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The Oil Search Ltd (ASX: OSH) share price is rising on Tuesday morning.

At the time of writing, the energy producer’s shares are up 1% to $3.99.

Why is the Oil Search share price rising?

Investors have been bidding the Oil Search share price higher today following the release of its second quarter update.

According to the release, Oil Search recorded a 4% quarter on quarter decline in total production to 6,589 mmboe. This was driven by weaker PNG LNG project production which offset increases in its oil production during the period.

However, thanks to stronger pricing, the company reported a 21.5% quarter on quarter increase in operating revenue to US$366.2 million. This brought its half year operating revenue to US$667.7 million, up 6.7% on the prior corresponding period.

This underpinned strong operating cashflows, allowing the company to reduce its debt by 5.3% over the three months to US$2,122.2 million.

FY 2021 guidance

Oil Search has reaffirmed its FY 2021 production, operating costs, and capital expenditure guidance.

Production is expected in the range of 25.55 mmboe to 28.5 mmboe. Whereas unit product costs are expected to be US$10.50 to US$11.50 per boe and capex is forecast to be in the range of US$250 million to US$350 million.

Oil Search’s Acting Chief Executive Officer, Peter Fredricson, said: “Oil Search delivered strong production in the latest quarter, supported by the safe completion of the major planned maintenance campaign at PNG LNG by the operator, ExxonMobil.”

“The macro environment helped drive an increase in revenue despite the planned rate reduction at PNG LNG during the quarter. Sales volumes were broadly similar to the first quarter due to careful inventory management and flexibility from using the spot market,” he added.

Mr Fredricson concluded: “While the COVID-19 outbreak continues to impact Papua New Guinea, strict operating procedures and logistical measures have ensured continued safe and reliable production with no impacts to Oil Search or ExxonMobil operated production facilities. Pleasingly, there has been strong uptake of the COVID-19 vaccine in the Port Moresby office, which has allowed nearly all staff to return to work there.”

The post Oil Search (ASX:OSH) share price rises on solid Q2 update appeared first on The Motley Fool Australia.

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• Oil Search (ASX:OSH) share price falls as boss demands bigger ‘diamond’
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• Oil Search (ASX:OSH) share price on watch — board tipped to fight merger
• Santos (ASX:STO) share price jumps on record quarterly sales

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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Nine’s Late News on Monday night to discuss the cracking results from Lynas Rare Earths Ltd (ASX: LYC), high hopes for BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), A2 Milk Company Ltd (ASX: A2M)’s Chinese challenges and an ASX debut for Best & Less Group Holdings Ltd (ASX: BST) shares.

The post Lynas share price soars, BHP and Rio on watch, A2 on the naughty list. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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• ASX 200 flat, Lynas soars, City Chic jumps
• Here are 3 ASX 200 shares flying around the share market today
• What to expect from the ASX 200 during earnings season
• Why a2 Milk, Cann, Flight Centre, & GPT shares are tumbling lower
• Here’s why the Bubs (ASX:BUB) share price is down 4% on Monday

Motley Fool contributor Scott Phillips owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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 Woolworths Group Ltd (ASX: WOW) share price has been in fine form so far this month, lifting by around 7%. This comes after the retail conglomerate last updated the ASX with its demerger of Endeavour Group Ltd (ASX: EDV) in late June.

At Monday’s market close, Woolworths shares ended the day slightly down 0.51% to $39.32. However, it’s worth noting that the company’s share price reached a record high of $39.63 yesterday.

Let’s take a closer look at what’s been helping boost the Woolworths share price in recent weeks.

What’s impacting the Woolworths share price?

Back in 2019, Woolworths announced that it planned to demerge from its 85.4% holding in Endeavour. Although the restructure was completed in 2020, COVID-19 postponed the proposer demerger until 2021.

Woolworths stated that the reason for the split was to maximise its shareholder value over time. In addition, this would also create a simpler operating model which focuses on food and everyday needs.

As the retail conglomerate focuses on its core business, COVID-19 has also helped boost the company’s share price. Despite restrictions being enforced by state governments, consumers still need to buy food and supplies.

During last year’s lockdown in Australia, panic buying led the company to experience a significant increase in sales. This so-called “pantry stocking” translated to bumper profits for Woolworths in its H1 FY21 result.

It’s possible that with half the country currently in lockdown and uncertainty around an endpoint, the company is revisiting the events of 2020.

