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Investors should be careful about certain ASX shares because inflation is coming. That’s according to Morgan Stanley’s chief investment officer of wealth management, Lisa Shalett.

Ms Shalett has warned that some investors seem to think that economic conditions are going to lead to an extended period of growth for markets, with low interest rates and not much inflation.

That isn’t Morgan Stanley’s view. Pundits may think this market is similar to 2013. Ms Shalett pointed out “That year, having shaken off the last vestiges of the Great Recession, U.S. markets settled into a “Goldilocks” period of low interest rates, stable but not stellar economic growth and steadily rising markets. For many companies and investors, that was great while it lasted.”

What does Morgan Stanley think is going to happen?

The global investment bank actually thinks that the economy is going to grow faster and the expansion will be shorter – bringing higher interest rates and elevated inflation. This could then have an important impact on investors.

These are some of the factors that Morgan Stanley thinks could affect things for the economy and (ASX) shares:

Strong policy response

Household finances are in a strong position thanks to lower spending and higher savings. There has also been a high level of government stimulus and central bank support.

Company profits are high and they have a lot of cash. Morgan Stanley believes that economic activity is on track to return to 2019 levels, which would be the fastest recovery since the 1970s.

GDP growth over the next couple of years is expected to be two to three times faster than what happened after 2013.

New infrastructure spending

A large amount of investment is expected to go into infrastructure to help get the economy going again. The US alone is talking about $2 trillion of spending on infrastructure.

Morgan Stanley thinks that infrastructure spending will be passed by Washington and get the next cycle of capital spending going. Three key areas of investment will be green energy, 5G telecommunications and cybersecurity.

Inflation

A fully re-opened economy is likely to lead to inflation. Prices of goods and commodities are already on the up. Wages could also increase as well. By the end of 2021, US employment could be back to where it was before COVID-19 came along. Over 1 million jobs are being added each month, which will put more pressure on potential wage increases.

The bottom line

Morgan Stanley’s Lisa Shalett thinks this shorter, sharper cycle will lead to higher interest rates and more volatile movements.

She thinks this will create headwinds for both (ASX) shares and bonds. Her final piece of advice was:

Investors should consider re-tooling portfolios away from long-duration and rate-sensitive sectors and toward pro-cyclical allocations, emphasizing short duration, value and quality in equity and fixed income.

More reading

• Beat low interest rates with these top ASX dividend shares
• Which big 4 ASX bank is going to pay the biggest dividend in FY21?
• 2 ASX growth shares that could generate huge returns for investors
• These were the best performing ASX 200 shares last week
• 2 great ASX payment shares to buy

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.

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Earlier this month the Reserve Bank of Australia kept the cash rate on hold at a record low of 0.1%.

Unfortunately, it could be a long time until interest rates move higher from here, let alone back to normal levels.

In light of this, income investors look set to be better off sticking with dividend shares instead of term deposits or savings accounts.

But which dividend shares should you buy? Two top dividend to consider buying are listed below. Here’s why they could be great options in this low interest rate environment:

National Storage REIT (ASX: NSR)

The first option to consider is National Storage. This self-storage operator appears well-positioned to grow its income and distribution at a solid rate over the long term.

This is thanks to its strong position in a fragmented market, its growth through acquisition strategy, and the booming housing market. The latter traditionally results in strong demand for its units.

In addition to this, an increasing number of small businesses are using its storage units for non-traditional uses such as running their ecommerce businesses. This is made possible thanks to supplied Wi-Fi, shelving, power connectivity, and packaging supplies.

Based on the current National Storage share price and its guidance for FY 2021, its shares currently offer a forward 3.5% distribution yield.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share for income investors to consider is Telstra. The telco giant could be a quality option due to its improving outlook and attractive valuation.

In respect to the former, thanks to a combination of cost cutting, rational competition, and a positive growth outlook in the mobile business, Telstra appears well-placed to return to growth from FY 2022. This should be boosted further by its separation and asset monetisation plans.

