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The Crown Resorts Ltd (ASX: CWN) share price has been the best performer on the ASX 200 on Thursday.

Earlier today, the casino and resorts operator’s shares jumped a massive 9% to $12.68.

Why is the Crown share price surging higher?

Investors have been bidding the Crown share price higher this morning after the company revealed the receipt of an improved takeover proposal from Blackstone.

Crown advised that the private equity firm sweetened its offer after considering non-public information provided by Crown during initial due diligence.

According to the release, Blackstone has tabled a non-binding $13.10 cash per share offer, up 4.8% from its previous offer of $12.50 cash per share in November.

The good news for the private equity firm is that this offer has gone down well with the Crown Board on this occasion. The previous offer did “not represent compelling value for Crown shareholders” according to the Board last time.

However, this time around the “Board’s current unanimous intention would be to recommend the proposal” if Blackstone makes a binding offer “no less than $13.10 cash per share.” This would remain subject to there being no superior proposal and the Independent Expert report concluding that it is in the best interests of shareholders.

In the meantime, though, the company has told its shareholders that they do not need to take any action in relation to the revised proposal. It also warned there is no certainty that the discussions between Crown and Blackstone will result in a change of control transaction.

What about Star?

All eyes will be on Star Entertainment Group Ltd (ASX: SGR) in the coming days and weeks. It was interested in a merger with Crown before withdrawing its offer due to the uncertainty caused by the Royal Commission into Crown Melbourne.

Star has previously suggested that a deal could unlock estimated cost synergies of between $150 million to $200 million per annum. Don’t be surprised if it returns with a new merger proposal.

The post Here’s why the Crown (ASX:CWN) share price jumped 9% today appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Crown jumps, miners rally, Sonic sinks
• Crown (ASX:CWN) share price on watch after Blackstone ups takeover bid
• 5 things to watch on the ASX 200 on Thursday
• Crown (ASX:CWN) share price slides on news of second $1m fine
• Leading fund manager says these blue-chip ASX shares are buys right now

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.

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Australian shares are extended gains for the third straight session today as the benchmark S&P/ASX 200 Index (ASX: XJO) inches higher to 7,477 points.

Gains in the broad indices are led by a rally in defensible pockets of the market today, namely in mining, energy and financial stocks.

For instance, the S&P/ASX 200 Energy Index (XEJ) is up less than 1% on the day whereas the S&P/ASX 300 Metals & Mining Index (XMM) has spiked over 2.5%.

Shares in oil and gas giant Origin Energy Ltd (ASX: ORG) are also crawling higher today and are now changing hands at $5.60 apiece, peaking at its 52-week high in doing so.

After trading sideways for the bulk of 2021, the Origin Energy share price has bounced from a low of $4.78 in December and has since traded in an ascending channel to rally as much as 17.5% in that time.

What’s lighting Origin shares today?

Momentum behind Origin’s share price has been high since it announced the acquisition of community energy services company WINconnect.

The deal is set to provide Origin with an additional 87,000 customers, helping the energy giant reach a total of 367,000 customers.

However, gains for ASX energy shares in 2022 are underscored by strengths in the natural gas markets that has been in situ since January.

Natural gas spot is now trading at US$4.82 per million British thermal units (MMBtu) after rallying more than 35% since December 30.

US Natural gas futures also jumped over 13% yesterday to US$4.8/MMBtu, a 6-week high that is well on course to reach 5-year highs of US$6.1320/MMBtu back in October 2021.

Origin, being one of Australia’s largest natural gas producers and exporters, is set to benefit from the surging prices at the margin and free cash flow level, as has been the case with many commodity juggernauts these past 2 years.

Aside from this, the US 10-year Treasury yield touched 1.8% on Monday resulting in a rotation into more defensive sectors like energy and financials.

The investment research team at JP Morgan offer some interesting insights into this, noting that financials, energy and industrials have the highest correlation with a rising yield on the US 10-year note.

