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The AGL Energy Limited (ASX: AGL) share price will be one to watch closely on Wednesday morning.

Why is the AGL share price on watch?

All eyes will be on the AGL share price today following the release of an update on its demerger plans.

According to the release, the company has confirmed its intention to undertake a demerger to create two leading energy businesses with separate ASX listings.

What’s next?

The release explains that AGL Energy will become Accel Energy, an electricity generation business focused on the accelerating energy transition and the redevelopment of its sites as low-carbon industrial energy hubs. It will be led by Chairman Peter Botten AC, CBE and CEO Graeme Hunt.

Accel Energy will then demerge a new entity, AGL Australia, which will be a multi-product energy-led retailing and flexible energy trading, storage and supply business. AGL Australia will retain the AGL brand. The new business will be led by Chair Patricia McKenzie and CEO Christine Corbett. The latter has been Chief Customer Officer of AGL Energy since July 2019.

The company intends to hold a scheme and general meeting to enable shareholders to vote on the proposal, with the aim of completing the demerger in the fourth quarter of FY 2022.

After the demerger, AGL Energy shareholders would hold one share in each of Accel Energy and AGL Australia for every share they own in AGL Energy on the applicable record date.

Management notes that that Accel Energy is expected to retain a minority ownership interest of between 15% to 20% in AGL Australia following the demerger. This will allow Accel Energy to share in the anticipated value creation in AGL Australia following demerger and provide balance sheet flexibility.

An inflection point

AGL Energy’s Chairman, Peter Botten, said: “The impact of recent challenging market conditions on our financial performance emphasises that AGL Energy is now at an inflection point, as the transition of the energy sector accelerates, driven by the rapid evolution in renewables and decentralised energy technology, customer needs and community expectations.”

“After careful consideration, the Board has confirmed that AGL Energy should move forward as two independently-listed companies as the Board believes this will be in the best interests of shareholders. The clarity of purpose created by this change will protect shareholder value, enabling each business to focus on their respective strategic opportunities and challenges presented by the accelerating energy transition,” he added.

Earnings guidance

AGL Energy has also provided the market with guidance for FY 2021. It revealed that it continues to expect underlying EBITDA to be at the low end of its previous guidance range of $1,585 million to $1,845 million.

On the bottom line, underlying net profit after tax is expected to be around the middle of the previous range of $500 million to $580 million. This includes approximately $90 million of insurance proceeds relating to the FY 2019 Unit 2 outage at the Loy Yang A power station and is consistent with previous guidance.

However, management has terminated its special dividend program because of its demerger plans. This means AGL will no longer pay out an additional 25% of underlying profit after tax for the FY 2021 final dividend or in FY 2022. Nor will it underwrite the dividend reinvestment plan for the FY 2021 final and FY 2022 interim ordinary dividends during the demerger planning period.

The AGL share price is down 25% in 2021. Investors will no doubt be hoping this demerger update is the catalyst to getting its share price heading in the right direction again.

The post AGL (ASX:AGL) share price on watch following demerger update appeared first on The Motley Fool Australia.

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

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Afterpay Ltd (ASX: APT) is the ASX fairytale story of recent times.

After listing at $1 per share, those lucky enough to put in $10,000 during the 2016 initial public offering would now be sitting on $1.2 million.

So it’s no surprise the last few years have seen a whole bunch of buy now, pay later and ‘something-pay’ companies floating on the ASX.

But most of them are early-stage businesses burning cash and not yet turning a profit. Not to mention competing in a hot sector that sees a new rival pop up almost each month.

Even the market leader Afterpay doesn’t currently make any money. It’s still concentrating on spending capital to try to grow faster than its rivals.

But there is one battler with a market capitalisation of just $105 million that’s bucking the trend: Earlypay Ltd (ASX: EPY).

Earlypay is actually making money 

Earlypay’s clientele is businesses, rather than end consumers. The North Sydney company sells products like line-of-credit and equipment finance.

According to Burman Invest chief investment officer Julia Lee, Earlypay seems to be doing everything right.

