Tag: Motley Fool

  • A2 Milk (ASX:A2M) share price lifts on China child policy change

    Glass of milk

    It’s shaping up to be a positive day for the A2 Milk Company Ltd (ASX: A2M) share price following a shift in China’s child policy.

    At the time of writing, the milk and infant formula company’s shares are trading 2.54% higher to $5.66.

    China upgrades the infant formula market potential

    The A2 Milk share price is not alone in today’s rejuvenated optimism. Other infant formula makers are enjoying some green on the back of China’s government revising its policy limiting couples to two children.

    China will now support couples to have a third child, according to a meeting of the Political Bureau held on Monday. The policy change is in response to China’s aging population, with people aged over 60 accounting for 18.7% of the country’s population in 2020.

    Obviously, an increase in the fertility rate for what was already considered to be the biggest growth engine for infant formula producers pre-COVID bodes well for associated companies.

    Today’s reaction is a little déjà vu. Back in late 2015, China increased its child policy from one to two. Shares in publicly traded infant formula companies received a boost following the change.

    Interestingly, smaller players like Bubs Australia Ltd (ASX: BUB) have done particularly well out of the news. The Bubs share price surged over 20% following the development.

    Doesn’t break the A2 Milk share price drought

    Much like one good downpour of rain, the gains from today doesn’t dispel the months of losses.

    COVID-induced demand waning has forced A2 Milk and others to downgrade its FY21 guidance. The last month was no exception, with the A2 Milk share price souring by 23%.

    Unfortunately for shareholders, the company’s full-year revenue estimate is now NZ$1.2 billion to NZ$1.25 billion. Earnings before interest, tax, depreciation, and amortisation (EBITDA) suffered the same fate – lowered to between NZ$132 million to NZ$150 million.

    Even with today’s gain, the A2 Milk share price 71.7% down from its all-time high of $20.05 a share. As they say, “When it rains it pours” – shareholders would be hoping the same applies for positive news.

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  • ASX investors were buying this US share over Tesla last week

    two women looking intently at computer screen

    Most weeks, Commonwealth Bank of Australia (ASX: CBA)’s CommSec brokerage service tells us the most popular US shares that its Aussie investors were buying and selling the previous week.

    Since CommSec is one of the most popular share trading platforms on the ASX, this data provides some useful insights into what is piquing the wallets of ASX investors beyond our shores.

    My Fool colleague James Mickleboro has already covered some of the ASX’s most popular shares today. So here are the top 10 US shares that CommSec users were buying and selling last week. This week’s data covers 24-28 May.

    Move over Tesla, AMC’s in town

    1. AMC Entertainment Holdings Inc (NYSE: AMC) – representing 6.2% of total trades with a 58%/42% buy-to-sell ratio.
    2. GameStop Corp. (NYSE: GME) – representing 5.2% of total trades with a 77%/23% buy-to-sell ratio.
    3. Tesla Inc (NASDAQ: TSLA) – representing 4.6% of total trades with a 66%/34% buy-to-sell ratio.
    4. Apple Inc (NASDAQ: AAPL) – representing 2.6% of total trades with a 66%/34% buy-to-sell ratio.
    5. Nio Inc – ADR (NYSE: NIO) – representing 1.3% of total trades with a 70%/30% buy-to-sell ratio.
    6. Palantir Technologies Inc (NYSE: PLTR) 
    7. Microsoft Corporation (NASDAQ: MSFT)
    8. Coinbase Global Inc (NASDAQ: COIN) 
    9. Airbnb Inc (NASDAQ: ABNB)
    10. Virgin Galactic Holdings Inc (NYSE: SPCE)

    What can we learn from these trades?

    Well, a major coup in last week’s data. The long-time dominator of the most popular US shares for ASX investors – the electric car and battery manufacturer Tesla – has been displaced after months at the top of the pile. ASX investors pushed Tesla aside last week for the American cinema chain AMC Entertainment. AMC has been a popular share for a while now on this list. But it has never cracked the top spot before (to this writer’s knowledge, anyway).

