said in his blog.

“Provided… you own companies that are high quality, growing and increasing their intrinsic value, then even rising rates won’t be enough to keep the share price from eventually reflecting its worth.”

This is all to say that he reckons it’s time to buy up bargain ASX shares, even though no one knows whether the carnage has finished.

Inflation would not be persistent, according to Montgomery.

“Wages will eventually be under pressure again,” he said.

“And given the very high levels of household debt, a few short and sharp rate hikes may be all that is necessary to put the inflation genie back in its bottle.”

The post Why 2 specific ASX share sectors are taking such a beating in 2022 appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• Why are Sydney Airport (ASX:SYD) shares such hot property today?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Is the Woodside (ASX:WPL) share price a smart buy for dividends?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/uib9rCL

There are some very compelling ASX shares to consider which have plenty of potential.

The ASX share market sell-off over the last several weeks has opened up the possibility to be able to jump on these companies at better value.

Businesses with significant plans for future operational growth give themselves a better chance of profit growth.

Here are two strong contenders:

Bubs Australia Ltd (ASX: BUB)

Bubs specialises as an infant formula business, particularly goat milk infant formula. It also offers goat milk products for adults and organic, grass-fed cow milk infant formula.

The ASX share said has said that it’s aiming to become the leading global family nutrition brand from Australia and it’s leading the return to growth for its category.

Bubs recently reported its quarter for the three months to 31 December 2021. Gross revenue of $19.9 million was up 56% year on year and 8% quarter on quarter. The half-year revenue to December 2021 was $38.5 million, up 73% year on year and 57% half-on-half.

The Bubs infant formula segment earns a much higher profit margin than the adult goat products. In the latest quarter, the Bubs infant formula revenue rose 83% year on year.

There were concerns about Chinese demand in 2021. But Chinese demand is now returning in a big way for the ASX share. Chinese gross revenue in the quarter was up 121% year on year and up 21% quarter on quarter.

The ASX share is steadily expanding its geographic reach and planting seeds for future growth. Bubs product sales to international markets outside of China were up 66% year on year and up 141% quarter on quarter. The Bubs family nutrition new product portfolio has been shipped to Africa, China, Singapore and ‘Pacific Islands’.

Another positive from the quarterly update was $2.4 million of operating cashflow.

It’s currently rated as a buy by Citi, with a price target of $0.68.

Accent Group Ltd (ASX: AX1)

Accent is a large shoe retailer in Australia. It owns some retailing brands, like Stylerunner, The Athlete’s Foot and Glue Store. It’s also the distributor for some international brands like VANS, Skechers, Dr Martens and Reebok.

The ASX share has a dual strategy of growing its online sales whilst also growing its store network.

Lockdowns and COVID-19 have impacted sales and profitability in the first half of FY22, but management were pleased with the gross profit margin improvement in December, which was stronger than expected.

Over the longer-term it’s expecting growth to be funded by various tactics including growing its owned brands, expanding with new businesses as well as its ‘exclusive distribution agreement’ brands.

In FY21 it opened 90 stores. During FY22 it’s expecting the store network to grow to more than 700 stores across Australia and New Zealand.

It’s currently rated as a buy by UBS, with a price target of $2.75. Looking at the FY23 projections, UBS thinks the Accent share price is valued at 13x FY23’s estimated earnings with a forecast grossed-up dividend yield of 9%.

The post Potential buys: 2 compelling ASX shares appeared first on The Motley Fool Australia.

More reading

• Analysts rate these ASX dividend shares as buys
• ASX retail shares have slumped in 2022. Could there be more pain to come?
• 2 quality ASX dividend shares for income investors to buy
• Analysts name 2 ASX dividend shares to buy
• Broker names 3 speculative ASX shares to buy

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/PV7ABQF

Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, SG Hiscock portfolio manager Rory Hunter explains why he’s so pumped about one possible IPO later this year.

The ASX share for a comfortable night’s sleep

The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?

