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The Bitcoin (CRYPTO: BTC) price just smashed through its previous record high.

The token gained 3% over the past 24 hours and 15% over past 7 days to currently be worth US$66,014 (AU$88,018).

That handily surpasses the previous all-time high of US$64,863, set on 14 April this year. And it’s more than double the recent Bitcoin price lows of US$29,807 on 20 July, when the token came under pressure from China’s crackdown and its massive energy requirements.

Even as it marched to a new record, though, there was plenty of the volatility crypto investors have come to expect.

Over the past 24 hours the Bitcoin price traded as low as US$63,610 and as high as US$$66,930, a range of more than 5%, according to data from CoinMarketCap.

Volatility aside, Bitcoin’s market cap now stands at US$1.24 trillion, representing almost half the total crypto market valuation of some US$2.6 trillion.

Bitcoin price record driven by BITO

A range of factors have been helping drive the Bitcoin price higher. These include investor fears about inflation sapping the value of fiat currency, cashed up households that haven’t been able to spend in their normal way due to the pandemic speculating on the price, and an increasing acceptance by institutional investors.

Most recently, Tuesday’s launch of the first United States listed Bitcoin exchange traded fund (ETF) ProShares Bitcoin Strategy ETF (NYSE: BITO) has been fuelling animal spirits. On its first day of trading, the turnover in BITO was more than US$1 billion, making it the second most heavily traded fund on its debut day.

Yesterday, overnight Aussie time, BITO again lit up the screens, with a turnover of some US$1.2 billion.

(You can get the full scoop on BITO’s launch here.)

What the experts are saying

Addressing the Bitcoin price record and the launch of BITO, Brendan Halfpenny, co-founder of CoinSpot said:

As BTC is steadily hovering around its all-time high, cryptocurrency investors are becoming increasingly varied. With more traditional finance sectors branching into cryptocurrency products, this further adds legitimacy to the space and provides greater access for more investors.

Jesse Proudman, CEO of crypto advisory Makara, added (quoted by Bloomberg), “It’s a validating moment,” “It’s no longer a question of does this asset class continue to exist – I think that’s a really meaningful mark in the history of the broader digital-asset class.”

And according to Leah Wald, CEO of Valkyrie Investments, which is awaiting approval for its own futures-based Bitcoin fund:

Clearly, the launch of a Bitcoin futures ETF in the US has sent prices soaring to these levels. Traders and investors perhaps see this is precursor to the holy grail – a spot Bitcoin ETF – and their optimism is pouring into the largest cryptocurrency at a furious pace, with all money FOMOing into the trade from all corners of the market.

If you’re feeling a bit of FOMO yourself, don’t forget the Bitcoin price can fall just as fast, or faster, than it goes up.

Never invest more than you can afford to lose.

The post Why the Bitcoin (CRYPTO:BTC) price is rocketing to new, all-time highs appeared first on The Motley Fool Australia.

More reading

• Newcrest (ASX:NCM) CEO reveals the company’s gold, copper and Bitcoin mining plans
• BITO, the first US Bitcoin ETF just started trading. Here’s what happened
• Here are the pros and cons of investing in the pending US Bitcoin ETFs
• Why Bitcoin miners are flocking to the US and what this could mean for Australia
• Bitcoin price to US$500,000? Why ARK’s Cathie Woods is doubling down

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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 AMP Ltd (ASX: AMP) share price is in the green today after the company released an update on its quarterly performance.

Over the third quarter of calendar year 2021, AMP Capital’s assets under management (AUM), which are owned by investors, fell by $7.3 billion.  

In brighter news, AMP’s Australian wealth management unit’s cash outflows dropped after the early release super scheme – designed to support Australians through COVID-19 ­– was scrapped.

Commenting on the company’s future direction, AMP’s CEO Alexis George said: “We have a clear focus on our priorities ahead, including to deliver the demerger of our Private Markets business from AMP in the first half of next year.”

