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The travel industry was arguably the first to feel the heat of the COVID-19 crisis and looks likely to be the last to recover.

But the rollout of vaccines is offering new hope to ASX travel shares. Travel bookings have been at all-time lows during the pandemic, with shifting border restrictions making leisure travellers fearful of committing.

The vaccines potentially signify the beginning of the end of the pandemic, and the start of freer movement across borders. This should result in more opportunity to travel for pent up consumers. 

ASX travel shares bore the brunt of the sudden downturn in travel, with travel share prices plunging at the start of the pandemic.

The Qantas Airways Limited (ASX: QAN) share price fell  63% between February and March last year. The Webjet Limited (ASX: WEB) share price fell 72% over the same period while the Flight Centre Travel Group Ltd (ASX: FLT) share price fell 73%.

It’s now been a year since travel bans started to bite and hope is on the horizon for a return to more normal conditions. Let’s take a look at how ASX travel shares are travelling right now. 

Qantas 

The Qantas share price is up 100% from its low in March 2020 but remains 27% below its February 2020 high.

The airline was hit hard by COVID restrictions, reporting a 91% decrease in underlying profits in FY20. This resulted in a statutory loss of $2.7 billion.

Qantas expects to begin the balance sheet repair process in the second half of FY21 as the airline moves into recovery mode. This will be assisted by the impact of domestic border re-openings, progress on cost reduction programs, and the continued strong performance of loyalty and freight divisions.

Qantas has advised it will post a statutory loss in FY21, but expects to be close to break even at the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) level for the first half. 

The airline has maintained strong liquidity throughout the crisis to protect against any additional, unexpected shocks. As at 30 November 2020, Qantas had $3.6 billion in available liquidity. This consisted of $2.6 billion in cash and a $1 billion undrawn revolving credit facility.

Qantas expected to increase this facility by $500 million before 31 December 2020 to provide additional standby liquidity. In a sign that the airline may be expecting greater travel in future, Qantas earlier this month signed a lease agreement with Alliance Aviation Services Limited (ASX: AQZ) for the provision of E190 aircraft. The agreement initially provides for three E190 aircraft to commence operations in mid-2021 with options to call on an additional 11 aircraft based on market conditions. 

Webjet  

Webjet reported its half-year results last week which demonstrated the continued impact of COVID-19 on the travel industry.

Total transaction volumes were $267 million, an 89% decrease compared to 1H FY20. This flowed through to a 90% drop in revenue, which was $22.6 million in 1H FY21 compared to $217.8 million in the prior corresponding period.

EBITDA was a negative $40.1 million, down from $87.3 million in 1H FY20. “These results reflect the devastating impact COVID-19 continues to have on the global travel industry,” managing director John Guscic said.

The Webjet share price is up 116% from last year’s low, but remains around 45% below pre-COVID highs.

For the travel operator, the focus continues to be on managing cash burn and cost reduction initiatives. The company says significant cost reduction initiatives are creating leverage for when travel markets reopen. These initiatives are expected to deliver 20% lower costs across the Webjet group when the business returns to scale. Webjet is also seeking capitalise on domestic leisure market opportunities. 

Webjet reported a statutory loss of $132 million for 1H FY21, with an underlying loss of $50 million. Trading for the rest of FY21 is expected to be in line with the first half.

Guscic says demand for travel remains high: “We believe people will want to travel as soon as they are able to and we are doing everything we can to ensure Webjet is there to capture demand when it happens.”

Webjet is looking to capitalise on this eventual travel recovery, which is expected to be led by domestic and leisure markets. 

Flight Centre

Flight Centre is due to release its half-year results this week, and with borders still in a state of flux, they might not be pretty.

The Flight Centre share price is up 74% from its March 2020 low, but is still trading well below pre-COVID levels, when shares were changing hands for closer to $40. As a result of the share price fall, Flight Centre was removed from the S&P/ASX 100 (ASX: XTO) in December. The travel operator reported a $510 million underlying loss for FY20, compared to a $343 profit in FY19. The loss was incurred entirely during the March–June period, which Flight Centre called “the most challenging trading environment the company has experienced”. 