RH: Okay, a slightly different one here, in the sense that it’s not actually a listed position, but a position that will soon be listed — so I think it will be of quite a lot of interest to readers — is a company called Planet Innovation. 

[Editor’s note: Planet Innovation is a public company but is unlisted. This means investors have access to buy shares for it off-market from time to time.]

They’re actually the parent company of Lumos Diagnostics Holdings Ltd (ASX: LDX). They’ve recently been in the press a bit, because Anthony Albanese gave a press conference from their headquarters in Box Hill, talking about the fact that there was a need for more local manufacturing of, not for rapid diagnostics, but medical devices. Pretty much giving the public commitment to fund businesses in this space. 

This is, first of all, fantastic for a fund like ours, because you’re going to see a lot of government funding and broader funding in the sector. But also great for Planet Innovation. 

I actually just think that the Planet Innovation business is just a strategically brilliantly set up business. They’ve got two sides to the business. One side is a services business and the other side is a ventures business — the cost of all the specialising in medical devices. 

The way the business model works, the way it’s worked historically, is that the ventures businesses as they mature, Planet Innovation actually harvests their investments in the ventures businesses in order to fund the more capital-intensive services business.

In terms of the services business, PI are now generating 70% of their revenue from the US. And they’ve built quite an incredible track record there with some of the world’s largest medical device companies in the US.

The interesting bit is there’s a bit of competition in this space. And this space in the US is worth about $25 billion at the moment. That market is expected to double by 2025, which I think is quite an extraordinary stat. It tells you a lot about the tailwinds in this space. 

PI actually have a competitive advantage over their competition, in the sense they do a lot of the design before they actually win manufacturing contracts. What that means is that they’re actually at the front of the queue when it comes to the manufacturing contracts now. I think what will be the case for the business when it comes to [the share] market, is that sell-side analysts will always undervalue the service business, because they’ll look at it and they’ll say, “Manufacturing business, short-term contracts. Not a very sticky customer base.”

But actually, I think potentially they’ll undervalue it, just simply because the nature of the contracts is with the large medical device companies. They’ll win contracts over and over again, because of that strong execution.

It’s a fantastic management team. It’s the old management team from Vision Biosystems, that actually spun out when Vision Biosystems was acquired by Danaher back in, I think it was, 2008 or 2009. So that’s Sam Lanyon and Stuart Elliott. They had incredible success with Vision Biosystems and they’re replicating that now with Planet Innovation. 

We expect Planet Innovation to come to market in the shape of an IPO at some point this year.

The post Expert reveals one IPO he’s absolutely pumped about. When will it hit the ASX? appeared first on The Motley Fool Australia.

More reading

• 2 small-cap ASX shares to handsomely reward patient investors
• Why are ASX COVID test shares climbing today?
• The Lumos Diagnostics (ASX:LDX) share price is soaring another 8% today. Here’s why
• Why the Lumos Diagnostics (ASX:LDX) share price is up 15% today
• AnteoTech (ASX:ADO) share price gains 42% in a week amid RAT race

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/6pTzJ8c

If you’re wanting to add some new dividend shares to your income portfolio, then the two listed below could be worth considering.

Here’s what analysts are saying about these dividend shares right now:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to look at is this footwear focused retailer. It owns a large (and growing) stable of store brands including Glue, HYPEDC, Pivot, Platypus, Sneaker Lab, and Stylerunner.

Accent’s shares have fallen heavily in recent months after lockdowns weighed on its performance. However, the team at Bell Potter appear confident that this is a short term blip and are expecting its earnings and dividends to rebound in FY 2023.

In light of this, while it is now only forecasting a fully franked dividend of 5.4 cents per share in FY 2022, it expects this to double to 11 cents per share in FY 2023. Based on the current Accent share price of $2.06, this will mean yields of 2.6% and 5.3%, respectively.

Bell Potter has a buy rating and $2.75 price target on Accent’s shares.

