Tag: Motley Fool

Some ASX blue chip shares are demonstrating reliable performance during these uncertain times.

Here are three to consider:

Macquarie Group Ltd (ASX: MQG)

The global investment bank recently released its profit update for the third quarter of its FY21. It said that trading conditions have improved across the company.

Macquarie’s ‘annuity-style businesses’, called Macquarie Asset Management (MAM) and banking and financial services (BFS), experienced a profit increase in the third quarter compared to the prior corresponding period.

These defensive businesses reported that net profit for the nine months from MAM and BFS was largely flat with the prior corresponding period because of base and performance fees being in line with last year, partially offset by BFS margin pressure, increased credit impairment charges and higher costs to support clients through COVID-19.

Meanwhile, the market-facing businesses of commodities and global markets (CGM) and Macquarie capital experienced a significant increase in net profit in the third quarter. The profit for the nine months to 31 December 2020 was broadly in line with the prior corresponding period. There was stronger activity across most CGM businesses, offset by lower fee revenue and principal income in Macquarie Capital.

The ASX blue chip share is expecting FY21 net profit to be almost as high as the FY20 profit. Management are confident about medium-term growth potential.

APA Group (ASX: APA)

APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

In FY20 the ASX blue chip share reported that total revenue increased by 4.8% to $2.13 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 5.1% to $1.65 billion, operating cashflow went up 8.3% to $1.1 billion and net profit after tax (NPAT) grew by 10.1% to $317.1 million. APA decided to increase the FY20 distribution by 6.4% to 50 cents.

After announcing some recent new investments, such as a new pipeline in WA to connect to its existing network, APA decided to increase its interim FY21 distribution by 4.3% to 23 cents. The ASX share funds its annual distributions from the operating cashflow that it generates.

The new WA pipeline that I mentioned is a $460 million investment to build a 580km pipeline to connect emerging gas fields in the Perth Basin to the resource rich Goldfields region, forming an interconnected WA gas grid.

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the world’s largest pathology businesses with operations in Europe, Australia and North America.

The ASX blue chip share is playing a key role in the fight against COVID-19 as it’s doing countless tests. The northern hemisphere, where Sonic has a major presence, is having a difficult winter with the pandemic.

The company’s base laboratory business revenue (excluding COVID-19 testing) is up on prior levels in most countries, with negative but improving growth in the USA and UK. The COVID-19 testing revenue that it’s generating is extra revenue on top of that.

Sonic Healthcare said that its revenue was up 29% in the first quarter of FY21 to $2.1 billion and its EBITDA was up 71% to $580 million.

At the annual general meeting (AGM), Sonic said that its October 2020 revenue was 33% higher than October 2019.

More reading

• Top brokers name 3 ASX shares to buy today
• ASX 200 drops 0.9%, Crown not suitable for Sydney casino, Macquarie rises
• ASX 200 down 0.4%: Macquarie impresses, Challenger disappoints, & Suncorp rises
• Why Douugh, Macquarie, Starpharma, & Suncorp shares are storming higher
• Here’s why the Macquarie (ASX:MQG) share price is surging 7% higher

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended Sonic Healthcare 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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If you’re a growth investor, then you’re in luck. The Australian share market is home to a good number of shares that are growing at a strong rate.

Two exciting ASX growth shares to consider buying are listed below. Here’s what you need to know about them:

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company. It provides innovative human resources, payroll, and rostering technology to over 1,400 businesses across the APAC region.

Management notes that its solutions are at the forefront of a disruptive technology industry, driven by the transition of organisations towards online systems which automate processes and aggregate information in new and intelligent ways.

The company has also been strengthening its offering (and cross-selling opportunities) through the acquisition of complementary business. This includes through the acquisitions of Webexpenses for 13 million pounds and Breathe for $32 million.

Morgan Stanley is a fan of the company and currently has an overweight rating and $9.70 price target on its shares.

Nuix Limited (ASX: NXL)

Nuix is a leading provider of investigative analytics and intelligence software. It specialises in transforming massive amounts of messy data from emails, social media, communications, and other human-generated content into actionable intelligence.

The company’s investigative analytics and intelligence software can help users understand the context and connections across billions of items of data. They can search it, filter it, visualise it, analyse it, and find the truth it holds.

Its software has been used in a number of important investigations. This includes the Panama Papers and the Banking Royal Commission.

