Tag: Motley Fool

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Let’s say you stumble across a stock you’ve never heard of before that has generated amazing annual returns of 20% or more year after year. Would you immediately add it to your portfolio? If you’re smart, you’d answer no. What if Warren Buffett recommended it? Your answer should still be no.

The reasoning is simple: If you’ve never heard of the company before, you probably don’t have any idea how it makes its money. You might be thinking, “Big deal. Look at those returns!” But I promise you, it is a big deal, and below, we’ll look at why.

Why you need to know how a company makes its money

When you purchase a stock, you’re investing in a company and betting on its future success. But if you don’t know how it makes its money, you won’t be able to tell when it’s headed for a fall. 

Understanding a company’s business model can help you better predict how its leadership’s decisions and industry trends could affect the company’s stock price. For example, let’s say in a bizarre parallel universe, Netflix (NASDAQ: NFLX) decides to go back to its old way of doing things, foregoing the streaming service we’ve all come to know and love and instead shipping old-fashioned DVDs to your door. 

As someone who presumably understands how Netflix works and why it’s so successful, you would be able to tell that that move is going to be bad for business and that Netflix’s stock price is probably going to drop. But if you had never heard of Netflix and weren’t able to guess what it does from the company name, you might not realize its leaders have just made a terrible mistake. If you buy its stock just to hop on the bandwagon with everyone else, you could find yourself facing huge losses in this scenario. 

Understanding how a company makes its money can also help you identify when it’s doing well and when it might be time to buy even more of its stock. If Apple releases the iPhone 13 later this year to rave reviews, that could clue you in to the fact that the company is doing a great job at producing products people want — and that could be a good time to invest more in its stock.

How to choose the best stocks for you

Investing only in companies you know well is what Warren Buffett refers to as investing in your “circle of competence.” If you’re new to investing, you may not think that’s very large, but it’s probably bigger than you think. You don’t need to understand every business decision a company has ever made. You just need to have a general idea of how it makes money.

If you’ve ever used Netflix — or even if you’re just familiar with what it does — that falls into your circle of competence. Same goes for the manufacturers of the groceries and household items you buy every day. You probably also know how airlines, auto makers, and retail stores make their money, so they’re potentially good investments for you too.

Your job might also open up more companies you can add to your circle of competence. For example, if you work in the tech industry, you might know about some more obscure tech stocks that an outsider may not be familiar with. These are all good places to start when deciding what you’d like to invest in.

What if I want to invest in a company I don’t understand?

To return to our fictional company stock with the 20% annual returns, let’s say you’re interested in possibly investing in it but you’re not familiar with what the company does. That doesn’t mean you can’t add it to your portfolio. It just means you shouldn’t do so right away. 

You need to do your research first to familiarize yourself with how the company operates, why it’s been so successful to date, and whether its stock has the potential to continue providing these outstanding returns in years to come. 

There’s no magic stat that can tell you whether a company’s worth investing in. There are many factors to consider, including a stock’s price-to-earnings (P/E) ratio, its debt-to-earnings ratio, its management team, and industry trends. As you become a more experienced investor, you’ll learn how all these factors play into one another and how to identify the truly valuable stocks from the ones that aren’t worth the hype. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

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• This ASX tech ETF might be in the buy zone today. Here’s why
• Netflix’s downbeat earnings explained
• Netflix’s pandemic boost is over — but here’s why I’m not worried
• Netflix wins big at the Oscars

Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Netflix and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Apple and Netflix. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Chorus Ltd (ASX: CNU) share price is moving higher, up 2% in morning trade.

Below we take a look at the New Zealand based telecommunications infrastructure company’s latest revenue proposal.

What revenue did Chorus submit?

Chorus’ share price is gaining after the company tendered its maximum allowable revenue submission (MAR) to New Zealand’s Commerce Commission for the 2022–2024 regulatory period.

The submission is based on the starting Regulated Asset Base of NZ$5.5 billion (AU$5.9 billion) submitted to the Commission in March. Chorus stated this is conservative and doesn’t properly reflect the costs of building its ultra-fast broadband (UFB) network.

The submission is forecast to deliver NZ$720–$820 million in revenue during the period. Chorus’ CEO JB Rousselot said this was consistent with the company’s forecast fibre revenues during the first regulatory period.

