Tag: Motley Fool

Key points

• Flight Centre shares dip following slow recovery of travel market
• Border closures and restrictions impacting company sales
• First-half FY22 results anticipated to be released on 24 February

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The Flight Centre Travel Group Ltd (ASX: FLT) share price dropped to a 5-month low earlier today. Although its shares have slightly recovered, could now be the time to pick up a bargain?

At the time of writing, the travel agent’s shares are swapping hands for $16.06, down 3% for the day. In earlier trade, they slumped to $15.81, their lowest price since mid-August.

It’s worth noting that since reaching a post-COVID high of $25.28 in October, its shares have fallen by 36%.

What has happened to Flight Centre shares lately?

The dumping of the Flight Centre share price is being driven by the sluggish recovery across the travel market.

The number of Omicron cases across the country has led Western Australia to delay the reopening of its borders. In addition, extended restrictions across the east coast have impacted foot traffic to Flight Centre stores.

Without clearer visibility surrounding the resumption of travel, Flight Centre could be battling to achieve strong financial numbers for FY22.

Late last year, the company highlighted a return in leisure and corporate profitability. Corporate transaction numbers were at 50% of pre-COVID levels, representing around 40% of Flight Centre’s total transaction value (TTV).

On a positive note, the business has a much leaner and more efficient cost base model compared to pre-COVID. This is expected to translate to bumper profits when considering the long-term.

All eyes will be on Flight Centre’s FY22 half-year results which are expected to be released on 24 February.

Are Flight Centre shares a buy?

A couple of brokers weighed in on the Flight Centre share price during the final months of 2021.

The team at Citi raised its 12-month price target by 8.1% to $18.31 for Flight Centre shares. Based on the current share price, this implies an upside of 14% for investors.

On the other hand, Goldman Sachs cut its assessment on the company’s shares by 1.4% to $20.40. Its analysts believe there is still value left in the travel agent over the next 12 months. This represents an uplift of 27% for Flight Centre shares at today’s prices.

Flight Centre share price summary

It’s been a challenging 12 months for the Flight Centre share price, despite gaining around 7% over the period.

The company’s shares reached a 52-week high of $25.28 in early October when Australia appeared to be managing the pandemic. However, since the outbreak of the Omicron variant, its shares have nosedived.

On valuation grounds, Flight Centre presides a market capitalisation of roughly $3.3 billion, with approximately 199.61 million shares outstanding.

The post The Flight Centre (ASX:FLT) share price just hit a 5-month low. Is now the time to buy? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Flight Centre (ASX:FLT) share price falls amid potential legal action on borders
• ASX travel shares are nosediving today amid border opening delays
• Why did the Flight Centre (ASX:FLT) share price gain 7% in a month?
• Why are ASX 200 travel shares down today?

Motley Fool contributor Aaron Teboneras 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 Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on track to record a big decline. At the time of writing, the benchmark index is down a sizeable 3% to 6,925.1 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Accent Group Ltd (ASX: AX1)

The Accent share price is down over 4% to $2.02 following the release of a trading update. This morning the footwear focused retailer revealed that like-for-like sales across November and December fell 3.4% when compared to the prior corresponding period. Management also warned that January has been challenging due to COVID-19 impacts.

BrainChip Holdings Ltd (ASX: BRN)

BrainChip share price has crashed 16% to $1.39. This is despite there being no news out of the artificial intelligence technology company. This latest decline means BrainChip’s shares have now sunk over 40% from their highs this month. Investors appear to be questioning the company’s sky high valuation in the current environment.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is down 5% to $19.46 following the release of its second quarter update. Although Fortescue delivered record first half iron ore shipments, the discount for its product continues to widen. In addition, Fortescue revealed that its C1 costs were up 20% year on year. Though, a small positive was that they remained flat quarter on quarter.

Novonix Ltd (ASX: NVX)

The Novonix share price is down 8.5% to $7.53. This appears to have been driven by broad weakness in the battery materials sector which has offset a positive announcement. In respect to the latter, the advanced battery materials and technology company has signed a letter of intent to enter into investment and supply agreements with KORE Power. This will see Novonix become the exclusive supplier of high-performance graphite anode materials to KORE Power’s U.S. facility.