Demand has been strong for its services and led to Nuix reporting a 25.9% increase in total revenue to $175.9 million in FY 2020. This revenue is largely from subscriptions, with subscription revenues now accounting for 88.7% of its total revenue.

Analysts at Morgan Stanley are also very positive on Nuix. They currently have an overweight rating and $11.00 price target on the company’s shares.

More reading

• 3 outstanding ASX shares growing rapidly
• 2 quality SaaS ASX shares to buy in February 2021
• 2 ASX shares that this fundie really likes right now
• Forget GameStop and buy these fantastic ASX growth shares
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%

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. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Elmo Software and Nuix Pty 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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Fortunately for income investors in this low interest rate environment, there are a good number of dividend shares on the Australian share market with attractive yields.

Two ASX dividend shares to consider buying are listed below. Here’s what you need to know about them:

Fortescue Metals Group Limited (ASX: FMG)

At present, the spot iron ore price is trading around the US$160 per tonne mark. As a comparison, Fortescue’s C1 costs are approximately US$12.74 per wet metric tonne.

It doesn’t take a rocket scientist to see that this is leading to material free cash flow generation by the mining giant. And with the company’s balance sheet is such good health, the majority of this free cash flow is likely to be returned to shareholders through dividends.

One broker that is forecasting bumper dividends from Fortescue is Macquarie. It expects the company to reward shareholders with a fully franked interim dividend of $1.37 per share. Based on the current Fortescue share price, this interim dividend alone represents a yield of 5.8%.

For the full year, the broker estimates that its shares offer an 8.6% yield. They also see upside for its shares and have an outperform rating and $26.50 price target on them.

Wesfarmers Ltd (ASX: WES)

This conglomerate has been a very positive performer over the last 12 months. This has been driven partly by its key Bunnings business, which has been experiencing strong sales growth during the pandemic. The hardware giant has been benefiting from government stimulus and consumers redirecting their spending from holidays to home improvements.

The good news is that Bunnings continues to perform well and recently reported stellar sales growth. This was supported by strong growth across other businesses such as Kmart, Target, and Catch.

Macquarie is positive on Wesfarmers as well and recently upgraded its shares to an outperform rating with a $60.00 price target. Its analysts are forecasting a 150.3 cents per share fully franked dividend in FY 2021. Based on the current Wesfarmers share price, this represents a 2.7% yield.

More reading

• How big will the ASX bank dividends be in 2021 and beyond?
• Top brokers name 3 ASX shares to buy today
• ASX 200 Weekly Wrap: RBA unleashes ASX’s inner animal
• 2 super ASX 200 shares to buy for your retirement portfolio
• Why ASX miners will get a double tailwind from Biden’s US$1.9tn stimulus

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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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A few small cap ASX shares have been generating quick revenue growth over the last few months.

Smaller businesses may be able to generate more returns because they are starting from a smaller size, whereas blue chips have already done a lot of their growing.

Here are two to consider:

Volpara Health Technologies Ltd (ASX: VHT)

Volpara says that it’s a health technology company, its clinical functions are used for screening clinics to provide feedback on breast density, compression, dose and quality, while its enterprise-wide practice-management software helps with productivity, compliance, reimbursement and patient tracking.

In its quarterly update for the three months to 31 December 2020 it revealed that its annual recurring revenue (ARR) increased by 20% compared to the prior corresponding period, up to NZ$20.7 million. There was rising demand for the Volpara breast health platform.

The small cap ASX share received quarterly cash receipts of NZ$4.6 million, which Volpara said was strong despite COVID-19 and the weak US dollar. Its churn was low and at that point it covered approximately 27% of women in the US. Average revenue per user (ARPU) grew 5% to US$1.22, up 5% from the second quarter of FY21.

Volpara CEO Dr Ralph Highnam said: “Our ability to identify women at high cancer risk who should have genetics testing has potential to be a game-changer and significantly increase our ARPU. Over the next few quarters, our focus will be on ramping up these genetics relationships and connections as quickly as we can.”

A few days after that quarterly announcement, the small cap ASX share announced that it was acquiring breast cancer risk assessment company CRA Health, which is based in Boston.

Volpara said that CRA Health is profitable, with ARR of over US$4 million, ARPU of around US$1.70 and coverage of around 6% of US breast screenings.

