Tag: Motley Fool

Since this time last year, shares in Bendigo and Adelaide Bank Ltd (ASX: BEN) have performed better than those in Australia’s big four banks. The Bendigo Bank share price has gained 82.62% over the last 12 months.

That’s an ever-so-slightly superior result than the best performing of the big four banks, Australian and New Zealand Banking Group Ltd (ASX: ANZ), and notably better than the other three banks. The ANZ share price has gained 82.05% since 14 May 2020 and the other three majors have each gained between 65% and 71%.

At the time of writing, the Bendigo Bank share price is trading at $10.30, up 1.2% for the day so far.

Let’s take a look at what’s been happening for Bendigo Bank over the last 12 months.

The year that’s been for the Bendigo Bank share price

This time last year, Bendigo Bank shareholders would not have been as happy as they are today. The bank’s share price, along with those of most other ASX 200 companies, had plunged as a result of the coronavirus-induced recession. In fact, one year ago, Bendigo shares were only a matter of days off hitting their lowest closing price since 2001.

On 22 May 2020, the Bendigo Bank share price closed at $5.57, yet now it is arguably within striking distance of double this.

Following its lowest point, the Bendigo Bank share price was helped along by improving investor sentiment and a positive broker note on 9 June, which saw the company’s value surge 9.4% higher.

In July last year, most Australian bank shares were once again hammered by coronavirus concerns, as Victoria and New South Wales both saw an increase in case numbers. Shares in Bendigo Bank also took a plunge. Between 17 July and 20 July, the bank’s share price fell 5%.

End of 2020 financial year results

On 17 August 2020, Bendigo Bank published dire end-of-year results. Its net profit after tax fell 48.8% lower than the previous year’s.

Its bad and doubtful debts grew to reach $168.5 million. That figure included a coronavirus collective provision worth $127.7 million.

The results caused the bank’s share price to close 6.5% lower than it had the previous session.

First-quarter results

Bendigo Bank then went a little quiet for two months before releasing its first-quarter update in late October.

The update stated the bank had had a good start to the 2021 financial year.

Over the quarter, it achieved total lending growth of 11% and residential lending growth of 16.1%.

In the middle of October, it had 6,797 customer accounts still on deferral– 69% less than the peak on 31 May.

The value of deferred repayments was also down, comprising just $2.5 billion worth compared to $6.9 billion worth in June.

On 28 October, Bendigo also announced it was undertaking a capital raise, the news of which had little impact on its share price.

Half-year results

On 15 February 2021, the Bendigo Bank share price closed 7.9% higher than the previous session after the bank released its half-year results.

The results included a positive outlook and a number of improvements on the company’s full-year results.

For the half-year ended 31 December, the bank had a total income growth of 3.3% – raking in $849 million. It also had statutory net profit growth of 67.3% to $243.9 million.

The bank reported cash earnings of $219.7 million – 1.9% higher than the previous period as well as a fully franked dividend of 28 cents per share.

Finally, it reported its bad and doubtful debts had fallen another 15.9%, totalling just $19.5 million.

More reading

• ASX 200 up 0.8%: Xero continues to slide, big four banks rise
• 2 buy-rated ASX bank shares with huge dividend yields
• What do the CEOs of the Big Four banks think of the Federal Budget?
• Which ASX bank share is the cheapest after earnings?
• Flight Centre and Zip were among the most traded ASX shares last week

Motley Fool contributor Brooke Cooper 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 The Bendigo Bank (ASX:BEN) share price has outperformed the big four appeared first on The Motley Fool Australia.

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Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Research Limited (ASX: WAX).

There’s also one called WAM Capital Limited (ASX: WAM) which targets “the most compelling undervalued growth opportunities in the Australian market.”

The WAM Capital portfolio has delivered an investment return of 16.5% per annum since inception in August 1999, before fees, expenses and taxes. This gross return outperformed the S&P/ASX All Ordinaries Accumulation Index return of 8.6% per annum over the same timeframe.

These are the two ASX shares that WAM Capital outlined in its most recent monthly update:

Viva Energy Group Ltd (ASX: VEA)

Viva Energy is a business that refines, imports and delivers energy across Australia and is the exclusive licensee of almost 1,300 Shell and Liberty service stations. The Geelong Refinery employs more than 700 people and supplies more than 50% of Victoria’s fuel requirements.