    AMC was a company hard hit in the pandemic last year, falling 68% between 14 February and 23 April. But it appears to be the object of some turnaround plays ever since. This has hit the next level over the past month or so since the infamous stock-picking group WallStreetBets seems to have taken up its cause. Back on 3 May, AMC was a US$9.70 share. Today, it’s a US$26.12 one, having put on an astonishing 170% or so over the past month. No wonder ASX investors have taken notice. It also seems as though many of these investors are taking profits, with 42% of AMC trades last week being sells.

    A changing of the guard?

    The other popular US shares last week were also the subject of above-average selling pressure too. When we looked at the most popular US shares last week, Tesla was at the top of the pile with a 79%/21% buy-to-sell ratio. This week’s numbers give us a 66%/34% ratio. So clearly some investors are ducking out of Tesla, perhaps to chase AMC shares. We see a similar pattern with GameStop.

    In other news, this week sees the reemergence of Airbnb and Virgin Galactic after a few months of these companies seemingly dormant in the minds of ASX investors. Airbnb shares have actually been on the back foot in the past month, losing around 17% of their value. 85% of Airbnb trades were buys though, so there are obviously at least some investors who are ‘buying the dip’ there. But Virgin Galactic has rocketed more than 100% since 14 May, so it’s not hard to see why investors are chasing that one.

    It will be interesting to see if this week’s stats prove a blip, or else some kind of realignment when we check out next week’s numbers! 

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  • 2 highly rated ASX growth shares

    rising share price of a company

    A new month is here, so what better time to look for new additions to your portfolio.

    If you have room for a growth share or two, you might want to consider the shares listed below. Here’s what you need to know about them:

    Breville Group Ltd (ASX: BRG)

    The first ASX growth share to look at is Breville. This appliance manufacturer has been growing at a solid rate in recent years thanks to its international expansion and favourable industry tailwinds.

    In respect to the latter, COVID-19 has led to more cooking and working at home, which has underpinned an increase in demand for whitegoods such as cooking equipment and coffee machines.

    Demand was so strong that Breville reported stellar sales and profit growth during the first half of FY 2021. The company posted a 28.8% increase in revenue to $711 million and a 29.2% increase in net profit after tax to $64.2 million.

    Looking ahead, management is confident its strong performance will continue in the second half. It is guiding to earnings before interest and tax of $136 million. This is up from its previous guidance of $128 million to $132 million and will be a 20% increase year on year.

    UBS is positive on its long term growth thanks to its strong market position, new product launches, and its expansion into new markets. The broker has a buy rating and $35.70 price target on its shares.

    NEXTDC Ltd (ASX: NXT)

    Another ASX growth share to look at is NEXTDC. It has nine world class data centres across Australia and a rich partner ecosystem that comprises over 660 clouds, networks, and ICT specialty services. It is also currently looking to expand its offering into both Singapore and Tokyo, which offer huge market opportunities.

    In the meantime, though, NEXTDC is generating significant revenue and earnings in the Australian market. For example, during the first half of FY 2021, the company reported a 27% increase in data centre services revenue to a record $121.6 million and a 29% increase in EBITDA to $65.7 million. This was underpinned by a 33% lift in contracted utilisation to 71MW, a 16% lift in customers, and a 16% rise in interconnections.

    Positively, more of the same is expected in the second half. This is being driven by the ongoing shift to the cloud, which has led to very strong demand for capacity in its centres. So much so, a good portion of its planned capacity additions have already been contracted.

    UBS is also a fan of NEXTDC. Its analysts currently have a buy rating and $15.40 price target on its shares.

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  • Worley (ASX:WOR) share price continues to fall despite second contract win

    A stockmarket chart on a red background with an arrow going down, indicating falling share price

    It has been a disappointing day for Worley Ltd (ASX: WOR) shares, having spent the entire day in the red. This comes despite the company announcing a contract award with Celanese, and now a deal with international fuel supplier, Shell.