After the acquisition is complete, Volpara will have ARR of around US$17.5 million and at least one product in use in over 30% of breast screenings.

Regarding this acquisition, Dr Highnam said: “The acquisition of CRA is very significant for Volpara. CRA is a leading provider of risk assessment tools within major EHR systems and has integrations already built with the main genetics companies.”

Bubs Australia Ltd (ASX: BUB)

Bubs says that it’s a business that makes a range of premium Australian infant nutrition and goat dairy products. It has Bubs goat milk infant formula and Bubs organic grass-fed cow milk formula, along with organic baby food, cereals, toddler snacks and Vita Bubs (a range of vitamin and mineral supplements).

Whilst Bubs had a difficult first quarter of FY21, sales have rebounded significantly in the second quarter. A couple of weeks ago it revealed that group quarterly gross revenue was up 36% compared to the first quarter of FY21, to $12.8 million. However, total revenue was still down 12% on the prior year.

The small cap ASX share said that export sales to markets outside of China continue to strengthen, with sales up 194% quarter on quarter. The first shipments of Bubs infant formula and Bubs organic baby food were exported to Malaysia during the second quarter. It has signed with e-commerce platforms in the Asia region recently, including Redmart in Singapore and Lazada in Malaysia.

The corporate daigou trade is still lower than pre-COVID-19 levels, but it was up 122% compared to the first quarter of FY21.

The company boasted that it is the fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse with combined retail scan sales at the checkout up 41% quarter on quarter.

Bubs infant nutrition sales in the second quarter were up 27% compared to the first quarter. Adult goat dairy revenue was up 45% quarter on quarter and China cross border e-commerce (CBEC) sales were up 45% quarter on quarter.

More reading

• Got cash to invest? Here are 3 ASX shares to buy
• Leading brokers name 3 ASX shares to sell today
• Got money to invest? Here are 2 ASX shares to buy
• 2 growing small cap ASX shares to buy
• Why AGL, Bubs, BWP, & Origin shares are dropping lower

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 and recommends VOLPARA FPO NZ. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST FPO and VOLPARA FPO NZ. 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 ASX shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

FINEOS Corporation Holdings PLC (ASX: FCL)

FINEOS is an ASX share liked by at least three brokers at the moment, including UBS which likes the tech company for the long-term growth opportunity.

This business says that it’s a global player in the software space for the employee benefits and life, accident and health industry.

FINEOS operates a platform which has technology for a number of different areas for clients like new business, claims, policy, billing and absence. Its software is designed to manage the structure and relationships of group and individual insurance processing to optimise plan, coverage and data management, operational processing, and business intelligence.

The company is aiming to increase its market share over time. For the quarter ending 31 December 2020, FINEOS generated 69% growth of its cash receipts to €28.2 million.

City Chic Collective Ltd (ASX: CCX)

City Chic is an ASX share that’s liked by at least three brokers, including Morgan Stanley.

It’s a retailer of plus-size clothes, footwear and accessories for women. It operates through a number of different brands including Avenue, Evans, CCX, Hips & Curves and Fox & Royal.

This business isn’t just a bricks and mortar operator in Australia and New Zealand. It’s currently selling around 70% of its products online, with more than 40% of revenue being generated in the northern hemisphere.

City Chic recently acquired Evans in the UK. It’s not taking over the retail store chain, but it is acquiring the online assets and the wholesale business. Those two segments generated £26 million of sales for the 12 months to August 2020. City Chic said that the retail store network had been shrinking in recent years as more customers transition to the digital channel. Evans bought this business for $41 million, funded from existing cash.

City Chic says that this acquisition will give the company a platform to launch in the $9 billion UK market. It’s also confident that it can use its lean, customer-centric operating model to drive revenue growth and cost efficiencies in the existing business.

Brickworks Limited (ASX: BKW)

Brickworks is an ASX share that’s liked by at least three brokers, including UBS.

The broker thinks that the housing industry has good growth potential in 2021 as long as there aren’t any rate hikes or credit lending restrictions.

Brickworks has several different segments that serve the construction industry in Australia. It manufactures and sells bricks, paving, roofing, masonry, cement and precast.