Viva Energy recently revealed its first quarter operational update to investors. In that, it revealed a strong performance in its retail service stations division, with volumes of petrol consumed in the quarter ending 31 March 2021 now only 17% below the prior corresponding quarter.

The CEO and managing director of Viva Energy, Scott Wyatt, said:

Viva Energy is making strong progress on our business recovery program with encouraging results in all parts of our business during the first quarter.

WAM Capital pointed out that the Australian Government announced a support package providing a production payment to support domestic refiners which should help with the profitability of the ASX share’s struggling refining business which has been impacted by lower demand for refined fuel through this COVID-19 pandemic period.

Downer EDI Limited (ASX: DOW)

The LIC outlined what the Downer business is about – it designs, builds and sustains assets, infrastructure and facilities. It has a large workforce, with approximately 50,000 staff across more than 300 sites, largely in Australia and New Zealand.

During April, Downer announced that it was going to divest its tyre management business to Bridgestone Corporation for $79 million.

WAM Capital said this sale by the ASX share represented a strategic step in Downer’s divestment of its portfolio of mining businesses. Downer’s sale of mining and laundries assets so far will deliver total proceeds of $605 million to the business.

After the announcement of the sale of Otraco, the company revealed its intention to do an on-market share-buyback of up to 70.1 million shares, which is around 10% of its issued share capital. This will return the divestment program proceeds to investors.

More reading

• Its WAR! More details of WAM’s new listed investment company emerge
• ASX 200 Weekly Wrap: Shares have average week but a great month
• These were the best performing ASX 200 shares last week
• Downer (ASX:DOW) share price may only be at start of a capital return cycle
• Why the Sandfire (ASX:SFR) share price jumped to a 2-year high today

Motley Fool contributor Tristan Harrison 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 Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy appeared first on The Motley Fool Australia.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) remains on course to finish a difficult week on a positive note. At the time of writing, the benchmark index is up 0.7% to 7,033.8 points.

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

De Grey Mining Limited (ASX: DEG)

The De Grey Mining share price is down 12% to $1.27 despite there being no news out of the gold explorer. However, with its shares up over 250% since the time year amid excitement over its Hemi prospect, today’s decline could have been driven by profit taking from some investors.

GrainCorp Ltd (ASX: GNC)

The GrainCorp share price is down almost 2.5% to $5.30. This morning analysts at Credit Suisse downgraded the grain exporter’s shares to a neutral rating with a $5.54 price target. This follows the release of its half year results on Thursday. With its shares up 24% since the start of the year, the broker doesn’t appear to have seen enough in the result to maintain its outperform rating.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down 5% to $1.09. Investors have been selling Pilbara Minerals and other lithium miners today despite there being no obvious reason. Once again, this could be due to profit taking after some stellar gains in 2021. In fact, even after factoring in today’s decline, the Pilbara Minerals share price is up almost 25% this year.

Xero Limited (ASX: XRO)

The Xero share price has continued its slide and is down a further 4% to $112.50. Investors have been selling the cloud accounting platform provider’s shares since the release of its full year results on Thursday. The market was disappointed that Xero fell well short of earnings expectations. In addition to this, the company’s operating expense guidance for FY 2022 was higher than consensus estimates.

More reading

• Has COVID-19 killed the ASX WAAAX shares?
• Could this be a once-in-a-lifetime buying opportunity for ASX tech shares?
• ASX 200 up 0.8%: Xero continues to slide, big four banks rise
• Brokers name 3 ASX shares to buy now
• Top broker gives its verdict on the Xero (ASX:XRO) share price

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.

The post Why De Grey, GrainCorp, Pilbara Minerals, & Xero shares are dropping appeared first on The Motley Fool Australia.

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Rewind to the blissful time before the COVID-19 pandemic, and WAAAX was an acronym that ASX investors were tossing around with fevered excitement. The ‘ASX’s answer’ to the US FAANG stocks, the WAAAXers were growing quickly and amassing incredible amounts of cash for shareholders. If you’re not familiar with the FAANG acronym, don’t worry. It stands for Facebook, Inc. Common Stock (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMAN) Apple Inc (NASDAQ: AAPL) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), which of course used to be called Google.

The ASX’s answer was WAAAX: WiseTech Global Ltd (ASX: WTC), Appen Ltd (ASX: APX), Altium Limited (ASX: ALU), Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO).