The post Why Accent, BrainChip, Fortescue, and Novonix shares are sinking appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Zip confirms Sezzle talks, Fortescue’s Q2 update
• Novonix (ASX:NVX) share price drops 6% amid agreement with US battery cell developer
• Fortescue (ASX:FMG) share price lower following Q2 update
• Why is the Accent (ASX:AX1) share price backtracking today?
• 5 things to watch on the ASX 200 on Tuesday

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.

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Key points

• The ASX 200 Index is at its lowest point in eight months
• Data from the Australian Bereau of Statistics shows inflation has increased 3.5% since last year
• Investors are putting selling pressure on ASX shares amid the news

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The S&P/ASX 200 Index (ASX: XJO) is hurtling towards correction territory on Tuesday. In the process, the benchmark index has now fallen below 7,000 points for the first time since May 2021.

At the time of writing, the Aussie index that tracks the top 200 listed companies on the ASX is down 2.54% to 6,958.5 points.

Interestingly, the ferocious sell-off is out of step with the movements on US markets overnight. So, what could be weighing down investor sentiment today?

Let’s take a closer look.

Aussie inflation runs hotter than expected

A potential catalyst behind the steep drop in ASX shares on Tuesday could be the release of current inflation figures. The byproduct is a heightened expectation that the Reserve Bank of Australia (RBA) will increase interest rates sooner, rather than later.

According to the Australian Bureau of Statistics, the consumer price index (CPI) increased 1.3% in the December ending quarter. This rise in household inflation brings the increase in CPI compared to 12-months ago to 3.5%. Prior to release, investors had been expecting a 2.3% CPI print.

Already, bond markets are reacting to the news, outlining the expectation that the RBA will lift rates by May this year. In addition, bond futures indicate the potential of four interest rate rises throughout 2022. If this eventuates, the official cash rate would be sitting at 1.15% by December.

The increased likelihood of higher rates appears to have spooked the ASX 200 today. Not a single sector has been able to escape the treacherous selling pressure.

Here’s a quick summary of what the market looks like on a sector-by-sector basis as we head into the afternoon:

ASX sector	Price change
Consumer discretionary	-1.2%
Consumer staples	-1.14%
Energy	-4.29%
Financials	-3.05%
Healthcare	-1.39%
Industrials	-2.13%
Information technology	-2.94%
Materials	-2.28%
Real estate	-3.03%
Communication services	-2.51%
Utilities	-2.3%

The near 3% tumble in the benchmark index has now erased all of the gains since May 2021.

The few green soldiers of the ASX 200

As sentiment continues to go cold on ASX 200 shares, there are a few companies that have managed to dodge the red bombardment today.

These companies include A2 Milk Company Ltd (ASX: A2M), Star Entertainment Group Ltd (ASX: SGR), and Resmed CDI (ASX: RMD).

Finally, today’s downward move marks the second biggest since 26 February 2021. The only session to outdo it occurred in the first week of this year.

The post ASX 200 breaches 7,000 points for the first time since May 2021, but why? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Zip confirms Sezzle talks, Fortescue’s Q2 update
• Are ASX consumer staples shares really ‘safe’ to hold in a market selloff?
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares this Monday

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 recommended A2 Milk and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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As a longstanding blue-chip ASX share, Woolworths Group Ltd (ASX: WOW) arguably has a reputation as a solid dividend payer. And fair enough too, if we examine this company’s history of dividend payments. Woolworths shares have given out two dividend payments every year since at least the early 1990s. You can’t fault that record for consistency.

Now saying that, it’s not as if Woolworths’ dividends have been ‘up and to the right’ every year. The company paid out $1.08 in dividends per share over 2021, which wasn’t even close to the all-time high of $1.39 per share that we saw doled out back in 2015.

Grocery dividend showdown

So as it stands today, that $1.08 in dividends that was paid out last year gives the Woolworth share price a trailing yield of 3.13%. That’s going off of the present Woolworths share price of $34.48 (at the time of writing). Woolies also typically attaches full franking credits to its dividends, so that yield grosses-up to 4.47% with the inclusion of said franking credits.