Rousselot added:

We want to encourage fibre uptake, investment and innovation, consistent with the goals of our public-private partnership with government and our desire to help more New Zealanders realise the benefits of fibre broadband.

The MAR proposal includes the use of tilted depreciation to ensure a smooth transition into the new regulatory regime and properly reflect the commercial risks we face.

Chorus said it remains in talks with the Commission on various aspects of the new regulatory framework in New Zealand. It is strongly advocating that the Regulated Asset Base “reflect the true costs” of its UFB public-private partnership requirements. Chorus believes this would see Regulated Asset Base outcomes of up to $6 billion.

Chorus share price snapshot

It’s been a challenging year for Chorus shareholders, with shares down 15% over the past 12 months. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 29% at that same time.

Chorus has continued to struggle in 2021, with shares down 20% year-to-date.

At the current share price of $5.82, Chorus pays an annual dividend yield of 4%, unfranked.

More reading

• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 5 things to watch on the ASX 200 on Monday
• 2 high-quality ASX 200 shares to buy
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week

Motley Fool contributor Bernd Struben 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.

The post Why the Chorus (ASX:CNU) share price is moving higher appeared first on The Motley Fool Australia.

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The Elders Ltd (ASX: ELD) share price is in the red today. The agribusiness comes into focus after releasing its half-year results for the six months to 31 March 2021.

At the time of writing, shares in the company are trading for $11.87 – down 2.95%. By comparison, the S&P/ASX 200 Index is 0.54% higher.

Let’s take a closer look at the results and what they mean for the Elders share price.

Elders half-year results

In today’s release, Elders reports underlying profit after tax is up 31% on the prior corresponding period (pcp) to $68.2 million. Total sales for the six-month period are $1.1 billion, which is 22% higher than the first half of FY20.

Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 28% to equal $94.3 million. Underlying earnings per share (EPS) are up 38% on the pcp to 42.9 cents. The company will pay a 20-cent interim dividend per share to shareholders, 20% franked. In the first half of FY20, the company paid a 9-cent dividend, fully franked.

The biggest drivers of the growing profit were an $18 million increase in the margin of retail products and $11.9 million for wholesale products. Costs were up $16.5 million on the pcp. Elders attributed this to “acquisitions, higher insurance costs, investment in strategic areas and systems modernisation expenses”.

Despite these positive figures, the Elders share price is heading south today.

In a separate statement to the ASX, Elders said the results were due to a variety of factors, including a backward integration strategy that boosted retail sales, encouraging weather conditions (which it expects to continue in the short term), and favourable commodity prices.

The Australian Bureau of Statistics (ABS) supports this view of favourable growing conditions when compared to the previous financial year.

In FY20, the total value of crops produced decreased by 5% compared to the previous year. This was driven largely by a 20% drop in the value of wheat production and a 78% fall in the value of cotton production. Operating cash flow was down 13% on the pcp to $23.9 million. Total cash flow for the period was a $21.2 million outflow. In the pcp, it was a total inflow of $55.4 million. Elders says the drop in operating cash flow is due to increased working capital in rural production. Financing cash flows fell 115% into the red (-$19.8 billion) to drive the total cash flow loss.

Elders share price snapshot

Over the past 12 months, the Elders share price has increased 23.7%. Only last week, Goldman Sachs put a buy-rating on Elders shares, with a target price of $15.00.

Elders has a market capitalisation of $1.8 billion.

More reading

• Leading broker names 5 emerging ASX shares to buy today
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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

According to a note out of Macquarie, its analysts have retained their outperform rating and $30.50 price target on this banking giant’s shares. The broker has been looking at the banking sector following recent results releases. It believes ANZ’s shares offer investors the best value over the medium term. This is despite Macquarie not expecting ANZ’s second half performance to be as strong as the first due to increasing costs. The ANZ share price is fetching $27.39 on Monday morning.

TPG Telecom Ltd (ASX: TPG)

A note out of Ord Minnett reveals that its analysts have upgraded this telco’s shares to a buy rating but cut the price target on them to $6.45. The broker made the move largely on valuation grounds following a sharp pullback since announcing changes in its leadership. And while it notes that COVID-19 headwinds won’t be going away any time soon, it expects this to be offset by merger synergies. The TPG Telecom share price is trading at $5.20 this morning.