WiseTech Global managed to put on almost 750% between May 2016 and September 2019. Altium managed roughly 470% over the same period. Appen was a top performer, adding more than 1,000% over that period, as did Afterpay. And Xero put up a still-respectable 300% or so of gains.

Well, the FAANG stocks have continued to show their dominance. All 4 of these US tech giants are right now, at, or near, all-time highs. Facebook is up more than 47% over the past 12 months. Apple, up 61%. Amazon is up 32.3% and Alphabet (C Class), 65%. Long story short, the FAANGs still have claws.

But the same can’t be said of the WAAAXers.

WAAAX off

After reaching an all-time high of just over $38 in 2019, WiseTech has, as of today’s pricing, gone backwards to the tune of 32% from that all-time high from close to 2 years ago. Altium has lost 42% from its high watermark that it hit just before the pandemic struck. Appen is a real clanger, down more than 72% since August last year on today’s level. Afterpay was doing ok for a while there, topping out at $160 a share back in February. But again, on today’s prices, it has given up more than 45% from those levels. And Xero has been dealt a similar fate, falling around 30% from its all-time high of $158 in December last year to today.

So what’s changed? Well, some of the WAAAXers have run into problems scaling their business models in a post-COVID world. This is especially true of WiseTech, Altium and Appen. In Appen’s case, the shares were especially hard hit earlier this month when the company’s CEO warned that the pandemic had led to changes in its customers’ behaviour, and not in a way that benefits the company.

Foolish takeaway

But ultimately, perhaps the story of the WAAAX shares so far just highlight how a narrative can get ahead of fundamental business performance. Just because a company grows at a breakneck speed for a few years doesn’t mean it will do so until Judgement Day.

But many of the WAAAX shares attracted prices over the past few years that arguably seemed to assume they would. When the market corrects this over-optimism, it can be devastating for existing shareholders. Remember, the great investor Benjamin Graham once said that in the short term, the market is a voting machine, and in the long term, a weighing machine. This might be exactly what we’ve seen play out with the WAAAX shares.

More reading

• Why De Grey, GrainCorp, Pilbara Minerals, & Xero shares are dropping
• Broker says this BNPL share could be better than Afterpay (ASX:APT)
• Could this be a once-in-a-lifetime buying opportunity for ASX tech shares?
• ASX 200 up 0.8%: Xero continues to slide, big four banks rise
• Brokers name 3 ASX shares to buy now

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, and WiseTech Global. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. 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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Boral Limited (ASX: BLD) looks to be stepping up its defence of Seven West Media Ltd‘s (ASX: SWM) take-over bid, with investment bank Jarden Australia expected to join the cause. The Boral share price is wobbling today, having spent time in both the red and the green.

At the time of writing, shares in Boral are trading for $6.79, 0.4% higher than yesterday’s closing price.

Let’s take a look at the week that’s been for the building materials group.

Take-over bid

Seven West made a bid for Boral on Monday night, offering to buy all of Boral’s issued shares for $6.50 apiece. That figure would value the building materials company at around $8 billion.  

The offer price is a nil premium on the company’s share price at the time, which closed for $6.50 the previous day.

At the time, The Motley Fool Australia reported the bid was likely an attempt to avoid breaking ‘creep rules’.  Under the Corporations Act, Seven West wasn’t able to increase its 23.2% stake in the building materials company unless it made a takeover offer. Seven West claimed it would have been happy to increase its stake to 30%.

Boral was quick to advise its shareholders to reject Seven West’s bid, announcing that was its preference on Tuesday morning. The offer is expected to open on 25 May at the earliest.

Jarden Australia is expected to be appointed to Boral’s defence through the off-market takeover bid, according to a report in the Australian Financial Review (AFR).

Jarden Australia, alongside Citigroup, was mandated to manage Boral’s on-market buyback in April. The buyback involves it purchasing as many as 122 million of its own shares – around 10% of those on issue – over 12 months.

Boral share price snapshot

Regardless of its dramatic week, the Boral share price has been having a great 2021 on the ASX.

Currently, the Boral share price is up 36% year to date and has gained 164% since this time last year.

The company has a market capitalisation of around $8.2 billion, with approximately 1.2 billion shares outstanding.  

More reading

• ASX 200 sinks, Boral rises, A2 Milk drops again
• Why Adore Beauty, APN Property, Boral, & Calix shares are pushing higher
• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• Boral (ASX:BLD) share price in focus as it rejects Seven Group (ASX:SVW) takeover bid
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The EcoGraf Ltd (ASX: EGR) share price is taking off during early afternoon trade. This comes after the company announced its shares are listed on another stock exchange and have commenced trading.

