Tag: Motley Fool

ELMO Software Ltd (ASX: ELO) shares were on the rise today despite news circulating that the software developer has suffered a setback in a New South Wales Supreme Court case. By the market’s close, the ELMO share price was trading at $5.23, up 3.16%.

In comparison, the All Ordinaries Index (ASX: XAO) closed down 0.63%.

Let’s take a closer look at the Supreme Court decision.

What did the Supreme Court decide? 

The Elmo share price finished in the green today despite news spreading that, in an interim decision before the final hearing, the NSW Supreme Court placed a temporary injunction against David McMurchy and Arumugam Kumaran from beginning employment with Breathe – a wholly-owned subsidiary of ELMO.

McMurchy and Kumaran are ex-employees of UK based Peninsula Group company Employsure, and were to join Breathe in the roles of sales manager and sales representative respectively.

Employsure took the matter to court in January, claiming both employees were contractually bound to not seek employment with a competitor. ELMO denies its product is in direct competition with Employsure’s HR and WHS software product, known as Bright.

Mr McMurchy’s last position at Employsure was as sales manager of the Bright product. Mr Kumaran was a senior salesperson.

On 8 February, the court prevented Mr McMurchy from joining Breathe until at least 14 March. On 15 March, the court extended the order for him and Mr Kumaran until a final decision is made. The next hearing is expected to take place in April 2021.

Employsure also indicated it is highly likely to begin proceedings against a third employee, who is planning a move to ELMO.

Words from the parties

In a statement, a spokesperson for Employsure said the decision was welcomed.

The decision vindicates Employsure’s efforts to protect its legitimate business interests, particularly relating to its software product Bright, which were being threatened by the ex-employees and ELMO, despite requests for them to refrain from doing so.

More fundamentally, the decision shows that it is possible to protect against underhand behaviour from ex-staff and competitors, including preventing against the solicitation of colleagues and removal of confidential information, supporting that contractual commitments protecting against such actions are an important foundation for business. 

ELMO declined to comment as the case is still before the court.

ELMO share price snapshot

Over the past twelve months, the ELMO share price has gained around 22%. In comparison, the S&P/ASX All Technology Index (ASX: XTX) is up 117% over the same period.

Based on the current ELMO share price, the company has a market capitalisation of around $452.4 million.

More reading

• 2 small cap ASX shares you need to know about
• ASX quarterly rebalance: HUB24 joins ASX 200, Brainchip into ASX 300
• ASX tech correction? 10 of the worst-hit shares
• ASX All Technology Index teetering on verge of a bear market
• 2 very exciting small cap ASX shares to buy

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 and recommends Elmo Software. 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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In a pandemic, everyone’s a socialist.

So quipped conservative pundits from the United States to Australia, and indeed across the globe, as COVID-19 saw governments of all stripes open the spending taps to support their stricken economies.

Will ASX retail shares take a hit with JobKeeper ending?

Here in Australia, the government passed several crucial fiscal relief packages. It worked alongside the Reserve Bank of Australia (RBA), which slashed interest rates to 0.10% and initiated a record quantitative easing (QE) program to keep borrowing costs low.

Among the hallmarks of the government’s support program was JobKeeper. Although the program is catching some flak for seeing some of its funds supporting higher company profits (and boosting some executive paycheques), it helped as many as 1.5 million Aussies hold onto their employment.

In so doing, it also put a lot of extra money into consumer’s pockets – extra money which offered a nice tailwind to many ASX retail shares.

But the pandemic relief scheme is coming to an end on 28 March. And with it, consumer spending may slump.

How the Reject Shop is preparing for the end to JobKeeper

The Reject Shop Ltd (ASX: TRS), Australia’s largest discount variety store, didn’t get any JobKeeper aid itself. However, many of its customers did, and the extra money almost certainly helped lift sales.

With JobKeeper slated to end in less than 2 weeks, Reject Shop CEO Andre Reich says he’s already seen a change in customer spending habits.