Now, comparing Woolies shares to that of its arch-rival Coles Group Ltd (ASX: COL) and something stands out like the proverbial. At the current Coles share price, the company offers a trailing yield of 3.77%. That’s obviously a lot larger than what Woolworths shares are currently offering. Coles usually gives its dividends the full franking treatment too, so this yield grosses-up to a meaty 5.39% at these prices. That’s based on Coles’ two dividends of 2021. Those were a March interim payment of 33 cents per share. And a September final dividend of 28 cens per share.

So why does Coles have a larger dividend yield than Woolworths right now? Isn’t Woolworths the larger company with a higher market share of the grocery market? Well, yes and yes. But that means a whole lot of not much when it comes to a share’s dividend yield. There are only a few things that can affect a company’s dividend yield. Those would be the actual raw dividend number per share. And the price-to-earnings (P/E) ratio the shares trade at.

Woolworths shares vs. Coles shares

As it currently stands, Woolworths is trading on a P/E ratio of 28.5, which means that investors are paying $28.50 for every $1 of earnings that Woolies brings in. Coles on the other hand, currently commands a P/E ratio of just 21.4. That means investors are currently placing a premium on Woolies shares compared to Coles, perhaps for the reasons listed above. But if a company is more expensive on a P/E ratio basis, then its dividend yield will be lower. For example, if Woolies shares halved in value tomorrow, its dividend yield would double for any new investors.

So because the market is placing a higher premium on the Woolworths share price against the Coles share price, its dividend yield is lower. The picture would be completely different if both companies traded on the same P/E multiple. But they don’t (at least, not today), and thus we see this dividend disparity.

So if you were wondering why the Woolworths dividend isn’t as high as the Coles dividend, now you have your answer.

The post Why is the Woolworths (ASX:WOW) dividend smaller than Coles? appeared first on The Motley Fool Australia.

More reading

• Are ASX consumer staples shares really ‘safe’ to hold in a market selloff?
• 2 ASX dividend shares Morgans rates as buys
• Here are 3 ASX dividend shares with grossed-up yields over 5%
• Supermarkets were once ‘COVID winners’, so why is the Coles (ASX:COL) share price struggling amid Omicron?
• 2 excellent ASX shares for a retirement portfolio

Motley Fool contributor Sebastian Bowen 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 owns and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• The ASX 200 Index has dropped to an 8-month low point today
• The index is likely reacting to the latest quarterly consumer price index, which dropped this morning
• Dragging it lower are shares in household brands AMP, Westpac, and Harvey Norman

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It’s been a nightmare day so far for many S&P/ASX 200 Index (ASX: XJO) stocks. That can most certainly be felt by AMP Ltd (ASX: AMP), Westpac Banking Corp (ASX: WBC), and Harvey Norman Holdings Limited (ASX: HVN) – they’ve each seen their share price hit new 52-week lows.

At the time of writing, the ASX 200 has fallen an eye-watering 2.44% to sit under 7,000 points for the first time in 8 months.

Let’s take a look at what’s weighing on the index and which of its biggest names have dropped to their lowest point in at least a year.

Why is the ASX 200 tumbling on Tuesday?

The ASX 200 Index is suffering today after Australia’s consumer price index rose to 3.5% over the 12 months to the December quarter, boosted by housing and transport costs.

The inflation measure has seemingly inspired the market to sell, with only a few ASX 200 shares recording notable gains at the time of writing. They include metal detector and electronic products company Codan Limited (ASX: CDA) and A2 Milk Company Ltd (ASX: A2M).

The index is being weighed down by shares in energy, financials, real estate investment trusts (REITs), and technology companies.

These ASX 200 shares have hit 12-month lows

Some of the ASX 200’s biggest names are among the hardest hit today.

The AMP share price reached a new record low of 87 cents today. It’s currently trading at 89.5 cents ­– 1.65% lower than its previous close.

For context, this time last year the financial services company’s stock was swapping hands for $1.55.

Big banks also aren’t immune to today’s suffering. The Westpac share price hit a low of $20.09 in intraday trade ­– a new 52-week low. Right now, it’s bounced back to $20.18, representing a 2.98% fall.

