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If you’re wanting to add some diversification to your portfolio in 2022, then you might want to look at exchange traded funds (ETFs).

ETFs are a great way to achieve this because they give investors easy access to a large and diverse number of different shares through a single investment.

With that in mind, here are two highly rated ETFs that are generating strong returns for investors:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ETF to look at is the BetaShares Global Cybersecurity ETF. It aims to track the performance of an index providing investors with exposure to the leading companies in the growing global cybersecurity sector.

Cyber security companies look well-placed for growth in the coming years thanks to increasing demand for cybersecurity services due to a rise in cybercrime. And given how this side of the market is heavily under-represented on the ASX, this ETF give investors an easy way to invest in the sector.

Among the ETF’s holdings you’ll find the likes of Accenture, Cisco, Cloudflare, Crowdstrike, and Okta.

In respect to the latter, Okta provides large enterprises with workforce identity solutions. Its customer identity and access management (CIAM) solutions ensure an organisation’s remote workforce is who they claim to be and that they only have access to the business applications they need to perform their job.

The fund has generated a return of 23.4% per annum for investors over the last five years. This would have turned a $20,000 investment into ~$57,000.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ETF to look at is the VanEck Vectors Morningstar Wide Moat ETF. This fund gives investors access to around 50 US-based stocks which are judged to have sustainable competitive advantages.

Historically, companies with competitive advantages, or moats, have generated strong returns for investors. This is why investing in companies with this quality is a key investment tenet for Warren Buffett.

Among the ETF’s holdings are the likes of Amazon, Boeing, Coca-Cola, Meta, and Microsoft.

Over the last five years, the ETF has outperformed the ASX 200 index with an average total return of 19.8% per annum. This would have turned $20,000 into ~$49,350.

The post 2 fantastic ETFs generating strong returns for ASX investors appeared first on The Motley Fool Australia.

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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 shares of and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia owns shares of and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The cryptocurrency market keeps expanding and that means a lot more choices for investors looking for exposure in digital currencies. Risk is inherent in all types of cryptocurrency, but there are some denominations that should hold up better on a relative basis. 

Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and USD Coin (CRYPTO: USDC) are my three largest personal investments in the cryptocurrency space. They also happen to be my top choices in terms of limiting the unusually high risks that come with the wild price swings for the market. 

Bitcoin

The world’s best known cryptocurrency is Bitcoin, and understandably so. It’s the one that put digital currencies on the map. With a market capitalisation of $1.1 trillion, it is more valuable than the next 40 cryptocurrencies combined. If Bitcoin were a stock there would only be five US publicly traded companies commanding larger market caps.

Bitcoin is the industry standard. Some companies are converting some of their cash reserves to Bitcoin, and a growing number of financial platforms are allowing their customers to trade in the top dog of digital currencies. 

There are risks, of course. Bitcoin has been susceptible to sharp spikes and plunges. We’ve seen it happen this year. Bitcoin peaked in April, only to shed more than half of its value by June. It would go on to more than double, hitting fresh all-time highs earlier this month. If this is the kind of volatility that scares you away, you’re not going to want to hear that it has had even bigger crashes in the past. Bitcoin has always bounced back, but that’s obviously not a guarantee of future performance. 

Bitcoin is also coming under fire this year for the vast amount of energy consumed in mining for the crypto as a proof-of-work platform. It’s also expensive to transfer relative to some more nimble digital currencies. It’s not perfect, but it’s the default crypto as long as it sits atop the market cap throne.

Ethereum

The world’s second-most valuable denomination — with a market cap just above $500 million — is Ethereum. Despite commanding less than half of Bitcoin’s value it overtook the top dog as the most traded crypto on Coinbase Global in the last two quarters.

Ethereum’s blockchain tech has the superior functionality when it comes to use cases beyond being merely a store of capital. Ethereum has become a popular choice for decentralised applications — dApps — for gaming transactions, advertising, and non-fungible token bidding wars. Bitcoin’s recent Taproot update will help it close the gap on some fronts, but Ethereum’s already looking ahead to its next major transformation.

Ethereum is migrating away from proof-of-work to proof-of-stake, a shift that will make the world’s second-most valuable crypto even more energy efficient when it comes to generating new tokens but also help speed up transactions and related costs. 

