As we approach the start of August, keen-eyed investors will be watching out for one thing: reporting season. August means many ASX companies report their half-year or full-year earnings, and National Australia Bank Ltd (ASX: NAB) shares will be on many investors’ radars.
Notably, NAB will actually not report its results until 9 November. That means shareholders have a long wait for further updates from the company itself compared to other investors. If you’re hungry for more info next month, here are a few things to watch out for in August that may impact NAB shares.
What factors could influence NAB shares in the August reporting season?
Perhaps the most obvious thing to watch is NAB’s own third-quarter trading update. NAB shares could be on the move following the company’s update scheduled for 12 August. However, there are other items that are also worth keeping an eye on next month.
Chief among them are the results of NAB’s fellow banks. Of particular note will be the Commonwealth Bank of Australia Ltd (ASX: CBA) full-year result on 11 August. Given the size and strength of the big four in Australia’s banking market, CBA’s results release will be hotly anticipated.
This could help investors work out how the banking sector, in general, has performed. It could also help inform expectations for net interest margins (NIMs), cash profits and loan impairments. On top of the purely financial information, commentary in the full-year results can provide an indication of what bank bosses are expecting in FY2022.
For many NAB shareholders, the CBA full-year result will likely be pencilled in on their calendars. CBA isn’t the only bank to be reporting earnings, however. Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Ltd(ASX: BOQ) results could provide an insight into how regional Australia is doing right now.
What about the residential mortgage market?
The housing market is on the minds of many Australians, but particularly those who own NAB shares. NAB has a significant proportion of the Australian residential mortgage market with $111.4 billion in risk-weighted residential mortgage assets as at 31 March 2021.
Therefore, for those who own NAB shares, one thing to keep an eye on could be Genworth Mortgage Insurance Australia Ltd (ASX: GMA). Genworth is one of two providers of lenders’ mortgage insurance (LMI) on home loans where deposits are less than 20%. That means Genworth generally does well when everyone pays for LMI with no defaults actually requiring the insurance payout to the lender.
A strong Genworth result could provide an indication of the residential mortgage market’s health right now. That would be worth watching if you’ve got an interest in NAB shares given the large proportion of residential mortgages held by the bank.
Before you consider NAB, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and NAB wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
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 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 Commonwealth Bank of Australia(ASX: CBA) share price has been a very positive performer in 2021.
Since the start of the year, CBA shares have risen a sizeable 18%.
So, with its full year results just around the corner, expectations certainly are high for a strong report next month.
What to expect from CBA during reporting season
Investors have been bidding CBA shares higher this year in anticipation of a strong result next month. But just how strong is it expected to be?
According to a recent note out of Bell Potter, its analysts are forecasting a cash net profit after tax of $8.51 billion for the 12 months ending 30 June. This represents a 16.5% increase from a cash net profit after tax of $7.3 billion a year earlier.
Bell Potter also notes that this will mean its second half cash net profit has grown 19% over the first half of FY 2021.
The broker commented: “Our cash NPAT estimates on a continuing basis are increased by up to 20% mainly due to changes in loan impairment expenses (and with this decreasing to 6% in the following year). While we were caught off-guard by the speed of recovery in mainstream banking, we still expect operating income and operating expense growth to result in a 2-3% “Jaws” in the long term.”
The CBA dividend
Also giving CBA shares a boost this year has been optimism over its dividend. Especially given its improved performance and APRA removing dividend restrictions.
The note reveals that Bell Potter expects the CBA dividend to come in at a fully franked $3.34 per share in FY 2021. This comprises a final dividend of $1.84 cents per share and its interim dividend of $1.50 per share.
Based on where CBA shares are currently trading, this will mean a fully franked 3.35% dividend yield.
Are CBA shares in the buy zone?
Bell Potter currently has a hold rating and CBA share price target of $105.00.
Its analysts explained: “The price target is increased by $15.00 to $105.00 as such. CBA’s better dividend prospects in the medium term (yield reaching back to around 4.0% by 2023) and solid recovery in consumer, business and institutional banking may be intact but we have decided to lower the rating from Buy to Hold in the meantime.”
Before you consider CBA, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and CBA wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
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 S&P/ASX 200 Index (ASX: XJO) has decisively shaken off the malaise of the previous week to post a bumper week of gains, pushing the ASX 200 to close last week at a record high level. It was a dramatic week of trading on the ASX 200 last week, with the flagship index posting a gain of 0.6%, enough to push it to close at a record high of 7,394.4 points.