“When you have a look at anything with ‘pay’ in it, usually it’s not making a profit. But this one actually is,” she told SwitzerTV Investing this week.

“This year, they’re actually forecasting a net profit after tax and amortisation of above $8.5 million… Next year they’re forecasting a net profit after tax and amortisation around about $12 million — so almost 50% growth there.”

Not only is the company earning more than it spends, but the share price is attractive at the moment.

“PE multiples in this space are commonly above 80 or 100 times. But this one’s trading at around about 20 times historical,” Lee said.

“And you’ve got a dividend yield of about 5% as well.”

The Earlypay share price was trading at 45 cents per share at market close on Tuesday, which is 4.26% down for the day. The stock is up 18.4% for the year.

“We usually don’t track smaller companies like this. But having a quick look through some of the numbers… the numbers don’t look too bad in the type of market that we’re in.”

But Earlypay has these headwinds…

Tribeca Investment Partners portfolio manager Jun Bei Liu disagrees with Lee, indicating she would stay away from Earlypay.

The fear is that interest rates would rise due to post-COVID inflation.

“My view is that a lot of those financing businesses, when you have bond yields start moving higher it’s not in a great environment for these guys to do business,” she said.

“It is well-funded and exposed to the SME [small to medium enterprise] space — it will have a little bit of growth. But it’s not something that I would rush into.”

Earlypay just last week announced it would raise $18.75 million through the issue of almost 45 million new shares.

The post Unlike Afterpay, this ASX fintech actually makes a profit appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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One thing the Australian share market isn’t short of is growth shares. At present, there are plenty of companies that appear well-positioned to grow at an above-average rate over the next decade.

But which ones should you consider adding to your portfolio? Three that are highly rated are listed below:

IDP Education Ltd (ASX: IEL)

IDP Education could be a growth share to look at. It is a provider of international student placement services and English language testing services. Although demand for its services has softened during the pandemic, it has been tipped to bounce back strongly once trading conditions return to normal. After which, analysts at UBS expect IDP Education’s growth to accelerate as it emerges as a stronger player with a quality technology business differentiating it from the remaining competition. Earlier this month UBS put a buy rating and $28.25 price target on its shares.

NEXTDC Ltd (ASX: NXT)

Also worth a closer look is NEXTDC. It is one of the Asia-Pacific region’s leading data centre operators with a growing number of world class centres in key locations across Australia. Thanks to insatiable demand for data centre capacity due to the structural shift to the cloud, NEXTDC has been growing its sales and operating earnings at a solid rate for years. The company is now looking to bolster its growth by expanding into the Asian market. If this is a success, it could provide it with a significant growth runway. Citi currently has a buy rating and $14.45 price target on the company’s shares.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX growth share to look at is Temple & Webster. It is Australia’s leading online furniture and homewares retailer which has been benefiting greatly from the shift to online shopping. The good news is that this shift still has a long way to go, which bodes well for the company given its leadership position. Credit Suisse is positive on the company and sees scope for the furniture industry to reach ~13% in online penetration by FY 2025. The broker currently has an outperform rating and $12.54 price target on its shares.

The post 3 high quality ASX growth shares analysts love appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Idp Education Pty Ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended 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.

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Post-COVID recovery stocks have had a nice run the past 6 months. So much so that many are now above their pre-pandemic highs, making them fairly expensive.

But one fund manager reckons he’s found a cheap ASX share that’s yet to realise its potential.

“We have screened the small caps universe for tactical opportunities within the later-stage (recovery) cohort which still offer earnings and valuation upside potential,” said Montgomery portfolio manager Dominic Rose. 

“A clear standout here is outdoor media company, oOh!Media Ltd (ASX: OML).”

oOh!Media is a provider of ‘out of home’ advertising.

“The company reaches 77% of the metropolitan and regional population via an extensive network of circa 37,000 digital and static asset locations,” Rose said.

“These include roadside billboards, retail shopping centres, offices, bus stops, train stations and airports.”

How COVID-19 killed oOh!Media’s business

The pandemic last year completely floored the outdoor advertising market.

