Tag: Motley Fool

The Origin Energy Ltd (ASX: ORG) share price has stepped into the green on Tuesday and, at the time of writing, is trading at $4.76.

As The Motley Fool’s James Mickelboro reported earlier today, Origin shares are on the move after the company announced a positive update regarding its UK investment in Octopus Energy.

Here we examine how the market is reacting to the energy giant’s news today.

What’s up with the company’s shares today?

The Origin Energy share price is up 5.54% with only moments of trade remaining after the company revealed the value of its equity stake in energy retailer Octopus Energy has increased substantially.

Origin strategically invested a total of 211 million pounds (A$507 million) into Octopus last year, earning it a 20% stake in the UK energy retailer. This was on a valuation of around $2.5 billion at the time.

Today’s release notes that Octopus Energy has received a 211 million pounds investment from Generation Investment Management, a sustainable investment manager.

As a result, Origin has today announced it will be investing an additional 38 million pounds in Octopus in order to maintain its 20% equity stake.

That’s because Generation’s 7% equity offer puts the valuation of Octopus at around 3 billion pounds (A$5.5 billion Australian) – considerably higher than it was 12 months ago.

So essentially, Origin has to pay up in order to keep the gains coming in from Octopus.

But there’s no need to feel sorry for Origin. Since its initial investment in Octopus, the position has grown in value to $1.1 billion, signifying a return on investment of 92% in a relatively short period of time. That’s almost break even.

Investors appear to have relished Origin’s successful return on capital and are buying Origin shares in droves on Tuesday.

At the time of writing, today’s trading volume is almost 11.5 million Origin shares changing hands, well above the 4-week average volume of 6.4 million shares exchanging daily.

Origin appears equally as satisfied with the outcome, bolstering confidence in its financing decisions.

Speaking on the announcement, Origin CEO Frank Calabria said: 

Origin’s additional investment demonstrates our confidence in Octopus’ strategy, management team and growth prospects, confirmed by GIM, which is one of the world’s most innovative sustainable investment funds. Our exposure to Octopus’ continued success is expected to be an important avenue of growth for Origin.

Origin Energy share price snapshot

The Origin Energy share price has had a horrible year to date and has is currently around 1% in the red since 1 January.

Things aren’t much better over the past 12 months, during which the company’s shares have only climbed 3.8%.

This is well behind the S&P ASX 200 index (ASX: XJO)’s return of around 25% over the past year.

The post Origin Energy (ASX:ORG) share price leaps 6% on investment news appeared first on The Motley Fool Australia.

More reading

• Why Beach, Collins Foods, Origin, & Tuas shares are racing higher
• ASX 200 (ASX:XJO) midday update: Beach shares jump, a2 Milk rises
• Origin (ASX:ORG) share price on watch after Octopus investment update
• The Origin (ASX:ORG) share price is up 5% in less than a week. Here’s why
• Why the embattled AGL (ASX:AGL) share price is surging higher today

The author Zach Bristow 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.

from The Motley Fool Australia https://ift.tt/39NCb8M

The Bubs Australia Ltd (ASX: BUB) share price is set to finish today’s session strongly in the green.

Investors have bid shares in the goat milk infant formula company 7% higher.

By comparison, the broader S&P/ASX200 Index (ASX: XJO) has sunk more than 1.4% today.

So what’s been fuelling the Bubs share price?

What’s pushing the Bubs share price today?

Bubs has not released any price-sensitive news that could explain today’s bullish price action.

As a result, there are a few factors that could be pushing shares in the infant formula company higher.

Firstly, shares in fellow infant formula producer A2 Milk Company Ltd (ASX: A2M) has enjoyed a strong run recently.

As a result, sentiment towards the sector could be parlayed onto the Bubs share price.

Secondly, investors might have had a change in heart towards Bub’s recent news of expanding into the US.

Earlier this month the company announced plans to expand into the lucrative North American market.

The company’s formula products will be launched on both Walmart‘s (NYSE: WMT) and Amazon‘s (NASDAQ: AMZN) online stores.

Investors did not react to the news favourably, with the Bub share price sinking more than 9% on the day.

The company had flagged first shipment of products in its results presentation for FY21.  

How did Bub’s perform in FY21?