Xero Limited (ASX: XRO)

Analysts at Morgan Stanley have retained their overweight rating but trimmed their price target on this cloud accounting platform provider’s shares to $135.00. This follows the release of Xero’s full year results last week. According to the note, the broker feels the market has overreacted to Xero’s investment plans. It believes the strategy of reinvesting is the right thing to do and will help it maintain a leadership position over the long term. It points out that this strategy helped it unseat previous market leader MYOB in the past. The Xero share price is fetching $116.25 on Monday.

More reading

• US market bounces back, ASX 200 tech shares on watch
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 3 great ASX tech shares to buy
• These were the worst performing ASX 200 shares last week
• ASX 200 rebounds, Treasury rises, Xero falls

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 Xero. 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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Tyro Payments Ltd (ASX: TYR) shares are edging higher on Monday after the company announced another solid transaction value update. At the time of writing, the Tyro share price is trading 0.27% higher at $3.69.

Tyro is Australia’s fifth largest merchant-acquiring bank by number of terminals in the market, behind the four major banks. Tyro derives a majority of its revenues from payment services via its EFTPOS terminals. The weekly updates provide key insights into how the business is performing. 

Solid transaction values 

The Tyro share price is in the green today after the company reported a 96% increase in transaction values between 1 to 14 May, compared to a year ago. This follows a 147% increase in the month of April. 

The strong transaction value increases throughout April and May are likely driven by easy comparables against a year ago, at the height of COVID-19 lockdowns. This was during a period when a majority of Tyro’s merchant base across hospitality, retail and health sectors were forced to operate at a limited capacity. 

However, from a year-to-date perspective, the company’s transaction values are up a solid 22% from $17.740 billion to $21.662 billion. 

Tyro share price outperforms ASX 200 tech index

The Tyro share price has surprisingly emerged as one of the top-performing tech shares this year. 

The S&P/ASX 200 Info Tech Index (ASX: XIJ) has slipped to an 8-month low and is down by 18.5% year to date. This follows significant share price weakness in tech heavyweights including Afterpay Ltd (ASX: APT), WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO). 

Despite the pressures facing the tech index, the Tyro share price has pushed around 15% higher year to date. Its share price has emerged stronger after its crippling EFTPOS terminal outages and scathing short-seller attack earlier this year.

According to Tyro, it continues to innovate in the payments landscape, with a number of strategic investments announced in its presentation at the Macquarie Australia Conference 2021 and a recent move to acquire Aussie health fintech, Medipass. 

More reading

• Why Crown, Fortescue, Nearmap, & Tyro shares are charging higher
• The Tyro (ASX: TYR) share price jumps 5% on 2 positive updates
• Why is the Tyro Payments (ASX:TYR) share price dropping today?
• Why Bubs, IDP Education, ResMed, & Tyro shares are dropping today
• The Tyro Payments (ASX:TYR) share price has gained 30% in 12 months

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tyro Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, WiseTech Global, and Xero. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bitcoin (CRYPTO: BTC) hype train has taken a sharp turn away from destination moon and is hurtling back to earth.

The all-father cryptocurrency has experienced a ~30% selloff since its all-time high of US$64,899 on 14 April. This marks its largest correction since the March 2020 COVID-19 selloff where prices halved from US$8,000 to as low as US$3,800 within two days. 

Why is Bitcoin sliding?

Last week, Tesla Inc (NASDAQ: TSLA) CEO Elon Musk (aka the “Technoking of Tesla”) announced that the company would no longer offer Bitcoin as a payment option.

Musk’s tweet said at the time: 

We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. 

He also tweeted the recent surge in energy usage over the past few months with regards to bitcoin electricity consumption.

On a slightly positive note, the tweet said that: 

Telsa will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. 

Within two hours of the tweet, bitcoin crashed from approximately ~US$54,500 to as low as ~US$48,500. 

Tesla exiting bitcoin speculation 

More recently, there has been speculation that Tesla may have planned or already sold its bitcoin holding. A Twitter user who goes by the handle @CryptoWhale said: 

Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings.

With the amount of hate @elonmusk is getting, I wouldn’t blame him…

To which Musk replied, “Indeed.”