In light of the above, Morgan Stanley is forecasting a 16 cents per share fully franked dividend for FY 2021 and FY 2022. This represents a generous 4.7% dividend yield.

More reading

• This underperforming ASX large cap is sitting on a ~10% dividend yield
• ASX stock of the day: Over The Wire (ASX: OTW) shares bounce
• Telstra (ASX:TLS) share price falls amid overseas expansion talks
• What’s happening with the Pentanet (ASX:5GG) share price today?
• WAM Leaders thinks these 2 ASX shares are a buy

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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The big four ASX banks are expected to pay much bigger dividends in FY21 compared to FY20.

COVID-19 caused a big hit to bank profits in FY20, with high levels of credit provisions.

But things are now much better. Indeed, the NAB CEO said that the economy is looking much stronger from the bank’s perspective. As my colleague Brooke Cooper covered on Friday, Mr McEwan said about improving conditions:

I see this when I visit customers around the country. They are more confident, and they are looking to expand. Others, particularly farmers, are choosing to pay off their loans faster – a trend we have seen previously in good times.

Mr McEwan also revealed that 98% of previously-deferred loans have been taken off the payment holidays.

All the banks reported a similar trend in their recent results during reporting season in February 2021.

But what is going to happen with the dividends?

Strong bank balance sheets

Just under four years ago, the Australian Prudential Regulation Authority (APRA) announced that banks need to have strong balance sheets. Unquestionably strong balance sheets.

At the time of the rules being implemented, APRA said:

The four major Australian banks need to have CET1 capital ratios of at least 10.5 per cent to meet the ‘unquestionably strong’ benchmark.

APRA said that CET1 is the highest quality capital and therefore most likely to create confidence in an ADI’s financial strength.

Well, the big four ASX banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) all have balance sheets that are materially stronger than the ‘unquestionably strong’ benchmark.

At 31 December 2020, the CET1 ratios at the big four banks were: CBA (12.6%), Westpac (11.9%), NAB (11.7%) and ANZ (11.7%).

This level of capital has some analysts suggesting that much bigger dividends are likely over the next 12 months.

Forecast dividends and yields

Every broker covers the big banks, so I’m just going to use one of the most recent estimates for each of the big banks – Morgan Stanley’s.

The broker currently rates CBA shares as a sell, with a share price target of $79. The expected dividend for FY21 is $3.25 per share. This translates to a grossed-up dividend yield of 5.3%.

Morgan Stanley has a buy rating on Westpac, with a share price target of $27.20. The forecast dividend for FY21 is $1.10 per share. This equates to a grossed-up dividend yield of 6.2%.

The broker has a neutral rating on NAB, with a share price target of $25.30. The estimated dividend is $1 per share. This would result in a grossed-up dividend yield of 5.3%.

Morgan Stanley has a buy rating on ANZ shares, however the share price target is $26.20. The forecast dividend is $1.15 per share, this is a grossed-up dividend yield of 5.7%.

Based on the above estimates, Morgan Stanley seems to think that Westpac will have the biggest dividend yield this year. But that is just one broker’s opinion about one financial year. Future dividends may vary even more, depending on how much growth each bank is able to generate.

More reading

• This underperforming ASX large cap is sitting on a ~10% dividend yield
• Housing prices outpace the Commonwealth Bank (ASX:CBA) share price
• COVID recovery “far better than expected” says NAB (ASX:NAB) CEO
• Westpac (ASX:WBC) and these ASX shares have just hit 52-week highs
• What Coinbase’s float means for the Westpac (ASX:WBC) share price

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.

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Are you looking for growth shares to buy?

If you are, then you might want to look at the two top growth shares listed below. Here’s why they are highly rated:

Appen Ltd (ASX: APX)

This artificial intelligence (AI) data services company could be a ASX growth share to buy right now. Especially given the recent weakness in the Appen share price, which has left it trading 61% lower than its 52-week high.

