Tag: Motley Fool

  • Why these ASX shares just hit 52-week lows or worse

    Scared, wide-eyed man in pink t-shirt with hands covering mouth

    Although the S&P/ASX 200 Index (ASX: XJO) is closing in on a record high, not all shares are performing as positively.

    Two ASX shares that have just fallen to 52-week lows or worse are listed below. Here’s why they are down in the dumps:

    A2 Milk Company Ltd (ASX: A2M)

    The a2 Milk share price hit a multi-year low of $7.13 on Monday. Investors have been selling the infant formula company’s shares for a number of reasons.

    The main one is the fact that it has downgraded its earnings guidance multiple times during the last 12 months. This has been driven by significant weakness in the daigou channel and management’s failure to accurately predict its recovery.

    Unfortunately for shareholders, one of the most supportive brokers, Morgans, has lost faith and downgraded its shares last week.

    It notes that ecommerce platform pricing in China isn’t improving and in Australia it has seen retailers and pharmacies discounting stock to clear ageing inventory.

    Morgans feels this could be bad news for the company. It explained: “A2M needs pricing to rise so that reseller margins improve and therefore demand for its products increase. Our industry feedback suggests that there has been no real improvement in the underlying operating environment.”

    As a result, it thinks that its FY 2021 guidance will be difficult to achieve.

    Adore Beauty Group Limited (ASX: ABY)

    The Adore Beauty share price dropped to a record low of $4.52 on Monday. This means the online beauty retailer’s shares are now trading 33% lower than their October IPO listing price of $6.75.

    Several disappointing updates from ecommerce companies this month have weighed heavily on investor sentiment and put significant pressure on the Adore Beauty share price.

    This is despite the company’s performance in FY 2021 tracking ahead of its prospectus forecasts. For example, during the first half of FY 2021, the company had almost 800,000 active customers. From these, it generated revenue of $96.2 million, up 85% on the prior corresponding period.

    Morgan Stanley appears to believe the weakness in the Adore Beauty share price is a buying opportunity. It currently has an overweight rating and $8.75 price target on its shares.

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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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. recommends Adore Beauty Group Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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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  • 2 highly rated ASX growth shares for May

    Are you looking to add a growth share or two to your portfolio next month? Then take a look at the two ASX shares listed below.

    Here’s why they could be growth shares to buy right now:

    Afterpay Ltd (ASX: APT)

    This buy now pay later (BNPL) provider could be a good option for growth investors.

    It has been growing at a rapid rate over the last few years and this has continued in FY 2021. For example, during the third quarter, Afterpay reported a 104% increase in underlying sales to $5.2 billion.

    This strong performance was driven by a 75% increase in active customers globally to 14.6 million and increasing customer frequency across all regions.

    The good news is that the company still has a significant runway for growth over the next decade thanks to the lucrative US and UK markets and its expansion across Europe and Asia.

    In addition to this, the company is expanding beyond BNPL into savings accounts and cash flow tools with its Afterpay Money app. That is scheduled to launch early in FY 2022 and could be another key driver of growth in the future.

    One broker that is positive on the company is Morgan Stanley. Its analysts have recently put an overweight rating and $149.00 price target on its shares.

    Pro Medicus Limited (ASX: PME)

    Another growth share to consider is Pro Medicus. It is a healthcare technology company that provides healthcare organisations with radiology information systems, picture archiving and communication systems, and advanced visualisation solutions.

    Like Afterpay, it has been a strong performer during the pandemic. In February the company reported a 7.8% increase in revenue to $31.6 million and a 25.9% jump in underlying profit before tax to $18.76 million.

    Positively, since the end of the first half, the company has won a number of lucrative long term contracts with major healthcare institutions. It also still has a large pipeline of sales opportunities that could be converted in the near future, particularly given its industry-leading technology and the structural shift away from legacy systems. 

    Goldman Sachs is a fan. The broker currently has a buy rating and $53.80 price target on its shares.

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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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 Pro Medicus Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Pro Medicus Ltd. 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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  • These ASX dividend shares have attractive fully franked yields

    janus henderson share price increasing represented by pile of australian one hundred dollar notes

    Unfortunately for income investors, interest rates are still at ultra low levels and unlikely to improve in the near term.