At the time of writing, the AMP share price is $1.165, 4% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) and the All Ordinaries Index (ASX: XAO) are both up around 0.1%.

Let’s take a closer look at how AMP performed over the quarter ended 30 September 2021.

AMP’s mixed quarterly performance

The AMP share price is higher this morning on news of a quarter full of ups and downs.

In the spirit of giving bad news first, AMP Capital’s AUM dropped 4% over the quarter, driven by $12 billion of cash outflows. For context, over the same quarter of 2020 AMP Capital saw cash outflows of just $2.4 billion.

As of 30 September, AMP Capital managed $180.3 billion of investors’ funds.

Additionally, while AMP’s New Zealand wealth management unit saw its AUM boosted by around $300 million to $12.9 billion last quarter, its cash outflows grew by 66%.

Its cash outflows came to $39 million for the period. The increased costs were partly because AMP’s status as a default KiwiSaver provider wasn’t renewed. AMP remains a non-default KiwiSaver provider.

However, AMP’s Australian wealth management saw positive returns and lesser cash outflows. That lead its AUM to end the quarter at $131.2 billion. That’s roughly the same as at the end of the previous period.

The unit’s cash outflows dropped by around $400 million, mostly because it paid no early release super payments after the Australian Government scrapped the scheme late last year.

Over the 3-month period, AMP’s Australian wealth management unit paid out $468 million of regular pension payments to its retired clients.

AMP Bank also saw its loan book increase by around $300 million to $21.3 billion, driven by a competitive owner-occupier housing market. The bank’s total deposits also increased by $1 billion, bringing its deposit-to-loan ratio to 81%.

Finally, the company’s North platform‘s AUM grew by $1.7 billion in the third quarter of 2021, reaching $58.6 billion. The platform’s cash flows came to $991 million, 21% more than in the prior corresponding period.

AMP share price snapshot

The struggles faced by the AMP share price are well known among market watchers. Many will likely be keeping a close eye on it ahead of the planned demerger of its Private Markets business.

Right now, its 25% lower than it was at the start of 2021.

The post AMP (ASX:AMP) share price gains 4% as $7b of funds go down the drain 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 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 Catapult Group International Ltd (ASX: CAT) share price has been a positive performer on Thursday.

In early trade, the sports analytics company’s shares are up over 3% to $1.95.

Why is the Catapult share price racing higher?

Investors have been bidding the Catapult share price higher this morning following the release of a strong first half trading update.

According to the release, the company’s Annual Contract Value (ACV) has surged 43% or $17.6 million higher to $58.8 million since this time last year.

Management advised that this was driven largely by demand for its software solutions in its largest vertical of Performance & Health, which grew at 33% annualised for the half to $34.4 million. In addition, the recent acquisition of SBG also gave its ACV a lift. Excluding the SBG acquisition, Catapult’s ACV growth was still a very strong 30% year on year.

The company’s largest market, the Americas region, was a key highlight during the period. Catapult’s Performance & Health ACV in the region grew at an annualised rate of 62% for the first half. This follows a significant strengthening in the operating environment for pro sports in the key market.

Another big positive is that the company’s ACV Churn continued to improve from its already world-class SaaS levels. ACV Churn fell 40% for the year from 6.8% to 4.1%. Management notes that the usage of Catapult’s software products is continuing to prove critical to its customers’ daily workflows.

Also potentially giving the Catapult share price a boost is its unaudited cash balance. At the end of the period, Catapult had $42.1 million of cash at bank. This is an increase of $19.9 million over the previous six months.

Catapult’s CEO, Will Lopes, was pleased with the company’s performance.

He said: “I am very pleased with the results of the last six and 12 months and our ACV growth trajectory. It’s extremely pleasing to see our core Performance & Health vertical continue to grow so strongly, coupled with our continued ability to cross-sell video solutions to those customers.”