    During late afternoon trade, the global engineering company’s shares are down 0.47% at $10.51 apiece.

    Let’s take a close look at what the company updated the ASX with today.

    Second contract win

    In its announcement, Worley advised it has won a contract from Shell for a green hydrogen hub in the Netherlands.

    This marks an important project for Worley as it supports the development of a new 200-megawatt electrolysis-based hydrogen plant in Rotterdam. Worley prides itself on being a part of sustainable projects, creating cleaner energy for customers around the world.

    The new plant will be powered by renewable energy from an offshore windfarm that is currently in development. Once complete, the green hydrogen plant will be one of the largest commercial green hydrogen production facilities in the world.

    The green hydrogen hub is expected to be operational by 2023, producing between 50,000 and 60,000 kilograms of green hydrogen each day. Initially, the clean fuel alternative will be used to decarbonise Shell’s nearby refinery in Pernis, and support the heavy transportation industry.

    Under the services contract, Worley will provide early engineering services for the green hydrogen plant. This includes integrating with other assets such as offshore wind, pipelines, electrical grids and Shell’s Pernis refinery.

    The project will be managed by Worley’s offices in The Hague, Netherlands. Furthermore, ongoing support will derive from the company’s hydrogen subject-matter experts and Global Integrated Delivery team in India.

    Comments from the CEO

    Worley CEO, Chris Ashton welcomed the deal with Shell, saying:

    As an Australian company operating globally, we are pleased to be working with Shell on this first-of-its- kind project. We look forward to supporting Shell’s strategy to be a provider of net-zero emissions energy products and this project is an example of how Worley can help our customers achieve their goals and own purpose of delivering a more sustainable world.

    Worley share price update

    Regardless of today’s dips, Worley shares are still more than 20% higher from this time last year.

    The company is ranked 93rd in terms of the largest market capitalisation on the ASX, with $5.4 billion.

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  • Why the Kogan (ASX:KGN) share price was sold off in May

    An ASX investor looks devastated as he watches his computer screen, indicating bad news

    The Kogan.com Ltd (ASX: KGN) share price continued its disappointing decline in May.

    The ecommerce company’s shares lost 8% of their value during the month. This meant the Kogan share price was down 60% from its 52-week high.

    And that’s despite the company’s shares rebounding 17% after hitting a 52-week low during the month.

    Why did the Kogan share price tumble in May?

    The Kogan share price was sold off last month following the release of a disappointing trading update.

    According to the update, Kogan is expecting to report adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $58 million to $63 million in FY 2021. This represents growth of just 16.7% to 27% on FY 2020’s adjusted EBITDA of $49.7 million.

    This is a significant slowdown on what it was reporting early on in the financial years. For example, during the first half, Kogan reported adjusted EBITDA of $51.7 million. This was up a massive 184.4% on the prior corresponding period.

    In addition to this, the company’s FY 2021’s result also includes the Mighty Ape business, which was acquired for $122.4 million last year. When announcing the acquisition, management was expecting the business to contribute EBITDA of A$14.3 million in FY 2021.

    If Mighty Ape has contributed this, then it would mean the core Kogan business has actually posted a decline in EBITDA in FY 2021.

    Why is Kogan underperforming?

    Management revealed that it has struggled with its inventory management in FY 2021. It appears to have been anticipating that the heightened sales activity would last longer and therefore loaded up on inventory.

    Unfortunately, sales slowed and Kogan was left with a significant excess of inventory across its warehouses. Things were so bad that the company incurred millions of dollars in demurrage costs at ports for inventory it didn’t have room for.

    This had a threefold impact on the company’s operations. As well as the extra storage costs, the company is discounting product to shift it and increasing its marketing spend to boost sales.

    Shareholders will no doubt be hoping that June is kinder to the Kogan share price.