In other words, over the last 5-years, these sectors have tracked the US 10-year yield closely and this helps explain their strength since yields spiked again in 2022, JP Morgan says.

With these points in mind, it appears these are the ingredients to make a flavoursome recipe for Origin shareholders in the early days of 2022 with shares jumping 7% since January 1.

Origin Energy share price summary

In the last 12 months, the Origin Energy share price has climbed more than 8% after rallying almost 12% this past month.

Long-term things aren’t as rosy, with shares making a gradual but substantial walk downwards from highs of $10.15 over the last 5-years.

The post Why is the Origin (ASX:ORG) share price hitting new highs today? appeared first on The Motley Fool Australia.

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The author has no positions 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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The ReadyTech Holdings Ltd (ASX: RDY) share price is sinking today following a company update regarding a government licensing project.

At the time of writing, the mission-critical software company’s shares are swapping hands for $3.15, down 6.80%.

What did ReadyTech announce?

The ReadyTech share price is falling after ReadyTech advised it was not successful in winning the government licensing project.

Last year on 11 January, ReadyTech noted that Open Office had been shortlisted for a key government contract. However, the company was not selected for the contract, meaning it will not be paid an $8 million earn-out.

Management said the government client selected an alternative option rather than its configurable Open Office offering.

The project was not included in ReadyTech’s gross opportunity pipeline. Therefore, its FY22 guidance remains unchanged.

Furthermore, the company reiterated its government and justice division is focused on innovating, developing, and delivering scalable cloud-based solutions.

ReadyTech co-founder and CEO Marc Washbourne commented:

Open Office is completely aligned with ReadyTech in its focus on configurability, not customisation, in delivering innovative, customer-centric SaaS [software-as-a-service] solutions. This cultural alignment has facilitated the integration of the two businesses and outperformance of Open Office relative to expectations.

With the business continuing to perform strongly, we are excited by the opportunities we see for the government and Justice segment, as with our education and workforce Solutions segments.

About the ReadyTech share price

It’s been a sound year for shareholders, with the ReadyTech share price having gained around 70% in the last 12 months. However, the company’s shares are down around 20% so far in 2022.

Based on today’s price, ReadyTech has a market capitalisation of $331.63 million and a price-to-earnings (P/E) ratio of 129.17.

The post Here’s why the ReadyTech (ASX:RDY) share price is tumbling 7% today appeared first on The Motley Fool Australia.

More reading

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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. owns and has recommended Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings Ltd. 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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The Ai-Media Technologies Ltd (ASX: AIM) share price is falling today amid news relating to its captioning service.

Shares in the company are currently trading at 68 cents, down 3.13%.

Ai-Media provides captioning, transcription, and translation services to companies around the world using a cloud-based technology platform.

Let’s take a look at what may be weighing on the Ai-Media share price today.

Djokovic leak controversy

Investors could be reacting to news that Ai-Media is investigating whether a staffer leaked a private conversation between Seven Network Holdings Ltd (ASX: SVW) newsreaders about the World No. 1-ranked tennis star, Novak Djokovic, The Australian has reported.

Ai-Media and Seven held high-level discussions about the matter on Wednesday night, the publication said.

In the footage, which has been going viral on social media, newsreader Rebecca Maddern comments:

Whatever way you look at it Novak Djokovic is a lying, sneaky… it’s unfortunate that everybody else stuffed up around him. To go out when you know you are COVID-19 positive…

Djokovic has been dominating the news in recent days after his controversial entry into Australia to play in the Australian Open.

The Federal Immigration Minister, Alex Hawke, is considering whether to use his veto rights to cancel Djokovic’s visa. A decision is expected today, according to a News Corp report.

My Foolish colleague James noted Ai-Media is a growing small-cap share to watch this week. Broker Bell Potter has a buy rating on the company and a $1.50 target for the Ai-Media share price.

Ai-Media share price snapshot

The Ai-Media share price has fallen by 27.66% in the past 12 months. It is down 5.56% over the past 4 weeks.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has returned nearly 12% in the past year.