“COVID-19 absolutely hammered the out-of-home sector, far worse than most other forms of media, with audiences significantly declining due to initial lockdowns and mobility restrictions,” said Rose.

“Advertisers pulled outdoor campaigns and redirected what was left of their budgets towards viewers stuck at home in front of the telly.”

oOh!Media suffered a painful 62% reduction in year-on-year revenue for the quarter ending June 2020.

“Faced with a rapidly evolving and highly uncertain near-term outlook, management took the decisive steps to materially reduce operating costs and strengthen the balance sheet,” said Rose.

Outdoor ads will roar back

Rose is optimistic about oOh!Media’s recovery as he’s certain outdoor ads will make a comeback as Australia adjusts to post-coronavirus life. 

Earnings would recover to pre-pandemic levels next year, he suspects.

“Clear upside potential for the business exists as workers eventually return to offices and borders reopen to facilitate a travel sector recovery,” Rose said.

“We also see OML as well positioned to benefit from the strong domestic macro backdrop which should drive higher advertising rates across all formats as big advertisers like banks and auto come back into the outdoor market.”

The best thing is that the fund manager is convinced the market has not yet fully realised the ASX share’s comeback potential.

At the market close on Tuesday, oOh!Media shares were down 0.58%, trading at $1.71. That’s only 5.2% up from the start of the year.

“Valuation looks too cheap to us. The stock is trading on 7.5x recovered EBITDA (2022) which compares to OML’s historic average of 10x to 12x and the broader small cap market on 11x,” Rose said.

“We see potential for the stock to rerate towards 10x as confidence in the earnings recovery builds.”

That’s a 33% upside that the Montgomery Small Companies Fund is betting on.

Rose admitted the recent lockdowns in Sydney and Melbourne have been a setback for the ASX share.

“However, successful vaccination programs in countries like the US and the UK provide confidence in the medium-term outlook.”

The post Pssst… here’s a cheap COVID-recovery ASX share appeared first on The Motley Fool Australia.

More reading

• COVID-19 lockdown hits oOh!Media (ASX:OML) share price

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

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The Telstra Corporation Ltd (ASX: TLS) share price has been a very strong performer in 2021.

Since the start of the year, the telco giant’s shares are up almost 20%.

Can the Telstra share price climb even higher?

The good news is that one leading broker still believes the Telstra share price has a lot further to run from here.

According to a note out of Goldman Sachs this morning, the broker has retained its buy rating and lifted its price target to $4.20.

Based on the current Telstra share price, this implies potential upside of 16.5% over the next 12 months excluding dividends. And if you include the 16 cents per share fully franked dividend the broker is forecasting, this potential return stretches to over 21%.

What did Goldman say?

Goldman Sachs is bullish on the Telstra share price largely due to its belief that the key Mobile business is well-placed for growth.

Its analysts commented: “We have high conviction on the quantum of mobile market repair that is occurring in Australia, along Telstra’s ability to grow subscribers and ARPU across FY21-23E. Based on our detailed analysis, we estimate that Telstra could potentially achieve a postpaid ARPU > A$53/sub/m in FY23 (vs. $46 in 1H21) which is c.6% ahead of Visible Alpha Consensus Data expectations.”

Goldman believes there are a number of reasons why this is achievable. This includes deferred 5G prices rises impacting ~30% of subscribers, rational market behaviour, and international roaming recovery.

Overall, the broker notes that this underpins its $7.8 billion underlying EBITDA estimate for FY 2023, which is 4% ahead of the consensus estimate but well within Telstra’s $7.5 billion to $8.5 billion aspiration.

What else did it say?

Also potentially giving the Telstra share price a lift in the coming years could be the introduction of inflation-linked pricing. Goldman sees opportunities for Telstra to follow the lead of UK telcos that have done this recently.

It explained: “We also consider whether the AU telco market has capacity to introduce inflation linked pricing across fixed & mobile plans, potentially in response to the recent NBN pricing proposals that has a CPI plus component to access pricing.”

“We believe that should Telstra, as the incumbent, introduce inflation-linked pricing, the industry would likely follow, which could drive sustained revenue growth in an industry that has historically seen pricing deflation.”