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  • Why the Nuix (ASX:NXL) share price fell 30% in May

    An ASX investor looks devastated as he watches his computer screen, indicating bad news

    The Nuix Ltd (ASX:NXL) share price has finished a dramatic month 30.23% lower than where it started.

    Over the course of the month, the software company faced a series of investigative reports and its second revenue downgrade for 2021.

    After starting the month at $4.15, the Nuix share price closed yesterday trading for $2.78.

    May was the second month in a row that saw a poor performance from Nuix shares. The Nuix share price was driven 19.8% lower over April after the company downgraded its 2021 financial year guidance only weeks after reaffirming it.

    Let’s take a closer look at the troubles the Nuix share price has faced in May.

    Manic May for the Nuix share price

    Last month, before its major troubles had even begun, the Nuix share price had fallen 16%. The drop appeared to be a delayed reaction to its April downgrade.

    Nuix’s real trouble started on 17 May.

    Investigations

    That morning, Nine Entertainment Co Holdings Ltd‘s (ASX: NEC) Australian Financial ReviewThe Age, and The Sydney Morning Herald began publishing a series on a joint investigation into Nuix.

    The series involved 5 articles that ran daily over the course of a week.

    Within the articles, the media outlets claimed Nuix had been poorly governed and had a history of bad financial disclosures.

    Most of the claims were related to Nuix’s co-founder and former chair Tony Castagna, and his 2018 money laundering and tax evasion charges. Castagna was acquitted of the charges in 2019.  

    The publications claimed Castagna left Nuix’s board the day its prospectus was released, meaning many Nuix investors wouldn’t have known Castagna was involved with the company.

    They also made allegations about an options package, given to Castagna in 2005.

    According to the publications, Castagna was issued 300,000 shares in Nuix for $3,000 in 2005, but only one piece of paperwork noted the options’ existence until 2011.

    The options were supposedly cashed out for $80 million during Nuix’s ASX debut.

    The publications questioned if the options were given to Castagna in 2011 and backdated to 2005.

    The AFP has begun an investigation into the options package. But, they haven’t stated exactly what about the package is suspicous.

    Nuix cut its ties with Castagna on Friday, sending its share price falling once more.

    Class action lawsuit

    A second option package has kept Nuix on its toes recently.

    The three Nine publications claimed Niux’s former CEO, Eddie Sheehy, is taking legal action against Nuix over his 2008 remuneration package.

    Apparently, Sheehy was told options within his remuneration package weren’t applicable for a 50 for 1 share split, which Nuix conducted in 2017. Sheehy claims the share split cost him $118 million.

    Another 2 class actions are also being evaluated by law firms. They mainly relate to prospectus forecasts that were missing during Nuix’s first year on the ASX.

    Another downgrade

    Yesterday saw May’s final blow to the Nuix share price.

    The company delivered yet another downgrade. This time it stated its pro forma revenue will be between $173 million and $182 million for the 2021 financial year.

    Nuix’s previous guidance (its April downgrade) stated its pro forma revenue would be between $180 million and $185 million over the 2021 financial year.

    Nuix share price snapshot

    The poor month’s performance has added to the Nuix share price’s recent woes.

    Currently, the Nuix share price has fallen 65% since its initial public offering (IPO) on the ASX in December.

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  • 2 top ETFs to buy in June 2021

    the words exchange traded fund with a zig zag arrow pointing up

    Exchange-traded funds (ETFs) can be an effective way for investors to get exposure to a region or sector of the share market.

    Technology businesses are often the businesses that are creating the products of ‘tomorrow’, so it might beneficial to get exposure to that sector. These two ETFs are potential options:

    Betashares Nasdaq 100 ETF (ASX: NDQ)

    This investment is about giving investors exposure to 100 of the largest businesses on the NASDAQ. This is a stock exchange in the US.

    You’ll find many of the world’s most well-known tech companies in this portfolio including Apple, Microsoft, Amazon.com, Facebook, Alphabet, Tesla, Nvida, PayPal, Adobe and Netflix.