As the Australian Financial Review reports, Reich said:

It feels like customers are already becoming more prudent in terms of their spending – we’ve definitely seen that change in the last month. Everyone is aware something will happen when JobKeeper comes off.

The Reject Shop may fare better than some higher-end ASX retail shares, with its selection of bargain-priced items.

Reich said, “Our plan is to capitalise on those who are more challenged in the next six to 12 months. We’re setting our business up to take advantage of that and to serve more customers with products they need.”

The AFR reported that the Reject Shop is also working with landlords to reduce rents. According to Reich:

We’re starting to see rents come down but it’s not a material number at this stage. As we get through the latter half of this year, vacancy rates will probably increase in shopping centres, so rental deals will become better.

The company is also planning to continue its new and successful push into online retailing, which it only launched after the pandemic outbreak. Reich said, “We hadn’t considered online in our business until COVID, so it’s been a remarkable turnaround in such a short space of time.”

The Reject Shop share price snapshot

After a morning in the red and a slightly more positive afternoon of trading, the Reject Shop share price is currently inching lower, down 0.32% at $6.26.

Over the past 12 months, Reject Shop shares have soared 122%. That compares to a gain of 37% on the All Ordinaries Index (ASX: XAO). So far in 2021, the Reject Shop share price is down 8%.

More reading

• 3 top ASX shares rated as buys by brokers
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• 2 ASX shares rated as strong buys by brokers

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

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It’s not cool to take ‘victory laps’, especially when others have done it tough.

And I’m the first to criticise those who make bold (often outlandish) predictions.

After all, when they’re right, they claim victory, but when they’re wrong, they’re strangely quiet, hoping we’ll forget. (It’s a good strategy: when was the last time you saw a newspaper article reviewing some ‘experts’ bold claims?)

So, I’m treading carefully, here.

I still don’t do predictions.

They’re usually of two types.

They’re either consensus calls that are so close to the average to be useless when they’re right, and when they’re wrong they just say ‘well, we all were’.

Or, they’re outlandishly bold, seeking attention, or conforming to some long held (and seldom, if ever changed) worldview, and trotted out at every opportunity… in which case, they’re of the type I outlined at the top.

In short: They’re generally useless.

But that’s different from choosing an investment approach, based on experience, education and a basic understanding of human nature, and letting it play out.

A prediction is: I expect the ASX 200 to be at X points by Christmas.

An expectation is: I think the market will likely go higher, from here, over the long term.

And you know which one is more useful, right?

I make the point, today, because we’re almost exactly 12 months on from the market’s 2020 low point.

This time last year, investors were freaking out, and were in the process of sending the ASX down almost 40% in just over a month.

It was the fastest bear market in history: truly a panic for the ages.

And when I say panic, I mean it.

The market lost control of its senses.

Many people who hadn’t invested through a downturn took flight.

Many people who had invested longer — and arguably should have known better — still lost their nerve, and also fled.

And it’s not just those who sold after the first 5%, 15% or 25% fall.

On March 23, as the market was down 38% (and, while we couldn’t know it at the time, would not fall any further), people were still selling.

Now, in hindsight that looks silly, doesn’t it.

But here’s where I want you to listen closely.

Because, at the time, I was shouting, loudly, that investors should be buying. 

Or, at the very, very least, not selling.

Not because I knew it was the bottom.

And not because I knew the fastest bear market in history would be followed by the fastest recovery in history.

None of that.

I didn’t make a single prediction.

I simply said something like this (I said it so frequently, there would have been many versions):

“It is, in my opinion, likely that the ASX eventually gets back to pre-pandemic levels. And, if I’m right, when it does, it will have gained 50%.”

In other words, unless the ASX was never, ever going to get back to the levels of February 2019, shares were on sale.

I didn’t say where the ASX 200 would get to.

I didn’t say when.

I just said, in essence, “things will get better, and that’ll make money for those who hang around, or buy more”.

