Tag: Motley Fool

  • 2 high yield ASX dividend shares for income investors

    Dividend stocks represented by paper sign saying dividends next to roll of cash

    If you’re wanting to beat low interest rates in 2021, then you might want to look at the dividend shares listed below.

    They offer investors attractive yields that are vastly superior to term deposits and savings accounts. Here’s what you need to know about them:

    Aventus Group (ASX: AVN)

    Aventus is a leading owner, manager, and developer of retail parks. It has a portfolio of 20 centres valued at $2.2 billion and featuring a diverse tenant base of 593 quality tenancies. From these tenancies, national retailers represent 87% of its total portfolio.

    The company also has overweight exposure to the household goods sector and everyday needs. This has been a big positive during the pandemic, allowing Aventus to collect rent largely as normal in FY 2021. This led to Aventus reporting a 6.5% increase in funds from operations (FFO) to $55.9 million during the first half.

    One broker that is a fan of Aventus is Goldman Sachs. It currently has buy rating and $3.06 price target on its shares. The broker is also forecasting a 16.6 cents per share full year dividend in FY 2021. Based on the latest Aventus share price of $2.92, this represents a generous 5.7% dividend yield.

    Super Retail Group Ltd (ASX: SUL)

    Another ASX dividend share to look at is Super Retail. This retail conglomerate has been a big winner from the redirection in consumer spending during the pandemic.

    And with international travel off the cards for some time to come, it appears well-placed to benefit from higher than normal demand across its brands.

    This certainly has been the case in FY 2021. Super Retail recently released a trading update which revealed that like-for-like sales were up 28% during the first 44 weeks. Positively, management also revealed that its gross margin had remained steady since the end of the half. This should mean even stronger profit and dividend growth.

    Goldman Sachs is positive on Super Retail. It has a buy rating and $15.00 price target on its shares. The broker is also forecasting an 84 cents per share fully franked dividend in FY 2021. Based on the current Super Retail share price of $12.72, this represents a 6.6% yield.

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  • Top brokers name 3 ASX shares to sell next week

    business man holding sign stating time to sell

    Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

    Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

    Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

    According to a note out of UBS, its analysts have retained their sell rating and trimmed their price target on this medical device company’s shares to NZ$22.65 (A$21.34). This follows the release of the company’s full year results last week. Although the company delivered very strong profit growth, it still fell short of the broker’s expectations. In addition to this, although management has not provided guidance for FY 2022, UBS is expecting a sharp decline in earnings due to COVID-19 tailwinds ending. Overall, it feels this makes the company’s shares overvalued. The Fisher & Paykel Healthcare share price ended the week at A$27.47.

    Magellan Financial Group Ltd (ASX: MFG)

    A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $39.60 price target on this fund manager’s shares. Morgan Stanley has been looking at the company’s new retirement income product. While it believes the FuturePay product has a lot of potential and could support fund inflows, it will be capital intensive. In addition, it notes that the company’s active ETFs are experiencing fund outflows. The Magellan share price was fetching $48.30 at the end of the week.

    Zip Co Ltd (ASX: Z1P)

    Analysts at UBS have retained their sell rating and cut their price target on this buy now pay later provider’s shares to $5.60. According to the note, the broker has made its move on the belief that Zip’s margins are under threat from increasing competition in the United States. This would be a disappointment given the higher margins its QuadPay business enjoys. It also suspects that a major US bank could enter the market in the future like Commonwealth Bank of Australia (ASX: CBA) has in Australia. The Zip share price ended the week at $7.19.

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  • 2 small cap ASX tech shares to watch

    tech asx share price represented by man wearing smart glasses

    If you’re a fan of both small caps and tech shares then you’re in luck. Because right now there are a few trading on the ASX market that I think have a lot of potential.

    Two which could be worth keeping a close eye on are listed below. Here’s why they are highly rated:

    Audinate Group Limited (ASX: AD8)

    The first small cap tech 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.

    Dante is used widely across the professional live sound, commercial installation, and recording industries globally. Audinate recently revealed that it has reached an impressive milestone of more than 3,000 different products now incorporating Dante for audio-over-IP connectivity.