Ai-Media has a market capitalisation of about $145 million based on the current share price.

The post Ai-Media (ASX:AIM) share price slides amid Novak Djokovic leak saga appeared first on The Motley Fool Australia.

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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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It’s been a rocky start to the day for the APA Group (ASX: APA) share price despite good news regarding the company’s Orbost Gas Processing Plant.

The plant’s operations were boosted over December and have continued strong into January.

Despite the positive update, the APA Group share price struggled in early trade. It opened higher than its previous close but quickly tumbled to a low of $9.97 – a 0.3% fall.

At the time of writing, the company’s stock is trading at $10.06, 0.5% higher than it was at the end of yesterday’s session.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.51%.

Let’s take a closer look at what’s likely moving the $11.8 billion gas transmission provider’s stock on Thursday.  

What’s up with the APA Group share price on Thursday?

The APA Group share price has seemingly shaken this morning’s wobbles to trade on a slightly lower gain than the broader market.

The movements followed news from Cooper Energy Ltd. (ASX: COE). The gas and oil producer released an update on its operations, noting APA’s Orbost Gas Processing Plant – which is fed by Cooper Energy’s Sole gas field – saw its production increase 5% in December compared to that of November.

The average processing rate at the plant was 44.3 terajoules per day last month.

Excitingly, the boost has continued into the new year. The plant recorded a stable processing rate of 50 terajoules per day over the first 12 days of the year.

Though, that’s still less than its long-term expectations. The plant has a nameplate capacity of 68 terajoules per day.

December’s increase was due to optimisation of the gas plant’s process parameters.

Additionally, 2 two sulphur absorbers have been recently operating on a planned 21-day cleaning cycle. Continuing optimisation and monitoring could result in the cycle’s extension.

Finally, high demand for Cooper Energy’s gas has continued, with its average sales volume reaching 58 terajoules per day in December.

APA Group’s plant is processing shortfalls met through Cooper Energy’s backup gas supply arrangements and Otway Basin production.

While the APA Group share price seems to have just gotten its groove back, Cooper Energy’s shares have surged ahead.

Right now, they’re trading for 5% more than they were at yesterday’s close, swapping hands for 30 cents apiece.

The post What’s up with the APA Group (ASX:APA) share price today? appeared first on The Motley Fool Australia.

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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 APA 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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The BWX Ltd (ASX: BWX) share price is plummeting this morning after the beauty and wellness brand announced a leadership change.

At the time of writing, the BWX share price is down 14.22% trading at $3.74. Let’s take a look at the news.

New leadership for BWX

In this morning’s release, BWX advised that its group chief operations officer Rory Gration will take over the position of group CEO and managing director from 1 March.

Gration will replace Dave Fenlon, who will remain on the board as a non-executive director.

With 25 years of experience in consumer goods and executive positions before joining BWX, the board is confident in the transition.

BWX chair Ian Campbell said:

Rory has been with BWX since August 2018 and has played a pivotal role in executive BWX’s global expansion strategy.

With our new operations and manufacturing facility opening in March 2022, the Board and Dave believe that now is the appropriate time for him to step into the Group CEO role.

Both regional operations managers — Doug Hosking (president, Americas) and Stephen Brown (managing director of APAC & EMEA) — will report to Gration.

A busy year for BWX in 2021

The appointment sets a fresh leadership agenda moving forward after a busy 2021 for the company. BWX’s share price gained a boost in February and was at its highest in the middle of the year, coinciding with a landslide of news.

The company announced a five-year strategic partnership with Chemist Warehouse in February, coinciding with a share price jump of 11%.

Under the partnership, BWX’s entire line of products will be carried through the chemist’s Australian, New Zealand and Ireland online stores.

In May, the company announced it would acquire vegan retailer Flora & Fauna, and finalised the deal in July. A few days later, BWX confirmed the Chemist Warehouse collaboration.

In August, the company announced a 50.1% controlling stake in Go-To Skincare — a beauty brand founded by Australian personality, Zoë Foster Blake.