It was, in my opinion, one of the lowest risk investing statements I’d ever made.

Meanwhile?

Meanwhile, other investors, who were keen to show just how smart they were by trying to pick the bottom, or to time the recovery, were largely left on the sidelines.

They waited… and watched as the market recovered.

They told us how the recovery couldn’t last. 

How shares would get cheaper as the pandemic continued.

And then they’d buy and make a killing.

And did they?

Nope.

Now, to be fair, it could have turned out that way.

They might have made a fortune, buying as shares bottomed out down 50%, 55%, or 60%.

Maybe.

But, in my view, it was just a low return bet, given what was on offer for the rest of us.

There was a potential 50% return, on the table, just asking to be picked up.

And yet, in search of a little bit more — because they were ‘smarter’ than the rest of us — they couldn’t help but try to be a little too clever.

By half.

I don’t mean to be critical of those people. In a different universe, they might have made money.

I simply want — in this age of Reddit groups playing funny buggers to try to make a point, and people punting on Bitcoin — to remind you of Aesop’s tortoise and hare.

Those clever hares, trying to outsmart the rest of us, missed their opportunity to buy shares when they were cheap, because they were looking for ‘cheaper’ — an opportunity which never came.

Meanwhile, we tortoises just plodded along.

Yes, it was uncomfortable.

Scary even.

I’m not going to pretend it was easy, or fun.

But, once we put our egos aside, we just needed to look at what was in front of us.

If (I thought ‘when’) the market went back to pre-pandemic levels, we were going to get a 50% return.

That was it.

If it took 5 years, we’d get 8.5% per annum. Not wonderful, but not bad. Plus, we’d probably get some dividends along the way.

If it took 3 years, we’d have earned 14.5% per year.

In two years? That’s a gain of 22% or so.

I didn’t even consider the possibility we’d be almost all the way there in a single year!

See, I wasn’t making a prediction.

Just thinking through the probabilities.

The ASX had never, before then, failed to set a new high after a big decline.

Sure, sometimes it took a while.

But as a net-buyer of stocks, that’d actually work in your favour: imagine getting an extended time to add meaningfully to your portfolio at low prices!

Oh, the media would have decried a stock market that was ‘going nowhere’, but that would have hidden the real opportunity.

So, heads — the market recovered quickly — we win.

And tails — the market took longer to recover — we win.

The only way to fail was to be too clever, trying to time the market, and missing out altogether.

Remember:

I didn’t predict anything.

I didn’t claim any special insight.

I didn’t try to outsmart anyone.

I just recommended you buy — or at least hold — because I thought the odds were overwhelmingly in your favour.

The lessons:

1. Don’t predict.

2. Check your ego. There are no extra points for ‘degree of difficulty’ or being smarter than the next bloke

3. Keep buying.

4. Ignore the noise

5. Focus on being roughly right (thus avoiding being precisely wrong).

Don’t make investing harder than it needs to be.

Fool on!

More reading

• 3 reasons to buy the BetaShares Asia Technology Tigers ETF (ASX:ASIA)
• Could the run be over for the Fortescue (ASX:FMG) share price?
• Will a US Bitcoin ETF send the Bitcoin price to new record highs?
• ASX shares making the biggest moves today
• Lark Distilling (ASX:LRK) share price just hit a new 52-week high

Motley Fool contributor Scott Phillips 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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There are a lot of exchange traded funds (ETFs) for investors to choose from on the Australian share market right now.

But one of the very best is arguably the BetaShares Asia Technology Tigers ETF (ASX: ASIA). Below are three reasons to consider buying this popular ETF.

1. Diversification

The BetaShares Asia Technology Tigers ETF provides investors with diversified exposure to a high-growth sector that is under-represented in the Australian share market. Diversification is very important when it comes to investing. For example, if you’re only invested in the local share market and something unexpected happens to the Australian economy, then your portfolio is liable to underperform one which has exposure to economies that continue to boom.

