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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Shares of AMC Entertainment Holdings (NYSE: AMC) have been on a wild ride recently, as the theater chain’s stock is caught up in the buying frenzy induced by online discussions on a Reddit forum. Despite this, the fundamental outlook for the company hasn’t changed all that much in the past few weeks — and certainly not enough to justify the frenzied buying.

The substantial increase in the stock price in recent days has allowed management the option to offer more shares to the public and raise much-needed capital. That financial lifeline will be crucial for AMC, which is burning through available cash at a pace of $130 million per month as it continues to manage the operational difficulties created by the coronavirus pandemic. AMC recently raised nearly $1 billion in additional debt issuance, which gave CEO Adam Aron enough confidence to say that bankruptcy is not an imminent threat any longer.

However, just because bankruptcy is not on the horizon at the moment doesn’t mean that AMC now on its way to again producing its pre-pandemic revenue and profit levels. The company still faces issues a resolution of the pandemic is unlikely to solve.

Here are two specific reasons why AMC is going to have a hard time bouncing back. 

1. People have upgraded their home-entertainment systems 

Some people like to watch a movie at an AMC theatre instead of at home because of the vast difference in the quality of the viewing experience. AMC theaters have massive wide screens with the latest and loudest surround-sound audio technology that makes your comfortable reclining theater seat rumble.

However, as people were forced to hunker down at home to avoid being exposed to the coronavirus, some upgraded their home-entertainment systems. Indeed, sales of TVs in the U.S. increased by 20% year over year in 2020.

Some regular movie goers also noticed the difference in cost and convenience between theaters and home viewing was becoming significant. Movie ticket pricess, parking fees, child-care costs, concession costs, travel to the theater, and the occasional irritations in the theater with fellow viewers all contribute to make watching a movie at home more acceptable. If you have the latest big-screen TV with a high-quality sound bar, the difference between your home setup and that of the theatre just narrowed. For some, that is enough to keep them at home. 

2. Studios are skipping theatrical releases and going straight to streaming  

During the scramble that ensued at the onset of the pandemic, studios with movies slated to be released either delayed them or instead released them straight to streaming. Comcast‘s Universal Studios, for instance, put its film Trolls 2 on demand for rental simultaneous to its release in theaters (which were mostly closed and couldn’t show it) last April. In September, Disney released its film Mulan straight to its Disney+ streaming service for a premium fee in the U.S. and offered its most recent Pixar production Soul for free to members of Disney+ in December. The results of these experiments appear to have been positive, because other media companies have jumped on board with similar release strategies. AT&T‘s Warner Media said that all its 2021 movies would be released simultaneously in theaters and for a limited time on its streaming service HBO Max.

These changes could spell big trouble for AMC, which makes much of its revenue from short-term exclusive access to new releases that attract movie enthusiasts to its theaters. Indeed, AMC’s share price fell after Warner Media’s announcement, and the company’s fighting to regain the initial exclusivity window before movies are released to other platforms.

What this could mean for investors 

Overall, AMC will have a difficult time bouncing back from the devastating consequences of the pandemic. People have gotten accustomed to entertaining themselves at home, and media companies have made adjustments to deliver entertainment to their living rooms. Add to those negatives the fact that the rollout for coronavirus vaccines has been slower than anticipated.

New variants of the COVID-19 disease are emerging, and the reality may be that the difficult economic effects of the pandemic last well into 2022. Investors who were hoping for a quick recovery for AMC’s revenue and profits might be disappointed in the way things are turning out.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• GameStop (NYSE:GME) dominates the US shares ASX investors have been buying
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Parkev Tatevosian owns shares of Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Comcast. The Motley Fool Australia has recommended Walt Disney. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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With earnings season now underway, I have been looking at what is expected from some of Australia’s most popular companies.

On this occasion, I’m going to take a look at airline operator Qantas Airways Limited (ASX: QAN).

What is the market expecting from the Qantas half year result?

Unsurprisingly, given the impact that COVID-19 is having on the travel industry, the market is expecting Qantas to report a significant loss for the first half of FY 2021.