A new cryptocurrency in town 

Musk appears to have turned his back on Bitcoin in favour of meme-inspired, dogecoin. Dogecoin has suffered a similar ~30% correction from 8 May highs of US$0.739 to US$0.506 at the time of writing.  

On 14 May, Musk tweeted: 

Working with Doge devs to improve system transaction efficiency. Potentially promising.

Which again, witnessed a significant surge in dogecoin prices. 

More reading

• Why I’m loving this ASX bank share at the moment: fundie
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Elon Musk cancels Bitcoin! Is it gold’s gain?
• Tesla stops taking Bitcoin payments over fossil fuel concerns
• Could Dogecoin and Bitcoin be getting an extra push?

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. 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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Shares in mid-cap ASX biopharmaceuticals company Starpharma Holdings Limited (ASX: SPL) have endured a volatile start to 2021. After surging to an all-time high of $2.52 by mid-February, the company’s shares have now plunged more than 35% to just $1.62 as at the time of writing.

While this still means they have risen close to 70% over the last 12 months, it’s a disappointing result for shareholders who may have thought 2021 would be a breakout year for Starpharma.

Company background

Before we look at the reasons behind the volatility, it’s probably worth taking some time to explain what Starpharma actually does – particularly since this is a junior healthcare company that may be flying under the radar for many investors.

Starpharma is an Australian healthcare company specialising in dendrimer-based nanotechnologies. Dendrimers are essentially man-made synthetic compounds: well-defined collections of molecules that have been created in a lab to serve a particular purpose. Because scientists can precisely select the molecules included in the dendrimer, they can be developed to address specific needs in medicine and life sciences.

Starpharma’s flagship product is called Viraleze, a nasal spray that has been shown to provide strong protection against a range of respiratory viruses, including the virus that causes COVID-19. Viraleze works by targeting areas in the nasal cavity where viruses typically multiply, providing a physical barrier against infection and preventing the virus from spreading to the lungs.

The company also develops a number of other products, including dendrimer drug delivery systems. Dendrimer technology can also be used to enhance the properties of other drugs by ensuring that they target the right areas of the body. The company’s dendrimer drug delivery products are currently being trialled with cancer patients.

What’s been going on with the Starpharma share price?

The February surge in the Starpharma share price came on the back of a flurry of company announcements.

First, Starpharma released its activities report for the quarter ended 31 December 2020. The report provided a number of positive updates, including that Viraleze was on track to be registered for use in Europe, and clinical trials of its other dendrimer-based products were also progressing. 

Shortly afterwards, Starpharma announced that a clinical trial of one of its drug delivery products was progressing to a global phase 1 clinical study. The trial was being run in partnership with international pharmaceutical company AstraZeneca (LSE: AZN) and was investigating the efficacy of Starpharma’s products for patients with forms of acute leukaemia.

Starpharma also announced it had signed a research agreement with US-based pharmaceutical company Merck & Co Inc (NYSE: MRK). Under the agreement, Merck & Co will seek to evaluate whether Starpharma’s dendrimer technology provides advantages for oncological medicine.

Despite these positive announcements – and a number of others since, including the news that Starpharma is set to partner with LloydsPharmacy for the UK launch of Viraleze – the Starpharma share price has continued to slide lower.

Although this might leave some loyal shareholders frustrated, it’s worth noting that Starpharma is still a young biotech. It is yet to book any meaningful sales revenue, and many of its products are still progressing through trial phases. This makes it a very speculative investment, and ups and downs in its share price are to be expected.

However, if the company can successfully launch Viraleze in Europe, the Starpharma share price could be worth watching over the next few months.

More reading

• The ASX shares poised to benefit from new spending in the 2021 federal budget
• Starpharma (ASX:SPL) share price slides despite COVID spray rugby deal
• Why Eclipx, Emeco, SeaLink, & Starpharma shares are storming higher today
• Starpharma (ASX:SPL) share price surges higher on COVID product update
• Why Dubber, PointsBet, Starpharma, & Westpac shares are storming higher

Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings 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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Shares in ASX tech company Bigtincan Holdings Ltd (ASX: BTH) have had a disappointing start to 2021. The Bigtincan share price has already slid roughly 25% lower this year – and at their current price of $0.825, the software developer’s shares are not far off the 52-week low price of $0.69 they hit all the way back in June.