    It advised that research from RH Consulting shows that 3,034 Dante-enabled devices are available from 361 different manufacturers. Furthermore, the research shows that Dante is dominating the market and is the protocol of choice in more than 91% of the networked audio products currently available. This bodes well for its future growth in a niche but lucrative market.

    Dubber Corp Ltd (ASX: DUB)

    Another small cap tech 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 in North America, Europe and the Asia Pacific.

    The company’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.

    Demand for its offering has been growing strongly over the last couple of years, leading to a significant increase in active customers and revenue. This was evident in its recent third quarter update. That update revealed that Dubber’s annualised recurring revenue (ARR) increased 20% over the three months to $34 million. This was also a 158% increase over the prior corresponding period.

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  • Top brokers name 3 ASX shares to buy next week

    finger pressing red button on keyboard labelled Buy

    Last week saw a number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

    Here’s why brokers think investors ought to buy them next week:

    Ansell Limited (ASX: ANN)

    According to a note out of Citi, its analysts have retained their buy rating and $46.00 price target on this safety and protective products company’s shares. The broker has been looking at the industry and believes that demand for PPE will remain strong in the near term. And while there will inevitably be a decline in sales once the pandemic passes, the broker believes the average growth rate between FY 2019 and FY 2023 means its shares are good value at the current level. The Ansell share price ended the week at $40.70. 

    Bigtincan Holdings Ltd (ASX: BTH)

    A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $1.50 price target on this sales enablement software company’s shares. Morgan Stanley notes that the company has been increasing the range of its offering, providing it with upselling opportunities. It also points out that management has seen opportunities to market the product to sales team that are less informed that their customer base. It believes providing these teams with real time access to content will support their sales. If the company can make a success of this, the broker believes its strong growth could continue for longer. The Bigtincan share price was fetching $1.02 at Friday’s close.

    TechnologyOne Ltd (ASX: TNE)

    Analysts at Morgans have retained their add rating and lifted their price target on this enterprise software company’s shares to $10.00. This follows the release of a strong first half result last week. In addition to being impressed with its result and software as a service revenue growth, Morgans was pleased with its full year guidance. The broker appears confident more of the same is coming as legacy customers migrate to its cloud offering. The TechnologyOne share price ended the week at $9.20.

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  • 2 ASX shares that could be buys in June 2021

    ASX shares upgrade best buy Stopwatch with Time to Buy on the counter

    There are some ASX shares that could be good to look at in June 2021.

    The two businesses in this article have a heavy focus on technology with the offerings that they provide for their clients and customers.

    These two ASX shares might be interesting to think about in the coming weeks:

    Volpara Health Technologies Ltd (ASX: VHT)

    Volpara has grown to be one of the leading breast screening businesses in the US with a market share of almost a third. That means that approximately 32% of women have at least one of Volpara’s products used on their images.

    The business has been improving its offering for clients. But the acquisition of CRA Health can take it to another level.

    Volpara says that there is an increasing push at the biggest US sites to use a single electronic health record (EHR) system. The ASX share recognises that it needs to work closely with these EHRs. CRA Health software is tightly integrated with these systems.

    According to Volpara, there are major US tailwinds for personalised breast care. This includes the US CDC pushing for genetics testing and the CMS including breast cancer risk assessment as a quality measure for reimbursement adjustments. The company has also seen that identifying those women who should get genetics testing can significantly increase the average revenue per user (ARPU).

    CRA Health was profitable and cashflow positive in the previous three years. Volpara signed its largest contract to date through CRA Health. The contract was worth over US$400,000 per year of annual recurring revenue (ARR). It covers the provision of breast cancer risk scores to a large Indiana-based organisation that has sites across more than 20 states and runs a major electronic health record system.

    Temple & Webster Group Ltd (ASX: TPW)

    Temple & Webster is already one of the biggest furniture and homewares businesses in Australia.

    The business has been growing at a fast rate and continues to do so. In the first half of FY21 it saw revenue growth of 118% to $161.6 million. The third quarter of FY21 saw revenue growth of 112% year on year. April 2021 revenue increased more than 20% despite April 2020 being a very big month of strong online sales growth during the COVID-19 lockdowns.

    Temple & Webster is about to embark on another few years of investment as it aims to capture more market share and capitalise on the opportunity of the continuing shift to digital shopping.