Flight Centre entered the crisis with healthy cash reserves and minimal debt. It moved quickly to buffer itself when trading conditions deteriorated by securing additional cash and liquidity. It raised $700 million in capital in April 2020 and sold its Melbourne property for more than $62 million in July.

Cost reductions were implemented via store rationalisations and global workforce reductions. This saw Flight Centre close some 50% of leisure shops globally. 70% of employees were placed on redundancy, stand-down or furlough programs. By August Flight Centre advised its cost base could service 40% of normal transaction volume, which is likely to represent a break-even position. 

Can ASX travel shares stage a comeback? 

ASX travel shares have spent the past year under the cloud of COVID-19 and the unprecedented disruption it wrought. Now that hope has arrived in the form of a vaccine, we could start to see a return to better conditions for travel industry participants.

Although leisure travel is likely to be limited to domestic travel for the next year or so, demand from pent up travel consumers is growing. This could point to the start of a recovery for ASX travel shares. 

More reading

• These are the 10 most shorted shares on the ASX
• Brokers name 3 ASX shares to buy right now
• ASX 200 dips, EML soars after reporting, Appen sinks
• Share prices of travel shares soar, Corporate Travel (ASX:CTD) and Webjet (ASX:WEB) report
• Webjet (ASX:WEB) share price soars to 5% increase in late trade

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

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

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

According to a note out of Macquarie, its analysts have retained their outperform rating and lifted their price target on this bank’s shares to $28.50. The broker was pleased with ANZ’s first quarter update and has upgraded its estimates to reflect lower impairment charges, improving margins, and strong cost control. And while it still believes low interest rates and competition will limit its growth in the medium term, it expects its strong capital position to support higher dividends. The ANZ share price is fetching $26.55 today.

Goodman Group (ASX: GMG)

Analysts at Credit Suisse have upgraded this integrated property company’s shares to an outperform rating with a $19.62 price target. According to the note, Credit Suisse was expecting Goodman to upgrade its full year guidance last week, but the size of the upgrade was better than it expected. In addition to this, the broker was pleased with its result and notes that its development income was stronger than it forecast. The Goodman share price is trading at $17.30 this afternoon.

Lovisa Holdings Ltd (ASX: LOV)

A note out of Morgan Stanley reveals that its analysts have upgraded this fashion jewellery retailer’s shares to an overweight rating with an improved price target of $15.00. According to the note, Lovisa delivered a first half result ahead of its expectations. In fact, it almost surpassed the broker’s full year profit estimates in the first half. Morgan Stanley was also pleased to see its same store sales growth return early in the second half. Looking ahead, it sees a lot of potential from its global rollout. The Lovisa share price has now breached the broker’s price target and is trading at $15.07 this afternoon after a huge gain today. However, analysts at Morgans believe its shares can go even higher that Morgan Stanley’s price target. This morning they retained their add rating and lifted their price target to $17.95.

More reading

• Why Costa, Lovisa, OZ Minerals, & Tyro shares are racing higher today
• Why broker downgraded these 2 ASX 200 shares last week
• ASX 200 Weekly Wrap: ASX lower despite bumper dividends
• Is the ANZ (ASX:ANZ) share price a buy?
• 2 of the best ASX 200 results from last week

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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The QBE Insurance Group Ltd (ASX: QBE) share price surged after a leading broker upgraded the stock while others lifted their valuation on the stock.

The QBE share price soared 6% to its highest level this calendar year at $9.52 during lunch time trade while the S&P/ASX 200 Index (Index:^AXJO) was flat.

In contrast, other insurers like the Suncorp Group Ltd (ASX: SUN) share price and the Insurance Australia Group Ltd (ASX: IAG) share price fell 0.6% each at the time of writing.

QBE share price upgraded to “buy”

A recommendation upgrade by UBS could explain the QBE share price outperformance. The broker upped its rating on the stock to “buy” from “neutral” as it believes the bad news is more than reflected in the current share price post QBE’s results.

“While a US$1.5bn loss justifies ~40% share price underperformance over the last 12 months, the vast majority of the provisions taken by QBE (US$655mn for COVID-19 claims) are for currently unreported claims,” said the broker.

“Further QBE has provisioned its BI claims to a level that reinsurance protects from any potential developments from here.”