“This would be consistent with what was launched in the UK in 2020, where operators are implementing +4.5% price rises in early 2021 (CPI + 3.9%). On a recent earnings call, VOD also noted it was planning on launching inflation-linked pricing across Europe, given it was well-received in the UK,” it added.

The post Telstra (ASX:TLS) share price tipped to jump 16% from here appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
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• Should you buy Telstra (ASX:TLS) shares for its dividend yield?
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• ASX 200 Weekly Wrap: Share market breaks 5 week winning streak

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 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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Luckily for income investors during these low interest rate times, the Australian share market is home to a number of companies offering very generous yields.

Two that do just this are listed below. Here’s why they could be top options for income investors:

Aventus Group (ASX: AVN)

The first ASX dividend share to look at is this leading owner, manager, and developer of retail parks. Aventus has been performing very positively during the pandemic. This has been driven by its high weighting to household goods and everyday needs retailing, which have experienced strong and sustained consumer demand.

Things have been going so well that Aventus recently revealed that the value of its properties have increased by $254 million or 12% since the end of December. It also advised that it expects its earnings to grow 7% this year, compared to its prior guidance of 4% growth.

This went down well with analysts at Goldman Sachs, who retained their buy rating and lifted their price target to $3.27. The broker is also forecasting distributions per share of 16.7 cents, 18.85 cents, and then 20.4 cents between now and FY 2023. Based on the current Aventus share price, this represents yields of 5.2%, 5.9%, and 6.4%, respectively.

Mineral Resources Limited (ASX: MIN)

Another high yield ASX dividend share to consider is Mineral Resources. It is a mining and mining services company with exposure to iron ore and lithium.

Thanks to the sky high iron ore price, Mineral Resources has been tipped by analysts at Macquarie to reward shareholders with some big dividends over the next couple of years. It is for this reason that the broker currently has an outperform rating and $73.00 price target on the company’s shares.

Macquarie is expecting Mineral Resources to pay fully franked dividends of $3.32 per share in FY 2021 and then $3.05 per share in FY 2022. Based on the latest Mineral Resources share price of $51.64, this will mean fully franked yields of 6.4% and 5.9%, respectively, over the next two financial years.

The post 2 high yield ASX dividend shares named as buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 Tuesday the S&P/ASX 200 Index (ASX: XJO) fought back from a heavy morning decline to finish the day just a touch lower. The benchmark index fell almost 0.1% to 7,301.2 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to push higher on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open the day 25 points or 0.35% higher this morning. This follows a reasonably positive night of trade which saw the Dow Jones and S&P 500 rise slightly and the Nasdaq push 0.2% higher.

Oil prices push higher

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be on the rise on Wednesday after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.65% to US$73.40 a barrel and the Brent crude oil price is up 0.6% to US$75.11 a barrel. Oil prices rose after demand hopes offset concerns the Delta variant of COVID-19 reducing mobility globally.

Telstra rated as a buy

The Telstra Corporation Ltd (ASX: TLS) share price could be heading notably higher from here according to analysts at Goldman Sachs. This morning the broker has retained its buy rating and lifted its price target to $4.20. The broker suspects that Mobile ARPU growth could positively surprise over the coming years. It also sees opportunities for Telstra to introduce inflation linked pricing across fixed and mobile plans.

Gold price sinks

It could be a tough day for gold miners Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) after the gold price sank overnight. According to CNBC, the spot gold price is down 1.1% to US$1,761.40 an ounce. The precious metal fell to an 11-week low amid concerns that a strong U.S. jobs report this week could cement the Federal Reserve’s recent hawkish stance.

Nuix insider trading allegations

The Nuix Ltd (ASX: NXL) share price will be on watch today amid allegations of insider trading at the embattled investigative analytics and intelligence software. According to the SMH, the company’s recently sacked chief financial officer, Stephen Doyle, is the subject of a criminal investigation into insider trading and dealing with the proceeds of crime over Nuix shares. Mr Doyle’s brother and father are also being investigated according to the report.

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

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

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The S&P/ASX 200 Index (ASX: XJO) went down by around 0.1% to 7,301 points.