USD Coin

Picking a stablecoin as my third choice for risk-averse cryptocurrencies may not seem fair, but it certainly makes the cut as a digital currency. Coinbase created USD Coin — more commonly referred to as USDC — and the leading trading exchange stands by it as coin with a price locked at $1 and pegged 1-to-1 with the US dollar. 

Why would you want to own a crypto locked at $1? Coinbase only offers a 0.15% yield on traders holding the stablecoin, but there are far better alternatives elsewhere if you’re willing to risk it on another app that will lend, stake, or otherwise use your USDC. Platforms like Celsius Network currently pay more than 10% on USDC. Voyager is rolling out a debit card where you can earn 9% interest on your USDC until you use it for purchase. 

Chasing yield on USDC is riskier than just parking it on Coinbase or in a crypto wallet and even if you’re OK with just earning 0.15% on Coinbase, you are at the mercy of the platform’s financial viability. It’s still a low-risk crypto with a decent $37 billion currently in circulation. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Here are my top risk-averse cryptocurrencies appeared first on The Motley Fool Australia.

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• The DigitalX share price has tumbled 30% in 8 days. What’s happening?
• Did the Bitcoin and Ethereum bubble burst just signal a crypto market top?
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Rick Munarriz owns shares of Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool Australia’s parent company The Motley Fool Holdings Inc. owns shares of and recommends 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Qantas Airways Limited (ASX: QAN) share price is struggling through this week despite the company’s CEO Alan Joyce heralding the end of “the most challenging period in Qantas’ history”.

Joyce made the comment as the first international flights from Victoria took off on Monday.

On top of the reopening, the travel giant’s boss noted the company is taking advantage of “new opportunities” to broaden its offerings.

At the time of writing, the Qantas share price is $5.23, 0.57% lower than its previous close. That also represents a 4.6% drop since Friday’s close.

For context, the S&P/ASX 200 Index (ASX: XJO) has fallen 0.06% today, while the All Ordinaries Index (ASX: XAO) is down 0.14%.

Here is a breakdown of the opportunities Australia’s iconic airline is taking advantage of as Australia’s borders reopen.

Qantas share price slumps despite Joyce’s optimisim

The Qantas share price is struggling this week, but the business is surging into the newly-reopened world.

As The Motley Fool reported earlier this week, increasing numbers of new COVID-19 cases in parts of Europe and the United States might be weighing on ASX 200 travel shares.

Still, Qantas is forging ahead with its reopening plans. Additionally, the airline is launching new flights and opening new facilities as many Australians return to international skies.

The first new offering: Flights between Melbourne and Dehli.

The new route will take off from 22 December. It comes after the airline announced the launch of flights between Delhi and Sydney last month.

In more good news for those travelling in style from Melbourne to Delhi – or any other overseas destination ­– Qantas has reopened its international first class lounge in Melbourne.

Qantas is also opening a new business lounge in Singapore next month.

Joyce stated the new offerings are in response to “unprecedented pent-up travel demand”. He also said:

The restart of our international flights is only possible because of the way Victorians and Australians more broadly have rolled up their sleeves to get the jab…

This is helping us bring more Qantas employees back to work.

Qantas will also be relaunching flights between Melbourne and London on 27 November. Though, the flying kangaroo won’t be flying between Melbourne and Los Angeles until 19 December.

Right now, the Qantas share price is 7% higher than it was at the start of 2021.

The post Qantas (ASX:QAN) share price down 5% so far this week despite boss spruiking ‘new opportunities’ appeared first on The Motley Fool Australia.

More reading

• Is the Qantas (ASX:QAN) share price still a good recovery buy?
• Is the reopening already priced into ASX 200 travel shares?
• Here’s why ASX 200 travel shares are getting hammered today
• Here’s why Qantas (ASX:QAN) is not having such a ‘Bonza’ day
• Qantas (ASX:QAN) share price shrugs off another Rex route

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 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 Macquarie Group Ltd (ASX: MQG) share price has been a force to be reckoned with over the past year. In fact, the Australian investment bank has returned twice as much as the best performing of the big four banks during this time. In quantifiable terms, Macquarie has gained ~47% in 12 months.

Despite the company’s already impressive run, one fund manager remains bullish on a longer-term view. The team at Perennial Partners discussed a few key reasons as to why they expect more good times to come for the Macquarie share price in their latest monthly report.

Why is the Macquarie share price appealing to this fund manager?

Recently, Perennial Partners shared its overview of the ASX market in its October monthly report. Overall, the sentiment was fairly positive as the economy begins to reopen on high vaccination rates. From there, the fund manager honed in on appealing opportunities in the market, one being the Macquarie Group share price.