This weakness has been driven by a disappointing performance in FY 2020 because of the pandemic. A number of tech giants that Appen counts as customers have put off major AI projects during COVID-19. This has led to a reduction in demand and lower than expected growth rates.

While this is disappointing, this weakness should only be temporary and demand is expected to increase materially once the pandemic passes. And thanks to its leadership position in the market, Appen is well-positioned to capture this demand.

Last week Citi retained its buy rating and $30.90 price target on the company’s shares. Based on the latest Appen share price, this implies potential upside of almost 83% over the next 12 months.

ELMO Software Ltd (ASX: ELO)

Another ASX growth share to consider buying is ELMO. It is a cloud-based human resources and payroll software company.

It streamlines a range of processes such as employee administration, recruitment, on-boarding, remuneration, and payroll through a single a unified platform.

Demand has been strong for its platform in recent years and this has continued in FY 2021. During the first half, the company reported a 42.8% increase in annualised recurring revenue (ARR) to a record $74.2 million.

Positively, this is still only a very small slice of its addressable market. At present the company is operating in both the ANZ and UK markets, where it has $2.4 billion and $6.8 billion opportunities, respectively. And thanks to its jurisdiction agnostic platform, ELMO has the option to expand into other regions in the future.

Morgan Stanley is positive on ELMO’s growth prospects. It has an overweight rating and $9.70 price target on its shares. Based on the current ELMO share price, this equates to potential upside of 70% over the next 12 months.

More reading

• Broker calls 80% upside on beaten up Appen (ASX:APX) share price
• Brokers name 3 ASX shares to buy now
• 2 highly rated ASX shares to buy now
• Is the Appen (ASX:APX) share price a cheap buy?
• What’s been going on with the ELMO Software (ASX:ELO) 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 and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia has recommended Elmo Software. 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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It was another positive week for the S&P/ASX 200 Index (ASX: XJO) last week. The benchmark index rose 1% or 68.3 points to end the period at 7,063.5 points.

While a good number of shares climbed higher with the market, some stood out with particularly strong gains. Here’s why these were the best performing ASX 200 shares last week:

Zip Co Ltd (ASX: Z1P)

The Zip share price was the best performer on the ASX 200 last week with a 12.9% gain. Investors were fighting to get hold of the buy now pay later (BNPL) provider’s shares following the release of a very strong third quarter update. For the three months ended 31 March, Zip posted an 80% increase in group quarterly revenue to $114.4 million. This was driven by a 195% increase in transaction numbers to 12.4 million and a 114% jump in quarterly transaction volume to $1.6 billion. Also supporting its growth was another jump in customers. At the end of the period, Zip had 6.4 million active customers globally. This was up 88% from the prior corresponding period and 12.3% from 5.7 million at the end of December.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price wasn’t far behind with a 12.1% gain over the five days. This appears to have been driven by a bullish broker note out of Macquarie Group Ltd (ASX: MQG). That notes reveals that the broker has upgraded its lithium price forecasts by between 30% and 100% for the next four years after reassessing the outlook for the battery making ingredient. Macquarie suspects that electric vehicle demand could put the lithium market into a deficit in 2022, with material shortages emerging from 2025. In light of this, Macquarie put an outperform rating and $1.30 price target on Pilbara Minerals shares.

Pendal Group Ltd (ASX: PDL)

The Pendal share price was on form and charged 9.7% higher last week. Investors were buying the fund manager’s shares following the release of its latest funds under management (FUM) update. According to the release, Pendal reported a 4.4% or $4.3 billion increase in FUM during the March quarter. This left the company with total FUM of $101.7 billion.