“With the addition of SBG to our product mix, we are confident in our ability to expand ACV significantly in the long term. We’re also very pleased to see the large North American market return to strength following the challenges presented by the pandemic,” he concluded.

The post Catapult (ASX:CAT) share price higher on surging annual contract value 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 Catapult Group International Ltd. The Motley Fool Australia owns shares of and has recommended Catapult Group International 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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Newcrest Mining Ltd (ASX: NCM) was in the spotlight at yesterday’s Allan Gray Live webinar.

Newcrest CEO Sandeep Biswas joined Allan Gray’s managing director, Simon Mawhinney, for a candid Q&A session.

Below we look at some of the key takeaways Biswas shared about the company he’s presided over for the last 7 years. A company that now counts as largest gold producer listed on the ASX, and amongst the biggest gold miners in the world.

Why has the Newcrest share price been under pressure?

Addressing the pressured Newcrest share price, Biswas said that was partly driven by “its near-term production decline because of declining grades” at some of its mines.

Grades here means the amount of gold the company can extract from any given tonne of material it digs up.

The pressure on the share price, Biswas added is “also coupled with the fact that we’ve never really given the longer-term outlook, but just the 12 months guidance. Now, as of last week, we do have that longer-term outlook out there. And I think that’s really informed the market a lot better about what our future is.”

(You can find Newcrest’s longer-term outlook, released last week, here.)

Gold prices, margins and production profiles

Biswas also highlighted Newcrest’s low all in sustaining costs (AISC) and its industry leading profit margins. Which, at current gold prices above US$1,770 per ounce, he said means, “We make a lot of money.”

Biswas continued:

But when prices drop… we’ll be there with the best margins in the business. There’s no other gold mining company of scale that has our level of sustaining cost profile. That differentiates us, and it plays to our philosophy of long life plus high margin. Which ultimately, I think, investors will appreciate as less risky to invest in with a better return profile.

Mawhinney then pointed to Newcrest’s pre-feasibility study (PFS) at its Lihir project, which the company says supports gold production growth to 1 million ounces per year commencing in the 2024 financial year.

Asked how confident he is about those production profile figures, given some past operational issues at the project, Biswas replied, “I’m very confident about the profile… It’s one of the few mines in the world where the grade profile, this is the amount of gold per tonne, actually goes up end of the year term.

“A big portion of the increase in gold production from Lihir,” Biswas continued, “is driven not by mining tonnes or mill tonnes, but driven by grade. Which is inherent in the ore body, which we’re very confident about.”

What are Newcrest’s copper plans?

Copper, in high demand for its high conductivity and corrosion resistance as the world moves towards renewable energy, was another focus point of the webinar.

Mawhinney pointed out that, atop the increase in gold production, Newcrest’s PFS studies also indicate its copper production nearly doubling over the next 10 years. “Is that by design?” he asked.

According to Biswas, the ramp up in forecast copper production isn’t really by design, but more related to Newcrest’s industry leading technological knowhow:

Because of our ability with mining bulk underground ore bodies, we explore deeper than most other companies. Because a lot of companies who explore deeply, if they found something, they couldn’t do anything about it. Whereas we can. That in itself leads you to look also for copper gold porphyry and gold copper porphyry deposits…

We haven’t gone out to search for copper specifically, it just happens to come with the geology of these particular assets. And it’s great exposure. The green credentials of copper… If you look at copper today it’s about 5 bucks per pound. Of all the metals, [it has] the brightest future of them all.

“We also have a copper deposit in Fiji, which we haven’t turned minds to for quite some time,” Biswas added. “Because at $3 [per pound] copper it doesn’t give us the double-digit returns. But at $4 or $5 copper, I think that’s also going to be a fantastic opportunity.”

ESG credentials

In today’s world corporations’ environmental, social and governance (ESG) credentials are under intense scrutiny.

And big gold miners like Newcrest are no exception.