Late last month, shares in Bubs took a tumble following a disappointing full-year report.

The infant formula company posted a huge loss for FY21, with a 24% decline in revenue of $46.8 million.

The dour result was driven by a 44% decline in Australian sales to $20.4 million and a 17.5% decline in China sales to $10.47 million.

Other highlights from the company’s full-year report included;

• Underlying EBITDA loss of $28.5 million
• Statutory loss after tax of $74.7 million
• Cash balance of $27.9 million

Part of the company’s loss for the full year was attributed to a $44.6 million non-cash impairment relating to the Nulac Foods cash generating unit.

Bubs noted that weaker sales, a $12.6 million inventory write down, and the sale of excess bulk powder attributed to a bloated operating loss.

Snapshot of the Bubs share price

Today has provided a brief reprieve for Bubs shareholders.

Shares in the infant formula company have not had a great year, trading more than 39% lower since the start of 2021.

At the time of writing, the Bubs share price is poised to close today’s session more than 5% higher.

The company’s shares were up more than 11% earlier, having hit an intra-day high of 38 cents.

The post Why is the Bubs (ASX:BUB) share price leaping 7% on Tuesday? appeared first on The Motley Fool Australia.

More reading

• Here’s why the A2 Milk (ASX:A2M) share price is rising again today
• ASX 200 (ASX:XJO) midday update: Beach shares jump, a2 Milk rises
• Here are the top 10 ASX shares today
• Here’s why the A2 Milk (ASX:A2M) share price is up 9% in a week
• Why this broker sees ~50% upside in the A2 Milk (ASX:A2M) share price

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Nikhil Gangaram owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended A2 Milk, Amazon, and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3kJvQl8

The S&P/ASX 200 Index (ASX: XJO) is out form and sinking on Tuesday. In afternoon trade, the benchmark index is down 1.1% to 7,301.8 points.

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

CSL Limited (ASX: CSL)

The CSL share price has fallen almost 4% to $294.85. This appears to have been driven by weakness in the healthcare sector and a broker note out of Credit Suisse. In respect to the latter, the broker believes that CSL’s plasma collection market share will not recover to pre-COVID levels until 2025. Credit Suisse has a neutral rating and $315.00 price target on its shares.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price is down 2% to $155.80. This morning the pizza chain operator revealed that its ANZ boss, Nick Knight, will be leaving the company. The release explains that Mr Knight will be retiring after 30 years with the company. His exit has sparked a restructuring that will see Domino’s undertake a twin-region structure, focused on opportunities in Europe and Asia-Pacific.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price is down 3% to $12.57. As well as being caught up in the selloff, soft retail sales data may be weighing on this online furniture and homewares retailer’s shares today. The ABS revealed that retail sales fell 1.7% in August. This was the third month in a row of declines.

Xero Limited (ASX: XRO)

The Xero share price is down 6% to $140.57. This decline appears to have been driven by a selloff in the tech sector following a weak night of trade on the tech-focused Nasdaq index. It isn’t just Xero that is tumbling. The S&P ASX All Technology index is down a disappointing 2.4% this afternoon.

The post Why CSL, Domino’s, Temple & Webster, & Xero shares are tumbling appeared first on The Motley Fool Australia.

More reading

• Domino’s (ASX:DMP) share price slips amid management restructure
• The healthcare sector is weighing on the ASX 200 on Tuesday
• Technology shares are dragging the ASX 200 down on Tuesday
• Why the Collins Foods (ASX:CKF) share price is surging higher today
• 2 top ASX growth shares that might be worth buying

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 CSL Ltd., Temple & Webster Group Ltd, and Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3AQ3awm

The Cannindah Resources Ltd (ASX: CAE) share price is rocketing to an all-time high today. This comes as the copper and gold company announced impressive assay results from its recent drilling operations.

During morning trade, Cannindah shares rose to a record high of 16 cents and are now trading at 15 cents apiece.

What were the results?

In its announcement, Cannindah advised the first assay results from Mt Cannindah have returned with significant copper and gold credits.

As such, the first drill hole (21CAEDD001) was abandoned after hitting old workings and mining voids at 6 metres deep.

