Tag: Motley Fool

Brokers have been searching the ASX for potential opportunities. The two ASX shares in this article have rated as buys.

Businesses that multiple brokers like could be interesting to look at. The below two stocks are liked by several analysts:

Reject Shop Ltd (ASX: TRS)

Reject Shop has been rated as a buy by at least three analysts. The discount retail store ASX share is rated as a buy by the broker Morgan Stanley, which has a price target on Reject Shop of $10.

The broker likes Reject Shop for its roll-out targets, careful management of money and improving margins. After seeing the FY21 half-year result, the Morgan Stanley decided to increase its expectations of FY21 earnings by more than a third.

Looking at that actual interim result, Reject Shop reported flat comparable store sales and a overall sales decline of 0.3% to $434.3 million. However, before AASB 16 lease accounting, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 20.8% to $31.1 million, earnings before interest and tax (EBIT) grew 44.9% to $23.3 million and net profit after tax (NPAT) grew 46.5% to $16.3 million.

The ASX share is currently working on the “fix” phase of its strategy as it looks to reduce costs, exit expensive store leases and make stores more efficient.

Once the cost base has been established, the business will open more stores and work on an online offering. Management believe the discount variety sector presents a significant opportunity for growth over the medium to long term.

According to Morgan Stanley, the Reject Shop share price is valued at 17x FY22’s estimated earnings.

Bega Cheese Ltd (ASX: BGA)

Bega Cheese is one of Australia’s largest dairy businesses. It sells a variety of products including cheese, butter, peanut butter, vegemite, ZoOsh dips, mayonnaise and dressings.

It’s currently rated as a buy by three brokers including UBS which has a price target on Bega Cheese of $6.80 over the next 12 months.

The broker was pleased by the HY21 result thanks to the bulk business. It noted the comments by management that seemed positive.

In the first six months of FY21, the ASX share normalised EBITDA grew 51% and profit after tax rose 98%.

The dairy business said that it has made significant progress in its ambition to develop the branded segment of its business. That’s why it spent $534.1 million on acquiring Lion Drinks and Dairy which expanded it into other categories including yoghurt, white milk and flavoured milk.

Bega Cheese believes that the acquisition will create the opportunity for significant synergies. The company also said that the international branded food business continues to grow despite COVID-19 affecting some key export markets. The acquisition provides a platform for further growth in international markets according to management.

According to UBS, Bega Cheese is valued at 19x FY22’s estimated earnings.

More reading

• The ASX’s China problem is getting worse… and quickly
• 3 ASX shares to buy in May 2021

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The Costa Group Holdings Ltd (ASX: CGC) share price is leading the S&P/ASX 200 Index (ASX: XJO) in losses on the market today.

The Costa share price is down 22.07% at the time of writing to $3.46 a share. That comes after Costa shares closed at $4.46 each yesterday, and opened at $3.74 a share this morning.

The Costa Group share price has been on something of a wild ride over the past 5 years.

Shares in the fruit and vegetable company last peaked in mid-2018, when the price got up to a high of more than $8 a share.

Deteriorating growing conditions and supply issues then battered the company, and by December 2019, Costa was down to just $2.44 a share.

In the year-and-a-half since, Costa had been on something of a recovery.

The company rose close to 100% by the middle of April this year, and topped out at $4.89 a share on 16 April. After today’s move, shares are down close to 30% from those highs.

So what’s going on today?

As we discussed this morning, Costa’s slide seems to have been in response to the company’s annual general meeting.

The highlights (or in this case, lowlights) were released to the markets this morning before open.

Costa told investors its guidance for 2021 would need to be revised.

While berry and avocado sales have reportedly been solid, the company warned its domestic mushroom, citrus and tomato productions were all experiencing issues.

Even so, Costa expects its 2021 first-half performance to be slightly ahead of the same period in 2020. Still, the markets were evidently expecting a bit more, and have seemingly punished Costa as a result.

Are Costa shares a buy today after the dip?

A share price fall of this magnitude might have some investors wondering if this is a buy-the-dip kind of opportunity today.