Addressing his company’s ESG commitments, Biswas said:

Our new vision incorporates, more than ever before, the goals we’ve got to achieve in the broader ESG dimension. Obviously green house gas is a big focus for us. We had already made a commitment to reduce green house gas emissions intensity by 30% by 2030… I think we’re well placed to get to that target…

We’re also committed to net zero by 2050. Which is meaningful for us because our mines will actually be running in 2050… We’ve got a full-time task force working on mapping how we might get there. Through technology in the first instance. Partnering with others as to how these technologies may develop in that time frame, so we can start deploying them into our businesses.

Will Newcrest enter the crypto space?

With Bitcoin (CRYPO: BTC) again dominating headlines as it toys with setting new all-time highs, Mawhinney quipped, “Gold seems to be so yesteryear. Any bolt-ons on crypto for Newcrest?”

The short answer there was, “No.”

Biswas elaborated, “I think there’s a realisation now that they are very different. Gold is physical. If the internet goes down you still have your gold bar. You can touch it… change its form. And it does have some uses, more and more in electronics and medicines, and jewellery, obviously.”

His recommendation?

“If you have a Bitcoin or crypto portfolio, put a good chunk of gold in there, because it actually reduces your volatility. So, they may ultimately be more complimentary than working against each other.”

The post Newcrest (ASX:NCM) CEO reveals the company’s gold, copper and Bitcoin mining plans appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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 ELMO Software Ltd (ASX: ELO) share price surged on open after the company announced an upbeat first-quarter trading update.

At the time of writing, the cloud-based human resources and payroll software company’s shares are up 8.49% to $5.11.

ELMO share price jumps on well-grounded growth in Q1 FY22

ELMO reported strong growth across key financial metrics for the first quarter of FY22. Some highlights include:

• Annualised recurring revenue (ARR) up 61% against the prior corresponding period (pcp) to $88.5 million;
• Revenue rose 52% to $20.7 million;
• Cash receipts increased 78% to $27.7 million; and
• Cash balance of $75.7 million.

ELMO’s mid-market business, which focuses on organisations with 50 to 2,000 employees, was the main driver of growth in the quarter.

Mid-market ARR rose 43% to $78.4 million via a combination of organic and acquisition-based growth. Organic growth for mid-market across the last 12 months was 28%, demonstrating an acceleration in ARR growth and the return towards pre-COVID growth rates.

Elsewhere, ELMO’s small business segment ‘Breathe’ enjoyed 55% growth over the past 12 months. The company said this was driven by the onboarding of new customers and cross-selling of new modules.

In the first quarter of FY22, ELMO released two new modules, Experiences and COVIDsecure. Experiences enables employers to manage the employee lifecycle using an easy-to-use journey builder to increase engagement and reduce manual overheads. COVIDsecure enables businesses to record, monitor and report on their employees’ COVID vaccination and test statuses.

Management commentary

CEO and co-founder Danny Lessem was pleased with the performance driving the ELMO share price today, saying “the majority of the growth [was] organic”.

The mid‐market business performance continues to return towards pre‐COVID levels with growth accelerating. The Breathe small business segment continues to generate high levels of growth as small businesses rapidly automate people processes.

Lessem provided some encouraging comments on the company’s outlook, saying:

Finally, we have strong momentum coming into Q2 with a positive macroeconomic backdrop and with small and medium-sized businesses continuing to adopt cloud‐based solutions to manage a flexible workforce

ELMO share price still down 20% year-to-date

Despite the strong move up this morning, the ELMO share price remains well in negative territory, down around 20% in 2021. It is also down more than 8% over the last 12 months.

The post ELMO (ASX:ELO) share price surges 8% on first-quarter update appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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 Elmo Software. The Motley Fool Australia owns shares of and has recommended Elmo Software. 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 BlueScope Steel Limited (ASX: BSL) share price has been reinvigorated on Thursday. This comes as the steel producer reveals better than expected performance in an announcement this morning.

At the time of writing, BlueScope shares are trading 2.73% higher to $20.68. This means the BlueScope share price is now 20.9% away from its 52-week high.