    But don’t worry because the Australian share market is home to countless dividend shares offering attractive yields. Two to consider are listed below, here’s what you need to know about them:

    Accent Group Ltd (ASX: AX1)

    Accent is a retail group with a collection of popular footwear-focused store brands. These include stores such as HYPEDC, Platypus, Sneaker Lab, Stylerunner, and The Athlete’s Foot. 

    But it is unlikely to stop there. Accent is not afraid to test the waters with new ideas. In fact, just last month the company launched a new brand called 4 Workers. If this launch is a success, the company is likely to throw capital behind the brand and grow its nationally. If it isn’t a success, it will move onto the next idea.

    Positively, this strategy has been working wonders. Thanks to the popularity of its brands and its expanding footprint, Accent has been growing at a consistently solid rate over the last few years. 

    In addition to this, the company has just bolstered its offering with the acquisition of Glue Store. This opens up Accent to the growing street fashion market, complementing its existing businesses.

    Citi currently has a neutral rating but $3.10 price target on its shares. The broker is forecasting dividends of 12 cents per share and 12.5 cents per share over the next two years. Based on the latest Accent share price of $2.90, this represents fully franked yields of 4.1% and 4.3%, respectively.

    Telstra Corporation Ltd (ASX: TLS)

    Another ASX dividend share to consider is Telstra. Although the telco giant’s shares have been on a strong run in recent months, it doesn’t appear to be too late to invest.

    Thanks to its improving outlook due to the T22 strategy and its separation and asset monetisation plans, the Telstra share price has been tipped to climb meaningfully higher in 2021 by a number of leading brokers.

    One of those is Goldman Sachs. Its analysts have a buy rating and $4.00 price target on the company’s shares. 

    The broker is also forecasting 16 cents per share fully franked dividends for the foreseeable future. Based on the latest Telstra share price, this will mean dividend yields of 4.7%.

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    Returns As of 15th February 2021

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Accent Group. 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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  • 5 things to watch on the ASX 200 on Tuesday

    Business woman watching stocks and trends while thinking

    On Monday the S&P/ASX 200 Index (ASX: XJO) started the week with a small decline. The benchmark index dropped 0.2% to 7,045.6 points.

    Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

    ASX 200 expected to rise

    The Australian share market looks set to bounce back on Tuesday following a solid night start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 10 points or 0.15% higher this morning. In the United States, the Dow Jones dropped 0.2% but the S&P 500 rose 0.2% and the Nasdaq climbed 0.9% to a record close.

    Oil prices soften

    Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could trade lower today after oil prices softened. According to Bloomberg, the WTI crude oil price is down 0.35% to US$61.92 a barrel and the Brent crude oil price has fallen 0.7% to US$65.67 a barrel. Oil prices dropped after surging COVID-19 cases in India sparked fuel demand concerns.

    IRESS update

    The IRESS Ltd (ASX: IRE) share price will be on watch today following the release of an after market update. The financial technology company has upgraded its net profit after tax guidance for FY 2021 to between $70 million and $77 million from $56 million and $63 million. This follows IRESS concluding its QuantHouse earnout ahead of schedule, enabling the full integration of the business.

    Gold price rises

    Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.2% to US$1,780.80 an ounce. Gold was up and down during the session ahead of the US Federal Reserve meeting later this week.

    Tech shares on watch

    Australian tech shares including Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) will be worth watching closely today. This follows a very positive night of trade on the tech-focused Nasdaq index. The Nasdaq was the standout performer and hit a record close ahead of major earnings updates by Amazon, Apple, Google, Microsoft, and Tesla this week.

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended IRESS 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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  • 2 fantastic ASX 200 dividend shares rated as buys

    man handing over wad of cash representing ASX retail capital return

    Are you wanting to boost your income portfolio with some ASX 200 dividend shares in May?

    Then you might want to take a look at the blue chip dividend shares listed below. Here’s what you need to know about them:

    BHP Group Ltd (ASX: BHP)

    The first ASX 200 dividend share to look at is this mining giant. It could be a great option due to its world class operations and favourable commodity prices.

    This is particularly the case for its iron ore operations, which should be generating significant free cash flow thanks to an iron ore price nearing US$200 per tonne.

    One broker that is positive on the mining giant is Goldman Sachs. It currently has a buy rating and $53.40 price target on its shares.