At the time of writing, the graphite producer’s shares are selling for 54.5 cents, up 11.2%.

Quick take on EcoGraf

Based in Australia, EcoGraf is engaged in the exploration and development of graphite and nickel projects in Tanzania. The company uses innovative technologies to recover graphite from recycled batteries, thus reducing waste and minimising the environmental impact.

What’s pushing EcoGraf shares higher?

Investors are snapping up EcoGraf shares following the company’s listing efforts in other overseas stock markets.

According to its release, EcoGraf advised that its application to join the OTCQX market in the United States has been approved. This enables the company’s shares to commence trading at market open today under the code of ECGFF.

EcoGraf noted that its primary listing continues to be the Australian Securities Exchange (ASX). Its secondary listing is through the Frankfurt Stock Exchange (FSE).

By EcoGraf shares listing on the OTCQX, it provides access to one of the largest investment markets in the world. In addition, it allows ease of trading by investors in real-time quotes and market information.

The company highlighted surging investor interest in the electric vehicle sector as one of the reasons for joining the OTCQX. Recently, United States president Joe Biden announced plans to replace its government fleet of vehicles with electric vehicles.

Furthermore, international attention has picked up after the European Commission put forward new legislation in favourable of eco-friendly batteries. This includes improved recycling, visibility, and traceability of raw materials within the electric vehicle supply chain.

About the EcoGraf share price

Over the past 12 months, the EcoGraf share price has accelerated over 660%. These strong gains reflect growing positive sentiment among investors regarding the lithium-ion industry. Many of Ecograf’s fellow ASX-listed producers have also posted whopping gains over the same time frame.

Based on today’s prices, EcoGraf has a market capitalisation of around $247 million, with approximately 449 million shares outstanding.

More reading

• Here’s why the EcoGraf (ASX:EGR) share price is rising today

Motley Fool contributor Aaron Teboneras 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 Here’s why the EcoGraf (ASX:EGR) share price is storming 11% higher appeared first on The Motley Fool Australia.

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The Commonwealth Bank of Australia (ASX: CBA) share price is on fire today. CBA shares are currently up 0.72% today, mostly in line with the S&P/ASX 200 Index (ASX: XJO) which is up 0.85%. But it’s not CBA’s rise today that makes it notable, it’s what it has risen to. CBA shares are up to $96.67 a share on the back of this rise, after soaring as high as $97.38 this morning. And that, friends, is the highest level Commonwealth Bank has traded at in history. Not just post-COVID, but ever. The company has a market capitalisation of $171.47 billion at this price.

It’s actually quite a momentous occasion. CBA is the largest share on the ASX 200, and the Australian share market by extension. This makes it the largest public company in Australia. And CBA’s previous highs had stood for a long time. It was back in March 2015 that CBA first hit $95.92 a share, a level that would be unseen again for 6 years…. until this week. Even before the pandemic struck, CBA had only managed to climb to just under $89 a share.

What is pushing CBA shares to all-time highs?

So what has pushed CBA over the edge? Well, the catalyst appears to have been the ASX bank’s third-quarter update, which was released to the markets earlier this week. In this update, CBA reported a cash profit after tax of $2.4 billion for the 3 months to 31 March 2021. That was a 24% increase over the quarterly average over the first half of FY 2021. CBA also reported that its cash reserves were strong, and well within regulatory requirements. As such, CBA also flagged that it’s considering further “capital management”. This could come in the form of higher dividends down the road, or perhaps share buybacks.

Commonwealth Bank shares could have also been influenced by the 3 other major banks all reporting half-yearly earnings over the past couple of weeks. All 3 of the other banks delivered large increases in profits, as well as major increases to their dividends from 2020 levels (not a hard ask, to be fair).  Another factor that is likely feeding into this performance is the overall health of the Australian economy. Recent unemployment figures have pointed to a storm recovery in place. Additionally, the Federal government has promised to focus on bringing the unemployment rate down to 4.5% in the budget which was delivered this week. As a bank, CBA is leveraged to the overall health of the economy. So all of these developments are good news for CBA by extension.

The CBA share price is now up more than 15% year to date, and 64% over the past 12 months. On the current share price, Commonwealth Bank of Australia is trading on a price-to-earnings (P/E) ratio of 21.5 and a trailing dividend yield of 2.57%.