The company also has its joint venture industrial property trust with Goodman Group (ASX: GMG) which is expected to increase in value significantly once the large warehouses for both Amazon and Coles Group Ltd (ASX: COL) are completed. The gross value of the trust’s assets are expected to be higher than $3 billion once completed, which is also expected to lead to a 25% increase in the net rental profit distributions to Brickworks.

More reading

• 3 ASX dividend shares with higher yields
• 3 ASX shares rated as strong buys by brokers
• 2 ASX shares to own according to fund managers
• 2 ASX dividend shares with yields above 4%
• 3 compelling ASX shares rated as buys by brokers

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends FINEOS Holdings plc. The Motley Fool Australia owns shares of and has recommended Brickworks and Macquarie Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended FINEOS Holdings plc. 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 the S&P/ASX 200 Index (ASX: XJO) was back on form and charged higher. The benchmark index climbed 0.5% to 6,856.9 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 futures pointing lower

It looks set to be a tough day for the Australian share market on Thursday. According to the latest SPI futures, the benchmark index is expected to open the day 0.5% or 32 points lower this morning. This follows a poor night of trade on Wall Street, which in late trade sees the Dow Jones up 0.05%, the S&P 500 down 0.1%, and the Nasdaq down 0.25%.

Telstra half year update

The Telstra Corporation Ltd (ASX: TLS) share price will be on watch today when it releases its half year results. According to a note out of Goldman Sachs, it expects Telstra to report an 8% decline in revenue to $12,318 million and a 15% decline EBITDA to $3,971 million. Despite this, the broker is forecasting the Telstra board to maintain its fully franked 8 cents per share interim dividend.

Oil prices continue to rise

Energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could have a positive day after oil prices pushed higher once again. According to Bloomberg, the WTI crude oil price is up 0.5% to US$58.64 a barrel and the Brent crude oil price has climbed 0.6% higher to US$61.45 a barrel. Oil has now had its longest rally in two years amid hopes that vaccines will lift demand.

ASX Ltd update

The ASX Ltd (ASX: ASX) share price will be one to watch today when it hands in its half year results. According to Morgans, it expects the stock exchange operator to report a net profit after tax of $240 million. From this, the broker is expecting the ASX board to declare an interim dividend of $1.11 per share. This follows a mixed half which is believed to have been weighed down by weaker Futures volumes.

Gold price edges higher

It could be a positive day for gold miners such as Newcrest Mining Ltd (ASX: NCM) and Resolute Mining Limited (ASX: RSG) after the gold price edged higher again. According to CNBC, the spot gold price is up 0.3% to US$1,843.10 an ounce. This was driven by further US dollar weakness and stimulus optimism. Newcrest is also releasing its half year results this morning.

More reading

• 2 ASX 200 shares to buy for growth
• ASX 200 rises 0.5%, CBA reports, Crown deemed unsuitable for Sydney
• Nasdaq at record high! Here’s what it means for the ASX 200
• Here’s what low interest rates really means for your cash
• ASX 200 up 0.35%: CBA half year update, IAG impresses, Zip shoots higher

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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If you’re interested in adding some exposure to the small side of the market to your portfolio then you might want to take a look at the shares listed below.

Here’s why these ASX small caps have been tipped as buys:

Bigtincan Holdings Ltd (ASX: BTH)

The first small cap ASX share to look at is Bigtincan. It is an artificial intelligence-powered sales enablement automation platform provider. The company’s platform is being used by a growing number of blue chips, this includes 7 of the top 10 companies on the Fortune 500.

Last month Bigtincan released its second quarter update and revealed strong recurring revenue growth once again. According to the release, the company’s annualised recurring revenue (ARR) reached $48.4 million at the end of December. This represents an increase of 50% over the prior corresponding period.

Pleasingly, although the company has made some acquisitions, the majority of its growth was organic. Management advised that organic ARR came in at $40 million, which was up 42.9% on the prior corresponding period. ARR from acquisitions totalled $8.4 million.

Analysts at Morgan Stanley were impressed with its update. They initiated coverage on the company’s shares with an overweight rating and $1.40 price target. The broker believes the company is well-positioned for growth thanks to its leadership position in a growing market.

Universal Store Holdings Limited (ASX: UNI)

Another small cap ASX share to look at is Universal Store. It is a leading fashion retailer with a strategy of delivering a frequently changing and carefully curated selection of on-trend products to a target 16-35 year old fashion focused customer.