    Over time, the ASX share is expecting longer-term profit margins to be higher than many of its comparable offline peers.

    There are a few different things that could help Temple & Webster generate much higher margins: improved supplier terms, more repeat customers which will reduce marketing expenses, a slowing of investment in fixed costs and a higher percentage of exclusive products with higher gross profit margins.

    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 furniture shopper.

    Temple & Webster aims to remain profitable at the earnings before interest, tax, depreciation and amortisation (EBITDA) level during this scale-up phase.

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  • 2 blue chip ASX shares rated as buys

    Blue chips falling

    Are you wanting to buy some blue chip ASX shares for your portfolio? Then you might want to check out the ones listed below.

    These quality companies have been tipped as blue chips to buy. Here’s what you need to know:

    BHP Group Ltd (ASX: BHP)

    The first blue chip share to look at is mining giant BHP. If you’re looking for exposure to the resources sector, BHP could be a great way to do it.

    This is due to the quality of the Big Australian’s diverse operations and favourable commodity prices. The latter is particularly the case for iron ore, with the steel making ingredient recently hitting record highs. And while it has pulled back since then, it is still generating significant free cash flow from current prices.

    This is likely to lead to bumper earnings and dividend payments for shareholders in FY 2021 and FY 2022.

    Macquarie expects this to be the case and has put an outperform rating and $57.00 price target on its shares.

    ResMed Inc. (ASX: RMD)

    Another blue chip for investors to consider is ResMed. It is a medical device company with a focus on sleep disorders.

    Although the pandemic has negatively impacted sleep disorder diagnoses and referrals, ResMed has continued to grow at a solid rate over the last 12 months.

    Pleasingly, ResMed still has a long runway for growth over the next decade and beyond. In fact, management has set itself a goal of improving 250 million lives in out-of-hospital healthcare in 2025.

    Helping it achieve this goal will be its rapidly growing digital health ecosystem, which reached over 12 million cloud connectable medical devices in 2020. This provides ResMed with strong recurring and sticky revenues and high quality data.

    Analysts at Credit Suisse are positive on the company. The broker currently has an outperform rating and $29.00 price target on its shares.

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  • Property is booming, is the REA Group (ASX:REA) share price a buy?

    growth in housing asx shares represented by little wooden houses next to rising red arrow

    The property market has been performing very strongly. Does that make the current REA Group Limited (ASX: REA) share price a buy right now?

    About REA Group

    There are a lot of different parts to the REA Group business.

    It’s a multinational digital advertising business that operates many property sites including the country’s leading residential and commercial property websites – realestate.com.au and realcommercial.com.au.

    It also owns the country’s leading website dedicated to share property, Flatmates.com.au and Spacely which is a short-term commercial and co-working property website.

    REA Group also has a growing exposure to mortgage broking. It owns Smartline Home Loans and is currently going through the process of acquiring Mortgage Choice Limited (ASX: MOC). Another business that it owns is PropTrack, a major provider of property data services.

    The final segment is a diverse array of international property website stakes. In Asia, REA Group owns leading portals in Malaysia (iProperty.com.my) and Hong Kong (squarefoot.com.hk), a sizeable portfolio in China (myfun.com) and a leading property review site in Thailand called thinkofliving.com.

    In India, REA Group holds a controlling interest in Elara Technologies, which owns the brands of Housing.com, Makaan.com and PropTiger.com.

    REA Group also holds a significant shareholding in property websites realtor.com in the US, 99.co and iproperty.com.sg in Singapore and rumah123.com in Indonesia.

    How is the business performing at the moment?

    REA Group releases its performance number to investors each quarter, so there’s good visibility of its earnings and operating conditions.

    In the three months to 31 March 2021, excluding acquisitions revenue after broker commissions went up 8% to $225.6 million. Still excluding acquisitions, earnings before interest, tax, depreciation and amortisation (EBITDA) excluding profit and losses from associates was up 8% to $121.9 million and including those associates EBITDA was up 13% to $123.3 million.

    The quarterly free cash flow rose by 5% to $65.4 million excluding acquisitions.

    National listing volumes in the third quarter of FY21 were up 8%, with Sydney listings up 5% and Melbourne listings up 13%.