Woodside Petroleum Limited (ASX: WPL)

Another ASX dividend share to look at is Woodside. Unlike Accent, this energy producer’s shares have been on fire in recent months. This has been driven by oil prices hitting seven-year highs and optimism over its upcoming merger with the petroleum assets of BHP Group Ltd (ASX: BHP).

This merger will be transformative for Woodside, making it a top ten global producer with a collection of world class operations and numerous growth options.

Morgans is very positive on the company and is expecting generous dividend payments in the coming years. The broker has pencilled in dividends per share of $1.26 in FY 2021 and then $1.29 in FY 2022. Based on the current Woodside share price of $27.03, this will mean yields of 4.65% and 4.8%, respectively.

The broker has an add rating and $30.55 price target on its shares.

The post Analysts rate these ASX dividend shares as buys appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Own ASX energy shares? Citi issues stark oil production warning
• These 3 ASX energy shares just hit 52-week highs
• Is the Woodside (ASX:WPL) share price a smart buy for dividends?
• ASX retail shares have slumped in 2022. Could there be more pain to come?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/4WGEeKX

On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was in fine form and charged notably higher. The benchmark index rose 1.1% to 7,186.7 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to edge higher

The Australian share market looks set to rise slightly on Wednesday following a positive night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 5 points higher this morning. In late trade in the United States, the Dow Jones is up 0.9%, the S&P 500 is up 0.7%, and the Nasdaq is up 0.95%.

CBA half year results

The Commonwealth Bank of Australia (ASX: CBA) share price will be one to watch this morning when it releases its half year results. According to a note out of Morgans, its analysts are expecting Australia’s largest bank to deliver cash earnings of $4.320 billion and a fully franked interim dividend of $1.74 per share.

Oil prices tumble

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a difficult day after oil prices tumbled. According to Bloomberg, the WTI crude oil price is down 1.6% to US$89.82 a barrel and the Brent crude oil price has fallen 1.7% to US$91.07 a barrel. Oil prices tumbled amid talks between the US and Iran relating to sanctions

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a decent day after the gold price pushed higher. According to CNBC, the spot gold price is up 0.45% to US$1,829.7 an ounce. An unstable environment in the markets is believed to be supporting demand for the safe haven asset.

Mineral Resources half year results

The Mineral Resources Limited (ASX: MIN) share price will be in focus today when it release sits half year results. Over at Citi, its analysts are forecasting a net profit after tax of $262.4 million for the half. Goldman Sachs is less positive and has tipped the mining and mining services company to negatively surprise. It is forecasting a result “-5%/-16% below VA consensus 1H FY22 EBITDA/NPAT respectively.”

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

More reading

• Own ASX energy shares? Citi issues stark oil production warning
• Here are the top 10 ASX shares today
• These 3 ASX energy shares just hit 52-week highs
• Why are Sydney Airport (ASX:SYD) shares such hot property today?
• Forget toilet paper, now we’re ‘panic buying’ lithium! Here’s how ASX lithium shares are tracking

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/yxoZcbD

Are you wanting to add some ASX growth shares to your portfolio in February? If you are, you may want to look at the ones listed below.

Here’s what you need to know about these growth shares:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX growth share to look at is Aristocrat Leisure. It is one of the world’s leading gaming technology companies. It has been growing at a rapid rate over the last decade thanks to strong demand for its best in class pokie machines and its lucrative digital business. The latter is generating significant recurring revenues from highly popular games such as RAID. And while it has just missed out on the major acquisition of real money gaming company Playtech, that is unlikely to be the end of its real money gaming aspirations. Particularly given its balance sheet strength following its capital raising. Morgans is bullish on Aristocrat and has an add rating and $48.00 price target on its shares.

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

Another option for investors to consider is an ETF that provides easy access to a group of quality growth shares. By buying the BetaShares Asia Technology Tigers ETF, investors will be owning a slice of around 50 outstanding companies that are leading Asia’s technological revolution. Among the companies included in the fund are the likes of Alibaba, JD.com, Pinduoduo, Samsung, Taiwan Semiconductor, and Tencent.