What did BlueScope announce?

During a period where China’s steel output has been at multiyear low levels, BlueScope appears to have filled the gap in supply.

According to its release, the company now expects its first-half earnings for FY2022 to be above previous forecasts. BlueScope mentioned it is benefitting from strong spreads, prices, and demand amidst the ongoing challenges of the COVID-19 pandemic.

As a result, underlying earnings before interest and tax (EBIT) for H1 FY22 are expected to be between $2.1 billion to $2.3 billion. For context, the company’s previous guidance ranged between $1.8 billion to $2 billion. It is worth mentioning that this forecast came with a disclaimer, with forecasts being subject to foreign exchange and market conditions. As such, the BlueScope share price is gaining attention on Thursday.

Furthermore, the steelmaker provided a few other contributing factors to the improved outlook. These included:

• Stronger than expected hot rolled coil prices and spreads at its North Star mini-mill in the United States
• Improved margins and domestic demand for steel products from its Australian Steel Products brand
• Continued strong demand and pricing for its United States coated products business

These beneficial impacts mean BlueScope is seeing a further increase in net working capital employed in the business during the current half.

Management commentary

Commenting on the earnings upgrade, BlueScope managing director and CEO Mark Vassella said:

The performance continues to demonstrate the value of our business model, and further underpins our capacity to invest for long-term sustainable earnings and growth, to position the business for a low carbon future and to deliver solid returns to shareholders.

For investors seeking more details, the company stated it will provide more information at its 2021 annual general meeting on 18 November.

On another note, reports are circulating that China’s steel production is beginning to recover. In some areas, power restrictions have eased, allowing steel mills to increase output again.

BlueScope share price recap

Shareholders of BlueScope have enjoyed market-beating returns over the past 12 months. While the S&P/ASX 200 Index (ASX: XJO) is up 19.7% in the last year, the BlueScope Steel share price has returned 37.2%.

Despite the strong share price appreciation, BlueScope is currently trading on a price-to-earnings (P/E) ratio of 8.91.

The post BlueScope (ASX:BSL) share price rises on earnings upgrade appeared first on The Motley Fool Australia.

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

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The Aristocrat Leisure Limited (ASX: ALL) share price has returned from its three-day trading halt and is storming higher.

At the time of writing, the gaming technology company’s shares are up 8% to a record high of $49.39.

Why is the Aristocrat share price rising?

The Aristocrat share price is rising today after announcing the successful completion of the institutional component of its $1.3 billion entitlement offer.

According to the release, the company has raised approximately $895 million at the offer price of $41.85 per new share. This represents an 8.6% discount to its last close price.

Management advised that the offer was strongly supported by institutional shareholders with a take-up of approximately 92% by eligible institutional shareholders.

Furthermore, a bookbuild for Institutional Entitlement Offer shortfall shares was completed on Wednesday. The bookbuild cleared at a price of $47.10 per new share, which represents a premium of $5.25 to the offer price. This is also a 2.8% premium to the Aristocrat share price prior to its trading halt. Which demonstrates just how positive investors are about its plans for the funds.

Why is the company raising funds?

The company launched its entitlement offer on Monday to raise funds for the proposed acquisition of London-listed leading global online gambling software and content supplier, Playtech, for an enterprise value of $5 billion.

Playtech has two key business segments: Business-to-Business gambling (B2B) and Business-to-Consumer gambling (B2C).

The company’s B2B gambling operations include the design, development, and distribution of software and services to the online and land-based gambling industry. This covers all key online real-money gaming (online RMG) segments, including casino, live casino, poker, bingo and sports betting, monetising via a revenue share model.

Whereas Playtech’s B2C gambling operations predominantly consists of Snaitech (Italy). It is a vertically integrated retail and online business leveraging Playtech’s proprietary technology and capabilities. Management notes that as a leading Italy-based multi-channel gaming operator, it is free of any meaningful channel conflict with Aristocrat’s existing operations. Other B2C brands include HPYBET and SunBingo. HPYBET is Playtech’s retail sports betting B2C business, operating sports betting shops in Austria and Germany.