According to a note out of Goldman Sachs, its analysts are forecasting an operating loss of $65 million for the half. This is down from an operating profit of $1,896 million a year earlier.

On the bottom line, the broker is forecasting a loss before tax of $1,171 million. This is a touch larger than the market consensus estimate for a loss before tax of $1,103 million.

And as you might expect given the circumstances, no interim dividend is forecast to be declared.

What else should you look out for?

Given that the loss is inevitable and largely factored in, investors may be wondering what else to pay attention to. Well, the good news is there’s plenty to stay tuned for according to Goldman Sachs.

Firstly, it has suggested investors look out for an update on recent travel restrictions.

It commented: “The key focus of investors will be the impact of the recent domestic border restrictions on movements from Victoria and NSW. How has the airline adjusted scheduled domestic services, and what is the outlook for re-opening?”

It is also hoping management will provide clarity of its financial performance.

Goldman explained: “QAN indicted that its capacity had returned to 68% of pre-covid levels in December. How did the airline perform, including passenger volumes, load factors, yields and ultimately operating margins?”

In addition to this, the broker is keen to hear about the outlook for the Loyalty business and the company’s liquidity and balance sheet.

In respect to the latter, Goldman said: “In December QAN indicated that it had A$3.6bn in available liquidity. With the recovery in passenger activity what was the draw down on customer credits (A$3.2bn as at 30 June) and loyalty points (A$2.5bn), and how much of this has been recovered through recent sales?”

“QAN indicated that the balance sheet repair process would begin in 2H21. Is this still likely in the face of recent border closures? With mobility again restricted, what is QAN’s outlook for cash burn rates in the second half (2H21)?” it added.

Is the Qantas share price good value?

Goldman Sachs believes the Qantas share price is great value at present and that investors should look beyond the short term pain for potential long term gains.

It has just retained its buy rating and $7.05 price target. This compares very favourably to the current Qantas share price of $4.72.

More reading

• Here’s why the Qantas (ASX:QAN) share price is soaring today
• ASX 200 down 0.7%: AGL & Origin sink lower, Qantas pushes higher
• 4 most trusted ASX companies (and the 4 least trusted)
• Alliance Aviation (ASX:AQZ) share price surges 13% higher on Qantas (ASX:QAN) deal
• The latest ASX stocks to be hit by broker downgrades

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.

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

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Certain ASX dividend shares may be useful for retirees to consider for retirement income.

These businesses may be able offer reliable dividend income:

Coles Group Ltd (ASX: COL)

This is one of the biggest supermarket businesses in Australia. According to the ASX, it has a market capitalisation of around $24.5 billion.

The ASX dividend share hasn’t been an independent company from Wesfarmers Ltd (ASX: WES) for long, but its dividend in FY20 was bigger than FY19. Ex-parent Wesfarmers also has a focus on dividends to ensure that shareholders receive returns.

In FY20 the company saw sales revenue growth of 6.9% to $37.4 billion and earnings before interest and tax (EBIT) grew by 4.7% to $1.39 billion. Net profit went up 7.1% to $951 million. The company saw elevated demand due to COVID-19 demand for pantry stocking.

The final FY20 dividend was increased by 14.6% to 27.5 cents per share.

In the first quarter of FY21, Coles has seen continued revenue growth. Total first quarter sales were up 10.5% to $9.6 billion. The liquor segment, which includes Liquorland, saw sales growth of 17.4% to $852 million. Coles Express saw 10.3% sales growth to $291 million. Coles supermarkets saw sales growth of 9.7% to $8.46 billion.

According to Commsec, Coles has an estimated grossed-up dividend yield of 5.2% for FY31.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) which owns a diversified portfolio of different farms including almonds, cattle, vineyards and macadamias.

The ASX dividend share aims to grow its distribution by 4% every year, which it has been successful at doing since listing.

Rural Funds generates higher rental profits from two main sources. The first is that there is rental indexation built into its contracts that are linked to either CPI inflation, or have a fixed 2.5% increase, with some contracts having occasional market reviews.