2. Tech exposure

Another reason to consider this ETF is its exposure to the growing Asian tech sector. The fund is invested in a total of 50 “technology tigers” that are leading Asia’s (excluding Japan) technological revolution. BetaShares notes that due to its younger, tech-savvy population, Asia is surpassing the West in respect to technological adoption. As a result, the sector is expected to remain a growth sector for some time to come. This could make the ETF a good buy and hold option.

3. Quality companies

One key final reason to consider the BetaShares Asia Technology Tigers ETF is the quality of the companies that are included in it. Among the fund’s holdings you will find the likes of Alibaba, Baidu, JD.com, Meituan Dianping, Pinduoduo, Samsung, Tencent. Alibaba is regarded as the Amazon of China and reported 757 million annual active customers last year. Whereas Tencent is one of the world’s largest companies and the name behind the hugely popular WeChat app. At the last count, that app had over 1.2 billion active users.

Over the last 12 months the BetaShares Asia Technology Tigers ETF has provided investors with a very impressive 69.6% return.

More reading

• 2 ASX shares that could be fantastic buy and hold options
• 2 ETFs to buy in this tech sell off
• 2 high quality ASX ETFs to buy this month
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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 BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 reasons to buy the BetaShares Asia Technology Tigers ETF (ASX:ASIA) appeared first on The Motley Fool Australia.

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The recent slump in the Fortescue Metals Group Limited (ASX: FMG) share price has coincided with a slight pullback in iron ore prices.

Iron ore took a partial retreat this week from 10-year highs of US$175 per tonne to US$168 per tonne. The weakness in iron ore was triggered by new policies in China to curb carbon emissions and consequently, steel production and iron ore demand.

Are Chinese policies dragging the Fortescue share price lower?

China appears to be taking its first steps in its ambitious goal to achieve net-zero emissions by 2060. The city of Tangshan is one of the country’s most polluted cities due to its heavy industrial output.

Early this week, the South China Morning Post reported an emergency municipal meeting occurred on the weekend during which factories were ordered to “limit or halt production on days when a heavy pollution alert was in place to reduce the overall emissions of air pollutants such as sulfuric dioxide or nitrogen oxide by 50 per cent”. 

This announcement could be one of the reasons the Fortescue share price closed 4% lower on Monday.

Broker downgrade 

A note has come out of Morgan Stanley today citing the emission policies in Tangshan could be the beginning of major iron ore market headwinds. 

Morgan Stanley believes that the emission cuts could be a contributing factor that brings the iron ore market from its significant deficit to balance. 

Iron ore markets have been in a significant deficit due to soaring industrial activity from China and supply-side challenges from overseas iron ore producers. But the tides could turn as China’s stimulus eases and global supply returns to normal. 

The broker’s analysts also noted that improving mill profitability could result in greater discounts for low-grade iron ore. Between Fortescue and ASX iron ore majors BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), Fortescue produces the lowest iron ore grades. Fortescue’s average grades sit at approximately 57% to 58%, while BHP and Rio produce respective grades of 60% and 61%. 

As a result, Morgan Stanley rates the Fortescue share price as underweight with a $17.45 target price. This represents a downside of ~14% to the current share price, excluding dividends. 

More reading

• Top brokers name 3 ASX shares to sell today
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• Why the Monadelphous (ASX:MND) share price is in focus
• Why this fund likes these 3 exciting ASX shares

Motley Fool contributor Kerry Sun 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 Bitcoin (CRYPTO: BTC) price is up 5.7% over the past 24 hours. One Bitcoin is currently worth US$58,778 (AU$75,356).

That’s according to Bitcoin price data from CoinDesk, which also tells me Bitcoin is still trading below its all-time highs of US$61,557, which it reached this past Sunday 14 March. Though not by much!

At the current price Bitcoin has a market cap of US$1.1 trillion. That’s enough to buy half the shares of Apple Inc (NASDAQ: AAPL).

Astounding.