The ASX 200 has, of course, seen higher levels than this, hitting more than 7,400 points last month for the first time ever. Even so, Friday’s close represents the highest level the ASX 200 has ever closed at. Semantics, perhaps, but still worthy of note.
So what happened on the share market last week that resulted in such an occurrence? Well, solid performances from most ASX 200 blue chips, as well as in the tech sector, all pulled it together.
ASX 200 blue chips rise, miners fall
The major ASX banks provided the foundation, with Commonwealth Bank of Australia(ASX: CBA) and Australia and New Zealand Banking Group Ltd(ASX: ANZ) the standouts, both gaining 0.95%.
Wesfarmers Ltd(ASX: WES), Coles Group Ltd(ASX: COL) and Woolworths Group Ltd(ASX: WOW) helped to step on the gas. Each of these companies managed gains of more than 3% last week, with Wesfarmers shares rising by an impressive 4.75% to close at a new all-time high of $61.93 per share on Friday. Woolies shares also hit a new post-demerger high of their own on Friday.
But perhaps the biggest contributors to the ASX 200’s heights last week were healthcare shares. This sector was up big across the board last week. CSL Limited(ASX: CSL) was a standout performer, putting on almost 6%. But other ASX healthcare shares like Cochlear Limited(ASX: COH), Sonic Healthcare Limited(ASX: SHL) and Ramsay Health Care Limited(ASX: RHC) also performed well.
As it turns out, the only major detractor for the ASX last week was the resources sector. After rising to record highs in the week prior, the big miners like BHP Group Ltd(ASX: BHP), Rio Tinto Limited(ASX: RIO) and Fortescue Metals Group Limited(ASX: FMG) went backwards last week. Rio shares were down more than 2.7% over the week that was, while BHP and Fortescue were both down by more than 1%.
How did the markets end the week?
Rather well, as you might have guessed. Monday and Tuesday both saw the ASX 200 start the week on the wrong foot, with back-to-back losses of 0.85% and 0.46%, respectively. But it was all upside from there. Wednesday turned the ship around with a gain of 0.78%. This was followed up with further gains of 1.06% on Thursday and 0.11% on Friday. In the end, the ASX 200 stared out at 7,348.1 points and finished up at 7,394.4 points for an overall gain of 0.63% for the week.
Meanwhile, the All Ordinaries Index (ASX: XAO) also enjoyed a week in the sun. The All Ords started off at 7,630.7 points and finished up at 7,670.9 points – placing its gains at 0.53% for the week.
Which ASX 200 shares were the biggest winners and losers?
It’s now Foolish gossip pages time, where we scandalously peek at the ASX 200’s biggest winners and poorest losers of the week. So put the kettle on as we, as always, start with the losers:
As you can see, ASX 200 gold miner Silver Lake (a rather misleading name) was the ASX’s wooden spooner last week, with a loss of 11.3%. Investors can largely thank a quarterly update released on Friday last week for this loss. This update reported lower gold sales over the quarter, which might have been what spooked investors.
ASX tech share Altium also had a clanger last week, shedding close to 10%. This downwards move comes after Altium put an end to takeover talks with the US company Autodesk. Autodesk had upped its offer for Altium from $38.50 to $40 per share, but in the end, the circuit board design software company said no cigar.
Silver Lake’s fellow gold digger Evolution Mining was also in the wars last week. This seemed to be a response to a number of broker downgrades that hit Evolution shares over the week. Things would have been a lot worse for this gold miner if it weren’t for the near-4.5% bump it got on Friday. This came after Evolution announced it would be buying some mining assets from another gold miner in Northern Star Resources Ltd(ASX: NST).
Finally, we had the embattled casino operator Crown Resorts. Crown shares tanked after rival Star Entertainment Group Ltd(ASX: SGR) revealed it was no longer interested in a merger, at least for now.
Now with the losers out of the way, let’s check out the ASX 200 winner’s from last week:
Last week’s ASX 200 winner was healthcare company Polynovo. Investors were clambering to pick up shares of this company last week, despite no major news or announcements out. Until the end of the previous week, Polynovo had been on quite a long slide, so perhaps some bargain-hunting investors finally saw some value.
Miner Iluka was also on form last week, rising 10%. In this case, it seems a quarterly update was the source of investors’ optimism here. Iluka announced a 75% jump in revenues for the quarter on Thursday, alongside a 71% surge in zircon production.
The aforementioned tech share Nuix was our third ASX 200 winner last week, despite no major news or announcements. Like Polynovo, Nuix had previously been exploring new share price depths, so this might have been the result of some value-driven buying here.