Another source of rental growth is when Rural Funds invests in productivity improvements at the properties to increase the capital value and the long-term rental potential. Examples of those investments include water points for animals and irrigation for crops.

The ASX dividend share will infrequently make an acquisition of a farm which may increase diversification and be accretive for rental earnings per unit.

In FY21, Rural Funds is expecting to pay a distribution of 11.28 cents per unit. At the current Rural Funds share price that equates to a forward distribution yield of 4.5%.  

Amcor plc (ASX: AMC)

Flexibles and rigid packaging manufacturer Amcor has been regularly growing its dividend for many years.

The latest result, being the FY21 half-year report, included a dividend increase for investors from US 11.5 cents to US 11.75 cents per share.

Amcor reported that its adjusted earnings per share (EPS) grew by 16% in constant currency terms to 33.3 cents, with adjusted EBIT growing 8% to US$743 million.

The ASX dividend share has been purchasing hundreds of millions of dollars of shares, which improves the earning power of each remaining share for shareholders.

Amcor is also working on cost synergies with its Bemis acquisition. It has achieved $35 million of Bemis cost synergies in the first half and it’s expecting $70 million of cost synergies of approximately $70 million in FY21.

At the current Amcor share price, it has a dividend yield of 4.4%.

More reading

• Why the Wesfarmers (ASX:WES) share price has soared 24% in a year
• Goldman Sachs names 2 growing ASX dividend shares to buy
• Top brokers just upgraded these 3 ASX shares to “buy”
• 4 most trusted ASX companies (and the 4 least trusted)
• 2 of the best ASX dividend shares to buy today

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended Amcor Limited and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET and 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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The Emyria Ltd (ASX: EMD) share price is seesawing today despite the company winning a digital health monitoring grant with the University of Western Australia (UWA).

Shares in the healthcare technology and services company rose to an intraday high of 15 cents, before slightly pulling back. At the time of writing, the Emyria share price is up 3.5% to 14.5 cents.

Emyria, formerly known as Emerald Clinics, operates a network of specialist medical clinics and purpose-built, remote patient monitoring technologies. The company captures real-world clinical data and uses this to provide consultation letters, containing information on prescription, recommended dosage, and duration of cannabinoid-based medicines.

What did Emyria announce?

The Emyria share price is moving in both directions today as investors digest the company’s latest announcement.

In its release, the company advised that it was recently awarded a grant from Western Australia’s Future Health Research and Innovation Fund.

The grant aims to boost the state’s digital health infrastructure and capacity in dealing with future health concerns. In light of this, Emyria highlighted that it will take the leadership role in collaborating with major health services and universities. The company will seek to develop improved monitoring of mental health at-risk individuals and COVID-19 patients using its contactless remote monitoring platform, Openly.

The total grant is valued at $880,000. Emyria predicts it will receive around $320,000 to $400,000 over two years.

What is Openly?

Initially developed to remotely screen and manage COVID-19 patients, the platform moved into the digital health and wellness screening space. Using smart mobile devices, Openly collects real-world data by monitoring heart rate and heart rate variability. The information is then presented to a medical team who can act on any abnormal changes to vital signs.

Openly was registered as a class 1 medical device with the Australian Therapeutic Goods Administration (TGA) in September last year.

Management comments

Emyria managing director Dr Michael Winlo commented on the successful grant:

It’s very pleasing to see our unique contactless remote monitoring platform – Openly – recognised through this competitive grant process. Emyria’s unique digital health technology and clinical team will be playing a major role in improving how we monitor the clinical and mental wellbeing of vulnerable populations in WA.

Openly – the core technology of this grant – will also support and monitor patients during our upcoming clinical trials. These pivotal studies will support the registration of our leading drug candidate EMD-003 – targeting unmet needs in psychological distress and the symptoms of anxiety, depression and stress.

About the Emyria share price

Looking at the historical Emyria share price chart, its shares are dead flat from this time last year.