The second hole (21CAEDD002) drilled mostly copper mineralised and sulphidic breccia over a depth of 330 metres. The intersection from the top portion (from ground level to 151 metres) achieved the following:

• 117 metres at 1.01% copper, 0.39 grams per tonne of gold, and 28 grams per tonne of silver from 34 metres to 151 metres

Cannindah noted assays are currently waiting for the second part of the drill (from 150 metres to 330 metres). Initial visual indications suggest the rock contains primary copper mineralisation.

The third hole (21CAEDD003) has encountered a strong amount of copper mineralisation, with chalcocite rich supergene material from 15 metres to 33 metres. The hole was originally planned for a depth of 250 metres but extended to 762.5 metres. Assay results are pending but look extremely positive.

Cannindah is seeking to expand its current 5.5 million tonne JORC resource, with half of its ore reserves falling into the Indicated category. This represents a confident level of geological knowledge in Mt Cannindah containing probable copper, gold and silver credits.

About the Cannindah share price

Over the past 12 months, Cannindah shares have gained an incredible 525% with year-to-date up over 380%.

Based on today’s price, Cannindah commands a market capitalisation of around $77.8 million and has approximately 518.9 million shares outstanding.

The post Cannindah Resources (ASX:CAE) share price surges 30% on assay results appeared first on The Motley Fool Australia.

More reading

• Why CSL, Domino’s, Temple & Webster, & Xero shares are tumbling
• Why the Fortescue (ASX:FMG) share price is down 5% today
• Here are the 3 most traded ASX 200 shares so far this Tuesday
• Li-S Energy (ASX:LIS) IPO booms amid excitement over huge market opportunity
• Woolworths (ASX:WOW) share price slumps this week despite Everyday Market launch

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.

from The Motley Fool Australia https://ift.tt/3zGYdos

The Fortescue Metals Group Ltd (ASX: FMG) share price is having a hard time digging itself out of its recent rut.

Fortescue shares managed to eke out some gains this morning, opening 0.32% higher to $15.80.

But by the time Chinese iron ore futures markets began trading around 11 am, Fortescue’s gains faded and snowballed to steep losses.

At the time of writing, the Fortescue share price is trading 5.21% lower at $14.93.

Iron ore spot prices rise but futures tumble

Benchmark iron ore prices rallied strongly on Monday, rising 6.2% to US$119.31 a tonne.

According to Fastmarkets, buying activity picked up due to pre-holiday restocking activities ahead of China’s National Day which runs between 1 to 7 October.

As such, the Fortescue share price rallied 2.67% on Monday to $15.75.

On the flip side, benchmark iron ore futures on China’s Dalian Commodity Exchange, for January delivery, plunged on open this morning, diving 4.3% to around 670 yuan a tonne (US$103.7).

Chinese power curbs intensify

China is in the midst of a power supply crisis where 16 of its 31 provincial-level jurisdictions are rationing electricity after failing to make progress earlier in the year, according to the South China Morning Post.

Meanwhile, its crisis has driven up the price of energy commodities such as coal, oil and LNG, some of which are surging to all-time highs.

However, the power cuts and China’s broader carbon goals have forced smelters to curb production, reducing their demand for iron ore.

Mining.com reported that capacity utilisation rates for 247 blast furnaces at steel plants continued to ease. Utilisation rates across China stood at 82.06% last week, down from 83.74% the week earlier.

Fortescue share price snapshot

Things were looking promising for Fortescue, rallying above $16 last Thursday.

Unfortunately, the mounting pressures across China’s energy crackdown, Evergrande crisis and growth outlook have kept comeback hopes at bay.

The Fortescue share price is down 39.8% year-to-date and down 5.8% in the last 12-months.

The post Why the Fortescue (ASX:FMG) share price is down 5% today appeared first on The Motley Fool Australia.

More reading

• Can Fortescue (ASX:FMG) shares deliver long-term passive income?
• 5 things to watch on the ASX 200 on Tuesday
• Why AVZ, Flight Centre, Fortescue, & Sigma shares are storming higher
• Fortescue (ASX:FMG) share price rallies 5% as iron ore climbs
• ASX 200 (ASX:XJO) midday update: Fortescue jumps, Wesfarmers dealt takeover blow

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

from The Motley Fool Australia https://ift.tt/3kNOSHm

The S&P/ASX 200 Index (ASX: XJO) is having a pretty depressing day of trading so far this Tuesday. At the time of writing, the ASX 200 is down a nasty 1.34% to 7,285 points. But rather than dwelling on that miserly figure, let’s instead check out the ASX 200 shares that are topping the charts in terms of raw trading volume so far today, according to investing.com.