Finally, the Harvey Norman share price hit $4.70 today ­– the lowest this ASX share has been in more than a year. It has since gained back 10 cents to trade 2.04% lower than it was at the end of yesterday’s session.

The post Why Westpac (ASX:WBC) and these other ASX shares are trading at 52-week lows appeared first on The Motley Fool Australia.

More reading

• Is value finally emerging in the AMP (ASX:AMP) share price?
• What’s happening to ASX bank shares today?
• Here’s when Westpac (ASX:WBC) expects the RBA to raise the cash rate
• 2 buy-rated ASX 200 dividend shares with great yields
• Westpac (ASX:WBC) share price in focus after raising loan interest rates again

Motley Fool contributor Brooke Cooper 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 owns and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended A2 Milk and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key Points

• Perenti shares tumble 7% following instability in Burkina Faso
• Management advises all employees are safe and accounted for
• The company operates three gold projects within the country

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The Perenti Global Ltd (ASX: PRN) share price is in the red today following the release of a breaking update.

At the time of writing, the diversified mining company’s shares are travelling 7.10% lower to 78.5 cents.

Perenti provides security update

In a statement to the ASX, Perenti advised that its operations in Burkina Faso are continuing as usual despite the political turmoil.

The West African nation’s military recently seized power and deposed President Roch Kabore over his failure to stop Islamist insurgency. The coup comes after the security situation deteriorated rapidly over the last few months.

Perenti noted that all employees are safe and accounted for, and is working closely with its clients and advisors.

Investors will be closely watching how the security situation unfolds as this will weigh on the Perenti share price.

The company runs the Sanbrado Gold Project, which is about 90 kilometres east-southeast of the capital, Ouagadougou, Burkina Faso. The site is considered as one of the highest margin gold projects in West Africa.

In its first year of production, Sanbrado is expected to produce more than 300,000 ounces of gold. The following four years is anticipated to yield an average of 217,000 ounces annually, and 153,000 ounces each year thereafter.

The mine has a current lifespan of approximately 10 years.

There are a couple of other projects that the company operates within the country, however, they are in other provinces. They include Siou, another high-grade gold deposit, and Yaramoko, a high-grade underground gold operation in Moko.

About the Perenti share price

Established in 1987, Perenti is one of the world’s largest companies that provides surface and underground mining and support services. The group is headquartered in Australia and has operations and offices across 11 countries.

Over the past 12 months, the Perenti share price has dropped over 40%, with year-to-date performance also down around 13%.

The company’s shares reached a 52-week high of $1.55 last February before the release of its half-year results. Since then, Perenti shares plummeted following a disappointing trading update in May and a poor financial scorecard in August.

On valuation grounds, Perenti commands a market capitalisation of roughly $568.09 million, with about 705.71 million shares on issue.

The post Why the Perenti (ASX:PRN) share price is heading south amid Burkina Faso political turmoil appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX 200 shares last week

Motley Fool contributor Aaron Teboneras 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.

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Key points

• The Openpay share price is almost 7% higher today
• The company’s Q2 FY22 results showed record transaction value and soaring revenue
• In earlier trade, the company’s share price jumped 9%

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The Openpay Group Ltd (ASX: OPY) share price is in the green today amid a well-received quarterly update.

At the time of writing, the company’s shares are trading at 64 cents, a 6.67% gain. In late morning trade, after the release of the results, the Openpay share price hit 65.5 cents, a 9% jump on yesterday’s market close.

For perspective, the All Technology Index (ASX: XTX) is down 2.63%. Fellow buy now, pay later company Zip Co Ltd (ASX: Z1P)’s shares are also down 0.61%, while the Block Inc CDI (ASX: SQ2) share price is 4.43% lower.

Let’s take a look at what the BNPL company revealed today.