    The business is now cycling against the worst of the COVID-19 lockdown period and the property market is also booming. In April, REA Group was seeing increased levels of buyer enquiry underpinned by low interest rates, improving consumer confidence and healthy bank liquidity.

    National residential listings were up 98% year on year, with an increase of 127% in Melbourne and 116% in Sydney.

    The group continues to target full year positive operating jaws, excluding the impact of acquisitions. Core operating costs for FY21 are expected to increase marginally on FY20 as revenue-related variable costs are higher than previously expected, according to the company.

    REA Group CEO Owen Wilson said:

    Conditions are aligned for the Australian property market to continue its positive trajectory for the remainder of 2021. This momentum, combined with strategic investments made throughout FY21, positions REA for a strong finish to the year.

    Is the REA Group share price?

    Some brokers are positive on the business’ trajectory with the strengthening property market, though less excited about the valuation. Credit Suisse is expecting residential volumes to go up 20% in the second half of the year. However, it rates REA Group as a hold/neutral with a price target of $148.

    There’s a buy rating from Morgan Stanley with a price target of $175 which is one of the few brokers that thinks REA Group is a buy right now.

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  • Biggest ASX losers in May could be winners in June

    ASX shares buy Street signs stating 'Winners' and 'Losers' in front of urban backdrop

    This month has been a particularly volatile period for ASX shares but some of the worst performers could see a rebound in June.

    For one, risk appetite appears to be improving again in the last week or so. This means investors could be in a more forgiving mood as they hunt for bargains.

    And what better place to look for value stocks than among ASX shares that have been punished for issuing bad news in May?

    Returning to growth

    Mind you, not all of May’s ASX sinners are worth a second glance. However, Goldman Sachs reckons the Costa Group Holdings Ltd (ASX: CGC) share price could be one to back.

    The fruit and veggies grower is one of the worst performers on the S&P/ASX 200 Index (Index:^AXJO) for the month. Just about all of its losses came in the last two trading days when it warned that labour shortages and weak prices for some of its produce will weigh on its bottom line.

    The update triggered a more than 20% crash in the Costa Group share price. But Goldman is urging investors to buy the stock now as it believes the sell-off is an overreaction.

    Buy the dip

    “The business is well positioned over the medium term. Expansion of international operations is the key growth driver in the business,” said the broker.

    “We forecast China/Morocco to contribute 36% to Group EBITDA by FY23 (vs. 17% in CY19).”

    Goldman reiterated its “buy” recommendation on the Costa Group share price with a 12-month price target of $4.85 a share.

    Catching a breath

    Another laggard with a bright medium-term outlook is the Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price. The medical device maker shed more than 13% in the past week and is down 18.4% in the month.

    Earnings disappointment was the trigger for the sell-off but Goldman believes the mid to longer-term prospects remains positive.

    Stronger earnings ahead

    “Whilst we had factored a sequential slowdown to reflect the decline in hospitalisations, we had under-estimated the extent,” said Goldman.

    “We re-base our consumables forecasts to reflect this lower exit-rate, driving -8-10% revisions to our FY22-25E sales forecasts. The other negative surprise to us today was that air freight costs appear set to remain elevated for some time (currently running at 2x ‘pre-pandemic’ levels).”

    But the broker’s earnings before interest, tax, depreciation and amortisation (EBITDA) forecast for FY22 through FY25 are still 4% to 12% above COVID-19 levels.

    Goldman is recommending the Fisher & Paykel share price as a “buy” with a price target of $33 a share.

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  • 2 quality ASX growth shares with heaps of potential

    asx shares to buy in winter represented by happy investor holding colourful umbrella

    If you’re looking to invest in a growth share or two, then you might want to consider the ones listed below.

    Here’s why these ASX shares could be top options for growth investors:

    Afterpay Ltd (ASX: APT)

    The first option to look at is Afterpay. This buy now pay later (BNPL) focused payments company has been growing at an explosive rate over the last few years.

    This has been driven largely by the successful export of its platform into the United States and UK. The good news is that the payment method continues to resonate with consumers and merchants, which is underpinning rapid customer growth across the globe.

    Pleasingly, with the company expanding onto Mainland Europe and weighing up its options in the Asia market, Afterpay still has a significant runway for growth in the BNPL market over the 2020s. This should be complemented by its expansion into other products such as bank accounts and cash flow tools.