UBS also pointed out that the underlying trends in QBE’s latest profit announcement was better than originally thought. The broker increased its price target to $10.25 from $9 a share, and it wasn’t alone.

QBE price target lifted

The analysts at Citigroup, Goldman Sachs and Macquarie Group Ltd (ASX: MQG) all increased their price targets on QBE, reported the Australian Financial Review.

Citi reiterated its “buy” rating on the stock and increased its target price from $10.40 to $10.95 a share. Goldman Sachs also held its “buy” rating on the QBE share price and raised its price target from $10.24 to $10.73.

Macquarie not only lifted its fair value on QBE to $9.40 from $7.70 a share, but it also upgraded its recommendation on the stock to “neutral” from “underperform” as it believes QBE’s outlook has turned more positive.

Stronger operating leverage

It noted that QBE is well placed to benefit from rising insurance premiums. Its profit margins are also increasing from a low base and that means it has better earnings leveraged than its global peers.

“Although no official FY21 guidance was provided, the outlook for margins, premium rates and now FX are all positive and should provide support for the stock until a new group CEO is appointed,” the AFR quoted Macquarie as saying.

More reading

• ASX 200 up 0.1%: Macquarie upgrades guidance, Costa impresses, NIB surges higher
• ASX 200 Weekly Wrap: ASX lower despite bumper dividends
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week
• 2 ASX 200 shares to buy for growth

Motley Fool contributor Brendon Lau 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 Nexion Group (ASX: NNG) share price has on fire since hitting the ASX boards last week.

In afternoon trade the shares of the leading hybrid cloud, network, security and data centre company are up a massive 36% to 38 cents.

This means the Nexion share price is up 90% since its IPO last week.

The Nexion IPO

Nexion commenced trading on the Australian share market last Thursday after raising $8 million via the issue of 40 million shares at $0.20 per share.

This gave the company a market capitalisation of $25.4 million at the time of listing. This has now increased to just under $50 million following today’s gain.

Among its major shareholders are co-founder and CEO Paul Glass and fellow co-founder and COO Kevin Read. They collectively own 21.4% of its shares outstanding. Including the rest of its management and board, a total of 28.7% of its shares are in the hands of insiders.

The company believes this provides a high degree of alignment with investors.

What does Nexion do?

Nexion offers private cloud infrastructure coupled with public cloud products such as Amazon AWS and Microsoft Azure to create a hybrid cloud service called OneCloud.

It uses software-defined wide-area network (SD-WAN) technology to connect its corporate customers to its OneCloud Nodes.

OneCloud Nodes consist of compute and storage capacity, bonded globally via SD-WAN that customers rent to deploy their corporate applications and integrate their operations into public cloud services offered by the likes of Microsoft, Amazon and Google.

The company currently operates in Perth, Adelaide, and Melbourne. However, it is aiming to become a global operator of Hybrid Cloud SD-WAN infrastructure. Capital from the IPO will be used to fund its expansion.

This will include a staged expansion into New Zealand, Canada, and Africa.

Financials

In FY 2020 the company’s revenue almost doubled year-on-year to $4.5 million. It also achieved EBITDA profitability in FY 2020 after the business demonstrated outstanding scalability with operating costs increasing only 14%.

Management believes the outlook for Nexion is favourable and should support strong growth in revenue and EBITDA over the medium to long term time.

Mr Glass commented: “We are extremely pleased by the level of support from investors and the success of the IPO is testament to the market’s enthusiasm for our business. On behalf of the Board, I would like to welcome our new shareholders to the Company.”

“Since we founded the Company in 2017, NEXION has demonstrated outstanding growth in our initial target market of Australia, but we believe that the best is yet to come. The capital raised will allow us to expand the business in a staged approach beyond its existing domestic footprint and into global markets. Our strategic relationship with Aryaka is instrumental to our global ambitions.”

“NEXION is a business with strong revenue growth potential, a high level of recurring revenue, excellent scalability and a vast market opportunity driven by an irreversible trend towards pays-as-you-go IT platforms. I look forward to reporting on the continued success of the Company,” he concluded.

More reading

• 2 small ASX dividend shares with big yields
• 3 ASX blue chip shares that just raised their dividends
• Jumbo (ASX:JIN) share price slides despite positive update
• Why the McGrath (ASX:MEA) share price popped 14% today
• These ASX 200 shares are trading near 52-week highs 

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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There are some small ASX dividend shares that have large dividend yields.