Company background

Bigtincan develops sales enablement software. Bigtincan’s flagship sales enablement automation platform is a centralised, integrated software solution designed to support its corporate clients throughout their entire sales and marketing lifecycle, from onboarding and training new staff, to engaging new customers and providing accurate reporting.

As with many other emerging ASX tech companies like Megaport Ltd (ASX: MP1), Dubber Corp Ltd (ASX: DUB) and ELMO Software Ltd (ASX: ELO), Bigtincan operates a software as a service business model. In other words, it sells its customers subscription-based licenses to access its software platform. This means that a lot of its revenue is recurring – customers will have to pay their subscription fees at regular intervals to maintain their access.

As an investor, this takes some of the risks out of an investment. As long as Bigtincan can keep customer churn low, it can develop regular income streams from subscription renewals.

This is why you’ll notice that a lot of these companies – particularly in their growth phase – will focus on annual recurring revenues and other similar metrics. The idea is that, while current cash receipts may still be low, these companies are locking in higher future revenues by growing their customer base.

Financials

For a growing company, Bigtincan’s financial performance has been pretty strong. First-half FY21 revenues were $18.4 million, an increase of 33% over the prior comparative period. And annualised recurring revenues – that key metric I mentioned before – jumped more than 50% over the first half of FY20 to a record $48.4 million.

This business momentum seems to have carried over into the third quarter. In an update issued at the end of April, Bigtincan reported that it had received $12.2 million in cash receipts for the March quarter – a quarter-on-quarter uplift of 13% – meaning it was on track to book the full cash value of its annualised subscription revenues.

However, shareholders must have been hoping for something more from Bigtincan’s third-quarter update, and it was sold off heavily again. On 30 April, the day the third-quarter update was released, the Bigtincan share price fell sharply, down almost 13% by the close of trade. They dropped a further 5% the next trading day as well.

Outlook

Bigtincan expects full-year FY21 revenues to come in towards the top end of its previously issued guidance of between $41 million and $44 million. Included in its third-quarter update was a slight upgrade, to between $43 million and $44 million. Annualised recurring revenues are also expected to be at the higher end of $49 million and $53 million.

This could mean a year-on-year increase of as much as 42% for revenue, and 48% for annualised recurring revenues – both pretty substantial rates of growth. It will be interesting to see what impact that will have on the Bigtincan share price if the company can hit – or even exceed – those targets.

More reading

• These are the 10 most shorted shares on the ASX
• 3 stellar small cap ASX shares to watch
• 3 exciting ASX growth shares rated as buys
• Little ASX software share to explode once everyone wakes up: fundie
• 3 buy rated mid cap ASX shares for the long term

Rhys Brock owns shares of BIGTINCAN FPO, Dubber, Elmo Software, and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO, Elmo Software, and MEGAPORT FPO. The Motley Fool Australia owns shares of Dubber. The Motley Fool Australia has recommended BIGTINCAN FPO, Elmo Software, and MEGAPORT 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The stock market has brought wealth to millions of investors over the long run. To claim your share of that wealth, however, you have to be able to endure just about everything Wall Street throws at you — and you’ll have to fight your own emotional responses in order to stick with your winning strategy.

Most investors understand that stock markets go up and down, sometimes violently. When the entire market takes a plunge, it’s painful, but it comes with the somewhat comforting feeling that just about everyone’s in exactly the same boat. Together, you can ride out the storm — like so many people did in early 2020 — and emerge stronger, wiser, and richer.

What can actually hurt more, though, is when your stocks seem to take the brunt of the damage. It can make you question your ability to choose stocks for the long haul. It can even make you give up on investing in great companies entirely. As understandable as that reaction is, it’s the wrong approach. There are ways to turn your gut reactions into actionable and valuable guidance, but first, you have to get some perspective and get your emotions under control.

When you feel like you’re missing out

The market over the past few months has been hard to handle. Big swings have taken major market benchmarks to record highs, only to fall back downward again. Even those investing in index funds have had to deal with volatility.

Yet investors who’ve identified pioneering and disruptive stocks in high-growth areas like technology have had to go through an even wilder ride. After seeing amazing returns throughout much of 2020, a lot of these former high-flying stocks have fallen 20%, 30%, or even 50% or more of their value in a very short period of time.