The BWX share price rose slightly on Christmas Eve as it paid its final consideration of $89.49 million for Go-To Skincare (after completing the customary post completion working capital adjustments), before falling again before the new year.

In today’s announcement, BWX said it expects “strong revenue growth, including acquisitions, for the financial year ending December 2021” and anticipates this trend to continue into the full year FY22, providing the retail market continued to recover.

BWX share price snapshot

Despite its busy year of collaborations, the BWX share price has dropped by 26% in the last six months.

The company currently has a market capitalisation of around $605 million and a price-to-earnings ratio (P/E) of 21.9.

The post BWX (ASX:BWX) share price sinks 14% on leadership news appeared first on The Motley Fool Australia.

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Motley Fool contributor Alice de Bruin 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 BWX 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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The Global Lithium Resources Ltd (ASX: GL1) share price is charging higher today, up 12.69% at $1.46.

It marks a new record high for the company that began trading after being listed on the ASX in May last year.

The price rise comes after an announcement from Global Lithium regarding new appointments on its board. Here are the details.

What did Global Lithium announce?

The Global Lithium share price is surging after the company advised it has appointed two new members to its directorship. Specifically, it has appointed Ronald Mitchell as executive director markets and growth, and Greg Lilleyman as a non-executive director.

Global Lithium says Lilleyman comes with more than 30 years of international experience in the mining sector. He was formerly chief operating officer and director of operations at Fortescue Metals Group Limited (ASX: FMG) and had 26 years at Rio Tinto Limited (ASX: RIO) prior to that.

Meanwhile, Mitchell has more than 25 years of experience in senior roles. This includes more than 10 years in the lithium and battery metals industry, according to the company.

Mitchell, who is also the inaugural chairman of the London Metal Exchange (LME) Lithium Committee, will step into the role from 1 March.

Global Lithium also advised that managing director Jamie Wright has stepped down from the board and his role. Wright, who is moving back to his home state of South Australia, will remain as a director until 1 March.

Aside from that, the Western Australia-based company has engaged mining consultancy CSA Global to manage the exploration of its Marble Bar lithium project.

CSA Global is a “worldwide geological consultancy business with deep experience in managing drilling and exploration campaigns across a wide range of commodities”. CSA will act as program manager for the 60,000m drilling program due to commence this quarter.

With the “combination of CSA Global, Orlando Drilling, and Resource Potentials”, Global Lithium is “confident of successful campaigns across both the Marble Bar and Manna projects”.

Management commentary

Speaking on the announcement driving the Global Lithium share price, chairman Warrick Hazeldine said:

In his tenure as managing director, Jamie has overseen a significant period of growth, both in terms of tenement holdings and market capitalisation. Importantly, the Board and he are fully aligned in the belief that the company would continue to benefit from a WA-based management team. On behalf of the Board and our shareholders, I thank him for his tireless efforts over the past year.

We welcome Ron Mitchell and Greg Lilleyman to the Board.

Incoming board member Lilleyman said:

It’s great to have the opportunity to use my extensive experience and history in the Pilbara to assist Global Lithium in converting the exciting exploration potential of the Marble Bar Lithium Project into a world-class operation to support the clean energy transition.

Global Lithium share price snapshot

It’s been a fantastic start on the ASX for the Global Lithium share price. It is now up 620% from its IPO listing price of 20 cents in May 2021.

The share price was climbing steadily until late December when the company revealed significant lithium assay results from its exploration program at the Marble Bar project. Since then it has rocketed 128%.

The post Global Lithium (ASX:GL1) share price soars 13% to record highs appeared first on The Motley Fool Australia.

More reading

• Global Lithium (ASX:GL1) share price hits new 52-week high on acquisition update
• Why the Global Lithium (ASX:GL1) share price is surging 12% higher today
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The author has no positions 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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At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) is on form again and pushing higher. The benchmark index is currently up 0.5% to 7,477.5 points.