Openpay share price surges amid quarterly results

Total Group Q2 FY22 results

• Record high total transaction value (TTV) of $118 million, 22% more than the previous corresponding period (PCP) of Q2 FY21.
• Total quarterly revenue of $8 million, soaring 30% on comparable basis to PCP
• Global net transaction margin improved 8% on PCP
• Net bad debts fell from 2.3% to 1.9%
• Active customers grew 33% on PCP to 614,000
• Active merchants exploded 60% on PCP to 4,400
• Active plans grew to 2.5 million, rising 71% on PCP

Australia and New Zealand

• $87 million TTV, up 41% on PCP
• Total quarterly revenue of $6.3 million, rising 37% on comparable basis to PCP
• Net transaction margin gained 2.4% on PCP
• Net bad debts dropped to 1.2%
• Active customers gained 23% on PCP to more than 300,000
• Active merchants grew 57% on PCP to 4,200
• Active plans gained 61% on PCP up to more than 1.5 million

What else happened in the quarter?

In Australia, Openpay said its targeted approach and improved productivity supported its ambition to make a profit in the next 12 to 18 months.

Openpay launched its US-branded OpyPay product in the United States in the second quarter of FY22. Since the launch, the company has signed dental, veterinary, and automotive merchants in eight US states.

Also in the quarter, the company launched a US$271 million debt facility from Goldman Sachs and Atalaya. Opy also partnered with American Express, Worldpay from FIS, and Experian.

In the UK, the company formed a strategic partnership and revenue sharing agreement with Payment Assist.

What did management say?

Commenting on the results, non-executive chairman Patrick Tuttle said:

In Q2 FY22, Openpay delivered record TTV and very strong operating and financial results in a competitive market whilst keeping costs down and implementing additional efficiency measures to continue this trend.

In ANZ, we delivered record operating performance as we manage the business to profitability, and in the US, Opy now has all the building blocks in place to monetise this significant opportunity.

What’s next?

Openpay plans to prioritise growth in the US with its key partners in North America. The company says it has also secured a confidential agreement with a large US healthcare insurance provider to begin in the next quarter.

In the UK, the company has “made a strategic decision to change direction’ and will update the market “as appropriate”.

The company also plans to expedite its road to profit in Australia. As Motley Fool Australia reported earlier this month, Openpay has also announced some recent leadership changes.

Openpay share price snapshot

The Openpay share price has fallen 77% in the past 12 months, 15% in the past month alone. In the past week, it has shed almost 6%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) Index has returned nearly 2% in the last 12 months.

Openpay has a market capitalisation of $83 million based on its current share price.

The post What is the Openpay (ASX: OPY) share price up 7% today? appeared first on The Motley Fool Australia.

More reading

• Why is Openpay (ASX:OPY) up 19% today?
• These were the 5 worst performing ASX BNPL shares of 2021
• 2 ASX shares hitting 52-week lows

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ZIPCOLTD FPO. 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.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another very disappointing decline. At the time of writing, the benchmark index is down 2.3% to 6,977.6 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are charging higher:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is up over 7% to $5.46. This follows reports that the infant formula company could be a takeover target of Canadian dairy giant Saputo. This comes amid speculation that Saputo is on the verge of announcing a major acquisition in the Australian market. The report appears to overlook the fact that A2 Milk is a New Zealand company.

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is up over 5% to $5.06. This is despite there being no news out of the baby products retailer on Tuesday. Though it is worth noting that a number of brokers have buy ratings and price targets materially above today’s levels. This includes Morgans with an add rating and $6.20 price target.

Codan Limited (ASX: CDA)

The Codan share price has jumped 18% to $9.85. This follows the release of a trading update from the metal detector and electronic products company. Codan revealed that a strong finish to the half led to it recording sales of $257 million for the six months ended 31 December. This represents a 32% improvement over the prior corresponding period.

Sezzle Inc (ASX: SZL)

The Sezzle share price is up over 9% to $2.34. This follows news that Zip Co Ltd (ASX: Z1P) is interested in acquiring its buy now pay later rival. This morning both companies confirmed that they are in talks regarding a transaction. However, no details have been provided in respect to financial terms. In addition, both companies have warned that the talks are at an early stage and there is no guarantee that a deal will materialise.

The post Why A2 Milk, Baby Bunting, Codan, and Sezzle shares are surging higher appeared first on The Motley Fool Australia.