    Goldman is expecting a strong second half, leading to a full year dividend of $2.31 per share in FY 2021. Based on the current BHP share price of $45.65, this equates to fully franked 4.8% and 4.6% dividend yields.

    Telstra Corporation Ltd (ASX: TLS)

    A second ASX 200 dividend share to look at is Telstra. It could be a great option due to its increasingly positive outlook.

    This is being driven largely by its Telstra’s T22 strategy, which is creating a much leaner business, and its leadership position in 5G. Another positive is that Telstra is aiming to unlock value by monetising assets and splitting into three separate entities.

    Ord Minnett is a fan of the plan and believes the Telstra share price is in the buy zone. It currently has a buy rating and $4.05 price target on its shares.

    It is also expecting Telstra to continue to pay a 16 cents per share fully franked dividend for the foreseeable future. Based on the latest Telstra share price, this represents an attractive 4.7% dividend yield.

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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  • Could value finally be emerging for the embattled AMP (ASX:AMP) share price?

    AMP share price value Watching ASX share price represented by boy with question mark on forehead looking up

    There are signs of value emerging in the beaten down AMP Limited (ASX: AMP) share price, but you’d be hard pressed to find a broker who would recommend the ASX share as a buy.

    The AMP share price is hovering at record lows and the sum of its parts are now greater than its market value.

    That’s the view of JPMorgan, which put a 12-month price target of $1.35 on the embattled ASX wealth manager.

    Sum-of-parts worth more than the AMP share price

    This implies a close to 20% upside for the AMP share price and the broker noted other positives for this ASX underperformer.

    “There is significant downside baked into the market valuation of AMP. Wealth Management arguably has virtually no ascribed value assuming reasonable multiples for other divisions),” said JPMorgan.

    “A key point of uncertainty remains what may be achievable on AMPCI [AMP Capital Investors] (valued at 15x here).”

    The broker noted that other real asset businesses typically trade on a 20 times one-year forward valuation. Of course, these other businesses didn’t take a big reputational hit like AMP did.

    AMP share price ignoring good news

    But the market also appears to be ignoring other positives in AMP’s latest quarterly update. This includes a slowing in the rate of decline in capital flows.

    AMP’s Australian Wealth Management business suffered outflows of $1.5 billion, which was better than JPMorgan’s estimate of $1.7 billion. Assets under management in the quarter of $125.7 billion was also ahead of the broker’s circa $124 billion.

    Meanwhile, loans written by AMP Bank grew slightly to $20.8 billion in the March quarter. This was also slightly better than what JPMorgan had forecast.

    Value emerging but brokers stay cautious

    Despite the valuation support and relatively improved performance from parts of AMP’s business, JPMorgan is sticking to its “neutral” recommendation.

    Other brokers have largely followed suit as they mull the many risks facing the AMP share price and the wave of negative investor sentiment.

    UBS has put a 12-month price target of $1.45 on the AMP share price, while Citigroup reckons fair value is at $1.25 a pop.

    Foolish takeaway

    Both these brokers have a “neutral” equivalent rating on the AMP share price. This ASX share is the worst performer among its peers, which includes the Platinum Asset Management Ltd (ASX: PTM) share price, Magellan Financial Group Ltd (ASX: MFG) share price and Macquarie Group Ltd (ASX: MQG) share price.

    It would take a brave broker to dare call the AMP share price a “buy”, and an even braver investor to snap up the apparent bargain.

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor Brendon Lau owns shares of AMP Limited and Macquarie Group Limited. 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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  • Copper Mountain (ASX:C6C) share price rockets 8% on profit growth

    South32 share price

    The Copper Mountain Mining Corporation CDI (ASX: C6C) share price surged higher today after the company released its quarterly activities report outlining huge profit growth. 

    The Copper Mountain share price was up 8%, trading at $4.02 per share at the market close.

    Copper Mountain’s revenue increases

    The Copper Mountain share price has more than doubled in 2021 alone, and its business performance shows why investors have been jumping on the bandwagon.

    Copper Mountain posted record quarterly production in the first quarter of the calendar year 2021 of 30.4 million pounds of copper equivalent (comprised of 25.5 million pounds of copper, 8,187 ounces of gold, and 160,484 ounces of silver).