Here’s what is happening on the ASX 200 today:

Crown shares jump on improved Blackstone offer

The Crown Resorts Ltd (ASX: CWN) share price is surging higher today after receiving an improved takeover offer from Blackstone. The private equity firm has lifted its offer from $12.50 cash per share to $13.10 cash per share. While the previous offer did “not represent compelling value for Crown shareholders” this time around the Crown Board believe it would be acceptable if it becomes binding. All eyes are now on Star Entertainment Group Ltd (ASX: SGR), which has been interested in a merger with Crown.

Sonic shares sink

The Sonic Healthcare Limited (ASX: SHL) share price is sinking today despite there being no news out of the healthcare company. However, as Sonic has been a huge winner from COVID testing, the shift to rapid antigen testing looks set to weigh on its performance in the coming months. There appear to be concerns that this could see it fall short of the market’s lofty expectations.

Mining shares rally

The mining sector has been on fire on Thursday thanks partly to a broker note out of Goldman Sachs. Its analysts spoke very positively about the sector’s outlook and shares including South32 Ltd (ASX: S32) (here) and Whitehaven Coal Ltd (ASX: WHC) (here). Both mining shares are charging notably higher at lunch.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the Crown share price with an 8% gain following Blackstone’s takeover offer. Going the other way, the PolyNovo Ltd (ASX: PNV) share price is the worst performer with a 6.5% decline. This appears to have been driven by profit taking after a very strong gain on Wednesday following the release of a trading update.

The post ASX 200 (ASX:XJO) midday update: Crown jumps, miners rally, Sonic sinks appeared first on The Motley Fool Australia.

More reading

• Goldman tips Whitehaven (ASX:WHC) share price to jump 25%
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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 POLYNOVO FPO. The Motley Fool Australia has recommended Sonic Healthcare 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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When it comes to ASX exchange-traded funds (ETFs), Aussie investors are spoilt for choice. In addition to your typical (and popular) index funds like the iShares Core S&P/ASx 200 ETF (ASX: IOZ), the ASX is home to a variety of thematic ETFs. There are funds covering bank shares, silver bullion, mining shares, and even companies involved in the cryptocurrency space. But an often underlooked area on the ETF market is the dividend-focused ETF. Yes, the ASX is home to a number of ETFs that purely focus on maximising dividend income for their investors. And one such fund is the SPDR MSCI Australia Select High Dividend Yield Fund (ASX: SYI).

This ETF prom provider SPDR aims to track the MSCI Australia Select High Dividend Yield Index. According to the provider, this index is designed to “reflect the performance of listed Australian companies with relatively high dividend income and quality characteristics with the potential for franked dividend income”.

How does the SPDR MSCI Australia Select High Dividend Yield Fund invest?

It currently holds just 32 shares, a far cry from an ASX 200 index fund with its 200 holdings. The top five of these holdings are as follows:

1. Fortescue Metals Group Limited (ASX: FMG) with an 11.37% portfolio weighting
2. BHP Group Ltd (ASX: BHP) with a weighting of 10.45%
3. Rio Tinto Limited (ASX: RIO) with a weighting of 10.01%
4. Wesfarmers Ltd (ASX: WES) with a weighting of 8.03%
5. Mineral Resources Limited (ASX: MIN) with a weighting of 6.52%

Currently, SYI’s portfolio offers a dividend distribution yield of 7.48%. This yield comes with franking credits too, which gives this yield an additional kick.

So let’s see how this translates into performance. After all, the conventional wisdom dictates that investors usually take an overall performance hit if they want to maximise dividend income.

So SYI has returned 13.15% over the past 12 months (as of 31 December). It has also averaged a return of 11.19% per annum over the past 3 years, and 6.41% over the past 5.

In contrast, the iShares ASX 200 ETF that we discussed earlier has given investors a return of 17.11% over the past year. It has also averaged a return of 13.51% over the past 3 years, and 9.62% over the past 5.