Broker updates

Since announcing the completion of its divestment, two brokers cut their 12-month price target on Woolworths shares.

The first, Goldman Sachs, reduced its rating by 15% to $36.80 but placed a “hold” on the supermarket giant’s shares in a report released on 28 June. The multinational investment firm noted several key upside possibilities. They included:

• Industry growth and operating leverage could improve as a result of Increasing product price inflation;
• Divestment of Big W leading to potential profits;
• Increase in its wholesale business to convenience stores; and
• Sustaining market share growth.

On the other hand, Goldman Sachs also made mention of key downside risks, noting:

• Increased competition against existing competitors;
• Operating deleverage from physical store sales declines;
• Longer than expected recovery in population growth; and
• Poor management of the scaling back last year’s elevated costs.

Following suit on 5 July, Morgan Stanley decreased its outlook on Woolworths shares, citing a similar price target of $36.50, down 17%.

Woolworths share price summary

It’s been a strong 12 months for Woolworths shares, which have jumped 15% to reach a record high of $39.63 yesterday. While it’s anyone’s guess where the company’s shares will go from here, Woolworths appears to be proving its resilience in the face of the pandemic.

Woolworths presides a market capitalisation of roughly $49.85 billion, with more than 1.2 billion shares on its registry.

The post July has been a great month for the Woolworths (ASX:WOW) share price appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: Just like that… ASX back to record highs
• How the Woolworths (ASX:WOW) share price has performed since Endeavour’s demerger
• The other side of lockdown – ASX supermarket shares are flying
• Woolworths (ASX:WOW) store closes after staff contract COVID-19
• What is the outlook for the Woolworths (ASX:WOW) share price?

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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The Vulcan Energy Resources Ltd (ASX: VUL) share price is on watch this morning after the company announced its spin-off’s initial public offer (IPO) has been heavily oversubscribed.

The lithium producer’s spin-off, Kuniko Limited, will be listed on the ASX under the ticker KNI.

It will take over Vulcan’s non-core, battery metal projects. As a result, Kuniko will be a zero-carbon copper, nickel, and cobalt producer with assets in Scandinavia.

Right now, the Vulcan share price is $8.91.

Let’s take a closer look at today’s news from Vulcan.

Interest in Kuniko booms

All eyes will be on the Vulcan share price this morning to see how the market reacts to news of Kuniko’s popularity.

According to Vulcan, both offers within Kuniko’s prospectus have been oversubscribed.

The first offer allowed interested parties to get their hands on one of 12.5 million shares in Kuniko for 20 cents apiece.

Vulcan shareholders also had the opportunity to grab approximately 26.93 million Kuniko shares at 20 cents apiece through a 1:4 pro rata priority offer.

The company first announced the spin-off in April. Then, the Vulcan share price dipped on the back of the news.

Kuniko’s prospectus offers have raised $7.88 million for the company’s activities. Kuniko expects to list on the ASX sometime around 23 August.

After listing, Kuniko will have around 59.4 million fully diluted shares outstanding and, according to Vulcan’s latest announcement, more than 2000 shareholders. It expects to have a fully diluted market capitalisation of approximately $11.8 million.

At its current share price, Vulcan has a market capitalisation of around $969 million.

Kuniko’s directors didn’t include financial guidance in the company’s prospectus. Its prospectus said its operations are uncertain and any guidance would be too broad to be useful.

Vulcan share price snapshot

The Vulcan’s recent performance on the ASX has been superb.

Vulcan shares are currently trading for 222% more than they were at the start of 2021. They have also gained a whopping 1,682% since this time last year.

The post Vulcan (ASX:VUL) share price on watch following spin-off IPO update appeared first on The Motley Fool Australia.

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• Short-lived $10 party for the Vulcan Energy (ASX:VUL) share price
• What these 2 best performing ASX shares have in common….and what to expect next

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 QBE Insurance Group Ltd (ASX: QBE) share price continued its positive run yesterday, up another 1.41% to $10.78.

This means the insurance group’s shares are now up 27% in 2021, reflecting optimistic investor sentiment.

With no news out of the company, we take a closer look at what could be pushing QBE shares higher.

QBE in recovery mode?

A possible catalyst for the rise in QBE shares this year could be the release of the company’s annual general meeting (AGM) address to shareholders.

During late April, QBE revealed the global economic outlook has improved, with growth expected to be at 6% this calendar year.