Breville Group Ltd (ASX: BRG)

A final ASX growth share to look at is Breville. It is the leading appliance manufacturer behind the Baratza, Kambrook, Sage, and Breville brands. Thanks to its investment in research and development, these brands have been popular with consumers for many years, which has underpinned solid sales and earnings growth. And thanks to favourable consumer trends and its international expansion, brokers are expecting this growth to continue. One of those brokers is Morgan Stanley, which has an overweight rating and $36.00 price target on its shares.

The post Here are 3 excellent ASX growth shares for investors in February appeared first on The Motley Fool Australia.

More reading

• Could Aristocrat (ASX:ALL) still be eyeing a Playtech deal of sorts?
• Why these 2 ASX ETFs are in major correction territory
• 3 top ETFs for ASX investors to look at this month
• 4 fantastic ASX growth shares to buy
• Brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/caGoFES

The Webjet Limited (ASX: WEB) share price has taken off so far this week.

The travel company’s shares have lifted 12.9% since market open on Monday. Today alone, Webjet shares have gained 7.44%.

Let’s take a look at what might be buoying the company’s share price lately.

Travel share recovery

Webjet may be in the green but it wasn’t the only ASX travel share taking off today. However, Webjet performed a little better than its ASX travel share peers.

Today, the Flight Centre Travel Group Ltd (ASX: FLT) share price jumped 6.71% while Qantas Airways Limited (ASX: QAN) shares climbed 1.11%.

Helloworld Travel Ltd (ASX: HLO) gained 3.53% while Corporate Travel Management Ltd (ASX: CTD) rose 4.27%.

This follows Prime Minister Scott Morrison revealing yesterday that Australia’s international borders will open to tourists and visa holders from 21 February. Investors appear to be reacting positively to this news.

Today, the New South Wales government said the international border opening would create tourism and international investment opportunities.

The state’s Tourism Minister Stuart Ayres said:

Tourism and hospitality operators will welcome the opening of international borders after two incredibly difficult years. This means more jobs, stronger businesses and a faster economic recovery across NSW.

The world is moving quickly and this is another critical step towards NSW getting back to normal and us living with the virus.

Webjet is an online travel agency enabling customers to compare flights, hotel accommodation, and car hire deals around the world.

The company has not made any price-sensitive announcements to the market since November. It’s due to report its FY22 results at the end of May.

As my Foolish colleague Aaron reported recently, the company is growing its domestic offering along with expanding its presence in the North American B2B market.

The Webjet share price has soared nearly 28% since market close on 27 January, less than two weeks ago.

Webjet share price snap shot

Over the last 12 months, the Webjet share price has gained almost 15%. In the past week alone, it has surged nearly 22%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned 4.45% over the past year.

Webjet has a market capitalisation of $2.25 billion based on its current share price

The post On a roll. Why is ASX 200 travel share Webjet (ASX:WEB) skyrocketing? appeared first on The Motley Fool Australia.

More reading

• Why are ASX travel shares Flight Centre (ASX:FLT), Qantas and Webjet lifting off today?
• These are the 10 most shorted ASX shares
• Here’s why the Webjet (ASX:WEB) share price is up 10% in a week
• Are ASX travel shares finally emerging from the COVID storm?
• Could the Webjet (ASX:WEB) share price be about to get a boost?

The author has no holdings in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Helloworld Limited. The Motley Fool Australia owns and has recommended Helloworld Limited. The Motley Fool Australia has recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/Pt6MfWO

ASX energy shares have been clear beneficiaries of energy prices trading at multi-year highs.

Take oil, for example.

You have to go back to 2014 to find West Texas Intermediate (WTI) crude oil trading at these levels.

WTI is currently fetching US$91.27 per barrel, down just a touch from yesterday’s US$92.31 per barrel.

Now turn the clock back to 1 January and that same barrel was trading for US$75.21. And go back a full year, to 8 February 2021, and WTI was selling for $58.26 per barrel.