    But this ETF is more than just a tech ETF. It has plenty of other global leaders in its portfolio like PepsiCo, Costco, Mondelez, Moderna and Kraft Heinz.

    As a group, the NASDAQ 100 has performed strongly, even after the management fee of 0.48% per annum.

    Over the prior five years, the Betashares Nasdaq 100 ETF has produced an average return of 26.4% per annum. That’s higher than the long-term average return of 10% per annum.

    This could be an effective way to diversify ASX-focused portfolios considering almost half of the NASDAQ 100 is weighted to technology businesses, whilst technology only accounts for a single digit percentage on the ASX.

    Investors also get a lot of global diversification from the underlying earnings. Businesses like Microsoft and Facebook generate earnings from almost every country in the world.

    Betashares Asia Technology Tigers ETF (ASX: ASIA)

    This is an ETF where the idea is for investors to be able to get exposure to many of the biggest technology businesses in Asia, outside of Japan.

    It has a total of 50 holdings. You may have heard of some of the largest portfolio allocations including: Tencent, Samsung, Taiwan Semiconductor Manufacturing, Alibaba, Meituan, Pinduoduo, JD.com, Sea, Infosys and Netease.

    It’s not just the West that gives exposure to large tech businesses that have involvement in things like e-commerce, cloud computing, semiconductors and artificial intelligence. Asia has those businesses too. 

    Almost three quarters of the portfolio is invested in businesses that are listed in China and Taiwan. Another fifth is allocated to South Korean companies. The only other meaningful country allocation is a 5.7% position in Indian businesses.

    The annual management fee of this ETF is 0.67% per annum. Despite the fee, since inception in September 2018, the ETF has delivered an average net return per annum of 30.5%.

    However, past performance is no guarantee of future performance.

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  • Why CSL (ASX:CSL) and this ASX healthcare share are rated as buys

    rising medical asx share price represented by excited doctors dancing in ward

    The healthcare sector has been a great place to invest over the last five years. Since this time in 2016, the S&P/ASX 200 Health Care index has risen an impressive 98%.

    This compares to a ~34% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period, excluding dividends.

    While there’s no guarantee that the sector will continue this outperformance over the next five years, there are a number of positive tailwinds that are supportive of growth. This could make it worth considering a long term investment in the space.

    But which ASX healthcare shares should you consider? Here are two that are rated highly:

    CSL Limited (ASX: CSL)

    CSL is one of the world’s leading biotherapeutics companies. Its shares are up approximately 150% over the last five years due to a number of factors. This includes successful acquisitions, its high level of investment in research and development (R&D) activities, its growing plasma collection network, and its leading therapies and vaccines.

    In respect to its therapies, CSL’s portfolio includes lucrative and life-saving products such as Privigen, Hizentra, Idelvion, and Afstyla. These will be added to in the coming years thanks to its almost billion-dollar annual investment in R&D.

    One broker that sees value in the CSL share price at present is Credit Suisse. The broker currently has an outperform rating and $315.00 price target on its shares.

    Pro Medicus Limited (ASX: PME)

    Pro Medicus is a healthcare technology company. It provides healthcare organisations with radiology information systems (RIS), picture archiving and communication systems (PACS), and advanced visualisation solutions.

    Thanks to its industry-leading technology and the structural shift away from legacy systems, Pro Medicus has been growing at a strong rate in recent years. Pleasingly, this has continued in FY 2021. For example, during the first half, the company reported a 7.8% increase in revenue to $31.6 million and a 25.9% jump in underlying profit before tax to $18.76 million.

    Looking ahead, the company still has a large pipeline of sales opportunities that could be converted in the near future and drive further growth over the next decade.

    Goldman Sachs is a fan of Pro Medicus. It currently has a buy rating and $53.80 price target on its shares.

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  • Yikes! Is Bitcoin about to get dethroned?