Resolute Mining Limited (ASX: RSG)

The Resolute share price bounced back from a horror run and rose 8.4% over the five days. The catalyst for this was news that the Ghanaian government has restored the mining licence for the Bibiani Gold Mine. However, the government has done this on the proviso that Resolute cancels the sale of the operation to Chifeng Jilong Gold Mining. Resolute has agreed to these terms and will now look at its options for the mine.

More reading

• What to make of all this good news?
• These were the worst performing ASX 200 shares last week
• This underperforming ASX large cap is sitting on a ~10% dividend yield
• Housing prices outpace the Commonwealth Bank (ASX:CBA) share price
• ASX 200 edges higher, Origin crunched, Mineral Resources 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 ZIPCOLTD FPO. 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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Some ASX payment shares have exciting futures and may be able to generate good returns over the longer-term.

The world is steadily moving away from cash and towards digital payments. Some ASX shares can give investors exposure to that theme, whilst also displaying good signs of growth.

These two fit that description:

Humm Group Ltd (ASX: HUM)

Humm, which used to be called FlexiGroup, is focused on the buy now, pay later space.

It also offers other payment services including revolving credit and small and medium enterprise (SME) finance. It facilitates purchases for over 2.6 million customers.

In the first half of FY21, it generated cash net profit after tax (NPAT) of $43.4 million – up 25.8%. Statutory NPAT increased by 15.9% to $38.6 million. It’s one of the few businesses involved in buy now, pay later. In the first six months it processed 1.5 million BNPL transactions. Total BNPL volume was $473 million, up 13.8%.

Humm ‘Little things’ volume was up 46.5%. It can facilitate transactions of up to $30,000, with payment terms ranging from five fortnights to five years.

The ASX payment share also recently launched hummpro, a BNPL product for SMEs.

Its impressive HY21 result reflected a reduction of operating expenses. It also included the benefit of continued investment in a superior credit decisioning platform and adopting a customer-centric approach to managing hardships and collections during the pandemic, according to management.

The company plans to launch in the UK and Canada in the second half of FY21. It also continues to win market share in the healthcare and wellbeing sector, with new partners across dental, pharmacy, audiology, mobile and wellbeing. It now covers 25% of dental chairs in Australia.

Pushpay Holdings Ltd (ASX: PPH)

The donor management system ASX payment share is seeing very strong growth right now.

Pushpay has been reporting strong processing volume over the last 12 months as people choose to donate through the technology rather than with cash in these COVID-19 times.

Management have regularly updated earnings guidance as its benefits from growing operating leverage. The latest upgrade increased FY21 earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) guidance to a range of US$56 million to US$60 million.

In the six months to 30 September 2020, total operating expenses only increased by 16%. As a percentage of operating revenue, total operating expenses improved by 12 percentage points from 50% to 38%.

Its operating leverage is growing thanks to revenue growth, further margin improvements and disciplined cost management. Management is expecting “significant” operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.

In the half year, net profit after tax grew 107% to US$13.4 million. Operating cashflow tripled to US$27 million. The ASX share continues to assess further potential strategic acquisitions that broaden Pushpay’s current proposition and add significant value to the current business.

More reading

• Why Alumina, Delorean, Next Science, & Pushpay shares are tumbling lower
• 2 highly rated ASX shares to buy now
• The Afterpay (ASX:APT) share price is up almost 20% this month
• Afterpay (ASX:APT) leads Zip by 40% on one critical measure
• Got cash to invest? Here are 2 ASX shares to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended Humm Group Limited and PUSHPAY FPO NZX. 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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Wow, what a week.

The ASX set a post-pandemic high.

Bitcoin set an all-time high.

And a Bitcoin trading company floated, and its shares went through the roof.

Speaking of which, so did Australian consumer confidence, which set an 11 year high.

And the AFR reported that three prominent economists have essentially declared Australia has ‘fully recovered’ from the pandemic.

Not enough?

How about the unemployment rate falling from 5.8% to 5.6%?

Prefer raw numbers?

We have more Australians in work, today, than at any other time in our history.