Well, one broker who agrees is investment bank Goldman Sachs. According to CommSec, Goldman has reiterated a ‘buy’ rating on Costa after today’s announcement, with a 12-month price target of $5.35 a share.

Goldman thinks Costa will manage to improve its domestic production in the second half of the year, which will supplement strong international markets.

That target would imply a share price upside of roughly 54% on today’s Costa share price.

More reading

• Why ALS, Costa, Fisher & Paykel Healthcare, & Ramsay shares are falling
• ASX 200 flat: Costa crashes & Fisher & Paykel Healthcare tumbles
• Costa (ASX:CGC) share price crashes 23% on AGM update
• The ASX’s China problem is getting worse… and quickly

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ASX lithium shares made another run between late March and early May into multi-year highs. But early May soon became the tipping point for many lithium shares, with heavyweights Pilbara Minerals Ltd (ASX: PLS), Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) all falling roughly 20%.

However, ASX lithium shares are on the move again today, with the Pilbara share price up 6.60% to $1.21, the Galaxy Resources share price up by 6.44% to $3.80 and the Orocobre share price up 5.28% to $6.58 (at time of writing).

Elsewhere, US-based Piedmont Lithium Ltd (ASX: PLL) has edged 0.87% higher to 81 cents, soon-to-be producer Core Lithium Ltd (ASX: CXO) has dipped 2.08% to 24 cents and Vulcan Energy Resources Ltd (ASX: VUL) shares are running hot again, up 4.90% to $7.50 after announcing another key project milestone.

A winding road for ASX lithium shares

The run from multi-year lows to multi-year highs for ASX lithium shares has been filled with healthy pullbacks.

Take the Galaxy share price, for example. Its shares have run from lows of around 70 cents in May 2020 to highs above $4 in May 2021. During this time, its shares have experienced 4 pullbacks greater than 20%. These pullbacks occurred during June and September last year, and January/February and May this year. Since then, Galaxy shares have been trending strongly.

Commodity prices continue to edge higher

The resurgence and hype behind ASX lithium shares hasn’t just come out of thin air. Both explorers and producers have been supported by a sharp increase in lithium spot prices.

Fastmarkets provides regular lithium price updates across major regions including China, Europe and the US. Its more recent update observes higher lithium hydroxide prices in China on “tight supply and robust buying appetite” and higher prices across Europe and US.

Lithium in demand on all fronts

The tailwinds for ASX lithium shares continue to come from both countries and companies alike.

In Vulcan’s project milestone announcement, its managing director Dr Francis Wedin noted:

With the International Energy Agency last week declaring the need for annual battery production of 6,600 GWh by 2030, implying an annual lithium chemicals requirement of 22 times current total global production, Vulcan is leading the charge to reduce large carbon emissions currently embodied in the traditional production of lithium.

Elsewhere, ASX lithium shares could benefit from US President Joe Biden’s US$2.3 trillion infrastructure project with a focus on renewable energy. According to Mining.com.au, the program includes US$174 billion to promote electric vehicles, which could see Australia and other countries becoming the US’ battery metal suppliers.

On Wednesday, the Ford Motor Company (NYSE: F) share price jumped 8.55% after the company announced the acceleration of its electric vehicle efforts. The company expects approximately 40% of its sales to be electric vehicles by 2030 and plans to lift electric vehicle investment to more than US$30 billion by 2025.

More reading

• Why AMP, Champion Iron, EOS, & Vulcan shares are storming higher
• Stock markets stay strong; can Ford and Tesla both win?
• Up 5%, here’s why the Vulcan (ASX:VUL) share price is running higher
• Why the Core Lithium (ASX:CXO) share price jumped 7% today
• 3 ASX shares that could benefit from Biden’s Aussie electric vehicle swing

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Shares in Advanced Human Imaging Ltd (ASX: AHI) are trading modestly today despite news the company’s DermaScan AI has received European medical device approval. In earlier trade, the Advanced Human Imaging share price jumped more than 6% but has since retreated. At the time of writing, the company’s shares are fetching $1.495, up 0.34%.

Today’s news means the company’s DermaScan AI device can now be used in 27 European Union (EU) countries.