    One broker that is confident in its growth trajectory is Morgan Stanley. Earlier this month the broker put an overweight rating and $149.00 price target on its shares.

    Pushpay Holdings Group Ltd (ASX: PPH)

    Another ASX growth share to look at is Pushpay. It is leading donor management and community engagement platform provider for the faith sector.

    As with Afterpay, Pushpay has been growing at a quick rate in recent years. This has been driven by the shift to a cashless society, the digitisation of the church, and its industry-leading platform.

    Earlier this month the company released its full year results for FY 2021. Pushpay reported a 40% increase in operating revenue to US$179.1 million and a 133% jump in EBITDAF to US$58.9 million. The latter was at the high end of its guidance for EBITDAF of between US$56 million and US$60 million. It is worth noting that this guidance was upgraded three times during the course of the year.

    And while the company’s growth will moderate in FY 2022, it is still targeting growth that other companies would be envious of. Pushpay advised that it expects its EBITDAF to increase 12% to 20.5% year on year. However, as we have seen previously, Pushpay has a tendency to under promise and over deliver. There’s every chance this guidance will be upgraded as the year progresses.

    Looking further ahead, Pushpay appears well-placed for growth over the coming years thanks to industry tailwinds and also its expansion into new markets. One of those is the lucrative Catholic church market, which the company is entering this year. It is then aiming to win 25% of the Catholic church management system and donor management system market over the next five years.

    Ord Minnett currently has a $1.84 price target on the company’s shares.

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  • 3 reasons why the Webjet (ASX:WEB) share price could be an opportunity

    Brokers favorite ASX share COVID reopening trade buyA woman standing on a tarmac celebrates a plane lifting off, indicating rising share price in ASX travel companies

    There are a few different reasons why the Webjet Limited (ASX: WEB) share price could be an interesting idea at the current value.

    The ASX travel share has been through a lot of disruption over the last 15 months because of COVID-19 impacts.

    What’s happening right now with the Webjet share price?

    In the last few weeks the Webjet share price has been falling as it seems increasingly likely that Australia’s international borders are going stay closed longer than expected.

    Since 18 March 2021, the Webjet share price has declined by 17%. However, there has been a recovery since the announcement of the efficacy of the COVID-19 vaccines that are now being distributed around the world.

    Investors recently got an insight into the business’ performance and where it sees things going for the coming months. The FY21 report release showed why investors could be positive on the Webjet share price:

    Cost efficiencies

    Webjet is going through its transformation strategy with WebBeds, its business to business segment. Whilst bookings improved in the second half of its financial year, there are still large-scale restrictions in place in most regions.

    But Webjet managed to reduce costs by 42% over the nine month period, reflecting a reduction of headcount and overheads.

    The transformation strategy initiatives are on track to deliver at least 20% greater cost efficiencies at scale, which will further cement WebBeds as the clear lowest cost global player, according to management.

    Previously before COVID-19, WebBeds was aiming for an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 50%. This would occur with revenue being 8% of total transaction value (TTV) and expenses being 4% of TTV.

    However, it now has a new target of expenses being just 3% of TTV, which would lead to an EBITDA margin of 62.5%.

    Profitable online travel agency (OTA)

    Webjet’s OTA reported that in FY21, being the nine months to 31 March 2021, it saw positive EBITDA of $4.1 million thanks to significant bookings growth in the second half of FY21.

    Profitability is increasing as time goes on. The first half (being six months) EBITDA was $1.1 million and the second half (three months) saw EBITDA of $3 million.

    The EBITDA margin in the first half was 9.7% whilst the second half EBITDA margin was 30.9%.

    Improving outlook

    Webjet believes that there is strong pent-up demand for travel, particularly with leisure travel.

    The ASX travel share has retained its global footprint and diverse customer base. This will allow it to capture demand when international borders open.

    With the OTA business, it said that in April 2021, Australian domestic flight bookings were 95% of April 2019 levels.

    The management remain hopeful that vaccines will allow travel markets to reopen. With WebBeds, the US market is opening up fastest, TTV is already at 83% of April 2019 volumes.

    All businesses, including Online Republic, are seeing increased bookings and profitability month over month during the 2021 calendar year.

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