As with Bigtincan, it recently released a trading update which revealed very strong growth so far in FY 2021.

According to the release, Universal Store expects its underlying earnings before interest and tax (EBIT) to be in a range of $30 million to $31 million for the first half. This represents growth of between 61% and 67% on the prior corresponding period. This was driven by strong like for like sales growth and gross margin improvements.

This update went down well with Morgans. In response to the update, the broker put an add rating and $6.93 price target on its shares. It believes Universal Store is well-placed to grow its earnings at a 30% compound annual growth rate through to FY 2023.

More reading

• 3 fast-growing small cap ASX shares to watch
• 2 ASX growth shares to buy right now
• 2 explosive ASX growth shares to buy immediately
• Leading brokers name 3 ASX shares to buy today
• 3 very impressive ASX quarterly updates from last week

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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I received a question on social media the other day, from Ash.

It’s a good one.

Hi Scott,

I have my savings in CommBank Goalsaver right now and the interest rate is only 0.4%. I told them ING is 1.35%, but they said there’s not much they can do.

Should I move some to ING?

I buy shares and still looking at a house later in the year, but my savings aren’t doing much at all anymore with CommBank in the meantime.

Thanks if you can help me at all, appreciate your advice

Ash

It’s a good question on a few levels.

First, while we obsess over interest rates, much of the reporting is done through the prism of home mortgages, and occasionally the impact on business.

That’s understandable – those are the areas that are probably most sensitive to changes in rates, and where the RBA’s decisions have most economic impact.

But it’s not even close to the full story.

After all, only about one-third of us have a mortgage. A similar proportion rent and another similar proportion own their own homes, outright.

And yes, most of us work for a business, but relatively few businesses will change their hiring or firing decisions based on 0.25% (or less!) change in the official cash rate.

But what about self-funded retirees, who’ve seen their bank interest plummet?

And savers, who are trying to get ahead with money in the bank, often trying desperately to cobble together a deposit?

Yes, shares are actually a pretty good alternative (I would say that, but I happen to also think it’s true), but they’re not always practical, usually because the volatility doesn’t suit the needs for which the money is earmarked (you don’t want a sudden drop in the market three weeks before you planned to cash out for a house deposit or a new car, for example).

So, I’m glad Ash is looking around. And I’m glad Ash is asking the question.

Look, I know banks want to make a buck. And fair enough. Turns out Ash’s bank, CBA, actually made less money last year, in part because of lower interest rates.

But, in this instance at least, that’s CBA’s problem, not Ash’s.

Accepting a piddly rate, just because CBA can’t or won’t do better would be a terrible outcome.

After all, using just the rates quoted in the question, there might be more than three times the interest on offer, just by switching.

No, 1.35% doesn’t seem like much, does it?

But let’s do the numbers: 

If Ash has $10,000 in that account, the CBA rate will deliver $40 in interest. At 1.35%, that’s $135.

If Ash is well on the way to a deposit, with, say $50,000, that’s $675 to $200. And you can (obviously) double that amount if you have 100 grand.

No, the interest won’t buy you a sheep station, but it’s better in your pocket than the banks.

Now, the Australian Securities and Investments Commission (ASIC) is pretty strict on what you have to know before you can give someone personal advice.

So I can’t tell Ash what to do.

But I can comment generally. And my thoughts are pretty clear.

As I’ve said in other contexts, if your bank is your favourite charity, then by all means accept a crappy interest rate for your loyalty.

But, if not, switch!

Yes, #getabetterrate

Would I change banks if I only had $1,000 in my bank account? Probably not. The difference in interest is (unfortunately) less than a dollar a month.

But any more than that – particularly if you can do it online, from home in your pyjamas? Yep, I’d be getting out of there.

Where to?

Well, this is where it gets tricky. And Ash’s example is a good one. See, the Barefoot Investor himself, Scott Pape, sent an email to his readers only this week, in which he mentioned that there were some new conditions being set by ING.

 

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A brief, important, interlude:

Before we go any further, a disclosure: I was paid a small sum by ING in the middle of last year to take part in an online ad campaign where I talked about the importance of Super and investing. It was to be a ‘branded’ campaign, but I didn’t talk about, nor endorse, ING products.

In the event, ING didn’t run the campaign, but I was still paid for my time.