During October, Macquarie shares appreciated 8.7% in value after reporting a record first-half profit of $2,043 million. There was a lot for investors to like in this result as net profit contributions from the company’s various divisions all experienced strong growth.

In explaining the strong momentum behind Macquarie, Perennial Partners noted two dominant factors providing favourable operational conditions.

Firstly, the high level of merger and acquisition (M&A) activity fuelled by demand for returns is benefitting Macquarie. This is a positive for the business in two ways. The investment bank is able to sell its own managed assets for a premium price. Additionally, the high demand for its M&A advisory services is also boosting revenue.

Secondly, a volatile commodity market has enabled high returns from within the Commodities and Global Markets (CGM) business. In particular, the energy shortage across multiple countries has been a major opportunity for the company’s commodities trading operation.

That being said, the long-term catalyst for the Macquarie share price is believed to be its exposure to the energy transition. As stated by Perennial Partners in the October report:

On a longer-term view, Macquarie is very well placed to benefit from the energy transition as a result of its established position as a global leader in the financing and development of renewable energy assets and other infrastructure related to the energy sector.

The post Macquarie shares are very well placed for the long term: fund manager appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler owns shares of Macquarie Group Limited. 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 Macquarie 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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Investors in the Good Drinks Australia Ltd (ASX: GDA) share price might have woken up to a seemingly nice surprise this morning. On Monday, investors saw Good Drinks shares close at 9 cents a share. This morning, they opened at 90 cents a share, up an apparent 900%. Hallelujah!

Most unfortunately for investors though, this is not quite as good as it seems. Yes, Good Drinks shares were 9 cents earlier in the week, and are currently trading at 90 cents so far today. But if investors look carefully at their brokerage accounts, they will probably find that they own far fewer shares in Good Drinks than they used to.

That’s because this company has just completed a share consolidation. A share consolidation is the opposite of the much more well-known practice of a share split (or stock split). That’s why it’s sometimes referred to as a ‘reverse stock split’.

You might remember the hullabaloo over the US giants Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA) splitting their respective stocks last year. Apple did a 4-1 stock split while Tesla did a 5-1. That meant that investors in Apple, for example, woke up with 4 times as many shares as they had before the split, with each share worth approximately 4-times less than its value pre-split.

The opposite has just occurred with Good Drinks. But this shouldn’t come as much of a surprise. The company gazetted this move more than a month ago.

Why has Good Drinks consolidated its shares?

Here’s how Good Drinks explained it at the time:

Good Drinks Australia… proposes to seek shareholder approval… to consolidate its issued capital through the conversion of every ten existing shares into one share. The Company currently has 1,283,167,579 Shares on issue, which, for a Company of its size, is a considerable number. The Consolidation will result in a more appropriate and effective capital structure for the Company and a Share price more appealing to a wider range of investors…

While the share consolidation will have no effect on the underlying value of the Company, the effect on the Good Drinks share price at the time of the conversion should be to trade at 10 times the price at which it previously traded. 

So basically, if an investor had 100,000 GDA shares on Monday, worth 9 cents each, they would have a total value of $9,000 of capital in the company. Today, that same investor would have 10,000 shares worth 90 cents each, with a total value of $9,000. AS you can see, it’s just some numbers that have moved around. It means very little to Good Drinks investors in practice.

Sorry to burst anyone’s bubble who thought they’d woken up 900% richer this morning!

The post Did the Good Drinks Australia (ASX:GDA) share price really just leap 900%? appeared first on The Motley Fool Australia.

More reading

• Why is the Race Oncology (ASX:RAC) share price plunging 12% today?
• Why is the FBR (ASX:FBR) share price on ice today?
• Why Bapcor, Mayne Pharma, Race Oncology, and TechnologyOne shares are sinking
• Why is the Sovereign Cloud (ASX:SOV) share floating 27% higher today?
• Why is the Technology One (ASX:TNE) share price tumbling 9% today?

Motley Fool contributor Sebastian Bowen owns shares of Tesla. 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 Apple. 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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Investors are selling off shares in precision oncology company Race Oncology Ltd (ASX: RAC) after a flurry of market sensitive announcements yesterday.

At the time of writing, shares in the RNA focused company are down around 12.47% at $3.30, as investors digest the updates announced after the bell on Tuesday.

What did Race Oncology announce?