That’s a pretty good set of numbers, huh?

The best number of all might just be that we — still — have zero cases of COVID spread by community transmission.

What should you make of it all?

I’m glad you asked… because we covered all of that, and more, in this week’s episode of the Motley Fool Money podcast, which was released just yesterday!

Yes, we have underemployment.

Yes, some people are worried about whether or not the stock market is overvalued (I don’t think so, for the record).

Yes, our borders are still closed.

And yes, we have an eye-watering amount of national (government) debt.

Not to mention skyrocketing house prices.

(But don’t worry… the bosses of CBA and Westpac this week told a parliamentary committee there was nothing to worry about. Fancy that!)

Here’s the thing, though. 

It’s important not to let the worries get to you.

Not because they shouldn’t be addressed. 

They should!

But because the economy and stock market tend to grow — over the long term — regardless.

(And because the people who are now telling you how risky everything is, now that we’ve recovered, are the same people who were telling you that we wouldn’t recover at all! Yes, there’s a theme.)

My very first article for The Motley Fool was a localised version of an exhortation given by Warren Buffett.

He told New York Times readers, to “Buy American. I am.” My version, three years later, was (unoriginally) “Buy Australian. I am.”

And I’m going to finish today, with a similar Australianisation of another of Buffett’s key lines.

See, you adopt pessimism at your peril.

As Buffett might say if he was born here (and simply substituting “Australia’s” for “America’s” from Buffett’s original):

“Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. Australia’s best days lie ahead.”

Have a great weekend. (And don’t forget to check out the podcast!)

Fool on!

More reading

• These were the worst performing ASX 200 shares last week
• This underperforming ASX large cap is sitting on a ~10% dividend yield
• Housing prices outpace the Commonwealth Bank (ASX:CBA) share price
• ASX 200 edges higher, Origin crunched, Mineral Resources falls
• Why these 3 ASX 200 gold shares are racing higher today

Scott Phillips 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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The S&P/ASX 200 Index (ASX: XJO) was on form again last week and stormed to a 13-month high. The benchmark index rose 1% or 68.3 points to end the period at 7,063.5 points.

Unfortunately, not all shares were able to climb higher with the market. Here’s why these were the worst performing ASX 200 shares last week:

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven share price was the worst performer on the ASX 200 last week with a 17.7% decline. Investors were selling the coal miner’s shares after the release of a production and guidance update. That update reveals that the company’s production has been impacted by poor weather conditions and geological challenges. As a result, Whitehaven downgraded its FY 2021 managed ROM production at the Narrabri mine. Rather than its previous guidance of 5.3Mt to 5.5Mt, the company now expects production of 4.5Mt to 4.9Mt.

Regis Resources Limited (ASX: RRL)

The Regis Resources share price wasn’t too far behind with a disappointing 14.9% decline over the five days. The gold miner’s shares came under pressure after announcing an agreement to acquire a 30% interest in the Tropicana Gold Project for $903 million from IGO Ltd (ASX: IGO). To fund the acquisition, Regis raised $494 million from institutional investors at a 14.8% discount of $2.70 per share. It will now seek to raise a further $156 million via the fully underwritten retail component of the entitlement offer. The market doesn’t appear convinced with the acquisition management labelled as “transformational”.

Origin Energy Ltd (ASX: ORG)

The Origin share price was a poor performer and dropped 9.7% last week. The majority of this decline came at the end of the week when the energy company downgraded its earnings guidance for FY 2021. Origin was forced to make the downgrade due to an adverse and unexpected outcome on a domestic gas contract price review and continued headwinds in energy markets’ operating conditions. The company is now expecting its energy markets division to post a 30% to 35% decline in operating earnings in FY 2021.