The 3 most traded ASX 200 shares so far this Tuesday

Beach Energy Ltd (ASX: BPT)

Our first ASX 200 share to check out today is energy share Beach. This Tuesday has seen a hefty 23.28 million Beach shares trade on the ASX boards so far. This is almost certainly due to the company’s substantial share price jump we have seen today.

As my Fool colleague James covered earlier this morning, Beach announced a partnership with the oil giant BP. Coupled with a sharp increase in oil prices recently, this seems to have given the company a huge boost. Beach energy shares are currently up a very pleasing 8.3% today to $1.34.

Oil Search Ltd (ASX: OSH)

Another ASX 200 energy share takes second spot today in Oil Search. Today has seen a sizeable 25.11 million OSH shares bought and sold so far. Again, we see similar factors influencing this company’s shares today.

Whilst not as enthusiastic as Beach, Oil Search is still up an impressive 5.84% today to $4.35 a share. It’s this jump that is probably behind so many shares trading thus far.

AMP Ltd (ASX: AMP)

And our final and most traded ASX 200 share today is wealth manager AMP. AMP has seen a whopping 68.3 million of its shares change owners so far today. The AMP share price has also jumped today.

It’s presently up a healthy 4.77% to $1.03 a share, almost certainly explaining the huge surge in shares trading today. There are no obvious reasons why AMP’s shares are rocketing, but my Fool colleague Ken discussed this further this morning. 

The post Here are the 3 most traded ASX 200 shares so far this Tuesday appeared first on The Motley Fool Australia.

More reading

• The healthcare sector is weighing on the ASX 200 on Tuesday
• ASX 200 energy shares are surging, crude oil to hit US$90/b by year end: analyst
• Which ASX shares are the top movers in the ASX 300 today?
• Why Beach, Collins Foods, Origin, & Tuas shares are racing higher
• Why the Oil Search (ASX:OSH) share price is surging 5% on Tuesday

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

from The Motley Fool Australia https://ift.tt/3lY5v2g

It has been a stunning first day of trade for the Li-S Energy Limited (ASX: LIS) share price on Tuesday following its IPO.

At one stage today, the battery technology company’s shares were up as high as $3.05.

When the Li-S Energy share price reached that level, it was trading 260% higher than its IPO listing price of 85 cents.

The Li-S Energy IPO

Li-S Energy shares hit the ASX boards this morning after raising $34 million via an oversubscribed IPO. This was supported by retail and well recognised institutional shareholders.

Combined with existing and escrowed shares, this gave the company a market capitalisation of $544 million upon listing. However, with the Li-S Energy share price now fetching $2.31, its market capitalisation has ballooned to approximately $1.5 billion

The company notes that following the IPO and earlier funding rounds, Li-S Energy is exceptionally well capitalised to pursue its commercial and R&D activities. It now has a pro forma cash balance of $52.9 million.

From this, $29 million is earmarked for project expenditure, with working capital of ~$16.5 million to fund potential expansion or acceleration of existing projects, the commencement of new development projects, and the pursuit and engagement in revenue generating opportunities through Original Equipment Manufacturer (OEM) collaboration and other partnerships.

What does the company do?

Li-S Energy has made key technological breakthroughs with potential to make lithium-sulphur (Li-S) batteries commercially viable by extending their cycle life. The company notes that this is creating a genuine alternative to mature lithium-ion (Li-ion) battery technology.

It isn’t hard to see why investors are excited about the technology. With a theoretical maximum energy density more than 5x that of lithium-ion, lithium-sulphur batteries have the potential to substantially extend electric vehicle (EV) ranges and device battery life.

Li-S Energy’s CEO, Dr Lee Finniear, spoke to the Motley Fool and revealed that he was pleased to see investors respond so positively to the company’s IPO today.