What’s holding some investors back from buying Bitcoin?

As “easy” as Bitcoin is to buy and sell, according to its enthusiasts, needing to work through crypto exchanges and using a digital wallet has kept many investors, at an apparently significant cost, from dipping their toes into the crypto market.

Not to mention the legitimate fear of hacking.

These issues have driven a rising investor demand for Bitcoin exchange-traded products (ETPs) and exchange traded funds (ETFs)

Would a US Bitcoin ETF send Bitcoin to new record highs?

As Bloomberg notes, a Bitcoin ETF already exists in Europe on the Stockholm Stock Exchange – the $2.7 billion Bitcoin Tracker EUR. And the Purpose Bitcoin CAD ETF (TSE: BTCC.B) launched last month on the Canadian Stock Exchange.

But the United States Securities and Exchange Commission (SEC) has been reluctant to give the green light to a US-listed Bitcoin ETF. SEC is concerned, among other things, with the extreme price swings and Bitcoin’s alleged use in illegal transactions.

However, the tide may be changing and a US-listed Bitcoin ETF may yet launch in 2021.

According to Bloomberg:

U.S. regulators have repeatedly batted down attempts to introduce them, citing concerns about potential manipulation and thin liquidity. Yet with the world’s largest digital coin rallying to new heights and a change of leadership at the Securities and Exchange Commission, the prospect of a first U.S. Bitcoin ETF appears to be rising.

And there’s certainly no shortage of interest from institutional players to back a Bitcoin ETF, with the VanEck Bitcoin Trust, Valkyrie, NYDIG, and WisdomTree all having applied to the SEC inside the past few months.

It’s hard to say if easier access for global investors through a US ETF would send the Bitcoin price soaring, or perhaps only add to its volatility as investors seek to time the price swings for maximum gains.

But it will certainly be interesting to watch how this plays out.

More reading

• How to invest in the Nasdaq Index on the ASX
• Should ASX investors own Bitcoin (CRYPTO:BTC) as a defensive investment?
• Elon Musk reviews title and decides ‘Technoking of Tesla’ is more fitting
• ASX investors still can’t get enough of GameStop (NYSE:GME) shares
• Could this be the pin to pop the Bitcoin (CRYPTO:BTC) bubble?

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Bitcoin and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Apple. 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) has given back its gains from this morning and is down 0.60% at the time of writing. Here are the ASX shares that are ignoring the broader market and running much higher. 

4 ASX shares seeing big gains today 

Cyprium Metals Ltd (ASX: CYM) 

Cyprium Metals is a copper and gold explorer with a number of projects in the Murchison region of Western Australia. The company is currently undergoing a scoping study to determine the parameters required to develop a copper project in the region. 

The Cyprium share price opened as high as 30% higher today following the initial results of its reverse circulation drilling program at its Nanadie Well project. Its shares are currently 7.5% higher at the time of writing, on the highest trading volume since inception. 

Executive Director Barry Cahill was pleased with the preliminary investigations. 

We are pleased to announce the first results from the January 2021 Nanadie Well supergene RC drilling campaign. These fantastic results from the first four holes of the programme provide strong support to our understanding and demonstrate the potential of the supergene horizon at Nanadie Well.

We anticipate continued positive news flow over the coming weeks as the results for the remaining 62 holes are received.

SRJ Technologies Group PLC (ASX: SRJ) 

The SRJ share price has been in a constant decline since its IPO on 18 September. Its shares have slumped from 80 cents to 30 cents in just 7 months. 

SRJ provides a niche engineering service with products designed to maintain the integrity of pressure containment systems. The business struggled with widespread delays of repairs and maintenance in 2020 due to COVID.

More recently, on 15 March, the company upgraded its performance outlook in 2021 after experiencing increased levels of oil industry engagement and new market openings. Its share price has bounced 11% higher today, but is still near all-time lows. 