More reading

• What resurgent inflation really means for your ASX shares
• ASX 200 up 0.8%: Xero continues to slide, big four banks rise
• 5 things to watch on the ASX 200 on Friday
• ASX 200 sinks alongside largest US inflation rise in 12 years
• Has the A2 Milk (ASX:A2M) share price finally found a bottom?

Motley Fool contributor Sebastian Bowen 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 The Commonwealth Bank (ASX:CBA) share price hits new record high appeared first on The Motley Fool Australia.

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It has been a very disappointing week for the Zip Co Ltd (ASX: Z1P) share price.

Although the buy now pay later (BNPL) provider’s shares are pushing higher today, they are still down 8% this week.

Things are even worse if you stretch the timeframe out to a month. Since this time in April, the Zip share price has lost 30% of its value.

Is the weakness in the Zip share price a buying opportunity?

According to a note out of Shaw and Partners this week, its analysts believe the weakness in the Zip share price is a buying opportunity.

The broker currently has a buy rating and lofty $16.00 price target on its shares.

Based on the current Zip share price of $6.73, this implies potential upside of almost 140% over the next 12 months.

What did the broker say?

Shaw and Partners believes that valuation support is emerging for BNPL shares. Particularly given that further growth catalysts are on the horizon.

It notes that more than 10% of Americans have now used a BNPL product. However, the average spend is much higher than in the Australian market at the same period after launch. Looking ahead, it appears confident the positive trends will continue in the United States. Especially given COVID-19 stimulus checks, offline launches, and the growing presence of BNPL options at checkouts.

In addition to this, last month the broker became even more bullish on Zip following the release of its third quarter update. The highlight for its analysts was the performance of the company’s app. Shaw and Partners believes the market is under-appreciating the viral effect of its Zip’s pay-anywhere functionality. It also sees opportunities for Zip to expand its offering into the cryptocurrency market, shares, and lending.

It isn’t just the Zip that Shaw and Partners is bullish on. As well as Zip, the broker has a buy (high risk) rating and $4.00 price target on Openpay Group Ltd (ASX: OPY) shares. This compares to the latest Openpay share price of $1.76.

More reading

• What’s driving the Afterpay (ASX:APT) share price to 8-month lows?
• Is the Zip (ASX:Z1P) share price a beaten-down buy?
• Why Zip (ASX:Z1P) and these ASX growth shares are rated as buys
• Why is the Zip (ASX:Z1P) share price down 11% so far this month?
• ASX 200 down 1%: CBA Q3 update, tech shares rise, Qantas update

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 ZIPCOLTD FPO. 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 Top broker tips Zip (ASX:Z1P) share price to more than double appeared first on The Motley Fool Australia.

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Times are tough for the Afterpay Ltd (ASX: APT) share price, which is currently fetching just $85.90 at the time of writing. It was only a little over a week ago that the company’s shares were trading at around the $100 mark. And a month ago, Afterpay shares were fetching close to $130 apiece.  

Afterpay is certainly not alone in its partial fall from grace. Fellow buy now, pay later (BNPL) shares Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL) have also experienced substantial falls of late amid a wider sell-off across the tech sector.

While sentiment for Afterpay and its cohort might appear to have turned somewhat sour, analysts at Macquarie believe Humm Group Ltd (ASX: HUM) could outperform. 

Humm, a profitable BNPL company

Unlike many of its BNPL counterparts, Humm is currently profitable. In 1H21, the company delivered a statutory net profit after tax of $38.6 million. During the same period, Afterpay delivered a statutory loss after tax of $79.2 million. 

Humm reported its third-quarter results on Wednesday, in which the company delivered record transaction volumes of $100.8 million for its BNPL segment during the month of March.

Humm’s commercial and leasing segment also delivered a strong volume improvement, up 61.7% on the prior corresponding period to $142.2 million.

This strong result was offset by a weak performance for its Humm’s Cards ANZ segment, where volumes were down 26.5% to $264.8 million. According to Humm, an improvement in this segment is expected in the near term as spending is returning to key volume categories. 

The company pointed to the United Kingdom and Canada as significant opportunities for its differentiated offering in bigger-ticket, longer-term instalment plans. It intends to enter both markets in the near term with a focus on the home and home improvement, health care, automotive, and luxury retail sectors.