He commented: “It’s wonderful to see Australian investors get behind home grown technology. We’ve been delighted with the market’s response to the listing and look forward to the future growth of the company.”

Dr Finniear also notes the company’s significant market opportunity and appears optimistic that EV manufacturers will be taking note of its technology.

“With the massive growth forecast in the EV and battery market, and the demand for higher energy, lighter, safer batteries, we expect strong interest from EV manufacturers and others who are well aware of the limitations of existing lithium ion batteries,” Dr Finniear added.

All in all, the Li-S Energy share price will certainly be one to watch. If the company delivers on its aim to transform the EV battery market, it could have a very bright future ahead of it.

The post Li-S Energy (ASX:LIS) IPO booms amid excitement over huge market opportunity appeared first on The Motley Fool Australia.

More reading

• Why is the ASX All Ordinaries (ASX:XAO) struggling lately?
• Are there new Vulcan shares about to hit the ASX?
• ASX 200 Weekly Wrap: ASX puts earnings season to bed with another rise
• Woodside (ASX: WPL) share price leads ASX 200 energy sector giants on Wednesday
• ASX 200 Weekly Wrap: A mixed bag of earnings dominates ASX

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

from The Motley Fool Australia https://ift.tt/2XWuFpt

The Woolworths Group Ltd (ASX: WOW) share price is in the red this week despite the launch of its Everyday Market offering.

The retail giant’s Everyday Market – an addition to its online supermarket – was officially launched today.

It will see the supermarket’s customers able to purchase items from partner retailers such as Big W, Healthylife, and PetCulture.

However, the news hasn’t been enough to boost Woolworths’ stock out of its slump.

At the time of writing, the Woolworths share price is $38.42, 1.63% lower than its previous close and 2.2% lower than it was at the end of last week.

The retailer’s stock has also fallen 7% since this time last month.

Let’s take a closer look at the latest news from Woolworths.

Woolworths launches Everyday Market

The Woolworths share price is sinking this week despite the launch of Everyday Market.

Everyday Market will see household appliances, baby needs, toys, and pet care items added to Woolworth’s online platform and able to be purchased alongside groceries.

Items purchased through Everyday Market will be shipped by Woolworths’ partners and arrive separately from customers’ grocery orders.

While the supermarket giant officially announced the offering today, some media outlets reported on the launch yesterday.

If the new offering sounds oddly familiar, it could be because Woolworths has been piloting Everyday Market in select areas since July.

Woolworths’ general manager of Everyday Market, Lance Eerhard, commented on the new offering, saying:

We’re starting with a small group of partners and it really is just the beginning. We have ambitions to more than double our online range and offer tens of thousands of new products to our customers over time…

The response from customers during the pilot was really encouraging, with strong demand for cookware, kitchen appliances and toys. 

Woolworths share price snapshot

Despite today’s dip, the Woolworths share price has been performing well lately.

It has gained 11% since the start of 2021. It is also 16% higher than it was this time last year.

The post Woolworths (ASX:WOW) share price slumps this week despite Everyday Market launch appeared first on The Motley Fool Australia.

More reading

• Woolworths (ASX:WOW) and Coles (ASX:COL) could face a margin shock
• How do you value the Woolworths (ASX:WOW) share price?
• September hasn’t been a great month so far for the Woolworths (ASX:WOW) share price
• Why is the Woolworths (ASX:WOW) share price underperforming Coles today?
• The Endeavour (ASX:EDV) share price is lifting today

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.

from The Motley Fool Australia https://ift.tt/3EXS3UB

The Bellevue Gold Ltd (ASX: BGL) share price has been struggling over the last 30 days.

Additionally, the company’s woes have come about despite releasing only positive news to the market.  

At the time of writing, the Bellevue share price is 80 cents, 2.80% lower than its previous close and 19.70% lower than it was this time last month.

So, what’s been dragging the gold explorer’s shares down lately? Let’s take a look.

The month that’s been for Bellevue Gold

The Bellevue share price has tumbled over the last month for no initially obvious reason.

However, there are a number of happenings that might have contributed to its recent slide.

Firstly, the company underwent a $106 million capital raising in early September.

The market reacted poorly to news of the placement despite the extra cash putting the company in a position to move towards fully funded production at its Bellevue Gold Project.