The release notes that Playtech is highly profitable. In FY 2019, for example, Playtech’s revenue on an adjusted basis was $2.3 billion and its EBITDA was $586 million.

What has been the reaction to the acquisition plan?

The team at Morgans were pleased with the news. In response, the broker reiterated its add rating and lifted its target on the Aristocrat share price to $52.90.

The broker notes that the deal will expand the company’s total addressable market materially thanks to the growing global online RMG market.

It commented: “The proposed acquisition will give ALL instant scale and capacity to grow in the global online RMG space, an US$70bn market forecast to grow substantially in the years ahead as the US market opens up. It expands and diversifies ALL’s total addressable market from a $230bn market comprising land-based gaming and mobile games, to a $300bn market that will now include online RMG (iGaming and online sports betting). Playtech will provide a platform for ALL to leverage its content across new distribution channels and in new markets.”

This goes some way to explaining why the Aristocrat share price is rising despite its significant capital raising.

The post Aristocrat (ASX:ALL) share price jumps 8% to record high after raising $895m 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. 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 South32 Ltd (ASX: S32) share price is on the move this morning.

At the time of writing, the mining giant’s shares are up 1% to $3.87.

Why is the South32 share price pushing higher?

Investors have been bidding the South32 share price today following the release of its first quarter update.

South32 had a reasonably robust quarter in respect to its production, with several areas of the business reporting quarter on quarter increases.

The highlight was arguably the company’s metallurgical coal production, which came in at 1,575kt. This represents an 18% increase over its fourth quarter performance, though remains down year on year.

Another positive was manganese ore production which climbed to 1,565kwmt during the quarter. This is an increase of 7% both quarter on quarter and year on year. Management advised that this reflects a quarterly record at South Africa Manganese and a strong start to the year at Australia Manganese.

South32’s alumina production fell 10% quarter on quarter. This was impacted by an incident at Brazil Alumina that damaged one of the bauxite unloaders at the refinery in July. Positively, the company restored production to normalised rates in October.

Finally, the company reported aluminium production of 248kt, which was flat year on year but up 1% over the fourth quarter.

Positively, with all its operations continuing to deliver to plan, the company has maintained its FY 2022 production guidance.

At the end of the period, the company’s net cash balance stood at US$660 million. This was up US$254 million from three months earlier.

Management commentary

South32’s CEO, Graham Kerr, was pleased with the quarter.

He said: “Our operations continue to perform well, achieving record production at South Africa Manganese and maintaining production above nameplate capacity at Worsley Alumina. Production at Mozal Aluminium was higher, with the smelter benefitting from our investment in the AP3XLE energy efficiency technology.”

“We continue to actively reshape our portfolio for a low carbon future, and last week entered into binding conditional agreements to acquire a 45 per cent interest in Sierra Gorda, a long life, open pit copper mine in Chile. We have also recently exercised our pre-emptive rights to acquire an additional interest in Mozal Aluminium.”

“These initiatives, and our ongoing work with Alcoa in Brazil to investigate the Alumar smelter’s potential restart using renewable power, will see us increase our leverage to the metals critical to the green energy transition,” he concluded.

The post South32 (ASX:S32) share price rises on robust Q1 update 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. 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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price has been underperforming in 2021.

Since the start of the year, the regional bank’s shares have edged almost 1% lower to $9.38.

As a comparison, the Commonwealth Bank of Australia (ASX: CBA) share price is up 25% and the National Australia Bank Ltd (ASX: NAB) share price is up 26% over the same period.

Could the Bendigo and Adelaide Bank share price hit $11 by the end of the year?

While the Bendigo and Adelaide Bank share price has been underperforming so far this year, one leading broker sees potential for it to rebound strongly.