I told the agency any payment wouldn’t change my view – or how I expressed it – of ING then or in the future. And it hasn’t. They had one of the best savings products in the business, but now it’s come right back to the pack, as I lay out below.

I’ve never pulled any punches, and I’m not about to, now. But you deserve to know that background, as you continue to read my thoughts, below.

Now, back to the show…

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So I looked up the ING website:

“Add Orange Everyday to your Savings Maximiser, deposit your pay of $1,000+ each month and make 5+ settled card purchases (not pending) each month.

“Additionally from 1st March 2021, grow your nominated Savings Maximiser balance so that there’s more in it at the end of the current month (excluding interest) than there was at the end of the previous month. Then the following calendar month, this rate’s yours.”

Bloody hell. That’s got more steps than a military parade.

All they need to add is “last, subtract your age”, and Copperfield would be proud.

Let’s just break down the last bit of those conditions:

1. You have to know your last month’s balance.

2. Then make sure there’s more at the end of the current month.

3. But don’t forget to subtract any interest you earned.

4. And then – if you’ve followed all the rules – you’ll get more interest… next month!

And if you don’t?

Well, the advertised (conditional) 1.35% drops to…

… wait for it …

0.05%

Yep – that’s a 96.3% reduction.

Cop that!

Oh, I’m sure ING have their reasons. In fact, I’m sure there’s an FAQ ready to go which talks about costs and planning and prevailing interest rates and all sorts of other important things.

I’m not even sure any of it would be wrong, as such.

But it doesn’t mean it’s particularly user-friendly. 

Remember the old ING ads with Billy Connolly?

The ones he finished with “… and make the buggers work for your money!”

Yep.

Feels like ING is making us do all the work this time around, doesn’t it?

The bad news?

ING probably did it because the other banks do, too!

I jumped onto Canstar this morning, to compare interest rates.

Frankly, they all give terrible ‘base rates’, with higher rates only if you jump through hoops:

• HSBC: “Increase balance by $300 p/m, not including interest.”
• 86 400: “Deposit $1000+ per month, either Pay or Save.”
• Australian Unity: “Min $250 dep and no withdrawals.”
• BOQ: “Deposit $1000 + 5 eligible transactions in linked Day2Day Plus Account.”

Seriously…

And those that don’t have conditions seem to be largely the ‘honeymoon’ rate variety – you get the higher rate for the first few months before it drops back to essentially zero!

Do I think ING is bad? No, I don’t. At least, no worse than the others. But they’re less easy to deal with – and to understand – than they used to be, and that’s a shame.

So I’ve gotta say, Ash, my first answer is easy.

Should you switch? Yes, absolutely.

But to what?

Unfortunately, you’re going to have to trawl through the various options (using something like Canstar can make the process easier – just make sure you ‘untick’ the “Only show results which link to a provider’s website” button so you get the biggest range of options).

The good news is that I’m pretty sure you’ll be able to secure a much, much better rate, that suits your circumstances and your spending and saving patterns.

Either with one of these ‘high return savings’ accounts or, if it suits your circumstances (say, you won’t be adding, but also not needing the cash), the good old fashioned term deposit account might be worth considering.

Just –  as always – make sure that you understand all of the conditions before plonking down your cash!

That’s how you #getabetterrate

Fool on!

More reading

• GameStop lessons for ASX investors
• 2 ASX 200 shares to buy for growth
• ASX 200 rises 0.5%, CBA reports, Crown deemed unsuitable for Sydney
• Nasdaq at record high! Here’s what it means for the ASX 200
• These 3 ASX shares invested in Bitcoin before Tesla (NASDAQ:TSL)

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.

The post The banks are playing silly buggers with your savings appeared first on The Motley Fool Australia.

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The two S&P/ASX 200 Index (ASX: XJO) shares in this article could be worth considering for the growth that they are generating right now.

Here they are:

Bapcor Ltd (ASX: BAP)

Bapcor describes itself as the leading Australasian business for auto parts. It has various divisions including trade businesses (including Burson Auto parts), retail (including Autobarn), specialist wholesale (including AAD and Commercial Truck Parts Group) and services (including Midas and ABS).

The company has national networks across Australia and New Zealand. It also has a growing network of locations in Thailand.

The ASX 200 share is delivering higher levels of growth during these strange times.