    Falling ASX share price represented by shocked Investor looking at phone

    Bitcoin (CRYPTO: BTC) remains the best-known cryptocurrency in the world. It also claims the largest market cap. That currently sits at US$689 billion (AU$895 billion), according to data from CoinDesk.

    But just because it’s held the number 1 spot since, well, forever, doesn’t mean it might not get dethroned. Indeed, a valid contender is nipping at its heels.

    Namely, Ethereum (CRYPTO: ETH).

    Ethereum is gaining ground

    Ethereum currently has a market cap of US$308 billion. Yes, that’s less than half of Bitcoin’s market valuation. But Ethereum is closing the gap as it’s suffered less during the recent broader crypto sell-off than the world’s number 1 token.

    Whether that trend continues is hotly debated among the world’s crypto experts.

    Tegan Kline is the co-founder of blockchain software company Edge & Node. As Bloomberg reports, Kline believes Ethereum “will likely exceed Bitcoin at some point in the future, as Ethereum will be superior when it comes to innovation and developer interest”.

    Then there are Goldman commodity strategists Mikhail Sprogis and Jeff Currie. The pair don’t believe Bitcoin’s dominant position is written in stone. In fact, they wrote that the token may well “eventually lose its crown as the dominant digital store of value to another cryptocurrency with greater practical use and technological agility”.

    Sounding off in support of the world’s current number 1 digital token is Edward Moya, a senior market analyst at Oanda Corp.

    According to Moya, “Bitcoin will still remain king of the cryptos.” He added it “had too big of a lead for Ethereum to catch and has one major advantage, a fixed supply of only 21 million coins.”

    Bitcoin and Ethereum price snapshot

    Bitcoin is enjoying a strong rebound today, up 7.7% in the past 24 hours to US$ 36,887. Year-to-date the price has gained 27%.

    Ethereum is also surging today, up 15.1% over 24 hours to US$2,653. Though well down from its mid-May all-time highs of US$4,383, the Ethereum price is up 256% so far in 2021.

    Wondering where you should invest $1,000 right now?

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    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.

    *Returns as of May 24th 2021

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  • Here’s what happened to the Appen (ASX:APX) share price in May

    tech shares represented by woman holding hand out to touch icons on digital screen

    It certainly was an eventful month for the Appen Ltd (ASX: APX) share price in May.

    During the month, the artificial intelligence (AI) data annotation products and solutions provider’s shares lost 14% of their value.

    This was actually a decent result, as the Appen share price was down as much as 32% month to date at one stage during the month.

    Why was the Appen share price under pressure in May?

    The Appen share price came under significant pressure early on in the month following the release of a presentation which provided colour on industry conditions.

    Although management spoke positively about its position in the industry, it also revealed that its customers were changing the ways in which they develop projects. This has resulted in changing data volumes on a handful of large projects, impacting Appen’s revenue.

    This, and management’s failure to comment on its guidance for FY 2021, spooked the market and sent its shares crashing lower.

    The rebound

    In response to this, later in the month Appen announced that it would be restructuring its business to align to its product-led growth strategy and distinct customer propositions.

    This will see the company operate with four customer-facing business units – Global, Enterprise, China, and Government. Management expects the changes will provide greater visibility of the drivers and performance of the business. And judging by the significant rebound in the Appen share price following this update, the market appears to agree.

    Also going down well with investors was management finally commenting on its guidance for FY 2021.

    As it turns out, there was nothing to fear here. It has reiterated its guidance and is forecasting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$83 million to US$90 million in FY 2021. This represents constant currency growth of 18% to 28% year on year.

    Where next for its shares?

    According to a note out of Ord Minnett from late last month, it believes there is significant upside for the Appen share price over the next 12 months.

    The broker currently has a buy rating and $24.75 price target on its shares, which implies potential upside of 90%.

    All in all, shareholders will be hoping this broker is on the money and the Appen share price has a much better month in June.

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    More reading

    The post Here’s what happened to the Appen (ASX:APX) share price in May appeared first on The Motley Fool Australia.

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