TPG Telecom Ltd (ASX: TPG)

The TPG Telecom share price continued its slide and sank 5.7% lower last week. The telco’s shares have been on a downward trajectory ever since the surprise exit of its founder and chairman, David Teoh, last month. In addition to this, the improving outlook for rival Telstra Corporation Ltd (ASX: TLS) appears to have led to many investors choosing its shares ahead of TPG Telecom.

More reading

• This underperforming ASX large cap is sitting on a ~10% dividend yield
• Housing prices outpace the Commonwealth Bank (ASX:CBA) share price
• ASX 200 edges higher, Origin crunched, Mineral Resources falls
• Why these 3 ASX 200 gold shares are racing higher today
• Why Mineral Resources, Origin, Strike, Whitehaven shares are sinking

Motley Fool contributor James Mickleboro 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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After 20 years, the War in Afghanistan is coming to an end. US President Joe Biden announced by 11 September all US troops will leave the central Asian country, the date marking the 20^th anniversary of the Al-Qaeda terror attacks, which were the catalyst for the war.

“It is time to end America’s longest war,” President Biden said in a televised address from The White House.

Former President Donald Trump previously declared all US troops would leave the country by 1 May, therefore Mr Biden’s announcement was both delaying the withdrawal while also confirming it.

NATO commanders announced they would withdraw troops under their control from the war-torn nation by 11 September, in coordination with American forces. Australian Prime Minister Scott Morrison joined other leaders in saying Australia would also withdraw its remaining forces from the country.

39,000 Australian soldiers deployed to Afghanistan. 41 lost their lives in the battle. A report by Major General Justice Paul Brereton alleged Australian Special Forces committed war crimes while serving in Afghanistan.

In commemoration of today’s news, let’s look at three ASX-listed defence contractors, what they specialise in, their finances, and share prices.

Codan Limited (ASX: CDA)

Codan designs, supplies, and manufactures mining and communications equipment. It also supplies metal detection services. While focused mostly on the mining industry, it also supplies communication equipment to ‘Five-Eyes’ militaries and intelligence agencies.

In February, the company acquired US based Domo Tactical Communications (DTC) for at least $114 million. DTC provided communications equipment of at least 20 US government agencies. DTC’s products enable wireless transmission of data for its customers, including border control, first responders, broadcasters, military, and special forces.

For the six months ending 31 December 2020, the company recorded $194 million of revenue – up 14% on the prior corresponding period (pcp). Net profit was up 36% on the pcp to equal $41.3 million.

The company paid an interim dividend of 10.5 cents per share, fully franked, at the time.

Over the past 12 months, the Codan share price has increased by 230%.

Codan has a market capitalisation of $3.3 billion.

Austal Limited (ASX: ASB)

Austal is an Australian shipbuilder that designs and constructs commercial and defence vessels across the globe. The company considers many of the world’s leading ferry operators, navies and defence forces as customers, including the US Navy and Australian Border Force. Along with shipbuilding operations, Austal also provides vessel maintenance and management services, as well as vessel command and control systems.

Two weeks ago, the ship builder announced construction had commenced on a ship building facility in Alabama, USA. Ships built at the site will supply both the US Navy and the US Coast Guard.

A month ago, Austal delivered its ninth patrol boat to the Australian Department of Defence. The ship was gifted to the Papua New Guinean and navy and subsequently named ‘HMPNGS Rochus Lokinap.’ Two ships total have been shipped to PNG. Austal is contracted to deliver 21 ships to total to the Australian Navy. Some of these will be gifted to other Pacific nations. The government tender is worth $335 million and expires in 2023.

In its FY21 half year report, the company saw net profits grow 29% on the pcp to $52.4 million. Group revenue totalled $840.3 million in the period. While this reflected a 19% fall from the prior corresponding period, the company noted revenue was impacted by a number of factors. These included unfavourable currency exchange movements, a reduction in United States commercial shipbuilding and vessel support activities, as well as longer than expected commissioning of Australian ships.

The company paid an unfranked interim dividend of 4 cents per share.