Market Herald Ltd (ASX: TMH)

The Market Herald is a stock market internet discussion forum and news platform. The company reported strong growth figures during February reporting season with a 469% increase in net profit before tax to $8.1 million for the 6 months ending 31 December 2020. It shares are up 9.80% today on no market sensitive news. 

Bellevue Gold Ltd (ASX: BGL)

The Bellevue share price has struggled to make headway due to weak gold prices. Its shares were hovering around 10-month lows, before bouncing 9.15% today. 

Bellevue believes it has one of the highest-grade new gold discoveries globally with a 2.4 million ounce reserve at 10g/tonne resource located in one of the highest-rated mining jurisdictions in the world. The project is currently undergoing a significant drilling program to target further resource conversion and growth across the project.

More reading

• Why the Bellevue (ASX:BGL) share price is charging higher today
• Why the Bellevue Gold (ASX:BGL) share price is on watch
• Why is the Bellevue Gold (ASX:BGL) share price frozen?

Motley Fool contributor Kerry Sun 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 Lark Distilling Co Ltd (ASX: LRK) share price has been on a run today, twice hitting a new 52-week high of $1.98. Despite there being no news from the Tasmanian whisky maker, its share price continues to climb on high volume.

At the time of writing, the company’s shares are up more than 4% trading at $1.96. So, what has Lark been doing to garner such attention? Let’s take a look.

Results showing growth

Lark reported its half-year accounts towards the end of February. Pleasingly for shareholders, these numbers showed continued growth in the distilling business. Revenue from activities grew a significant 91% to $7.29 million for the period. Additionally, the company managed to turn profitable, with $542,436 in profits from the half.

In the same announcement, Lark detailed that it had a total of 817,549 litres of whisky set for maturing over the next six years. The liquidation value of the whisky would be approximately $56.7 million, while the sale value at maturation is expected to be $113.6 million.

Furthermore, Lark reported having $46.8 million in net assets at the end of December. This was strengthened by the distiller’s institutional placement of $8.85 million completed back in September of last year. As a result, Lark now has around $12 million of cash to give it financial flexibility moving forward.

Relaunch, online, limited edition

Three ingredients appear to be secrets to the current Lark share price success. The business relaunched its Forty Spotted Gin brand during the first half. The brand’s new packaging in the form of an unusual upside-down bottle has received positive consumer responses.

Forty Spotted turns #Gin on its head with striking new #packaging https://t.co/HTFXx7vcK6 @boldinc @LarkDistillery #PackagingDesign pic.twitter.com/JlwRvQIwBt

— FAB News (@fabnewslive) December 3, 2020

https://platform.twitter.com/widgets.js

Lark has also been using an accelerated social media/influencer campaign to raise brand awareness. E-commerce sales impressively increased by fivefold year over year, driven by its limited release programme.

To ensure that its liquor can be found in stores as well – Lark anticipates key distribution additions of Costco, First Choice, Liquorland, and Dan Murphy’s.

Lark share price recap

Perhaps people were driven to drink during the COVID-19 lockdowns, sending sales soaring. Whatever the catalyst, Lark Distilling has dramatically outperformed the S&P/ASX 200 Index (ASX: XJO) as a result.

The Lark share price has returned 160% over the past 12 months, in comparison to 36.3% from the index. In the last 6 months alone, Lark has gained 70%. That’s worth celebrating.

At today’s current share price, the Tassie distiller commands a market capitalisation of $112 million.

More reading

• ASX shares making the biggest moves today
• Australian funeral industry ‘on notice’ as Propel Funeral (ASX:PFP) fined by ACCC
• Top brokers name 3 ASX shares to sell today
• 2 strong blue chip ASX shares rated as buys by brokers
• Why the Boom (ASX:BOL) share price is surging 6% today

Motley Fool contributor Mitchell Lawler 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 Propel Funeral Partners Ltd (ASX: PFP) share price has risen slightly today, despite news that the Australian Competition and Consumer Commission (ACCC) fined two of the company’s regional businesses.