Advanced Human Imaging developed the smartphone-based skin scanner in partnership with Canadian company Triage Technology Inc. It uses Triage’s artificial intelligence (AI) technology to identify 588 skin conditions. The company claims the program is, on average, more effective than dermatologists.

Advanced Human Imaging also announced Triage has signed a distribution agreement with SkinHealth Canada. The agreement will see more than 2,000 Canadian healthcare professionals use the program.

Let’s take a closer look at the news.

DermaScan AI approval

Having received EU approval, DermaScan AI will be available to more than 20,000 clinicians and dermatologists in Europe. It’s already used by more than 20,000 medical professionals worldwide.

Advanced Human Imaging expects the technology will also receive US Food and Drug Administration approval later this year.  

The company plans to release DermaScan AI as a part of its smartphone-based CompleteScan platform in the third quarter of this year.

CompleteScan is a group of programs that use images from smartphone cameras to analyse a person’s risk of health conditions and monitor existing health conditions.

Currently, the CompleteScan platform includes BodyScan and FaceScan. BodyScan analyses a person’s body composition and chronic disease risk, while FaceScan analyses a person’s vital signs, such as blood pressure, heart rate, and respiratory rate.

Once DermaScan AI is incorporated into CompleteScan, it will be available in 200 countries worldwide.

Commentary from management

Advanced Human Imaging CEO Vlado Bosanac commented on DermaScan AI’s EU approval, saying:

This opens up the market significantly for AHI and Triage… More importantly it validates the Derma AI as credible, allowing medical practitioners access to the technology in their day-to-day practices… We are combining the Derma AI into the CompleteScan platform, which will allow our partner’s users an ability to perform an extensive number of health checks via the CompleteScan platform.

Advanced Human Imaging share price snapshot

Advanced Human Imaging shares are having a strong year so far on the ASX.

Currently, the Advanced Human Imaging share price is sitting around 24% higher than it was at the end of 2020. It’s also gained a whopping 740% since this time last year.

The company has a market capitalisation of around $204 million, with approximately 136 million shares outstanding.

More reading

• Why the Advanced Human Imaging (ASX:AHI) share price is jumping 15%
• Advanced Human Imaging (ASX:AHI) share price is sinking, but why?
• Advanced Human Imaging (ASX:AHI) share price sinks despite positive update

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The Reserve Bank of Australia (RBA) has made it clear what it expects the monetary policy framework to look like in Australia for the next several years.

Ever since the COVID-19 pandemic shuddered the global economy last year, the RBA has insisted interest rates will stay at the record-low level of 0.1%. It says this will remain as long as it takes to get the economy running hot again. 

Just this month, the RBA’s minutes revealed it sees no reason to change its predictions, despite the strengthening economy, and signs of substantial inflationary pressures over in the United States.

Here’s some of what the RBA said in a statement on 7 May:

The board is committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target.

It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.

For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest.

Will interest rates stay low forever?

Case closed, then? Well, perhaps not.

If economic changes force its hand, the bank could have no choice but to hike rates earlier than it had flagged.

Another big factor at play is what the rest of the world is doing. One of the reasons rates are at record lows is because they are also at record lows across most other advanced economies.

Europe, the United Kingdom, the United States and Japan all have an official interest rate that looks similar to ours.

And that includes New Zealand, which has an interest rate of 0.25%.

But our brothers and sisters across the ditch may be the first country to move on interest rates. 

According to a report in the Australian Financial Review (AFR) this week, the Reserve Bank of New Zealand (RBNZ) has signalled it might start raising New Zealand interest rates far sooner than the RBA.

Rate hike across the ditch?

The statement the RBNZ released yesterday stated the following:

The Committee agreed to maintain its current stimulatory monetary settings until it is confident that consumer price inflation will be sustained near the 2 percent per annum target midpoint, and that employment is at its maximum sustainable level. Meeting these requirements will necessitate considerable time and patience.

However, the AFR report notes that forecasts released alongside this statement show the bank is pencilling in a cash rate of 0.67% by December 2022. And one close to 1.5% by December 2023.

Now that’s a whole lot different from what the RBA is saying.

So if New Zealand does indeed hike its interest rates along these lines, it could well signal some pressure on the RBA’s own timeline.