Businesses that are smaller may have the potential to grow more because they haven’t reached their growth ceiling yet. However, some of them may be able to deliver higher levels of income because they are paying high dividend yields.

Here are two examples:

360 Capital REIT (ASX: TOT)

This real estate investment trust (REIT) invests across the entire real estate investment world, taking advantage of varying market conditions in order to find the best opportunities. It’s managed by fund manager 360 Capital Group Ltd (ASX: TGP).

The business has been busy with acquisitions and sales in recent months.

In the three months to 30 September 2020, it continued its investment strategy of buying equity stakes in real estate assets and businesses, whilst exiting the debt investments.

It recently settled on the sale of its non-core Penrith shopping centre in line with book value. A few months ago it announced that it had settled seven contracts for its Gladesville investment averaging at a 20.3% premium to the purchase price.

Over the last month the small ASX dividend share has bought a 9.18% interest in Irongate Group (ASX: IAP), a diversified REIT, for approximately $78.6 million.

It has also announced a 50% interest in PMG Funds, a New Zealand based real estate fund manager with over NZ$665 million of real estate funds under management (FUM).

360 Capital REIT said that the partnership gives it exposure to a growing funds management platform across New Zealand. It will allow 360 Capital REIT to invest in direct commercial and industrial real estate transactions in New Zealand.

Management said that the REIT remains well capitalised with no gearing and a focus on growing its real estate strategy.

360 Capital REIT is currently paying a quarterly distribution of 1.5 cents, which translates to a distribution yield of just under 7% at the current share price.

Pengana Capital Group Ltd (ASX: PCG)

Pengana is a fund manager that runs a variety of strategies including Australian share strategies, global shares and global private equity.

In the latest monthly update, Pengana said that its funds under management (FUM) was just under $3.6 billion.

The small ASX dividend share believes that there is significant further capacity in various international equity strategies. Pengana also thinks there is a major growth opportunity in the Pengana Private Equity Trust. There’s also the potential to diversify further over time by adding new strategies, according to management.

Pengana said that one of the key attractions about its business was that it has more than 20% of its FUM in listed vehicles. It says that it has good fee margins and diversified performance fees. It also says that profitability is highly leveraged to growth in FUM. It largely has a fixed operating cost base.

The company believes that a key growth opportunity is the USA expansion platform with its acquisition of a controlling stake in Lizard International.

At the current Pengana share price, it has a grossed-up dividend yield of 6.2%.

More reading

• 3 ASX dividend shares with higher yields
• 2 secret ASX dividend shares with large yields
• 3 small ASX dividend shares with big yields

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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The year 2020 was painful for ASX dividend investors. From the ASX banks to Woolworths Group Ltd (ASX: WOW), former blue chip income stalwarts were forced to slash and even cancel dividend payments to levels I’m sure no ASX investor thought was possible.

Take Westpac Banking Corp (ASX: WBC). Westpac did not pay investors an interim dividend at all last year, the first time since the 1980s.

But in 2021 so far, this trend looks well on the way to reversing. So here are 3 ASX blue chip shares that have just announced a dividend increase for their shareholders.

3 blue chip shares that have just given investors a pay raise

Coles Group Ltd (ASX: COL)

When Coles reported its earnings last week, I’m sure investors weren’t really expecting what this grocery giant had in store for them. Coles announced an interim dividend of 33 cents per share, fully franked.

That’s a 10% increase on last year’s interim payout of 30 cents a share, and a 20% bump from the company’s 2020 final dividend of 27.5 cents.

If you annualise that 33 cents payout, it would give a dividend yield of 4.05% on current pricing, or 5.79% grossed-up with full franking.

Rio Tinto Limited (ASX: RIO)

Mining giant Rio Tinto was another ASX blue chip that delighted investors last week with a hefty dividend rise. Rio, like its ASX mining stablemates BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG), has been benefitting enormously from strong commodity prices, especially iron ore. Last week, Rio reported iron ore revenues were 13.4% higher year over year.