Here are some of the highlights from the ASX today:

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price dropped around 5.7% after revealing its FY21 report. It was the worst performer in the ASX 200. 

It reported that total revenue increased 12.4% to $1.07 billion, with KFC Australia revenue rising 13.8% to $900.4 million. KFC Europe same store sales (SSS) declined 0.6% whilst Taco Bell revenue rose 57.4% to $28 million.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations (before AASB 16) went up 12.4% to $136.3 million. Underlying net profit after tax (NPAT) (before AASB 16) increased 18.2% to $56.9 million.

The ASX 200 share’s board declared a final dividend of 12.5 cents per share. That brings the total FY21 fully franked dividend of 23 cents per share, up 15%.

Collins Foods CEO Drew O’Malley had these comments on the outlook and Taco Bell:

With continuing strong cash generation and a healthy balance sheet, Collins Foods is well positioned to continue to pursue strategic organic and acquisition growth opportunities across the group in the year ahead.

Taco Bell is on track for accelerated development in FY22, supported by ongoing consumer demand for Mexican in Australia, and a refined marketing approach. With nine to 12 new restaurants in the pipeline in the year ahead, we remain committed to our strategy of achieving scale within three to five years. New restaurants will be opened in tightly concentrated clusters in Queensland and Victoria and we expect to open our first Perth restaurant in late 2021. Increased points of presence support brand visibility and will be complemented by a simplified marketing strategy that emphasises the core product range and everyday value, as we continue to brand drive awareness and trial.

Kathmandu Holdings Ltd (ASX: KMD)

The Kathmandu share price dropped 4% today after giving an update.

A number of its stores have suffered disruption because of the latest lockdowns of stores in NSW and WA. There was also the impact of the Victorian lockdown at the start of June.

Kathmandu’s sales for FY21 are expected to be below original expectations at approximately $930 million and underlying EBITDA is estimated to be approximately $120 million.

The impact of the NSW and Victorian lockdowns is estimated to be around $13 million of EBITDA.

Kathmandu did say that its stores had a positive start to winter, with trading broadly in line with pre-COVID-19 levels before Australian lockdowns began to cause impacts.

However, Rip Curl has continued to trade strongly according to the company. Despite COVID-19 disruptions, the North American and Europe regions have been “well above” pre-COVID-19 levels. Wholesale orders received for FY22 continue to show double digit growth compared to FY19.

Oboz has seen record sales performance in the second half of FY21, with wholesale orders for FY22 significantly above both FY19 and FY20.

Regional Express Holdings Ltd (ASX: REX)

The regional airline, which calls itself Rex, announced it had signed a letter of internet (LOI) with a lessor for the lease of two Boeing 737-800NGs.

The two aircraft are expected to arrive in late August, increasing the 737 fleet to eight, and are scheduled to enter service on Rex’s domestic network in September.

Rex said that the two additional aircraft will provide Rex with the ability to launch new routes to other capital cities, large regional centres and popular leisure destinations. The new routes will be announced shortly.

The post ASX 200 dips, Collins Foods drops, Kathmandu falls appeared first on The Motley Fool Australia.

More reading

• Here are 3 ASX 200 shares making market moves today
• Why Collins Foods, Genworth Mortgage Insurance, Kathmandu, & ResMed are sinking
• ASX construction shares like Brickworks (ASX:BKW) are falling today
• ASX 200 down 0.9%: Big four banks drop, Metcash charges higher
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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 has recommended Collins Foods 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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While the Australian tech sector may not be anywhere near as large as its US equivalent, that doesn’t mean there aren’t any quality options for investors to choose from.

Three ASX tech shares that are highly rated are listed below. Here’s what you need to know about them:

Altium Limited (ASX: ALU)

The first tech share to look at is Altium. It is an electronic design software provider best-known for its Altium Designer and Altium 365 platforms. These platforms dominate the electronic design market, which continues to expand due to the growing Internet of Things and artificial intelligence industries. Management is confident in its growth prospects. So much so, it is aiming to more than double its revenue to US$500 million within five years.