More reading

• Why the A2 Milk (ASX:A2M) share price is jumping 8% despite the market selloff
• ASX 200 (ASX:XJO) midday update: Zip confirms Sezzle talks, Fortescue’s Q2 update
• Codan (ASX:CDA) share price rockets 16% on trading update
• Why is the Sezzle (ASX:SZL) share price rocketing 20% higher?
• Zip (ASX:Z1P) share price higher amid Sezzle acquisition talks

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. owns and has recommended ZIPCOLTD FPO. The Motley Fool Australia has recommended A2 Milk and Baby Bunting. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• Adore Beauty and EML are both growing rapidly and are good value according to experts
• Adore Beauty is a leading e-commerce ASX share which is working on improving its business in several ways
• EML is a global payments business which provides the technology for multiple payment solutions

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There are a number of fast-growing ASX shares that have seen sell-offs in recent weeks. Yesterday was a particularly tough time for some of the ASX’s leading growth shares.

Lower prices may not necessarily mean some companies are opportunities.

However, there are a number of businesses that have been reporting operational growth. The decline that has occurred over the last month or two could prove to be attractive.

Here are two ASX shares that experts currently rate as buys:

Adore Beauty Group Ltd (ASX: ABY)

Since 6 January 2022, the Adore Beauty share price has fallen around 30%.

Morgan Stanley rates the beauty e-commerce business as a buy with a current price target of $6. That’s more than 90% higher than where it is today.

The broker notes that the business has good potential for long-term growth and can achieve annual revenue growth of more than 20% over the next few years.

Indeed, in the first quarter of FY22, Adore Beauty achieved revenue growth of 25% to $63.8 million. Active customers increased 24% to 874,000 whilst returning customers increased 63%.

There are several areas that the ASX share is working on. One priority is ‘range authority’ where it builds a compelling product range and deepens its brand partnerships. It’s also launching and scaling a private label brand.

It wants to provide customers with the best online transaction experience, which will help with site conversion.

Adore Beauty is also working on content-led customer engagement, by scaling and embedding the mobile app and loyalty program. It’s also growing brand awareness and owned marketing channels (like its podcasts).

It’s looking to unlock new addressable markets through related products and service adjacencies, as well as expand geographically into places like New Zealand.

EML Payments Ltd (ASX: EML)

As the name may suggest, EML is a global payments platform. It operates across 27 countries, with 23 multi-currencies. It also offers clients strong data security and maintains regulatory requirements.

It offers technology for things like open banking, digital wallets, virtual accounts, rewards cards, buy now pay later, branded gift cards, sports betting and gaming, government stimulus and emergency payouts.

Whilst there was a cloud of a threat from the Central Bank of Ireland (CBI) about limiting some of the ASX share’s growth, the regulator said that it will permit EML to sign new customers and launch new programs whilst staying within the material growth restrictions. Broad based reductions in limit controls on programs will not be imposed.

The broker UBS currently rates the EML share price as a buy with a price target of $4.40. That suggests a potential rise of around 55% over this year, if the broker ends up being right. This price target was before all of the volatility though.

UBS thinks that EML now has a stronger footing for growth with customers, and the business looks less risky.

EML is expecting another year of operational growth in FY22. Revenue is expected to rise from $194.2 million in FY21 to a range of $220 million to $255 million in the current financial year. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to grow from $53.5 million in FY21 to a range of $58 million to $65 million in FY22.

That growth is on top of revenue growth of 60% and underlying EBITDA growth of 65% in FY21.

The post 2 fast-growing ASX shares rated as buys in this correction appeared first on The Motley Fool Australia.

More reading

• 3 ASX growth shares to buy after the market meltdown
• 2 ASX fintech shares that could rocket this year
• Why is EML payments (ASX:EML) share price having a rollercoaster start to the year?
• Here are Scott Phillips’ top 5 ASX shares for 2022. Is it time to buy?
• Here’s why the EML (ASX:EML) share price could be a big opportunity

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. owns and has recommended EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia owns and has recommended EML Payments. The Motley Fool Australia has recommended Adore Beauty Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• The world is in the midst of an energy crisis
• Bitcoin’s proof-of-work protocol is hugely energy-intense
• This Achilles’ heel restricts it to a speculative asset class

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Bitcoin (CRYPTO: BTC) has enjoyed a bounce over the past 24 hours. The world’s biggest crypto by market cap is up 2% to US$36,472 (AU$51,152).