 That helped Rio declare a final dividend of US$3.09 and a special dividend of 93 US cents per share. That’s well up from the company’s previous final dividend of US$2.31. On the current exchange rate and share price, that dividend would give an annualised yield of roughly 7.98%, or 6.13%, if you only take the dividend’s final component.

CSL Limited (ASX: CSL)

CSL is another ASX blue chip that delivered a hefty dividend rise last week. The company reported its earnings last Thursday and gave investors a few surprises. Revenues were up 16.9%, and net profits after tax up 45%.

That helped CSL bump its dividend by 9% to US$1.04 a share from 2020’s interim payout of 95 US cents.

On current exchange rates and the CSL share price, that would equate to an annualised dividend yield of 0.98%. However, as my Fool colleague Tristan Harrison astutely noted last week, ASX investors actually got a 9% cut to their real payouts due to the sharp rise in the Aussie dollar against the US dollar over the past year.

Even so, a 9% dividend increase in US dollar terms is still a solid result, beating out inflation many times over.

More reading

• These ASX 200 shares are trading near 52-week highs 
• ASX 200 Weekly Wrap: ASX lower despite bumper dividends
• 2 of the best ASX 200 results from last week
• 2 buy-rated ASX dividend shares for your income portfolio
• ASX retail shares in focus as Aussies spend big in January

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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Jumbo Interactive Ltd (ASX: JIN) shares are trending lower despite the company advising it has launched a managed services business segment in Australia. During afternoon trade, the Jumbo share price has edged 0.69% lower to $14.49. However, it’s worth noting that at one point during intraday trading, Jumbo shares reached a high of $14.73 after the news broke.

Let’s take a look at what the online lottery ticket seller announced?

What did Jumbo announce?

The Jumbo share price is failing to stay afloat today after the company advised it has launched a managed services business catering to the Australian market. To complement the launch, Jumbo revealed that its foundation partners, Paralympics Australia and St John Ambulance Australia (VIC) Inc. have both signed on.

The newly launched segment will provide a complete lottery management service to not-for-profit organisations. This will include prize procurement, game design, campaign marketing, customer relationship management, and draw management.

Paralympics Australia and St John Ambulance will each have their own lottery games, and Jumbo will earn a fee as a percentage calculated from the total transaction value (TTV). This will be in addition to a share of the profits which Jumbo will also receive.

It’s estimated that these two clients will achieve an annual TTV of around $6.5 million once fully operationally. Furthermore, in the Paralympics Australia agreement, Jumbo will become an official partner of the Paralympics Australia Team.

Both clients will commit to their agreements for a period of up to 4 years. This will consist of a 2-year initial term followed by an option to extend for another 2 years.

According to an Australian Charities Report released in 2018, the total addressable market in Australia for Jumbo’s managed services business is roughly $10.5 billion comprising donations and bequests.

Words from the CEO

Jumbo CEO Mike Veverka touched on the newly launched segment, saying:

We are excited to launch the Managed Services business in Australia with our foundation partners Paralympics Australia and St John Ambulance Australia (VIC).

The addition of managed services in Australia is aligned with our vision of “making lotteries easier” and will assist many not-for-profits meet the challenges of COVID-19 and continue their fundraising efforts via a digital lottery program.

How has the Jumbo share price performed?

Over the last 12 months, the Jumbo share price is up more than 24%, reflecting a recovery in the sector.

Jumbo shares dipped to a low of $6.99 on 16 March, before surging around 85% over the course of the following month

Based on the current Jumbo share price, the company commands a market capitalisation of around $911 million.

More reading

• How to turn $20,000 into $1 million in 10 years with ASX shares

Aaron Teboneras owns shares of Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive 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 McGrath Ltd (ASX: MEA) share price is booming today. At the time of writing, McGrath shares are up 14.8% to 66 cents apiece.

The surge comes after the real estate services company reported its half-year results for the period ended 31 December 2020 (1H FY21).

Strong financials send McGrath share price soaring

McGrath reported revenues for the period totalling ~$56.8 million for 1H FY21. This is a 16% gain compared to the ~$48.9 million reported for the period ended 31 December 2019.

Across the half, company owned sales were a major factor in performance. McGrath advised that there was a 22% increase in the number of properties sold and a 7% increase in the average sales price.

The business earned a net profit after taxes (NPAT) for the period of $8.1 million, compared to a $1 million loss reported in the first half of FY20.