Race Oncology came out with several updates, including presentations from its AGM and advising of a share purchase plan (SPP).

The Company is intending to raise up to $29.7 million under the SPP. Eligible shareholders will have the opportunity to acquire fully paid ordinary shares in Race Oncology under the terms.

Shares will be issued at a price of $3 under the SPP. This is at a discount of 20.4% to Race Oncology’s last closing price.

Race Oncology has taken the liberty of providing three scenarios in which the funds will be raised and allocated.

In its best-case scenario, it hopes to raise the $29.7 million in order to finance various cancer and AML/MDS studies, whilst improving the formulation of its lead drug candidate called Zantrene.

Whereas in its base scenario, it hopes to raise $12 million and would narrow its study focus whilst refining the Zantrene formula.

Aside from this, Race Oncology also released the presentation from its AGM yesterday. In it, the company provided a strategic update to its “Three Pillar” strategy.

This involves extending Zantrene’s use to the “new area of cardio-protection, enhancing Zantrene’s utility for solid tumours through new formulations, and commencing a program to develop new RNA–targeting molecules”.

Speaking on the AGM, Race Oncology’s CEO and Managing Director Phil Lynch said:

2020-2021 has seen significant progress for Race. We have built a select and highly capable team, which has planned and completed important pre-clinical programs that positively capitalise on the FTO opportunity, most
recently reported for melanoma. We have also generated unexpectedly positive new preclinical data and insight indicating Zantrene provides cardio-protection, when used adjunctively with a traditional anthracycline chemotherapeutic. This is both a significant preclinical observation as well as a potentially large commercial opportunity for Race given there are few products that compete in this field.

The announcements follow an update out of Race’s corner on Monday. Investors bid up the Race Oncology share price following study readouts for Zantrene in a heart safety research program.

Race Oncology share price snapshot

Investors have responded poorly to the announcements today, driving the company’s share price down with force.

For instance, total trading volume today is over 445% of the 4-week average for Race Oncology shares at 1,148,215.

The Race Oncology share price is also down almost 6% in the past week of trading, however, has climbed over 89% this year to date.

As such it is well ahead of the benchmark S&P/ASX 200 index (ASX: XJO)’s gain of around 12% since January 1.

The post Why is the Race Oncology (ASX:RAC) share price plunging 12% today? appeared first on The Motley Fool Australia.

More reading

• Why Bapcor, Mayne Pharma, Race Oncology, and TechnologyOne shares are sinking
• Racing higher: Race Oncology (ASX:RAC) share price jumps 13% on study breakthrough
• Why the Race Oncology (ASX:RAC) share price is up on Monday
• Race Oncology (ASX:RAC) share price struggles despite new Leukemia study

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 FBR Ltd (ASX: FBR) share price isn’t moving at the moment because its shares are currently in a trading halt.

It’s currently finalising the details for a capital rising, which it is expecting to announce before the commencement of trading on Friday, 26 November 2021.

FBR’s capital raising

The robotic bricklaying business hasn’t officially released its announcement about the detail regarding the capital raising.

However, the Australian Financial Review had the inside scoop about what the money may be used for.

The AFR reported that FBR is looking to raise $10 million from investors to continue investing in its Hadrian bricklaying robotic technology.

Reportedly, the offer is for 222.2 million new shares at 4.5 cents per share, which was a 15% discount to the last closing price.

This money is going to be used for general working capital and to partially build tow more Hadrian bricklaying machines.

Ongoing progress

FBR has been making a number of announcements recently which have outlined the progress the business has made.

In the first quarter of FY22, it had record sales receipts of $621,000.

FBR has completed a few builds for customers – three residential and two low-rise commercial structures.

It has a pipeline of 24 confirmed upcoming builds for builders with expected revenue of over $1.1 million.

FBR said that an additional three builds in Wellard have been committed to complete the five home Wellard portfolio, with revenue of more than $2 million in FY23 expected from the sale of the five home portfolio.

Management boasted of a strong utilisation rate committed up to May 2022, with more future work expected to be added to maximise utilisation of both existing Hadrian prototypes.

Two additional Hadrian X robots are at the procurement stage.

International markets

FBR recently made an announcement regarding a non-binding term sheet for up to 5,000 homes in Mexico with GP Vivienda.

The bricklaying business also recently announced a market entry feasibility study for UAE with a memorandum of understanding with the Ministry of Energy and Infrastructure executed.