Analysts at Credit Suisse are positive on the company. Earlier this month they retained their outperform rating on its shares and lifted their price target on them to $42.00. The Altium share price is currently fetching $36.36.

Life360 Inc (ASX: 360)

Another ASX tech share to look at is San Francisco-based app maker Life360. Its eponymous app offers families a wide range of safety solutions for the modern world. This includes real-time location sharing and notifications, driving safety features like Crash Detection and Roadside Assistance, and messaging. At the last count, the company had a massive 28 million monthly active users.

This morning Morgan Stanley initiated coverage on the company with an overweight rating and $8.60 price target. This compares to the current Life360 share price of $6.25.

Whispir Limited (ASX: WSP)

Whispir is a software as a service (SaaS) communications workflow platform provider. Its popular platform is used by 750 businesses globally to automate interactions between them and their people and customers. Among its users are the Australian Government, Changi Airport, Monash University, Nespresso, and Takata. Management estimates that it has a total addressable market of US$4.7 billion in just United States. This compares to its current annualised recurring revenue (ARR) of $50.3 million.

Ord Minnett has a buy rating and $4.25 price target on Whispir’s shares. This is notably higher than the latest Whispir share price of $2.49.

The post Here are 3 ASX tech shares tipped for big things appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Altium and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Life360, Inc. The Motley Fool Australia owns shares of and has recommended Altium. The Motley Fool Australia has recommended Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a group of ASX shares that are growing at a very fast pace. Some are growing revenue by double digits, or even triple digits.

Businesses that are producing fast revenue growth may be able to generate profit growth and benefit from increasing scale.

Here are two businesses that are growing really quickly:

Bapcor Ltd (ASX: BAP)

This business has the goal of being the leading auto parts business in the Australasian region.

It has a number of operating segments include Bapcor Trade (which includes Burson), Bapcor New Zealand, retail (including Autobarn and Autopro), specialist wholesale (such as commercial vehicles and electrical), and service (like Midas and ABS).

In the first six months of FY21, the ASX share reported it had grown revenue by 25.8% and it saw net profit growth of 49.7%.

One of the main ways that Bapcor is looking to grow revenue and profit is by increasing its network footprint, both physical and online. It has plans to grow its number of stores, rolling out improved ‘concepts’ to differentiate against competitors. Bapcor wants to provide customers with an online offering to supplement its physical stores. The company also wants to grow its existing store sales and geographic expansion in Asia.

In Australia, it’s looking to grow its trade network by 10 to 12 stores per annum to a total of 260 over the next five years, up from 200. For Australian retail, it currently has 133 stores and will add around 12 new stores a year as it targets 200 Autobarn stores for the longer-term.

In Asia, the ASX share is targeting more than 60 stores in Thailand, it currently has six stores. This may translate into $100 million of annual revenue. Overall, Bapcor is targeting $500 million of Asian revenue thanks to its Tye Soon stake purchase.

Bapcor is also consolidating 13 distribution centres in Victoria into one located in Tullamarine.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is an online homewares and furniture business that sells many thousands of products by suppliers which ship directly to customers. That saves on inventory costs for the ASX share and makes delivery quicker.

In the third quarter of FY21, Temple & Webster said it continues to exceed expectations with revenue growth of 112%. Active customers reached around 750,000.

April 2021 revenue was up more than 20%, despite April 2020 having a large amount of sales because of the nationwide lockdowns.

The ASX share said it has a growth strategy to grow its online market leadership, utilising its strong balance sheet and capitalising on the significant market opportunity as more people buy homewares online.

In the short-term, the business is expecting a lower earnings before interest, tax, depreciation and amortisation (EBITDA) margin, but then it expects to achieve higher profit margins from greater scale benefits.

Temple & Webster CEO and co-founder Mark Coulter said:

You only need to look at the US to see how the e-commerce market is playing out, and why we remain bullish about the shift from offline to online. We are at the start of this once in a generation shift, and now is the time to put our foot down to secure market leadership and ensure we are the brand for the next generation of future shopper.

The post 2 ASX shares that are rapidly growing appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended 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.

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