    It also recorded quarterly revenue for Q1 2021, totalling $162.2 million, from the sale of 27.5 million pounds of copper, 8,553 ounces of gold and 161,657 ounces of silver, net of pricing adjustments.

    It made a record gross profit of $96.3 million and net income of $52.1 million, resulting in earnings per share (EPS) of $0.18.

    The company’s cash and cash equivalents at the end of Q1 2021 was $137.1 million, up $100.9 million from the previous corresponding period. Cash flow from operations for Q1 2021 was $79.6 million.

    After the quarter, Copper Mountain closed a US $250 million bond financing to refinance its existing debt, enabling the company to access 100% of the excess free cash flow from the mine.

    Copper Mountain’s history and market presence

    Copper Mountain is a mid-tier copper-gold producing company that was incorporated on 20 April 2006. The company owns 75% of the Copper Mountain Mine in Canada through a subsidiary, and Mitsubishi owns the remaining 25%.

    The Copper Mountain Mine is a conventional open-pit, truck and shovel operation located 20km south of Princeton in British Columbia and 300km east of the port of Vancouver. Production of copper concentrate started there in 2011. 

    The Copper Mountain share price is listed on the ASX because the miner also owns the Eva Copper Project. This a permitted development-ready copper-gold project in Queensland, Australia and an extensive 210,000 hectare highly prospective land package within the Mount Isa area. 

    Copper Mountain share price snapshot

    The Copper Mountain share price has now gained 119% since the start of the year, is up 813% over the past 12 months. 

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor Lucas Radbourne-Pugh 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 Uscom (ASX:UCM) share price plunged 6% today. Here’s why

    Two men react in shock at Evolution share price drop record profit

    The Uscom Ltd (ASX: UCM) share price tumbled today after the company released its quarterly cash report, showing significant falls across every major category.

    The Uscom share price was down 6% at the close of trade today, at 15.5 cents per share.

    A quick take on Uscom

    Uscom is a medical technology company engaged in developing, designing, manufacturing, and marketing premium non-invasive cardiovascular and pulmonary medical devices.

    The company’s geographical segment includes Australia, Asia, the Americas, Europe, and other regions. It generates maximum revenue from Asia.

    The company offers USCOM 1A, a non-invasive hemodynamic monitor that measures cardiovascular function; BP+; a supra-systolic oscillometric central blood pressure monitor that measures blood pressure and blood pressure waveforms at the heart; and SpiroSonic, a pulmonary function testing device based on multi-path ultrasound technology.

    Uscom’s financial woes

    For the third quarter of FY21, Uscom reported cash receipts of $0.89 million for the period, which is down 53% from $1.91 million in the preceding quarter, and at $4.2 million year-to-date with Q4 trading still ahead.

    Uscom’s sales revenue was $0.78 million, down 20% from $0.98 million in the previous quarter. This follows its record growth of cash receipts of 149% and sales revenue of 125% reported in the prior Q2.

    For the current quarter, Uscom’s global entity reported a net operating cash outflow of $0.25 million, while for Q2, cash flow was positive at $0.3 million. Uscom remains cash flow positive for the YTD with $2.03 million cash on hand on 31 March.

    What did management say?

    Uscom executive chair Professor Rob Phillips said that the future looked a lot brighter for the company.

    Q3 sales and receipts remain strong but down due to the impact of the Chinese New Year, effecting China activity for 6 weeks, while both European and US activities remained constrained by the pandemic. Hungary has effectively been closed for the quarter and our US team are still unable to attend hospitals and clinics.

    However, we remain cash flow positive for the YTD, supported by strong China sales. Going forward, management noted the 18.3% GDP growth in China for the March quarter and look forward to this growth converting into health spending.

    Uscom share price snapshot

    The Uscom share price has been tumbling for some time. It’s down 11% over the past month, 3% since 2021 began and 26% over the past 12 months. 

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor Lucas Radbourne-Pugh 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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  • Bubs (ASX:BUB) share price hits multi-year low but could keep sinking

    a trader on the stock exchange holds his head in his hands, indicating a share price drop

    The Bubs Australia Ltd (ASX: BUB) share price was under pressure yet again on Monday.

    The goat’s milk infant formula company’s shares tumbled a further 3.5% to a multi-year low of 42.5 cents.