Despite that bounce, Bitcoin remains down 23% so far in 2022. And the token is down 47% since its 10 November all-time highs, according to data from CoinMarketCap.

Ethereum (CRYPTO: ETH), the world’s No. 2 crypto, has fared even worse. Since hitting its own record highs on 16 November, Ethereum has lost 51% of its value.

Down another 4% over the past 24 hours, Ethereum has slipped 36% so far this year.

Looking ahead though, Ethereum’s future may be brighter than its bigger rival. That’s because Bitcoin still relies on what’s called “proof of work” while Ethereum has been transitioning to “proof of stake”.

Why is that an issue?

According to Saxo Bank’s cryptocurrency analyst Mads Eberhardt, “The future in energy-intensive proof of work looks dim.”

This deficiency could hobble Bitcoin

Earlier today, online trading and investment specialist Saxo Bank released its Q1 2022 quarterly outlook for global markets.

In the report, Eberhardt notes, “As the world is experiencing an energy crisis, the high energy consumption of the present consensus protocol – called proof of work – of both Bitcoin and Ethereum is not expected to go unnoticed.”

Ethereum has been working on shifting from proof of work to proof of stake. This process is expected to be completed this year.

Proof of stake, Eberhardt explains “is a consensus protocol where holders of the native cryptocurrencies can stake a part of their holdings, and through this validate transactions instead of miners”.

Unlike proof of stake, he said the “proof-of-work protocol is hugely energy-intense as it revolves around countless servers keeping the network alive. In return for a great deal of electricity and server capacity, the Bitcoin network returns the availability to solely execute 6 transactions per second”.

While some Bitcoin veterans have questioned the security of proof of stake, Eberhardt says, “Over the last years, the majority of newly launched cryptocurrencies have been based on proof of stake, so the framework has arguably proved its worth.”

Bitcoin, however, looks to be sticking with the proof-of-work protocol, which Eberhardt says “will likely not come without severe challenges”.

Just how much electricity does Bitcoin use?

The University of Cambridge estimates Bitcoin uses some 0.5% of global electricity. Which, Eberhardt points out, doesn’t even take into account the energy needed to produce the resources required to make the servers. And its electricity use tends to rise in line with its price.

For a better picture of its energy use, look at Kazakhstan.

Yes, Kazakhstan.

Following China’s ban on crypto mining last May, when it accounted for 71% of the Bitcoin hash rate (total Bitcoin mining capacity), miners flocked elsewhere, predominantly the US and Kazakhstan.

According to Eberhardt:

From originally accounting for a minor share of the hash rate, Kazakhstan … is today the second-largest miner, with 18 per cent of the total hash rate. From typically experiencing an annual growth of 1 or 2 per cent in its electricity demand, Kazakhstan witnessed an 8 per cent increase last year, contributing to severe power shortages, occasionally leaving some of the population without electricity.

Proof of work ‘a millstone around the crypto market’s neck’

“Bitcoin needs to adopt the alternative” proof of stake, Eberhardt says.

He notes Ethereum’s transition to proof of stake (ETH 2.0) will cut Ethereum’s energy use by 99.95%.

Eberhardt adds:

Ethereum’s transition demonstrates that it is not only possible to introduce new cryptocurrencies based on proof of stake but to adopt the framework while having been launched upon proof of work. Besides drastically decreasing Ethereum’s energy use, ETH 2.0 will make Ethereum significantly more scalable in terms of achievable transactional output.

Eberhardt said that with the world’s focus on decarbonisation only likely to increase, “individual investors, institutions, and developers are likely to reconsider committing time and money towards Bitcoin or other proof-of-work cryptocurrencies”.

So could this Achilles’ heel be Bitcoin’s undoing?

According to Eberhardt:

As we see it, the proof-of-work consensus mechanism is simply too fragile to operate harmlessly through an energy crisis spiced with an ever-changing regulatory environment and the ascending intention to be sustainable.

The post Could this Achilles’ heel bring Bitcoin tumbling down? appeared first on The Motley Fool Australia.

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• Investing in crypto? ASIC chairman sounds warning
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin and Ethereum. 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.

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