This is a stark contrast to 2020, during which COVID-19, along with higher-than-normal catastrophe events around the world, impacted the business. QBE reported a disappointing statutory loss of US$1.5 billion for FY20.

However, fast forward to FY21, the company stated that pricing momentum has accelerated, particularly in the northern hemisphere. QBE improved gross written premium (GWP) by 28% in the first quarter, compared to 23% in Q1 FY20 on a constant-currency basis. The increase reflected continued growth in select areas of QBE’s global portfolio coupled with a substantial uplift in crop premiums.

Pleasingly, the company reported that the overall first-quarter combined operating ratio is in line with expectations. It further noted that the net cost of COVID-19 remains unchanged.

In addition, QBE updated investors earlier this month in respect to a representative proceeding from Strand Fitness Pty Ltd “and others”.

The allegations state that QBE Insurance Australia denied cover to certain policyholders during COVID-19 for losses from business interruption. QBE said the allegations will be defended, and that business interruption claims remain robust. Despite the reassurance, the QBE share price fell by 1.7% on the day of the update.

What do the brokers think?

A broker note from Macquarie two weeks ago advised the broker was raising its price target by 1% to $10.10 for QBE shares. Goldman Sachs and Citi followed suit but provided different outlooks.

Both brokers increased their rating on QBE shares, adding 4.3% to $12.49, and 2.9% to $12.35, respectively. Based on the last closing price of the QBE share price, this implies an upside of around 15% to 16%.

QBE share price snapshot

QBE faced a turbulent couple of months during early 2021, with the company’s shares hitting a 52-week low of $7.88. Since then, the QBE share price has recovered to post a healthy gain of 27%. In comparison, the S&P/ASX 200 Financials Index (ASX: XFJ) is up roughly 18% year to date.

QBE commands a market capitalisation of around $15.9 billion, making it the 28th largest company on the ASX.

The post Here’s why the QBE (ASX:QBE) share price is up 27% so far in 2021 appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, The Montgomery Fund portfolio manager Joseph Kim tells how he sees value buys across many ASX sectors.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Joseph Kim: We’re a well-diversified quality portfolio with a value lens.

MF: What are your two biggest holdings?

JK: It’s Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) at the moment.

MF: What are your two biggest active holdings?

JK: Our biggest active holdings at the moment are Sydney Airport Holdings Pty Ltd (ASX: SYD) and Reliance Worldwide Corporation Ltd (ASX: RWC).

So [Reliance] is a global producer of plumbing fixtures. Their main market is in the US but they also have operations in Australia and Europe. Their signature product is something called push-to-connect. When you have a pipe burst, you can quickly fix it — you’ve got this brass fitting, you put it in between and you click both ends of the pipe together. And you’ve got a seamless waterproof fixture, which doesn’t require a plumber to come in and solder or crimp.

In the US, you can do your own plumbing… They’ve got this dominant market position — it’s called SharkBite. And the brand is synonymous with this push-to-connect product. 

There’s enormous strength in that brand name. And the penetration is still fairly low. I think they’re about 15% to 20% penetration relative to solder, relative to crimp. You have this enormous market share potential over time because the plumbers use it and they recognise the time-saving benefits. 

MF: What do you think of Sydney Airport after the recent acquisition offer?

JK: If you look at where the share price is trading, it’s trading below the bid price. I think without that bid there… it’s likely that the share price will be lower than where it is at the moment. 

So you’ve got to take that into account, but I think there’s an expectation that a lot of these big super funds have longer term time horizons. They’re not investing for 6 to 12 months, they’re investing for 20 to 30 years and you’re matching your liability stream. If you’re a super fund, it’s not about, “Well, what’s my percentage return over a period of time?” You have to pay out your super liabilities and you’re duration matching.

In our game, you’ve got this moving benchmark that you’re trying to beat — so sometimes you have to think about… what’s an investment idea that’s going to win in the short term. 

But these guys are like, “Well, in 10 years time, I’m going to have this liability. And what’s a dependable income stream that I can bank upon to provide that income stream?” 

So you’ve got this difference in duration. That’s all to say, look, there’s an expectation that there’ll be a higher bid, I would say. We’ll see how that plays out. 

Obviously, if there’s no higher bid, then it’s likely that the share price will fall from where it’s at, I’m not sure how much. But it’s still an extremely quality asset and I think globally, if we look at the global experience with COVID generally, there’s an acceptance that we’ll get out of this with widespread vaccination. From that perspective, there’s clear long-term value there.