The Austal share price increased 0.39% today to finish at $2.56. Over the past year investors have seen a negative 17% return on investment (ROI). Austal has a market cap of $915.1 million.

Electro Optic Systems Holdings Ltd (ASX: EOS)

Electro Optic is an Australian technology company. It develops and produces electro-optic technologies for the aerospace market. The group’s reportable segments are Communication, Defence and Space. It generates maximum revenue from the Defence segment.

The Defence portion of the business develops, manufactures, and markets advanced fire control, surveillance, and weapon systems to approved military customers. Geographically, it derives a majority of revenue from North America.

On 9 April, the company declared it had refined laser technology to track space debris and move it at faster speeds and lower altitudes than ever. In its statement at the time, the company noted approximately US$700 billion worth of global space infrastructure currently delivers essential services globally. These services, it said, are at risk from space debris ranging in size from rockets the size of buses, to flakes of paint measuring only 5mm. Even small debris can cause enormous damage because of how fast it travels in space.

For its final year results for FY20, the company declared a loss of $25.6 million. Revenue, however, was up 9% to equal $180 million. Investment into inventory saw a negative operating cash flow of $109 million. The report made clear that defence accounts for 80% of total revenue for the business. Its aforementioned space system is growing, however – up 27% on the pcp.

The Electro Optics share price finished the day up 1.50% to end at $5.41. Over the past 12 months, it has lifted by just over 13%. It has a market cap of $808.1 million.

More reading

• How to turn $20,000 into $240,000 in 10 years with ASX shares
• Why Codan, Flight Centre, Magellan, & Woolworths are sinking
• Why the Electro Optic Systems (ASX:EOS) share price is charging 5% higher
• Bullish ASX 200 shares breaking into 52-week highs 
• Acquisitions and spin-offs put these 3 ASX shares on brokers’ “buy” list

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited and Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems 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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Looking for a growth share or two to buy this week? Then you might want to consider one of the ASX shares listed below.

Here’s why these might be among the best growth shares to buy right now:

Altium Limited (ASX: ALU)

The first ASX growth share to look at is Altium. It is an award-winning printed circuit board (PCB) design software provider. It appears well-positioned for growth over the long term due to its leading position in a market exposed to the Internet of Things and artificial intelligence booms. The proliferation of electronic devices is expected to lead to increasing demand for its software over the next decade.

One leading broker that is positive on the company is UBS. It currently has a buy rating and $34.00 price target on its shares.

IDP Education Ltd (ASX: IEL)

Another ASX growth share to buy is IDP Education. It is a provider of international student placement services and English language testing services. It was unsurprisingly hit hard by the pandemic but is recovery strongly. The company revealed that testing volumes reached pre-pandemic levels towards the end of the first half. Looking ahead, IDP Education has been tipped to win market share and resume its rapid growth once the crisis passes and trading conditions return to normal.

Morgan Stanley is positive on IDP Education’s long term outlook. As a result, the broker has an overweight rating and $30.00 price target on its shares.

Kogan.com Ltd (ASX: KGN)

A final ASX growth share to buy is Kogan. It is a rapidly growing ecommerce company which has been benefitting greatly from the shift to online shopping. Pleasingly, this trend is expected to continue over the long term, which should support its growth. In addition to this, Kogan has bolstered its growth potential through value accretive acquisitions. This includes the significant acquisition of online retailer Mighty Ape for $122 million.

Credit Suisse is a big fan of Kogan. Last month its analysts put an outperform rating and $21.08 price target on the company’s shares.

More reading

• The Monadelphous (ASX:MND) share price surges as Rio Tinto (ASX:RIO) overhang lifts
• Why Kogan (ASX:KGN) should be on your watchlist at this share price
• 3 top ASX shares to buy this week
• 2 outstanding ASX growth shares to buy now
• This could be boosting the Kogan (ASX:KGN) share price today

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 Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd and Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com 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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