In other words, oil has surged 22% in 2022, helping propel some big gains for leading ASX energy shares.

S&P/ASX 200 Index (ASX: XJO) listed Santos Ltd (ASX: STO), as one example, has gained around 15% year-to-date.

Rival ASX 200 energy share Woodside Petroleum Limited (ASX: WPL) has done even better, up by more than 19%.

This, as the benchmark index itself has lost 5.3% in the calendar year.

But oil prices could be set for a significant retrace as the year unfolds.

Tailwinds ahead for ASX energy shares?

Crude oil prices have been driven higher as demand ramped back up following pandemic re-openings while new supply levels have failed to keep pace.

OPEC+, while opening the taps by another 400,000 barrels per day earlier this month, still has restrictions in place. And even so, many of its members aren’t currently able to even meet their production caps.

New investments in oil exploration and production have also lagged, while COVID continues to hamper labour availability.

But there could be a flood of new crude oil supply hitting the markets in 2022 yet.

According to Citi analysts, output from the United States could lift by as much as 1 million barrels per day this year, which could pose concerns for ASX energy shares.

As Bloomberg reports, Citi said, “Oil executives tempted by the prospect of the highest crude prices in seven years are showing all the signs of abandoning pledges to hold the line on drilling budgets.”

Citi analyst Scott Gruber expects US shale explorers will increase spending by some 40% in 2022. Citi had previously forecast a 30% increase in spending. Meanwhile, it expects overseas spending levels to increase by 32% this year, up from its previous expectation of a 17% rise.

According to Gruber:

E&P managements will be hard pressed to abandon their commitments. But we foresee an increasing number beginning to lean into the market as the challenge of managing supply in a market as disaggregated as the global oil market becomes increasingly clear.

Should the US pump an extra million barrels of oil per day, crude prices will likely retrace. And ASX energy shares could see their prices come under pressure.

The post Own ASX energy shares? Citi issues stark oil production warning appeared first on The Motley Fool Australia.

More reading

• These 3 ASX energy shares just hit 52-week highs
• Is the Woodside (ASX:WPL) share price a smart buy for dividends?
• Is now the time to rid your ASX share portfolio of COVID losers?
• ‘100 million tonnes’: Santos (ASX:STO) share price steady on world-first carbon storage deal
• 5 things to watch on the ASX 200 on Tuesday

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/FLlD8Nw

The GUD Holdings Limited (ASX: GUD) share price will be one to watch on Wednesday.

This follows the release of the diversified products company’s half year results after the market close.

GUD share price on watch following mixed half

• Revenue up 32% to $332 million
• Underlying net profit after tax (excluding Job Keeper) up 14.7% to $35.2 million
• Underlying earnings per share down 15.6% to 30.4 cents
• Fully franked interim dividend down 32% to 17 cents per share
• Cash conversion down 30.1% to 63.3%

What happened during the first half?

For the six months ended 31 December, GUD reported a 32% increase in revenue to $332 million. This was driven by a record performance from its Automotive segment, which benefited from acquisitions. Group organic revenue growth was a more modest 5.7%.

On the bottom line, GUD reported a 14.7% increase in underlying net profit after tax to $35.2 million excluding Job Keeper. This is a touch short of the market consensus estimate of $35.8 million.

As for earnings per share, it fell 15.6% to 30.4 cents due to its increased share count following a capital raising to fund the AutoPacific Group (APG) acquisition.

GUD’s cash conversion of 63.3% fell short of its mid-term targets. However, there was a good reason for this. Management advised that this reflects the strategic commitment to increase inventories to address supply chain disruptions. Cash conversion is expected to improve in the second half despite elevated inventory levels as the seasonal spike for Chinese New Year unwinds.

Management commentary

GUD’s Managing Director, Graeme Whickman, commented: “It was pleasing to see such solid organic growth in Automotive sales and Underlying EBIT considering Q1 was the most locked down period since the pandemic commenced. In addition, Automotive was coming off an extraordinarily strong pcp due to a COVID‐19 sales recovery phase experienced in that half.”