So investors have indeed sacrificed some overall returns with this particular ETF compared to the ASX 200, in exchange for larger dividend distributions. But given we all have different investing goals and needs, this might suit some investors.

The SPDR MSCI Australia Select High Dividend Yield Fund charges a management fee of 0.35% per annum (or $35 a year for every $10,000 invested).

The post The SPDR MSCI Australia Select High Dividend Yield Fund (ASX:SYI) explained appeared first on The Motley Fool Australia.

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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 Wesfarmers 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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The fund manager Naos Asset Management has revealed two unloved ASX growth shares in its portfolio that it believes have compelling bull cases.

There are a number of things that the investors at Naos look for when deciding on a potential opportunity.

It’s looking for businesses that are good value with long-term growth potential.

The portfolio is about finding quality over quantity. Naos’ strategy is to invest for the long-term, it isn’t a short-term trader. It doesn’t mind holding fairly illiquid ASX shares as long as they can generate good performance.

Naos ignores the index – it invests in whichever investments that look promising. The fund manager provides pure exposure to ‘industrial’ businesses, though this is a wide category. It invests with an ESG overlay. That means investments need to be satisfactory when it comes to environmental, social and governance factors.

Every month the listed investment company (LIC) NAOS Ex-50 Opportunities Company Ltd (ASX: NAC) releases an update about how its portfolio is going and some thoughts on some of the ASX growth shares.

Here are two that featured this month:

Step One Clothing Ltd (ASX: STP)

Step One describes itself as a leading direct-to-consumer pure online retailer for men’s underwear. That underwear is a range of high quality, organically grown and certified, and ethically produced products.

The Step One product is one that the Naos team have been using because they believe it’s best of breed. It’s one of the few on the ASX that Naos could say that about. Naos has been analysing the business in detail since it listed half a year ago.

Naos noted that within the last five years, Step One has gone from essentially $0 in revenue to potentially around $75 million in annual sales of men’s underwear, mainly in Austrlaia and the UK.

The ASX growth share’s initial public offering (IPO) price was $1.53 and Naos bought some shares at $2.25 in early December.

However, a business update in December said that revenue growth would be 1% to 5% higher than the prospectus forecast of 19.9% for FY22. After that update, the shares fell back to the IPO price.

Naos suggested the heavy share price reaction showed the update was well below the markets’ “very bullish expectations” with some shareholders perhaps selling until they see more evidence of consistent growth again.

The fund manager added to its Step One investment after the trading update. Regarding the bull case, Naos said that the business can continue to grow at a reasonable rate over the coming years thanks to geographic and product expansion.

Urbanise.com Ltd (ASX: UBN)

This ASX growth share is another that has seen its share price fall. Over the last month, it’s down by more than 20%.

Naos explained that Urbanise.com fell sharply after what some considered to be an abrupt exit of the CEO and the search for a replacement.

The fund manager believes that what has most likely unnerved the market is the risk that the company doesn’t convert on its immediate sales pipeline and subsequently requires a capital raising. Naos doesn’t think it would be a major issue if that happened.

The reason for that confidence is the assumption that growth rates (especially in the strata division) continue to be at least 20% per annum.

Naos thinks that company needs to focus on its strengths and uses a strategy that produce tangible results.

It is the fund manager’s view that Urbanise.com has a dominant position within the strata space and must focus on achieving a market share of more than 65% of a market that has recurring revenue of around $40 million per annum in the shortest time possible.

The current valuation of annual recurring revenue (ARR) to the market capitalisation of “just” five times suggests to Naos that there is little faith from the market that the company can grow in the medium-term.

But, in the fund manager’s opinion, if the company can demonstrate it can grow at around 20% per annum then the multiples applied to a business to business (B2B) enterprise software as a service (SaaS) business is likely to be significantly higher.

The post 2 unloved ASX growth shares that have good potential: expert appeared first on The Motley Fool Australia.

More reading

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• Why did the Step One Clothing (ASX:STP) share price plummet 34% today?
• Why did the Step One (ASX:STP) share price rocket 10% today?

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 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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