The company’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) blew up a massive 317% compared to the prior corresponding period (pcp). Underlying EBITDA for this half was ~$6.6 million, compared to ~$1.6 million in the pcp. 

This underlying EBITDA result is at the top end of the guidance that McGrath provided on 26 November 2020.

The company also announced a fully franked interim dividend of 5 cents a share.

CEO commentary

Reflecting on McGrath’s results amid the challenges of COVID-19, CEO Eddie Law said:

The residential property market has proved to be very resilient during the ongoing COVID-19 pandemic, compared with other sectors.

Cashed up homeowners, many of whom are prevented from travelling either domestically and internationally, are now largely working from home and as such, are reassessing their lifestyle and surroundings. This is positive for our industry as it results in homeowners either transacting or improving the asset value of their current home.

Despite a challenging year navigating the various lockdowns, McGrath has demonstrated our ability to continue to transact successfully and efficiently should further COVID restrictions are deemed necessary in the future.

We are very pleased as foreshadowed at the AGM, to return to the payment of dividends to shareholders as the business continues to recover and grow.

McGrath share price snapshot

McGrath has a current market capitalisation of $95.9 million. There are 166.8 million shares outstanding.

The McGrath share price zoomed as high as 74 cents during trading today, the highest price it has been since 11 September 2017. Year-to-date, McGrath shares are now up by 43%.

More reading

• Jumbo (ASX:JIN) share price slides despite positive update
• These ASX 200 shares are trading near 52-week highs 
• What to expect from the Afterpay (ASX:APT) half year result
• These ASX gold shares have reported record profits and dividends
• Here’s why the Althea (ASX:AGH) share price is racing 8% higher today

Motley Fool contributor Gretchen Kennedy 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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Reporting season surprises and the continued surge in commodity prices has helped tip these ASX 200 shares into record territory. Here are the ASX 200 shares that have been breaking out to 52-week highs lately. 

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Domino’s delivered a ripper of a result with all regions performing at or above expectations. The half-yearly result saw network sales increased 16.5% to $1.84 billion, while underlying NPAT soared 32.8% to $96.2 million. 

The Domino’s share price ran to an all-time record high of $115.97 on Thursday, and has since cooled down to $104.94 at the time of writing. Nonetheless, brokers are impressed with the company’s results and medium to long-term outlook, with Bell Potter upgrading the company to a buy rating with a $122.00 price target. 

Inghams Group Ltd (ASX: ING) 

On Friday, Inghams reported that its FY21 first-half revenue increased 4.6% to $1.363 billion versus the prior corresponding period (pcp) while underlying NPAT improved 10.7% to $46.5 million. The results sent the Inghams share price to a new, 52-week high of $3.93 during intraday trading.

Goldman Sachs has commented that the operating environment for Inghams is steadily improving following the disruption caused by COVID-19 in the 2020 calendar year. The broker has updated its coverage on Inghams shares with a 12-month target price of $4.25, representing an upside of approximately 15% at the time of writing. 

The broker noted that the biggest near-term risk for the company is its Woolworths Group Ltd (ASX: WOW) supply contract which is due to expire in August 2021. Goldman estimates that this contract accounts for approximately 50% of Inghams’ Australian poultry volumes. As such, retaining the contract in full and under similar terms and conditions is the key to medium-term production and profit stability for the poultry producer. 

OZ Minerals Limited (ASX: OZL)

The OZ Minerals share price is currently ripping to 13-year highs, coinciding with the surge in copper prices. The price of copper has doubled from its lows last March and soared to 9-year highs. Underpinning the copper rally is the demand from China, expectations of tight supply and a wider belief in a commodities ‘super cycle’. 

OZ Minerals delivered a record full-year result last Thursday, with NPAT increasing 30% to $213 million, thanks to higher copper and gold prices. 

Lynas Rare Earths Ltd (ASX: LYC) 

Rare earths is making headlines as China is making moves to limit the export of its rare earth minerals to the United States. Rare earth minerals are used in many applications including computing equipment, batteries, petroleum refining, medical imaging, and defence. 