FY20 saw Bapcor deliver 12.8% growth of revenue to $1.46 billion. FY21 has seen growth driven higher.

In the first five months of FY21 to the end of November 2020, revenue grew by 26% with net profit after tax (NPAT) achieving operating leverage from lower expenses in areas such as travel and other areas of discretionary expenditure.

For the first half of FY21, Bapcor is expecting to achieve revenue growth of at least 25% over the prior corresponding period and net profit after tax (NPAT) growth of at least 50% compared to the first half of FY20.

Bapcor’s CEO said that he was very pleased with the performance. Some of the changes implemented has helped the retail performance where revenue went up 40%, such as the recently launched new Autobarn store format and improvements in the online capabilities.

One thing that Bapcor is looking forward to is the completion of its Victorian distribution centre, which is expected this month. The automated picking system will be operational in the next six months. Bapcor said that this development should lead to “significant operational benefits.”

A few months ago Bapcor said that the automotive aftermarket is a resilient industry and historically has performed strongly in difficult economic circumstances. The CEO said that recent trading is another example of its resilience assisted by the increase in sales of second hand cars, reduction in use of public and shared transport modes as well as government stimulus. The ASX 200 share also said that it expects increased domestic tourism and increased use of vehicles will continue to drive the Bapcor businesses.

According to Commsec, the Bapcor share price is trading at 20x FY23’s estimated earnings.

Xero Limited (ASX: XRO)

Xero is another ASX 200 share that is delivering a high level of growth, including through the last year of difficult conditions.

This companies is a cloud accounting business for small and medium businesses. Business owners and their accountants and advisors can access the Xero system anytime, anywhere.

In November the software business reported its FY21 half-year result to 30 September 2020. It said that its operating revenue went up 21% to NZ$410 million with its subscriber numbers rising by 19% to 2.45 million.

Xero reported that its annualised monthly recurring revenue rose by 15% to NZ$877.5 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 86% to NZ$120.7 million. Net profit after tax (NPAT) rose by around NZ$33 million to NZ$34.5 million and free cash flow jumped by NZ$49.4 million to NZ$54.3 million.

One of the areas that Xero excels is the gross profit margin, it was 85.7% at 30 September 2020, which was an increase from 85.2% in the prior year.

Xero said that it’s a long-term oriented business with ambitions for high-growth. It continues to operate with disciplined cost management and targeted allocation of capital. Xero said this allows it to remain agile so we can continue to innovate, invest in new products and customer growth, and respond to opportunities and changes in the operating environment.

More reading

• ASX 200 rises 0.5%, CBA reports, Crown deemed unsuitable for Sydney
• Nasdaq at record high! Here’s what it means for the ASX 200
• Here’s what low interest rates really means for your cash
• ASX 200 up 0.35%: CBA half year update, IAG impresses, Zip shoots higher
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia owns shares of Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX 200 shares to buy for growth appeared first on The Motley Fool Australia.

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Adam Smith, CEO at Saxo Capital Markets Australia, says the GameStop Corp (NYSE: GME) phenomenon has been “lighting a fire under the growing retail investor sector”.

You’ve most likely heard of the so-called Reddit army. They’re the unofficially affiliated group of retail investors, recently linked together via Reddit’s WallStreetBets and other social media.

In mid-January, the group took exception to certain hedge funds shorting certain stocks. (That’s where you make money when a company’s share price falls.) To squeeze out the short-sellers, the Reddit army snapped up shares of some of the most shorted stocks in the US markets.

Two of the shares that got the most media attention, due to their wild price gains and subsequent losses, were gaming vendor GameStop, and movie and entertainment company AMC Entertainment Holdings Inc (NYSE: AMC).

And the results were spectacular.

On 27 January, AMC’s share price leapt 301%. That same day, GameStop’s shares closed up enough to notch a 1,915% gain in 2021.

Then the party began to sour.

Since 27 January, the AMC share price is down 72%. And the GameStop share price has shed 86%. Though both shares are still well up for 2021, mind you.

So, was this just a 21st-century social media statement?

Making money and having fun

Not according to Saxo’s Adam Smith.

“The idea Redditors were buying GameStop simply to make a social statement is a narrow interpretation. The rush on GameStop was driven by retail investors who saw this stock as an opportunity to make money while having some fun, with their peers soon following,” he says.