Management also boasted that it had unlocked the international clay block market, with the Hadrian X capable of laying the largest clay blocks currently in production, in addition to concrete blocks.

Research and development

The company said the next iteration of Hadrian X is under development, with a higher lay speed and a capability of handling even larger blocks with a longer reach.

Additional product revenue streams are also under development with multiple DST and digitalisation-related R&D projects underway.

FBR also recently received a R&D tax refund of $4 million, netting $1.4 million after the loan repayment.

FBR share price snapshot

Over the last month, FBR shares have risen by around 30% as it made a number of announcements mentioned in this article.

The post Why is the FBR (ASX:FBR) share price on ice today? appeared first on The Motley Fool Australia.

More reading

• Here’s why the FBR (ASX:FBR) share price is rocketing 8% on Wednesday
• Here’s why the FBR (ASX:FBR) share price is leaping 25% 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has just dropped into the red. At the time of writing, the benchmark index is down slightly to 7,408.9 points.

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

Bapcor Ltd (ASX: BAP)

The Bapcor share price is falling again and down almost 5% to $7.11. Investors have been selling the auto parts retailer’s shares after the surprise announcement of the exit of its Chief Executive Officer and Managing Director, Darryl Abotomey. Mr Abotomey is stepping down after a decade leading the company on 28 February 2022.

Mayne Pharma Group Ltd (ASX: MYX)

The Mayne Pharma share price is down 3% to 29.2 cents. This appears to have been driven by the pharmaceutical company’s annual general meeting update this week. At the event, management was unable to provide guidance for the full year. It also warned that its performance has not been in line with expectations so far in FY 2022.

Race Oncology Ltd (ASX: RAC)

The Race Oncology share price has sunk 13% to $3.30. This means the oncology company’s shares have now given back all of yesterday’s gains and some more. Race’s shares jumped notably higher yesterday following the release of a study update.

TechnologyOne Ltd (ASX: TNE)

The TechnologyOne share price has continued to slide and is down a further 9% to $11.42. Investors have been selling the enterprise software company’s shares since the release of its full year results on Tuesday. TechnologyOne delivered a 43% increase in SaaS ARR to $192.3 million and a 19% lift in profit before tax to $97.8 million. However, this wasn’t enough for a couple of brokers. This morning both Macquarie and UBS downgraded the company’s shares to the equivalent of sell ratings. These downgrades were made largely on valuation grounds.

The post Why Bapcor, Mayne Pharma, Race Oncology, and TechnologyOne shares are sinking appeared first on The Motley Fool Australia.

More reading

• Why is the Technology One (ASX:TNE) share price tumbling 9% today?
• Is the TechnologyOne (ASX:TNE) share price a buy after its results?
• ASX 200 (ASX:XJO) midday update: BHP, Woodside rise, TechnologyOne falls
• Why the Bapcor (ASX:BAP) share price is crashing 10% lower on Tuesday
• TechnologyOne (ASX:TNE) share price on watch following strong SaaS growth in FY21

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 Bapcor. 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 Sovereign Cloud Holdings Ltd (ASX: SOV) share price has returned to trading following the company’s completed placement and institutional entitlement offer.

At the time of writing, the infrastructure-as-a-service (IaaS) company’s shares are fetching for 77.5 cents, up a sizeable 27.05%.

Sovereign Cloud share price resumes

It’s been a strong day for the Sovereign Cloud share price, with investors buying up amid the company’s successful equity raise.

In a statement to the ASX, Sovereign Cloud advised it has raised gross proceeds of approximately $35 million. This consists of a placement to data centre operator, Nextdc Ltd (ASX: NXT) and the accelerated institutional component.

The placement saw 24.9 million shares issued to Nextdc at a price of 50 cents per share, raising $12.4 million. This was completed Monday 22 November and gives Nextdc a 19.99% controlling interest in AUCloud.

On the other hand, the institutional component raised roughly $4 million at the same price. This comprises a 4 for 11 fully-underwritten accelerated pro-rata non-renounceable entitlement offer. In turn, around 8 million new ordinary shares are to be issued by the company on 30 November.

A retail entitlement component is also expected to be raised, allowing everyday shareholders to take part in the offer. Approximately a further $18.6 million (before costs) is projected to be added to the Sovereign Cloud’s equity raise.

The proceeds will be used towards investing in customer growth, scaling AUCloud, and the research and development of new features. The platform will also be rolled out to Brisbane, Melbourne, and Adelaide. This is expected to complement the new cloud platform’s existing presence in Sydney and Canberra.