Lynas has a number of growth initiatives underway including a new rare earths processing facility in Kalgoorlie, Western Australia and a new facility in Texas, US. As the world’s second-largest producer of separated rare earths, and the only significant producer outside of China, Lynas is in an ideal position to support supply chain diversity. 

The Lynas share price has gone from strength to strength, surging by around 50% this year, and hitting a new all-time record high of $6.18 at the time of writing. 

Rio Tinto Limited (ASX: RIO) 

Iron ore prices have continued to sit at elevated levels of more than US$150 per tonne. Higher commodity prices have helped ASX 200 shares in the mining sector maintain strong cash flows, and even better dividend payments. 

After the mining giant’s bumper FY20 performance which included a 22% increase in net earnings of US$9,769 million, it announced a final dividend of US$4.02 (A$5.19) per share. This comprises an ordinary dividend of US$3.09 (A$3.99) and a special dividend of US93 cents (A$1.20) per share.

More reading

• Why Costa, Lovisa, OZ Minerals, & Tyro shares are racing higher today
• These are the 10 most shorted shares on the ASX
• Bell Potter thinks the Domino’s (ASX:DMP) share price is ‘mouthwatering’ 
• ASX 200 Weekly Wrap: ASX lower despite bumper dividends
• Don’t make the same mistake I made

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post These ASX 200 shares are trading near 52-week highs  appeared first on The Motley Fool Australia.

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On Thursday all eyes will be on the Afterpay Ltd (ASX: APT) share price when the payments company releases its highly anticipated half year results.

Ahead of the release, I thought I would take a look to see what the market was expecting from the market darling.

Strong customer growth

The market is expecting Afterpay to reveal strong customer growth during the first half.

For example, according to a note out of Morgan Stanley from last month, its analysts are expecting the company to report active customers of approximately 13.6 million. This represents a 37.4% increase from 9.9 million active customers at the end of FY 2020.

A maiden profit

After operating at a loss for a number of years, Afterpay is expected to report its maiden profit this month.

According to a note out Morgans, it has pencilled in a profit after tax of $5 million versus the market consensus estimate of $21 million.

Whereas analysts at Goldman Sachs are predicting a profit after tax of $17.4 million from revenue of $440.2 million. The latter will be a 99% increase on the prior corresponding period. This is expected to be driven by operating leverage.

Repeat use

Investors have been told to keep an eye on Afterpay’s repeat use metric, which leads the industry.

Goldman Sachs commented: “In our view, this remains the single most critical metric for APT: strongly rising trends are indicative of product market fit, low default rates and future merchant pipeline.”

Growth in this metric could be supportive of the Afterpay share price and vice versa if it softens.

New geographies

The market will be looking for updates on its international expansion in Europe and Asia with this results release.

Last year the company acquired its way onto mainland Europe via the acquisition of Pagantis for $82 million. Pagantis provides a range of buy now pay later and traditional credit services across Spain, France, and Italy. It also has regulatory approval to operate in Portugal.

The company also made smaller acquisitions in South East Asia and could provide an update on its plans in this market.

New products

Another thing that could give the Afterpay share price a boost is an update on new product launches.

Afterpay will shortly release transactions accounts via a partnership with Westpac Banking Corp (ASX: WBC). It has been tipped to expand on this with other offerings such as investment products and even home loans. Though, it may wait to see what the reaction to its transaction accounts is before taking things further.

In addition, at the weekend the company emailed out a change to its term and conditions. Included within the terms was the mention of an Afterpay Card. This is a contactless Mastercard stored in an Apple or Google Pay wallet. It will allow users to tap and pay with their mobile device to pay in four instalments with Afterpay.

The imminent launch of this product appears likely to be announced tomorrow.

Is the Afterpay share price in the buy zone?

While it may not be wise to invest right before a results release, one broker that believes the Afterpay share price is in the buy zone is Morgan Stanley.

Last week the broker put an overweight rating and $170.10 price target on its shares. This compares to the latest Afterpay share price of $151.67.

More reading

• 6 high profile ASX 200 shares reporting results this week 
• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 next week
• Here’s why the Afterpay (ASX:APT) share price is storming 6% higher today
• What’s the go with the EarlyPay (ASX:EPY) share price today?

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post What to expect from the Afterpay (ASX:APT) half year result appeared first on The Motley Fool Australia.

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