What’s more, many of these drops are happening even as these companies are announcing strong business performance. Growth is still there, and in many cases, future prospects look just as bright as they’ve been in the past. Yet share prices are falling.

3 things to do to keep your cool

When your stocks are falling more than the overall market, don’t panic-sell. Instead, follow this three-step plan to get your feet back under you and then take appropriate action.

1. Know why you own each stock in your portfolio

Every stock you own is in your portfolio for a reason. If you own a stock, you’re expressing your belief that the company’s fundamental business will thrive and prosper in the long run. So when you find yourself doubting that belief, it’s a good time to reacquaint yourself with the company’s business model and how it intends to grow and make money in the future.

Occasionally, that examination will reveal that there’s been a true change in the business environment that contradicts the original reason you bought the stock. More often, though, you’ll find that the same reasons you invested in the first place are still intact, and that’ll help give you the resolve to overcome the market’s inevitable volatility.

2. Look beyond right now

If you just bought a stock right before it dropped, then it’s easy to feel like your timing is horrible. But keep in mind that in most instances, you’ve made other investments before, and you’ll have new opportunities to invest in the future.

Say you’ve owned a stock for a year and it doubled in price before falling 25%. All told, you’re still up with a solid 50% gain.

Conversely, say you just bought a stock and it fell 25%. If it doubles in price from here, you’ll be up the same 50% on your original investment.

3. Take advantage of panic

Once you’ve gone through that calming process, you’ll often emerge feeling more confident about your stocks than ever. That shows the value of having some spare cash to invest during episodes like this because you can pick up the stocks you love even more cheaply.

When you’re first starting out, though, you’ll want to be prudent with your opportunism. It’s entirely possible that stock prices will fall even further. Investing a portion of your available cash while holding some in reserve for even bigger potential bargains down the road can be a good middle ground. You won’t always get that second chance to buy even more cheaply, but it can help you keep your wits about you if a downturn gets even more severe.

Fear is the mind-killer

No one wants to feel like they’re the ones losing the most money in the stock market. Unfortunately, even with great companies, downward moves like this happen. If you can get past them and stick to a long-term game plan, though, then you’ll have learned the secret that so many investors are never able to use to their advantage.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The EML Payments Ltd (ASX: EML) share price won’t be going anywhere on Monday.

Prior to the market open this morning, the payments company requested a trading halt.

Why is the EML Payments share price in a trading halt?

This morning EML Payments requested a trading halt to facilitate an orderly market in its securities pending an announcement in relation to significant regulatory concerns notified by the Central Bank of Ireland.

According to the release, the company received notification of these concerns on Friday 14 May 2021. They relate to the Prepaid Financial Services business that EML acquired on 31 March 2020.

What is the Prepaid Financial Services business?

Prepaid Financial Services was founded in 2008 as a reseller of pre-paid cards. Since then it has evolved into a leading provider of white label payments and banking-as-a-service technology with a pan-European footprint.

The company notes that it provides payments and digital banking capabilities, e-wallets and payout/distribution programs, regulatory Electronic Money Institution status and flexible software to enable financial institutions and non-financial institutions to deliver feature-rich transactional banking and other payment services to their end-user base without becoming a regulated entity.

What are the concerns?

As things stand, neither EML Payments nor the Central Bank of Ireland have revealed the latter’s concerns publicly.

However, this isn’t the first time the Prepaid Financial Services business has faced regulatory scrutiny.

At the end of March, EML announced the resolution of regulatory action by the Payment Systems Regulator (PSR) in the United Kingdom against Prepaid Financial Services. This related to an investigation under the Competition Act 1998 into anti-competitive conduct. The two parties ultimately settled the matter with a maximum penalty of 0.92 million pounds.

It is unclear if the Central Bank of Ireland’s concerns are similar and what the potential penalties or impacts could be. The term “significant regulatory concerns” is somewhat ominous. 

The EML Payments share price is expected to return to trade by Wednesday at the latest, when all will be revealed.

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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 recommends EML Payments. The Motley Fool Australia has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the EML Payments (ASX:EML) share price is in a trading halt appeared first on The Motley Fool Australia.

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