    This means the Bubs share price is now down over 64% from its 52-week high of $1.19.

    Why is the Bubs share price at a multi-year low?

    Investors have been heading to the exits in their droves this year amid concerns over its disappointing performance and its ongoing cash burn.

    And with Bubs due to release its third quarter update later this week, it appears as though some investors aren’t sticking around to see that.

    Bubs in FY 2021

    As with rival a2 Milk Company (ASX: A2M), FY 2021 has been a very disappointing year for Bubs.

    Despite all its many product launches, supply deals, and expansions, the company reported a 33% reduction in half year revenue to $18.3 million in February.

    This was driven largely by weakness in the daigou channel due to COVID-19 travel restrictions. Though, there are also concerns that Chinese consumers now have a preference for domestic brands and are choosing them ahead of ANZ based options.

    And while Bubs points out that it is the fastest growing infant formula manufacturer across the Australian grocery and pharmacy channel, this is from a very small base and comes at a time when the bigger manufacturers are being hit hardest by daigou weakness.

    Also weighing on its performance and the Bubs share price was its inventory write off during the first half.

    Bubs was forced to write off $3.1 million of inventory during the half. This is the equivalent of 17% of its revenue. And with the daigou channel still under pressure, investors appear concerned that further write offs will have to be made.

    Though, as Citi suggested with a2 Milk last week, before that, Bubs may have to discount its product in order to offload it before expiry. This would hurt margins and potentially damage the brand.

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

    According to Citi, the Bubs share price could still go lower from here. Its analysts currently have a sell rating and 35 cents price target on its shares.

    Based on the latest Bubs share price, this implies potential downside of 18% over the next 12 months.

    Citi has concerns over demand and uncertainty relating to its pathway to becoming breakeven at long last.

    Where to invest $1,000 right now

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

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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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 BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended BUBS AUST 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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  • Should you invest your super in cryptocurrencies like Bitcoin?

    When it comes to superannuation, most Australians tend to be pretty happy if their super funds grow at a modest rate, perhaps with some volatility protection as well.

    That’s why your average super fund is usually classed as ‘balanced’. This means it invests your money across multiple asset classes to balance between growth potential and volatility protection.

    These asset classes usually consist of a mix of ASX shares, international shares, bonds and cash. Since most Aussies tend to be pretty protective over their super funds’ balance, the idea of investing in cryptocurrencies like Bitcoin (CRYPTO: BTC) through super might be unthinkable.

    But this idea is reportedly gaining steam.

    CEO of BTC Markets, Caroline Bowler, recently told BusinessInsider that she estimates the cryptocurrency exchange now has 5 times as many self-managed super funds (SMSFs) trading on it as during the last cryptocurrency boom in 2017.

    “People are looking at it now as something other than as a speculative thing. They’re looking at it as something that’s been around, that’s been tested, that is a genuine investment”, she told BuinsessInsider.

    Bitcoin super?

    Now, most industry and retail super funds do not let members invest in Bitcoin or any cryptocurrency for that matter. But those restrictions don’t apply to SMSFs.

    In fact, according to the Australian Taxation Office (ATO), an SMSF can invest in any ‘collectable or personal use assets’. There are rules around the interpretation of what constitutes a collectable or personal use asset, which you can (and should) read more about.

    But these can include anything from gold bullion, artworks and jewellery to wine, boats or vintage cars. And yes, cryptocurrencies like Bitcoin.

    So, should you add Bitcoin to your super fund?

    Well, it pays to remember that your super fund has the potential to be your biggest asset for retirement outside your family home. As such, you might want to consider the impacts of investing these funds in an asset like Bitcoin.

    Cryptocurrencies are some of the wildest and most volatile assets in existence. Remember, Bitcoin has fluctuated between ~US$7,500 a coin and ~US$60,000 a coin in just the past 12 months. And it famously crashed by more than 80% between December 2017 and December 2018.

    If you can’t handle that kind of wild ride in your super fund (or indeed out of it), it might not be worth even considering including Bitcoin.

    But it’s certainly interesting that some investors are choosing to pursue Bitcoin and other cryptocurrencies with their retirement savings.

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    Sebastian Bowen owns shares of Bitcoin. 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.

    The post Should you invest your super in cryptocurrencies like Bitcoin? appeared first on The Motley Fool Australia.

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