All investors should be watching these developments closely since interest rates have a very real effect on asset valuations like ASX shares.

The general rule is higher rates equal lower share prices. That’s something we all might have to deal with if the RBA ends up following the RBNZ.

More reading

• ASX 200 flat: Costa crashes & Fisher & Paykel Healthcare tumbles
• 5 things to watch on the ASX 200 on Thursday
• ASX miners on edge as investors ask how low can the iron ore price go?
• Here’s why gold shares are up on the ASX 200 today
• ASX 200 up 0.2%: CBA share price cracks $100, ALS result impresses

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The Life360 Inc (ASX: 360) share price has been a very strong performer in 2021.

Since the start of the year, the technology company’s shares have stormed 49% higher.

What is Life360?

Life360 is a San Francisco-based technology company. The company’s core offering is the Life360 mobile app. It is a market leading app for families providing features such as communications, driving safety, and location sharing. At the end of March, it had more than 28 million monthly active users globally.

Despite facing tough trading conditions during COVID-19 (lockdowns, lower mobility), Life360 still delivered a 39% increase in normalised revenue to US$81.6 million during the 12 months ending 31 December.

Positively, with COVID-19 headwinds starting to ease, management is confident that its growth will continue in FY 2021. It is targeting Annualised Monthly Revenue in the range of US$110 million to US$120 million, which will be a 23% to 34% increase year on year.

Is the Life360 share price in the buy zone?

Although the Life360 share price has been on fire this year, Bell Potter remains bullish. The broker currently has a buy rating and $7.00 price target on its shares.

Based on the latest Life360 share price, this implies potential upside of 20% over the next 12 months.

It was pleased with its recent acquisition of Jiobit and believes it has a long runway for growth. Bell Potter also suspects that more acquisitions could be coming.

The broker explained: “When Life360 announced the proposed acquisition of Jiobit in late April it also said “the company will continue to evaluate both strategic and financial opportunities” and “this includes larger acquisitions … with a focus on companies in the insurance vertical”. We therefore believe another acquisition is likely in the coming months in the insurance space but it is unclear exactly what type of company this will be (i.e. an insurance carrier, a managing general agent (MGA), an insurance agent?).”

“Our view is the most logical acquisition for Life360 in the insurance vertical is a digital insurance agent in the US given this is consistent with where the insurance market is heading (i.e. online sales) and is in the tech space. It is also compelling given the large and very engaged user base of Life360 in the US which serves to significantly lower the typically high customer acquisition cost for an insurance agent.”

More reading

• This ASX tech share’s also a COVID-recovery stock: fund manager
• 2 ASX tech shares with bags of potential
• 2 highly rated mid cap ASX shares given buy ratings
• 2 exciting ASX tech shares that have been tipped as buys
• Brokers name 3 ASX shares to buy now

The post Up 49% in 2021: Can the Life360 (ASX:360) share price keep climbing? appeared first on The Motley Fool Australia.

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The Recce Pharmaceuticals Ltd (ASX: RCE) share price has been a strong performer on Thursday.

In afternoon trade, the biotechnology company’s shares are up 8.5% to $1.13.

Why is the Recce share price surging higher?

Investors have been bidding the Recce share price higher today following the release of a promising update.

According to the release, the company has announced positive results from a pre-clinical study investigating the Mechanism of Action (MoA) of its lead compound RECCE 327 (R327).

The company notes that R327 is a broad-spectrum synthetic anti-infective that has the potential to address the urgent global health threat posed by antibiotic resistant superbugs and emerging viral pathogens.

Recce advised that the study was performed by independent, world leaders in bacterial MOA analysis and antibiotic profiling.

What were the results?

The release explains that R327’s MoA was “unlike that of any antibiotic seen before” with multiple mechanisms identified in the study. These will be presented at an upcoming World Microbe Forum in June.

In addition, the study showed that R327 was rapidly and irreversibly bactericidal against Gram-negative Escherichia coli (E. coli) bacteria, in both active and stationary phase cells. Positively, it outperformed the best in class commercial antibiotics.