Macquarie thinks Humm shares could outperform

Macquarie has come out with an ambitious outperform rating and $1.30 target price for Humm this morning. 

This compares to its note on 20 April in which it declared a neutral rating on Afterpay with a $120 target price. 

Macquarie forecasts FY21 earnings per share of 16.40 cents and a dividend per share of 3.40 cents from Humm. With the Humm share price trading at 94 cents at the time of writing, this would put the company on a price-to-earnings ratio of just 5.7 times FY21 estimates.

More reading

• Could this be a once-in-a-lifetime buying opportunity for ASX tech shares?
• Why Humm, Moelis, Orica, & Treasury Wine shares are storming higher
• The Afterpay (ASX:APT) share price is rising, time to buy?
• ASX 200 sinks alongside largest US inflation rise in 12 years
• ASX 200 falls below 7,000, Xero sinks, Afterpay falls

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 ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Broker says this BNPL share could be better than Afterpay (ASX:APT) appeared first on The Motley Fool Australia.

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The ASX share market has been abuzz this week with the economic story of the United States. Specifically fears of inflation, which have reared their head this week in dramatic form.

On Wednesday (our time), we learned that US inflation numbers have come in at their highest level in more than a decade.

This naturally led to something of a market panic. Government bond yields spiked, for one. And although the US market indexes like the Dow Jones Industrial Average (INDEXDJX: .DJI) continue to trend pretty close to their all-time highs, interest-rate sensitive stocks in the US have cratered. And ‘interest rate sensitive’ shares tend to be those in the tech space.

This is evidenced by the Nasdaq Composite (INDEXNASDAQ: .IXIC) Index. While the Dow Jones remains above 34,000 points today, just 2% from its all-time high, the tech-heavy Nasdaq has taken a beating, down more than 7% from its own high that it reached last month, and down 5% over the past week alone.

ASX tech shares sold off on US interest rate concerns

Many US tech shares have been hit harder than that. Tesla Inc (NASDAQ: TSLA) is down 14% over the past week. MercadoLibre Inc (NASDAQ: MELI) is down around 11%. And Nio Inc – ADR (NYSE: NIO) has lost 16%.

Here in Australia, this panic seems to have spilled over into our own ASX tech shares. That’s despite the Australian economy not facing the same kind of inflationary pressure. We have seen some of the ASX’s most prominent tech shares smashed this week, including Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO).

Why these shares? Well, because they operate with a lot of debt on their balance sheets, and are in ‘growth mode‘. This makes these companies very sensitive to interest rates.

Many of these companies and their like are also priced against their future cash flows, not what they are producing right now. That means that higher interest rates today make their future cash flows riskier. That’s how some financial models work anyway.

But perhaps this is a giant buying opportunity.

A flash in the pan?

Let’s look at the facts. Yes, the US inflation numbers that we saw this week were dramatic. But the US Federal Reserve doesn’t seem too bothered. According to a report in the Australian Financial Review (AFR) yesterday, Fed vice chair Richard Clarida went on CNBC yesterday and attempted to calm the waters. Here’s some of what he said:

Our baseline view is that inflation is going to be close to our long-run objective of 2 per cent, but we will be vigilant… I think what the data is telling us now is there is going to be some upward movement as we reopen, but that it won’t persist over a long period of time, and that’s my view as well.

Remember, the US Fed has previously all but committed to leaving interest rate at near-zero until at least 2022 and probably 2023. Even if inflation picks up. If the Fed does indeed follow this course of action, there is very little to fear in the tech sector.

It’s higher interest rates, not just inflation itself, that tends to take the steam out of growth stocks, as we discussed before.

And if this latest round of US inflation is indeed just a ‘blip’ (the view Mr Clarida seems to think) rather than the start of a sustained rise, then there’s nothing to worry about anyway for the tech sector.

If this turns out to be the case, then the market is arguably overreacting, and panic-selling tech shares. This does indeed point to a possible buying opportunity. There are a lot of moving parts to this situation, though, so keep vigilant and try and see the forest through the trees.

More reading

• ASX 200 up 0.8%: Xero continues to slide, big four banks rise
• Brokers name 3 ASX shares to buy now
• The Afterpay (ASX:APT) share price is rising, time to buy?
• Top broker gives its verdict on the Xero (ASX:XRO) share price
• 5 things to watch on the ASX 200 on Friday

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MercadoLibre, NIO Inc., and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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