Finally, we had engineering company CIMIC. In this case, it was a set of half-yearly results that seemed to catch eyes last week. The company reported rises in both revenues and profits for the 6 months to 30 June 2021. On the former, the company managed an increase of 10.6%. Clearly, more than one investor was impressed.
A wrap of the ASX 200 blue-chip shares
Before we… wrap things up, here is a look at how the ASX 200’s blue-chip shares are looking as we start the last trading week of July:
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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, Ramsay Health Care Limited, and Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Altium, CSL Ltd., Cochlear Ltd., POLYNOVO FPO, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Altium, COLESGROUP DEF SET, Macquarie Group Limited, Telstra Corporation Limited, Wesfarmers Limited, and Xero. The Motley Fool Australia has recommended Cochlear Ltd., Ramsay Health Care Limited, and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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If you’re a fan of mid cap shares then you’re in luck. Right now, there are a number of mid caps trading on the ASX that could have a lot of potential.
Two which could be worth keeping a close eye on are listed below. Here’s what you need to know about them:
The first mid cap ASX growth share to watch is Audinate. It is a digital audio-visual networking technologies provider best known for its innovative Dante audio over IP networking solution. This solution is used widely across the professional live sound, commercial installation, and recording industries globally.
Demand for Dante softened during the height of the pandemic but has rebounded very strongly. For example, it recently released an update which revealed full year FY 2021 revenue of US$25 million. This was up 23% on the prior corresponding period.
Audinate also revealed a record backlog of committed sales orders for FY 2022. This bodes well for its growth in the new financial year. This should be supported by its recent expansion into the video market.
Another mid cap ASX growth share to watch is Dubber. It is a software company that provides businesses with a scalable call recording service. This service has been adopted as core network infrastructure by multiple global leading telecommunications carriers across multiple continents.
Dubber’s cloud-based technology allows businesses to record, manage, and analyse their phone calls and communications. They can even use artificial intelligence to analyse the emotions and stress levels of a caller.
The company has been experiencing growing demand for its offering, which is underpinning very strong growth in active customers and revenue. For example, during third quarter of FY 2021, the company revealed a 158% increase in annualised recurring revenue (ARR) to $34 million. This is still only a small slice of its overall market opportunity estimated to be 100 million users.
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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 AUDINATEGL FPO and Dubber Corporation. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and Dubber Corporation. 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 will be one to watch this morning.
This follows the release of an announcement revealing changes to its advice business model.
Why is the AMP share price on watch?
The AMP share price could be on the move today after it revealed a new contemporary advice service model.
According to the release, AMP is introducing a new service model with its aligned advice network, marking a new era for financial advice at the company.
AMP’s new model further prioritises its clients and will provide services to advisers which support the delivery of quality advice, improve practice efficiency, and help advisers grow their businesses.
Developed in collaboration with AMP adviser associations, the new model will be progressively introduced, giving advisers increased choice, flexibility, and transparency with how they partner with AMP and how they continue to operate their business.
Three key components
The contemporary approach includes three key components:
A new service proposition and fee model for advice practices, which has been competitively benchmarked against the industry and reflects the services offered. It includes a set of core services as well as user pay services. AMP intends to phase in the new fee model from 1 January 2022 to 1 January 2023.
The release of institutional ownership of clients from AMP Financial Planning to advisers, with the ability to transfer clients out of the AMP network. This change will take effect from 1 January 2022.
The conclusion of client register buy back arrangements from 31 December 2021, with practice principals able to take advantage of current terms remaining in place until this date.
Management commentary
AMP’s Managing Director of Advice, Matt Lawler, believes the changes are major step in the transformation of AMP’s advice business.
He said: “These changes represent a new value proposition to our financial advisers, one that is centred around us being a professional services provider to quality financial advice practices. Today’s announcement is another major step in the transformation of AMP’s advice business. It is a new era for financial advice at AMP.”
“Over the past few years we have worked with our financial adviser network to complete significant reforms, build robust and modern processes and are strengthening our compliance regime. With a lot of that hard work now embedded, it is the right time for AMP and our financial advisers to look to the future.”
“AMP is committed to the future of advice and building a stronger financial advice profession together. Importantly these changes recognise that the financial advisers should be in control of their business. It is their business, it is their clients and with our support we are determined to be working with our financial advisers long into the future,” he concluded.
The AMP share price is down 30% since the start of the year.