If you’re wondering if the same thing could happen on the All Ordinaries Index (ASX: XAO), I was too.

So I asked Adam if we could see a similar phenomenon in Australia, noting that Unibail-Rodamco-Westfield‘s (ASX: URW) share price was swept up a bit on the ASX, but really via its shorted European listing.

According to Adam:

Never say never but I don’t think we’ll see a similar occurrence here in Australia – the breadth of listed stocks and the liquidity in the US market (and other international markets) compared to the ASX means opportunities of this kind are more likely to occur overseas than in the Australian market.

ASX investors keen to trade GameStop and similar US shares

If you were watching the meteoric share price rise of some of the stocks targeted by the Reddit army, you might have been keen to get in on the action. If so, you’re not alone.

Even after the subsequent share price retreat of stocks like GameStop and AMC, ASX investor interest in trading these types of shares is on the rise.

Adam explains what’s been happening at Saxo:

What we’ve seen since at Saxo is the GameStop headline lighting a fire under the growing retail investor sector, with the majority of inbound inquiries over the past week being investors looking to trade GameStop and other stocks fitting a similar profile.

Appetite is particularly geared toward international stocks given that markets like the US have the breadth and liquidity required to facilitate successful trading from either the long or short side.

Investor education is paramount

One of the significant potential pitfalls for ASX retail investors here is focusing on the big early gains without considering the wild price swings, even when the shares were broadly trending higher. Not to mention the later huge reversals.

Adam says this puts the onus on brokers to educate their clients:

This trend should also raise questions for investors when they are considering their choice of broker. Market access – especially in international markets – as well as client service, platform stability and the financial robustness of the broker should be paramount when making this decision.

There is a huge responsibility for brokers to educate green investors at times like this. The worry is the GameStop narrative has positioned this as an easy way to make money without making it clear the principles of risk management still apply. Brokers must offer education as well as access. 

Retail investors should therefore be looking for a broker that’s in their corner in terms of giving them the tools, insights and technology to mitigate risk. Forgoing a couple of basis points on execution costs for a broker that’s reliable and keeps your money safe is ultimately worth it. If it seems too good to be true, it may well be – you get what you pay for.

I pointed out to Adam that trading via a broker appears to run counter to the whole Reddit army and Robinhood investor creed.

He was unswayed, saying “Education is paramount. The right broker will provide you with the information, research and risk management tools to facilitate sound decision-making, thereby ensuring that you do not lose more than you had intended to when you placed your trade.”

Could the Reddit army turn to short selling shares?

One of the fears circulating among analysts who watched the Reddit army’s huge impact on select share prices was that this same group could turn to shorting shares. As options markets are involved, that could precipitate some rapid and drastic share price collapses.

I asked Adam for his thoughts. Here’s what he said:

I think the risk of this happening is small. Investors that are drawn to this type of trading opportunity typically possess a long bias when it comes to stock investing and trading. They are looking to buy shares that are on a strong upward price trajectory rather than looking to short sell stocks they see as overvalued.

Trading a share from the short side is more difficult as it requires a fuller understanding of the products available and is a totally different mindset for the retail investor.

Finally, I wanted to get Adam’s take on the current US Securities and Exchange Commission (SEC) investigation into some of the share price movements driven by the Reddit army. Investors who got in early and out on time made a mint. Others who were late to the party and overstayed lost their shirts.

Is this akin to a social media-driven ‘pump and dump’?

Adam said that it was legally too early to make a decisive call, as all the participants’ actions have yet to be thoroughly investigated.

He added:

When events such as what we witnessed with GameStop arise, there are inevitably two sides to the story. On one hand, there are the retail investors and traders who believe that social media is a fantastic platform to share trade ideas with a like-minded peer group. On the other are the short sellers who believe their actions are contributing to an efficient market by aiding price discovery.

Neither group would accept their actions represent market manipulation as they will argue that the forces of supply and demand ultimately restore equilibrium in the stock price.

There you have it.

Happy and educated investing.

More reading

• Here’s what low interest rates really means for your cash
• How I knew GameStop would collapse
• ASX 200 Weekly Wrap: RBA unleashes ASX’s inner animal
• Should short selling be banned?
• To short or not to short? GameStop (NYSE:GME) ripple effect endures

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.

The post GameStop lessons for ASX investors appeared first on The Motley Fool Australia.

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