“It was also exciting to announce and complete the Vision X acquisition and announce the APG acquisition. Both are critical steps in achieving the Group’s Portfolio Vision and will be important contributors to GUD’s long‐term success.”

Outlook

Management has reiterated the guidance it provided in December. It continues to expect FY 2022 underlying EBITA of $112 million to $116 million before contributions from the Vision X and APG acquisitions.

Including these acquisitions, EBITA is forecast to be in the range of $155 million to $160 million. Though, management has warned that short term challenges remain.

Mr Whickman commented: “Short term challenges remain. The recent spread of Omicron has seen capacity to produce and deliver against sales orders diminished in January, but we remain confident this will be a deferral of demand rather than a loss in sales. If that scenario proves to be correct, we remain on track to deliver on FY22F EBITA guidance of $155 to $160 million.”

The post GUD (ASX:GUD) share price on watch after reporting 32% revenue growth appeared first on The Motley Fool Australia.

More reading

• ASX shares set to conquer the carnage: expert
• Top brokers name 3 ASX shares to buy next week
• Brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/420K6aT

The AnteoTech Ltd (ASX: ADO) share price embraced February with arms wide open.

So far, the new month has treated the biotechnology company much better than January. A month that saw AnteoTech shares plunge 36% as the Therapeutic Goods Administration (TGA) saught more information from the company for its EuGeni Reader and COVID-19 Rapid Diagnostic Test (RDT).

Since the beginning of February, the AnteoTech share price has climbed 30%. For context, the S&P/ASX 200 Index (ASX: XJO) is only up 3.1% over the same period.

At market close, ASX-listed AnteoTech finished the day up 13.04% to 26 cents apiece.

Although, investors might be scratching their heads wondering what could be behind this recovery. It’s time to take a closer inspection of what’s been happening.

ASX investors’ change directions on AnteoTech

Market sentiment towards AnteoTech was impacted in January. The disruptions to the company’s study timeline created by the Omicron outbreak depressed the share price.

In addition, the market was unimpressed with its quarterly business update. Upon the release of its update, AnteoTech shares continued to sell-off.

Fortunately, AnteoTech shareholders have been treated to a few news items that have been well received this month. Firstly, reports suggested the Federal Government might allow the use of unapproved rapid antigen tests for personal use in Australia.

Secondly, the government unveiled it would make COVID-19 tests tax-deductible. Several ASX-listed companies, including AnteoTech, experienced a jump in share prices on the news. A caveat is that the deduction only applies to COVID-19 tests used for work-related purposes.

Lastly, rapid antigen tests (RATs) are now compulsory for anyone arriving at Western Australia hospitals as of yesterday. Health Minister Amber-Jade Sanderson revealed that the screening process will be a requirement before entering hospitals.

Perhaps AnteoTech investors are viewing this as a positive for RAT demand.

AnteoTech share price snapshot

ASX-listed AnteoTech has been riding a rollercoaster over the past 12 months. In fact, shareholders have needed to grit their teeth through violent swings between 50 cents and 16 cents. Nonetheless, AnteoTech shares have provided a 49% return over the last year.

Despite the rise to prominence, the company continues to be a loss-making operation. Additionally, AnteoTech’s revenue for the trailing 12-months as of 30 June 2021 was $2.3 million. This is typically considered to not be a meaningful amount.

The post Rats! How have AnteoTech (ASX:ADO) shares already gained 30% in February? appeared first on The Motley Fool Australia.

More reading

• Why are ASX COVID test shares climbing today?
• AnteoTech (ASX:AD) share price surges 15% as COVID-19 RAT race continues
• Why did the AnteoTech (ASX:ADO) share price tumble 13% on Monday
• Why Ansell, AnteoTech, Dubber, and NIB shares are dropping
• Why AnteoTech, Newcrest, Nitro, and ResMed shares are falling

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/T5aYcFb