According to a recent note out Macquarie Group Ltd (ASX: MQG), its analysts currently have an outperform rating and $11.00 price target on the bank’s shares.

Based on the current Bendigo and Adelaide Bank share price, this implies potential upside of 17% for investors.

In addition, the broker has pencilled in a fully franked 55 cents per share in FY 2022. This represents a yield of 5.9%, stretching the total return on offer to approximately 23%.

What did the broker say?

Macquarie is positive on Bendigo and Adelaide Bank due to its growth strategy, which it feels is delivering results. And while it suspects competition may continue to weigh on margins, it appears optimistic that its strong balance sheet momentum will drive revenue growth.

All in all, the broker appears to see potential for the bank’s shares to be trading at $11.00 come the end of the year. Though, given its underperformance, it will no doubt need a catalyst.

That could potentially come at its annual general meeting next month if the bank releases a trading update at the event. Though, time will tell if that is the case.

The post Could the Bendigo and Adelaide Bank (ASX:BEN) share price hit $11 by the end of 2021? 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. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bendigo and Adelaide Bank Limited and 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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The Adairs Ltd (ASX: ADH) share price could be one to consider after the business released a trading update for the first quarter of FY22.

The last two years have been quite volatile for the homewares, furnishings and furniture business.

For the first 16 weeks of FY22, Adairs said that its total group sales were down 8.5%. However, on a like for like basis – which excludes stores closed for COVID-19 restriction reasons – total group sales were up 8.2%.

The Adairs share price could be an attractive option to consider for a few different reasons:

Continuing online growth

Whilst the headline numbers didn’t show much growth, the online portion continued to show double digit growth.

Adairs online sales were up 15% compared to the first 16 weeks of FY21, whilst it was up 172.8% compared to the same period in FY20. Mocka, which is an online-only furniture business, saw growth of 25.8% year on year and 87.6% against FY20.

Its digital transformation and omni-channel model is a key part of the strategy. The company says that selling online (and offline) gives it a larger total addressable market (TAM), significant synergy across channels, delivers customers a better experience and a more flexible shopping experience.

Adairs continues to invest in winning more customers, improving the customer experience, platform and team.

The company is upgrading its online platform to deliver a more seamless omni-channel customer experience in 2022.

Linen Lover membership

Adairs says that there is a relationship between total sales and Linen Lovers membership levels. Growth here is a key driver of sales.

Management believe that member retention initiatives and the facilitation of online sign-ups through the upgrade of its digital platform in FY22 offer “significant upside” to its growth.

Members account for more than 80% of total Adairs sales and spend more than around 1.5 times more than non-members with each transaction.

Each new member adds around $400 in total sales.

Average annual growth in membership numbers over the last five years was 14.5%. It’s aiming to continue to grow Linen Lover memberships by 10% to 15% per annum.

Both this and the next point could be helpful factors for the Adairs share price over time.

Retail floor space

There is also a relationship between store sales and retail store floor space.

New and up-sized stores are expected to continue to drive store sales. The company outlined that each additional square metre of floor space typically adds around $4,000 in store sales.

Average annual growth in floor space over the last five years was 7.5%.

The company is expecting to grow floor space by 8% (or more) in FY22 and then at least 5% per annum in the next five years through new and upsized stores.

Not only do larger stores generate more revenue, but it’s also more profitable. They can showcase more products and categories, with an average increase of the store contribution margin of 950 basis points after the upsizing.

A typical upsized store achieves $250,000 to $350,000 more profit each year after upsizing, representing around 60% average increase in store contribution.

Management believe profitable new store opportunities remain.

What is the Adairs share price valuation?

The earnings estimate on Commsec suggests a profit decline in FY22. Despite that, Adairs shares are forecast to be valued at under 12x FY22’s estimated earnings.

The post 3 reasons why the Adairs (ASX:ADH) share price could be a buy appeared first on The Motley Fool Australia.

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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 shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. 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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