Before you consider AMP, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and AMP wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
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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“Investors can expect more updates on the acquisition when A2 Milk releases its full-year results in August,” said The Motley Fool’s Zach Bristow this week.
The Mataura acquisition has led a mini-revival of A2 Milk shares in recent weeks. The stock is up more than 10.7% in the past month.
A2’s daigou channel numbers
One of the big reasons for A2 Milk’s fall from grace is the complete collapse of the daigou sales channel after COVID-19 arrived last year.
International travel bans had killed off these private exporters from getting A2 Milk baby formula into the lucrative Chinese market.
“While not without near-term risks as supply chains stabilise, at its core we see A2M as a business that, once (margin) is consolidated, has baseline revenue of NZ$1.4 billion to $1.5 billion and EBITDA of NZ$300m,” he said in a memo to clients.
“We do not see FY21 earnings as reflective of the returns the business can generate in the medium term.”
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Motley Fool contributor Tony Yoo 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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Pushpay is a leading business in the electronic donation space. The main client base is large and medium churches in the US.
The company has already grown to the point where it’s processing billions of dollars of donations. In FY21 it saw total processing volume increase 39% to US$6.9 billion. It also provides church management services.
Pushpay has been using scalable software, which has helped the business benefit from operating leverage. Whilst FY21 revenue increased by 40% to US$179.1 million, the net profit increased 95% to US$31.2 million and operating cashflow soared 145% to US$57.6 million.
COVID-19 has led to Pushpay seeing a clear shift to digital where customers are using mobile technology to communicate with congregations. Digital is playing a crucial role for churches. Pushpay hasn’t seen a meaningful proportion of digital giving revert to non-digital means.
The ASX growth share is expecting more growth as it wins more market share, benefits from digital adoption and expands into the Catholic sector. The Catholic expansion may lead to other growth opportunities such as the education sector.
Pushpay is expecting more operating leverage to accrue and it’s also on the look out for more acquisitions that will improve its offering.
At the current Pushpay share price it’s valued at 28x FY23’s estimated earnings.
This is an exchange-traded fund (ETF) that’s sadly benefiting from the rise in cybercrime across the world.
COVID-19 has accelerated the shift for businesses, governments and organisations to move integral data and operations online. That has meant they are more vulnerable to cybercrime, so there has been a steady increase in spending on cyber defences.
The ETF gives exposure to a number of different players in the space, both established businesses and rising stars.
At the last tally, the biggest 10 holdings in the portfolio were: Zscaler, Crowdstrike, Okta, Accenture, Cisco Systems, Cloudflare, Varonis Systems, Fortinet, Splunk and Cyberark Software. In terms of geographic diversification, almost 90% of the portfolio is invested in US shares and only the UK (3.4%) and Israel (3.4%) are the other countries to have an allocation of more than 3%.
In 2022 the global cybersecurity market is expected to reach $223.68 billion and then rise again to $248.26 billion.
Betashares Global Cybersecurity ETF has an annual management fee of 0.67%.
Past performance is not an indicator of future performance, however since inception in August 2016, the ASX growth share has returned an average of 21% per annum.
Before you consider Pushpay, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Pushpay wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
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 BETA CYBER ETF UNITS and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BETA CYBER ETF UNITS and PUSHPAY FPO NZX. 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 first ASX dividend share to take a look at is BWP. It is a commercial property company and the largest owner of Bunnings Warehouse sites across Australia. At the end of the first half, the company owned a total of 68 properties which were leased to Australia’s home improvement giant.
While having such reliance on a single tenant is not usually a good idea, it certainly has been a big positive for BWP. Thanks to Bunnings’ strong performance over the last few years, despite whatever the economy throws at it, BWP has been able to grow its rental income at a decent rate. This has led to the company’s distribution also growing nicely, much to the delight of income investors.
It is also worth noting that Wesfarmers Ltd(ASX: WES) is both the owner of Bunnings and a former owner and current major shareholder of BWP with a 24.2% stake. As a result, it is unlikely to do anything that would impact the value of its investment.
This year the company’s board plans to pay a full year distribution of ~18.3 cents per share. Based on the current BWP share price, this equates to an attractive 4.3% dividend yield.
Another ASX dividend share to consider is Rural Funds. It is an Australian agricultural property company with a portfolio of high quality assets.
These properties are leased to some of the biggest players in the agricultural sector on very long term agreements. And with these leases including periodic rental increases, the company is well-placed to deliver on its target of growing its distribution by 4% each year.