WT Howard Funeral Services in Taree and Coventry Funeral Homes in Townsville both continued to advertise themselves as “proudly local and independently owned” after they were bought by Sydney-based Propel in 2015 and 2019, respectively. 

The ACCC fined both businesses $12,600 for making false and misleading representations about their ownership, which led the Commission to warn the funeral sector that it plans to crack down on the industry.

ACCC cracks down on ASX funeral companies

The ACCC publicly hit out at the industry last month in its Compliance and Enforcement Priorities report.

Competition and consumer issues in the funeral services sector have long provoked complaints from the public, governments and generated stories in the media. Not least because many consumers engage with the funeral sector at a time when they are grieving, vulnerable and thereby at a disadvantage.

This is a concentrated sector with some players having significant market power. As some funeral service providers also have a large share of different services across the funeral home, cemetery and crematoria markets, there is an opportunity for these providers to bundle services and block new entrants to the market. There have been reports from people within the sector of anti-competitive conduct such as misuse of market power and exclusive dealing. We strongly encourage whistleblowers to come forward.

Propel share price outperforming Invocare ahead of uncertain future 

The fines come as Propel’s strong performance over recent months has drawn attention from the market. The Propel share price was one of the best performing ASX funeral shares on Monday. It holds about 6.3% of Australia’s funeral market, with a price-to-earnings ratio of 19.12 and a 12-month return of 2.41%.

Australia’s biggest funeral company, InvoCare Ltd (ASX: IVC), which owns brands like White Lady Funerals, is down 17.04% over the past year to $11.38 per share. InvoCare posted a 4.7% decline in revenue in the 12 months to 31 December 2020. 

While these two companies dominate the Australian funeral industry, the future of the sector appears more uncertain, with the ACCC voicing its intention to prevent further monopolisation.

“There are allegations that some funeral operators inflate the price of services, and take advantage of consumers at a vulnerable time,” ACCC Chair, Rod Sims, said at ACCC’s Committee for Economic Development Australia (CEDA) conference in February.

“Complex and opaque pricing, product bundling and other strategies adopted by some funeral operators are also issues we will be examining more closely.”

More reading

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• Top brokers name 3 ASX shares to sell next week
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• InvoCare (ASX:IVC) share price lower after posting full year loss
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Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has recommended InvoCare Limited and Propel Funeral Partners 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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below. Here’s why these brokers are bearish on them:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating and lowly $36.00 price target on this payments company’s shares. This follows the announcement of a new buy now pay later offering by Commonwealth Bank Australia (ASX: CBA). It notes that this service will not have additional fees for merchants. The broker believes this highlights the risk Afterpay faces from regulation for its no surcharge rules for merchants. The Afterpay share price is trading at $111.13 today.

Aurizon Holdings Ltd (ASX: AZJ)

Analysts at Goldman Sachs have retained their sell rating and $3.66 price target on this rail freight company’s shares. While the broker acknowledges that Aurizon has defensive earnings and a high dividend yield, it has concerns over the impact to valuations from the deterioration in the long term outlook for global coal demand. The Aurizon share price is fetching $3.87 on Thursday afternoon.

Fortescue Metals Group Limited (ASX: FMG)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $17.45 price target on this iron ore producer’s shares. According to the note, the broker fears that the recent curbing of production in China to combat pollution could bring the iron ore deficit to an end. It also suspects that the discount between low and high grade iron ore could begin to widen in the future, which would be bad news for the company. The Fortescue share price is trading at $20.36 this afternoon.

More reading

• 2 strong blue chip ASX shares rated as buys by brokers
• Hydrogen far from ‘fool cells’: EV trends and the major ASX players
• Afterpay (ASX:APT) share price drops on scathing broker note
• Why the Afterpay (ASX:APT) share price is down 7% in 2021
• Why the Monadelphous (ASX:MND) share price is in focus

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Top brokers name 3 ASX shares to sell today appeared first on The Motley Fool Australia.

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