Bellevue hopes to complete its project’s maiden production in the second quarter of 2023.

The Bellevue share price was placed into a trading halt as it underwent the capital raise. When it emerged, it fell 9.4%.

Additionally, the price of gold is likely weighing on the Bellevue share price.

The gold price has fallen 3.8% over the last 30 days to trade at US$1,749.50.

The dip followed from August’s rally and has brought its year-to-date loss to 8.77%, according to CNBC.

Finally, Bellevue’s stock isn’t alone in its recent suffering.

Shares in gold producing giants Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) have also fallen 10% and 14% respectively since this time last month.

Bellevue Gold share price snapshot

The month’s dip has added to Bellevue’s woes on the ASX.

Right now, the company’s share price is 32% lower than it was at the start of 2021. It has also fallen 23% since this time last year.

The post Why the Bellevue Gold (ASX:BGL) share price has fallen 20% in a month appeared first on The Motley Fool Australia.

More reading

• Why AMA, Bellevue Gold, Bendigo Bank, & BlueBet shares are falling
• Bellevue Gold (ASX:BGL) share price dives 8% after successful $106 million placement
• Why the Bellevue Gold (ASX:BGL) share price is in a trading halt

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.

from The Motley Fool Australia https://ift.tt/2Y3WKM9

August was an eventful month for the Dicker Data Ltd (ASX: DDR) share price. Being in the midst of earnings season, this was to be expected for most ASX shares.

However, the IT wholesale distributor surprised the market with the announcement of its acquisition during the month.

September has been a quieter and less fruitful month for Dicker Data shareholders. Although, one fund manager suspects there could be good things to come.

Let’s delve deeper into what Sydney-based EGP Capital thinks of the IT distributor after August.

The more the merrier

Dicker Data was a substantial contributor to the returns of EGP Capital’s Concentrated Value Fund during August. In quantitative terms, the company’s share price gained ~9.6% during the course of the month. This helped the fund outperform its benchmark with a return of 6.7%.

While the share price appreciation by the end of the month was enviable, it was down from its peak. It appeared to be a case of ‘buy the rumour and sell the news’ for the Dicker Data share price after the release of the company’s interim financial results.

Prior to releasing its results, the company’s value had ballooned by approximately 35% since the beginning of August. This considerable rise in a short timeframe followed the announcement of Dicker Data’s Exeed acquisition.

Exeed is the second largest IT distributor in New Zealand with earnings before interest, tax, depreciation, and amortisation (EBITDA) of $15 million. This means that ASX-listed Dicker Data paid roughly 4.5 times EBITDA, with a total consideration of $68 million for the company.

In its August fund update, EGP Capital highlighted the opportunity for Dicker Data shareholders.

The acquired business will almost inevitably be meaningfully more profitable in the DDR stable, removal of duplicated costs and cross-selling opportunities virtually guarantee that.

EGP Capital chief investment officer Tony Hansen

Despite this, the fund trimmed its holding in Dicker Data as it felt the share price reaction was outdone. However, Hansen went on to argue that the company is “priced for perfection” for a reason. That reason being Dicker Data’s excellent track record for delivery since its 2011 initial public offering (IPO).

Dicker Data short interest on the ASX

Another insightful point from EGP Capital was the impact of high insider ownership of Dicker Data shares.

Rightly noted, David Dicker and Fiona Brown own around 65.8% of shares on issue. As a result, the number of shares available to trade on the open market is far less. In turn, the short issue to marketable shares is around 4.6%.

EGP Capital considers the ~37 times price-to-earnings (P/E) ratio on ASX-listed Dicker Data lofty. Yet, the fund wouldn’t consider such a company to be a short target.

The post Dicker Data (ASX:DDR) to benefit from synergies: fund manager appeared first on The Motley Fool Australia.

More reading

• The Dicker Data (ASX:DDR) share price is up 80% over the last 12 months
• Dicker Data (ASX:DDR) share price continues to slide, down 21% since late August
• Which ASX shares are set to finish the week as the top movers on the ASX 300?
• Here are the top 10 ASX 200 shares on Thursday
• Why Altium, Catapult, Dicker Data, & PolyNovo shares are charging higher

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. owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/39KTqaR