In FY 2022, Rural Funds intends to reward its shareholders with a distribution of 11.73 cents per share. This will be up 4% on FY 2021’s planned distribution of 11.28 cents per share. Based on the current Rural Funds share price of $2.54, this represents an attractive yield of 4.6%.
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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 RURALFUNDS STAPLED. 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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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a solid week with a small gain. The benchmark index rose 0.1% to 7,394.4 points.
Will the market be able to build on this on Monday? Here are five things to watch:
ASX 200 expected to rise
The Australian share market is expected to start the week in a positive fashion. According to the latest SPI futures, the ASX 200 is expected to open the day 22 points or 0.3% higher. This follows a strong end to the week on Wall Street, which saw the Dow Jones rise 0.7%, the S&P 500 climb 1%, and the Nasdaq storm 1.05% higher. The latte could bode well for Australian tech shares today.
Oil prices rise
Energy producers such as Santos Ltd(ASX: STO) and Woodside Petroleum Limited(ASX: WPL) will be on watch today after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.2% to US$72.07 a barrel and the Brent crude oil price has risen 0.4% to US$74.10 a barrel. Forecasts for tight supplies gave oil prices a boost.
IAG rated as neutral
The Insurance Australia Group Ltd (ASX: IAG) share price is close to being fully valued according to analysts at Goldman Sachs. A note out of the investment bank this morning reveals that its analysts have responded to IAG”s full year update by putting a neutral rating on the insurance giant’s shares and cutting their price target to $5.41. It said: “A third consecutive period impacted by reserve strengthening, alongside margin targets which still appear fairly one-dimensional in domestic commercial repricing aren’t immediately enticing,”
Gold price softens
Australian gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could come under pressure today after the gold price softened on Friday night. According to CNBC, the spot gold price fell 0.2% to US$1,805.90 an ounce. The gold price weakened after bond yields and the US dollar strengthened.
Lynas quarterly result
The Lynas Rare Earths Ltd(ASX: LYC) share price will be one to watch this morning when the rare earths producer releases its quarterly update. No guidance has been given for the period, but NdPr production has been 1359 tonnes and 1367 tonnes for the last two quarters. Something similar is expected in the fourth quarter.
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Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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 Australian share market is home to a number of quality companies with solid growth prospects.
Two that have been tipped to grow very strongly over the long term are listed below. Here’s why analysts think investors should be buying their shares:
The first ASX growth share to look at is this San Francisco-based technology company. It is the app maker behind the hugely popular family-focused Life360 mobile app, which is used by 28 million monthly active users globally.
It has been a very strong performer in recent years and has continued its explosive growth in 2021. For example, Life360 recently revealed that it expects its annualised monthly revenue to be at the high end of its guidance of US$110 million to US$120 million this year. The high end represents a 34% year on year increase.
This could be boosted further in the second half by a highly successful marketing campaign on TikTok and a recent bolt-on acquisition. The latter has expanded its offering and opened up cross-selling opportunities.
One broker that remains very positive on the company and is forecasting very strong growth in the coming years is Bell Potter. Earlier this month its analysts retained their buy rating and lifted their price target on the company’s shares by 19% to $9.25.
The broker lifted its price target after a similar business, Nextdoor, was acquired by a special purpose acquisition company (SPAC) on significantly higher multiples. Bell Potter notes that Life360 is a year or two behind Nextdoor in scale, but is a better quality business. Particularly given that its subscription revenue is stickier and more recurring than Nextdoor’s advertising revenue.
Another ASX share that is growing at a rapid rate is Zip. It is a leading buy now pay later (BNPL) provider with operations across several continents.
Last week it released its fourth quarter update and revealed further strong growth across key metrics. Zip reported a 116% year on year increase in quarterly total transaction volume (TTV) to $1.8 billion and a 104% increase in quarterly revenue to $129.9 million.
Key drivers of Zip’s growth were further increases in transactions, customer numbers, and merchants on its platform. Zip revealed a 230% year on year increase in transaction numbers to 14.2 million for the three months, an 87% lift in customer numbers to 7.3 million, and an 84% rise in merchants to 51,300.
The good news is that the company still has a very long runway for growth over the next decade. This is due to the growing BNPL market in the massive United States market and its continued international expansion. The latter looks set to be boosted by a global rebrand which will see the company operate under the Zip name in all its markets.
Citi is very positive on Zip. Last week the broker responded to its update by retaining its buy rating and $10.25 price target.
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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 Life360, Inc. and ZIPCOLTD FPO. 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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