Hottest ASX shares

MF: What are the 2 best stock buys right now?

JK: The two best buys? So I actually struggled with this. One of them started really well, that’s the problem.

We bought Resmed CDI (ASX: RMD) before this wider Koninklijke Philips NV recall. So I’m not sure how much further upside there is in the short-term. 

We got in there, the wider recall came out and so we’ve done very well out of that. Now, clearly, the market is well aware of those. 

I’m not saying we’re going to be selling Resmed because we think there’s this enormous opportunity for them to grab a 20% market share going forward. I think that’s what most people expect. It’s a quality business, we want to see the earnings come through and if they deliver and grab even more share then it’s going to be even more valuable. 

So one of the companies I wrote about is a little gold mine called Capricorn Metals Ltd (ASX: CMM). Since I wrote about it, it’s actually come off a little bit, but again, this is one of those 6, 12-month investment horizons where they’re just commissioning this new mine in WA called Karlawinda. 

The management team is top-notch. So the guys are ex-Regis Resources Limited (ASX: RRL). If you look at what Regis did back in 2010 to 2013, 2014, they did a tremendous job generating shareholder value. Generally, there were lower grade gold deposits, but they’re very low-cost operators. It’s very cost-focused, it’s a huge amount of skin in the game.

These guys have done it in the past. It’s a relatively low-risk project. It’s not so gold price-dependent, but in terms of the investment thesis, it’s very much a re-rate story because once they’re fully up and running, it’ll look very cheap. It’ll generate significant cash flows.

MF: Because Resmed has already gone up, is there another ‘buy’ you’d like to mention?

JK: Look, there’s one I really like, this little business called Codan Limited (ASX: CDA). I’m a big fan of that one. Now it’s waiting for the next catalyst. 

Let’s say it’s got a little bit more integration risk because they bought a couple of businesses in the last 6 months. But if they can get those acquisitions right, get them humming, yeah, there’s a small upside. 

They’ve got this metal detection division, which is growing extremely well. They’ve seen [a] pickup in volume, they’ve been able to push through price increases and they’re the number 1 player. Their products have better reviews than competitors. They’ve just gone into the recreational side of things. So more coins, et cetera. 

They’re doing really well. The communications division, which has generally been a bit small, they’ve just gone out and bought 2 businesses to complement their existing business at a reasonable price — which means that if they execute on some of their targets, then you’re looking at a much bigger, more valuable business in the next 6 to 12 months. 

We won’t know for a little while because they’re just bedding those businesses down. But it’s one that I think is definitely worth watching.

The post Plumbing, health, tech: 3 ASX shares to buy for instant diversification appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
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• 2 excellent ASX 200 blue chip shares named as buys
• What can Commonwealth Bank (ASX:CBA) shareholders expect from buybacks in 2021?
• How do you value the Sydney Airport (ASX:SYD) share price?

Motley Fool contributor Tony Yoo owns shares of Sydney Airport Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Reliance Worldwide Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended Reliance Worldwide Corporation Limited and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price has had a poor run over the last few years, but some Telstra shareholders continue to hold the ASX 200 blue chip in the belief its famous dividends are earning sweet profit.

5 years ago today, the Telstra share price was trading at $5.77. Right now, it’s $3.74.

That’s 35% lower and means someone who bought a single Telstra share in 2016 would be $2.03 out of pocket today.

However, many believe that Telstra’s dividends offset any potential loss its share price might experience. But has that been proven over the past 5 years?

Thankfully, The Motley Fool has done the math to find out if Telstra shareholders are sitting in the green despite the Telstra share price being solidly in the red over 5 years.

Before we start, it’s worth mentioning many investors see value in Telstra’s dividends regardless of their value for money because of franking credits. In some cases, franking credits can reduce the amount of tax an investor pays.

Historically, Telstra’s dividends have always been fully franked.

Have Telstra’s dividends paid off?

Telstra shares are known for their dividends, and over the years they’ve been relatively reliable.

In fact, here’s a list of all the dividends Telstra has given its shareholders since the end of the 2016 financial year:

Dividend payment date	Value of dividend
September 2016	15.5 cents per share
March 2017	15.5 cents per share
September 2017	15.5 cents per share
March 2018	11 cents per share
September 2018	11 cents per share
March 2019	8 cents per share
September 2019	8 cents per share
March 2020	8 cents per share
September 2020	8 cents per share
March 2021	8 cents per share

The math:

So, here’s the answer to the age-old (well, five-year-old) question of whether it pays to keep Telstra shares for their dividends.