Furthermore, Sovereign Cloud will spend more than half of its funds on working capital requirements during the period.

AUCloud currently has 48 employees located in Canberra, Brisbane and Sydney. The company’s resources are forecast to expand over the next 2 years to support revenue growth in Canberra and Sydney.

About the Sovereign Cloud share price

Over the past 12 months, Sovereign Cloud shares have moved in circles, particularly in the second half of 2021. The company’s share price is down 30% since this time last year, and hovering around 25% below year to date.

Sovereign Cloud presides a market capitalisation of about $40.67 million, with more than 52.48 million shares on its books.

The post Why is the Sovereign Cloud (ASX:SOV) share floating 27% higher today? appeared first on The Motley Fool Australia.

More reading

• Here’s why the Sovereign Cloud (ASX:SOV) share price is in the spotlight this 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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Investors are selling off shares in software provider and consultant Technology One Ltd (ASX: TNE) on Wednesday.

At the time of writing, Technology One shares are down 9% from the open as the market continues to digest its full-year results released yesterday.

Whilst its Software-as-a-Service (SaaS) annual recurring revenue (ARR) was up 43% to $192.3 million for the year, amid other strengths, investors were quick to leave the Technology One party yesterday.

The selling pressure has spilled over into today’s session with the Technology One share price now sitting at $11.41, down from $12.55 at yesterday’s close.

Charging lower despite growth?

Technology One secured a number of growth areas in FY21, as reported in its results. For instance, profit before tax (PBIT) was up 19% at $97.8 million and was at the top end of guidance.

The result was underpinned by the growth of its TechnologyOne Global SaaS enterprise resource planning (ERP) solution.

According to the company, this trajectory puts it on track to hit a target of $500 million ARR by FY26. Given its current ARR is $257.5 million, this equates to an additional $242.5 million of annual recurring revenue in the coming 5 years.

SaaS annual ARR climbed to $192.3 million this year, which looks promising in reaching its target. Tech One also expects that by FY24, its total business should be growing by more than 15% per annum.

During the year, Tech One also added approximately 100 enterprise customers to its Global SaaS ERP solution and now has 637 large scale enterprise customers. With hundreds of thousands of users as well, this makes it the largest single instance SaaS ERP offering in Australia, according to the company.

Further, more than 30 organisations added the company’s SaaS ERP offering ahead of its competitors’ systems. These include systems from Oracle, SAP, Microsoft, Tribal, and Workday.

TechnologyOne also maintained its presence in the local government sector, closing “20 major deals with $25 million in total contract value”. It also has more than 300 council customers in the Asia-Pacific [APAC] region, according to the announcement.

In the higher education sector, Technology One “closed 10 major deals with $30 million in total contract value, cementing [its] position as the dominant provider to the APAC Higher Education sector”.

During the year, the company also announced the end of its “on-premise business” by October 2024. The date is intended to give its remaining on-premise customers ample time to make the transition to its “Global SaaS ERP solution”. It expects 90% of all remaining on-premise customers to make the transition.

Mixed response to results

There was a mixed response to Technology One’s set of results. Analysts at Bell Potter, Jefferies, Macquarie, and UBS were quick to update clients with their thoughts.

Bell Potter reckons the pullback in Technology One share price is a buying opportunity. It retained its $15 price target and held its buy rating on the share.

Analysts at each of Jefferies, Macquarie, and UBS aren’t so rosy on the situation. UBS cut its rating to sell despite raising its price to $11.90/share, citing reasons of valuation. However, it acknowledged the company’s solid annual result.

Jefferies noted that Tech One shares are trading at a record multiple that already has its performance baked in, and values the company at $11/share.

The broker notes the move from on-premise is positive for the company. It also reckons that “beyond FY24, however, growth from conversions is less likely and Technology One already has a strong presence with domestic customers (circa 70%)”.

This, it reckons, “may require the driver of growth to shift to either the UK or products currently in development”.

Meanwhile, Macquarie analyst Mitchell Sonogan also cut the bank’s rating on Technology One to underperform from neutral. It re-rated the company at an $11 price target as well.

In the past 12 months, the Technology One share price has climbed more than 26%, rallying over 31% this year to date.

The post Why is the Technology One (ASX:TNE) share price tumbling 9% today? appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of he stocks mentioned. 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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