Management notes that current antibiotics rarely retain bactericidal activities against non-dividing bacterial cells. However, R327 shows significant activity against both slow-growing bacteria and actively dividing cells, thereby enabling continuous treatment of infections throughout the bacterial cell life cycle.

Recce’s Executive Director & Chief Scientific Officer, Michele Dilizia, commented: “The data from this study further supports the potential of RECCE 327 to provide a novel and universal way to treat harmful infections. We are excited about these highly encouraging results as they provide important insights regarding how RECCE 327 is able to work repeatedly against the same strain of bacteria and their superbug forms.”

More reading

• Why the Recce Pharmaceuticals (ASX:REE) share price is storming higher today

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My portfolio went up 2% on Tuesday.

If you think that’s impressive, then no, I’m not boasting.

If you think that’s unimpressive, I’m tipping you’ve spent too long trading cryptocurrencies!

2% is, in the context of a single day’s market trade, unusually good.

Better, considering the market was only up 1% the same day.

But still, I’m not boasting.

See, the ASX gains an average of something like 10% per year, inclusive of dividends.

Let’s assume dividends are around 4% per annum (a reasonable guess, given an ASX 200 ETF is paying out 2.84%, but the banks are yet to get back to pre-COVID dividend levels), and the Year 1 maths says that the average share price gain is around 6%.

That means I got a full one-third of the average yearly gain in a day.

The market went up by one-sixth of the same benchmark.

No. Still not boasting.

Exactly the opposite.

Because when we talk about the ASX’s average yearly gain, that hides a helluva lot of volatility.

So yes, it was nice to make 2% on Tuesday.

But some of those winners — including companies I own like Kogan.com Ltd (ASX: KGN) and Corporate Travel Management Ltd (ASX: CTD) — have had a helluva last 6, 12 and 18 months.

In the last 12 months, CTM has been as low as $8 and as high as $22.

Kogan has been as high as $25 and as low as $8.70.

Kinda makes that 2% rise, though welcome, look a little anaemic, doesn’t it?

(And Kogan fell 6% yesterday. Did I mention the ASX can be volatile?)

Don’t get me wrong: I reckon you should take the wins when you get ‘em.

But remember there’ll be bad days, too.

And that the number of ‘up’ days is often not that many more than the ‘down’ days… but the net result of all of those ups and downs tends to be up, over time.

It’s why paying attention to short term movements is usually counterproductive.

You can’t just have the good days.

You can’t avoid the bad days.

You’ve gotta take the bad with the good.

I wish I could make it different, but I can’t.

So yep, I really enjoyed Tuesday.

Yesterday? Not so much.

But better than both is getting to a point where you realise that neither is important in the overall scheme of things.

You need to learn to enjoy the good days a little less… because that also helps the bad days hurt less.

And, in the long run, that helps you avoid acting out of fear, greed, pain or pleasure.

It puts your rational brain back in charge of your emotions.

Hard, but worthwhile.

And, in all probability, much more profitable.

See you tomorrow at our Live Facebook Q&A!

Fool on!

More reading

• Why Kogan, MyState, Regional Express, & Strike shares are sinking
• There’s now extra pressure on the Kogan (ASX:KGN) share price to perform
• Why Airtasker, Betmakers, Kogan, & Telix shares are charging higher
• Got money to invest? Here are 2 ASX shares that could be buys
• 2 ASX 200 blue chip shares that might be the best to buy

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Until now, Magellan Financial Group Ltd (ASX: MFG) was mostly known for its suite of listed managed funds. Or Listed Investment Trusts (LITs) if you want to get technical.

Over the past decade or so, these funds have become some of the most popular managed investments on the ASX.

Take the Magellan Global Fund (ASX: MGF). It’s a globally focused fund that holds companies such as Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Netflix Inc (NASDAQ: NFLX).

It targets both capital preservation and strong compounding returns. As of 30 April, it was worth a staggering $3.18 billion.

Historically, Magellan has been famous for this kind of fund. As far back as 2019, Magellan was flagging a retirement-focused product for its massive base of retail investors.

Until today, it had been very coy on what exactly this might be, only ruling out that it would be an annuity-style product.