If an investor put $10,000 into Telstra shares on 26 July 2016, their holding would be worth around $6481 today. Not a great start…

However, they would have seen $1.085 worth of dividends per share over the life of their holding.

5 years’ worth of Telstra dividends (on a $10,000 investment made 5 years ago today) would total roughly $1,880 – not quite the $3,519 this poor fictional investor has lost on their original investment.

But not all hope is lost. Let’s not forget that Telstra plans to return half the proceeds of a $2.8 billion sale to shareholders this financial year.

Telstra share price snapshot

Despite being in the red long term, the Telstra share price is, over the short term, in the green.

Right now, it is around 24% higher than it was at the start of 2021. It has also gained around 11% since this time last year.

The post The Telstra (ASX:TLS) share price is down 35% in 5 years. But have the dividends paid off? appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: Just like that… ASX back to record highs
• Own Telstra (ASX:TLS) shares? Here’s what to look for during reporting season
• Here are 3 ASX 200 shares flying around the markets today
• Top broker names 2 ASX shares for retirees
• Could the Telstra (ASX:TLS) share price be a buy for dividends?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation 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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Insurance Australia Group Ltd (ASX: IAG) shares have been picking up momentum in recent days. Shares in the Aussie insurance company climbed 2.2% higher on Monday and are up 5.9% in the last 5 days.

August is looming large right now, and that means the full-year reporting season is nearly upon us. Here are a few things to watch out for if you’re an IAG investor.

What reporting season could mean for IAG shares

IAG is the largest general insurance company in Australia and New Zealand. That means investors will be wanting to see signs that are good for the general insurance industry, such as higher premiums, low likelihood of payouts and a clear future strategy.

It’s worth noting that IAG has already provided its preliminary FY2021 results to the market. IAG shares climbed higher last week following the financial update ahead of the group’s full-year results.

The Aussie insurer flagged a statutory net loss but claimed many “unusual items”. IAG expects to report gross written premium (GWP) growth of 3.8% with net earned premium up 1.5% on FY2020 to $7,473 million.

The insurer’s underlying insurance margin is expected to fall 130 basis points to 14.7% with a $427 million reported net loss, down from a $435 million net profit in FY2020.

However, managing director and CEO Nick Hawkins said the financial results are “sound and within expectations”. COVID-19, additional expenses from a new operating model and losses in New Zealand were all cited as temporary factors weighing on the group’s performance.

IAG shares will certainly be worth watching in August. The group will release its full-year audited results on 11 August 2021. It may also be worth keeping an eye on other Aussie insurance results for signs of deteriorating conditions such as higher average claims or net natural perils claim costs.

Suncorp Group Ltd (ASX: SUN) and QBE Insurance Group Ltd (ASX: QBE) are two that spring to mind. Reviewing a cross-section of the Aussie insurance market could help provide insight into the prospects for IAG shares in the year ahead. Analysing financial results and qualitative commentary across these three entities could provide a broader perspective of how the industry is faring going into FY2022.

Foolish takeaway

IAG shares have struggled in the last 12 months, edging 0.4% lower to $5.02 per share. However, IAG has already flagged an increase in FY2022 underlying margin which may have investors hoping for a good year ahead.

Investors will be watching the IAG full-year result commentary closely as well as results from fellow Aussie insurers in August.

The post Own IAG (ASX:IAG) shares? Here’s what to look for during reporting season appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• ASX 200 midday update: Crown-Star merger talks end, Evolution jumps
• IAG (ASX:IAG) share price drops on FY 2021 update and guidance
• IAG (ASX:IAG) share price climbs on new leadership appointment
• Here’s why the IAG (ASX:IAG) share price is down 7% this last month

Motley Fool contributor Ken Hall 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 Insurance Australia 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 small end of the Australian share market is home to a number of companies with the potential to grow materially in the future.

Two investors might want to get better acquainted with are listed below. Here’s why brokers rate them highly:

Adore Beauty Group Limited (ASX: ABY)

The first small cap ASX share to look at is Adore Beauty. It is Australia’s leading online beauty retailer.

Adore Beauty has been growing strongly during FY 2021 thanks to the shift online. In fact, things have been going so well it recently revealed that it expects to report full year revenue growth of 43% to 47%.

And while its growth is likely to moderate in FY 2022 as its cycles significantly strong sales growth during the pandemic, its future remains very positive. This is thanks to its leadership position and the structural shift online for beauty sales.

It is worth noting that online penetration rates for beauty products are still much lower than other categories and in comparison to other Western markets.

UBS is a fan of Adore Beauty. Its analysts currently have a buy rating and $5.60 price target on the company’s shares.

Universal Store Holdings Limited (ASX: UNI)

Another small cap ASX share to look at is Universal Store. It is a fashion retailer delivering an ever-changing and carefully curated selection of on-trend products.

Thanks to its strong market position and a favourable redirection in consumer spending, Universal Store has been a very positive performer this year. For example, it delivered a 23.3% increase in half year sales to $118 million and a 63.6% increase in underlying net profit after tax to $21.1 million.

It then followed this up with an even stronger performance in the third quarter. Universal Store reported a 39.6% increase in quarterly sales, putting it in a position to deliver a very strong full year result in August.

Macquarie is positive on the company. Earlier this month it initiated coverage on the company with an outperform rating and $8.60 price target.

The post 2 small cap ASX shares brokers rate as buys appeared first on The Motley Fool Australia.

More reading

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• Could the Youfoodz (ASX: YFZ) takeover offer indicate a bubble?
• 3 growing small cap ASX shares to watch
• Top brokers name 3 ASX shares to buy today

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 recommended Adore Beauty Group Limited. 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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There are a small number of ASX shares that many brokers like at the same time.

It might indicate that there is an opportunity with these businesses because brokers are constantly on the lookout for ideas. If they all like a company, then perhaps it’s an obvious idea. Or maybe they’re all wrong at the same time. Only time will tell.

Here are two of those businesses:

Credit Corp Group Limited (ASX: CCP)

Credit Corp is a large debt collector in Australia and it has quickly-growing US operations as well.

It’s currently rated as a buy by at least three brokers. One of the brokers that likes Credit Corp is Morgans, which has a price target of $33.45 on the business. That suggests the Credit Corp share price could rise by more than 15% over the next 12 months.

The broker is expecting a strong profit result when Credit Corp reveals its FY21 report. It also thinks there is more PDL (purchased debt ledger) growth to come over the next 12 months. The US presents a good chance to increase its penetration in that market.

At the end of April 2021, the business gave an update. It suggested that it’s expecting a return to its pre-COVID growth trajectory of net profit and with its return on assets (ROA).

This growth could be delivered despite challenging debt buying market conditions, with a temporary reduction in market sale volumes of around 50% in both the domestic markets and the US.

However, at the time of the update, there were early indications of a recovery in sales volumes for the ASX share. A major Australian bank’s forward flow volume was up 50% on the run rate in April. There had also been a strong US credit growth rebound.

Credit Corp says that it has the capacity to increase investment as opportunities arise with cash and undrawn lines of around $400 million. It’s already the sixth largest debt buyer in the US market.

Current FY21 net profit guidance is for a range of between $85 million to $90 million.

Monash IVF Group Ltd (ASX: MVF)

Monash IVF is another ASX share that is liked by several brokers. It’s a business that specialises in fertility treatments. It is rated as a buy by the broker Macquarie Group Ltd (ASX: MQG) which has a price target of $1 on the business. That suggests it could rise by around 15% over the next 12 months, if Macquarie is right.

Macquarie thinks things could turn around for Monash with more fertility activity expected. Research and development spending could help it achieve better success rates over time.

In the FY21 half-year result, Monash IVF said that it made $14.6 million of statutory profit, up 78.5% year on year. Underlying net profit was $12 million, up 32%.

The first six months of FY21 saw Australian stimulated cycle growth of 27.4% thanks to the pent-up demand that was created during the temporary suspension of services in the final quarter of FY21. In the second quarter it saw cycle growth of 33.1% because of national industry growth of 20.6% and market share gains in Victoria, NSW and Queensland.

Monash IVF also said that solid progress is being made in southeast Asia with its expansion plans. There was 6.6% growth of Kuala Lumpur stimulated cycles.

The ASX share recommenced dividends, with improved operating cashflow generation. Management also said that the balance sheet is well positioned for future organic growth. The balance sheet can support strategic infrastructure projects according to the company.

The post 2 ASX shares that many brokers think could be buys 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. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and 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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