But that could be about to change after Magellan finally revealed some details about its new retirement-focused product. An ASX release this morning sheds some light on this new offering.

A retirement fund?

According to the release, the new product will be known as ‘FuturePay’.

Magellan didn’t offer too much detail, instead spruiking that more information will be available at the product’s official launch on 1 June.

But here’s what Magellan CEO Brett Cains did say about the “upcoming retirement income-focused solution”:

We are pleased to announce the launch of Magellan FuturePay. We believe it will help address the challenges faced by many investors and their advisers, particularly those dealing with the problem of establishing a retirement income.

This is an important topic and I look forward to discussing our approach in further detail at our upcoming launch event.

However, a report in the Australian Financial Review (AFR) this morning has some more details.

The AFR says the fund will target an initial yield of 4.3% per annum. This will be paid monthly to investors, which Magellan aims to adjust for inflation and grow over time.

Like most of Magellan’s other funds, FuturePay will focus mostly on global equities. It will be able to divert profits in times of outperformance into a trust.

The fund will also reportedly be backed up with capital, and a loan facility capped at 2% of the fund’s value, from Magellan’s own balance sheet.

This structure will allow Magellan to smooth out its distribution payments over time, balancing out market gyrations.

It’s also estimated the new FuturePay fund will list on Wednesday 2 June, just after the official launch. It will reportedly list on the Chi-X exchange under the ticker code ‘FPAY’.

The fund will charge a management fee of 1% per annum.

About the Magellan share price

The Magellan share price has risen slightly on the back of this news.

Magellan Financial Group shares are up 0.48% at the time of writing, to $47.74. That’s largely in line with the S&P/ASX 200 Index (ASX: XJO).

This share price gives Magellan a market capitalisation of $8.74 billion, a price-to-earnings (P/E) ratio of 21.56 and a trailing dividend yield of 4.61%.

More reading

• 2 ASX dividend shares that could be a buy for income today
• 2 ASX 200 dividend shares that could offer good income
• Why is the Magellan (ASX:MFG) share price up 4% today?
• 2 ASX 200 shares to buy for dividends
• ASX 200 rises, Macquarie falls, Magellan declines

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has overcome a soft start and is pushing higher. At the time of writing, the benchmark index is up 0.25% to 7,109.8 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

ALS Ltd (ASX: ALQ)

The ALS share price is down 1.5% to $12.08. This decline appears to have been driven by a broker note out of Morgans this morning. According to the note, the broker has downgraded the testing services company’s shares to a hold rating with an $11.56 price target. This was made largely on valuation grounds after a strong rise.

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price has crashed 22% to $3.48 following the release of its annual general meeting update. The horticulture company revealed that it is only expecting its first half performance to be marginally ahead of the prior corresponding period. This is being driven by weakness in its domestic operations and currency headwinds.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price has fallen 5.5% to $28.04. Investors have been selling the medical device company’s shares following the release of its full year results. Although the company reported a 56% increase in operating revenue to NZ$1.97 billion and an 82% jump in net profit after tax to NZ$524 million, its outlook appears to have spooked investors. Management warned that things were too uncertain to provide guidance.

Ramsay Health Care Limited (ASX: RHC)

The Ramsay Health Care share price is down 2.5% to $62.81. Investors have been selling the private hospital operator’s shares following the announcement of plans to acquire UK-based Spire Healthcare for approximately 1 billion pounds (A$1,822 million). Management expects the acquisition to be transformational for its UK business. Citi has responded by holding firm with its neutral rating and $67.00 price target. The broker appears uncertain whether it will achieve the synergies it is targeting.

More reading

• ASX 200 flat: Costa crashes & Fisher & Paykel Healthcare tumbles
• Costa (ASX:CGC) share price crashes 23% on AGM update
• Fisher & Paykel Healthcare (ASX:FPH) share price on watch after reporting huge profit growth
• 5 things to watch on the ASX 200 on Thursday
• Ramsay Health Care (ASX:RHC) share price on watch after announcing major UK acquisition

The post Why ALS, Costa, Fisher & Paykel Healthcare, & Ramsay shares are falling appeared first on The Motley Fool Australia.

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