The company’s shares have been on a rollercoaster ride, diving to as low as 3.8 cents in August then rising to reach a 52-week high of 16 cents just two weeks ago.

Based on the current share price, Emyria has a market capitalisation of $32 million.

More reading

• 3 ASX dividend shares to own for retirement income
• Short sellers doubling down on these ASX stocks despite the GameStop saga
• Brokers name 3 ASX shares to buy right now
• Why the Genex (ASX:GNX) share price is up 5% today
• Here’s why the Icetana (ASX:ICE) share price is up 19% today

Motley Fool contributor Aaron Teboneras 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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If you thought short sellers are beating a hasty retreat following the GameStop Corp. (NYSE: GME) share price saga, think again!

Australian short sellers are not only holding on to their bearish bets, but they have stepped up their attack on a number of ASX shares.

Unlike their US counterparts, short selling hedge funds are retreating with their tails between their legs after the Reddit army of retail investors sent the GameStop share price soaring.

Short sellers undeterred by GameStop squeeze

Short sellers are those who borrow stock to sell on-market. The aim is to buy it back later at a lower price to profit from the difference.

These bearing investors tend to be more sophisticated than mum and dad investors. But as the GME share price experience showed, David can beat Goliath at his own game.

But Aussie hedge funds aren’t worried. The total volume of ASX shares being shorted has actually risen by nearly 1% to 4.39 billion since the start of 2021.

That’s according to the latest ASIC data which is always a week behind.

Volume of shorted ASX shares holding firm

The fact that the S&P/ASX 200 Index (Index:^AXJO) is closing in on its record high may also be spurring on short sellers.

The volume of shorted ASX shares only dipped 0.18% when the GameStop made headlines around the world.

Not only have short sellers here given a collective yawn to the Reddit drama, they have increased their bearish bets against a number of ASX shares in January.

The ASX shares with the biggest increase in shorts

The stock that saw the biggest increase in short interest is the Northern Star Resources Ltd (ASX: NST) share price.

The number of shorts against the gold miner jumped a whopping 425 percentage points to 7.5% from the start of January till 29 January.

The rise in shorts against the NST share price could be due to a bearish view on Northern Star’s acquisition of Saracen Mineral Holdings Limited (ASX: SAR). It could also be due to the falling gold price.

Golden short target

After all, Northern Star isn’t the only gold miner to see an increase in shorts. The Resolute Mining Limited (ASX: RSG) share price was also hit by short sellers.

Short interest in the RSG share price lifted 189 percentage points to 7% over the same period – making it the third biggest increase on the ASX.

Betting against the TYR share price

In second place is the Tyro Payments Ltd (ASX: TYR) share price. The volume of shorts in the emerging payment solution provider jumped 330 percentage points to 4.6% last month.

The embarrassing outage on its platform is attracting short sellers who are convinced the stock could fall further as customers lose confidence in its solution.

This could severely impact on its short- to medium-term growth potential as it takes a long time to repair trust.

More reading

• Why the Wesfarmers (ASX:WES) share price has soared 24% in a year
• GameStop, AMC trades temporarily blocked on Square’s Cash App
• RBA stimulus to fuel ‘raging bull market’ in ASX shares. Should you go all in?
• Why Douugh, Janus Henderson, Northern Star, & Orocobre are dropping lower
• Westpac (ASX:WBC) share price to close gap with CBA (ASX:CBA) says Morgans

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Nick Scali Limited (ASX: NCK)

According to a note out of Citi, its analysts have retained their buy rating and lifted the price target on this furniture retailer’s shares to $12.05. This follows the release of Nick Scali’s half year results earlier this week. The retailer reported a half year net profit of $40.5 million, up 89.9% on the prior corresponding period. Citi was pleased with the result and expects the company to benefit from a favourable redirection of spending for the rest of the year. The Nick Scali share price is trading at $10.86 today.

Wesfarmers Ltd (ASX: WES)

A note out of the Macquarie equities desk reveals that its analysts have upgraded this conglomerate’s shares to an outperform rating with an improved price target of $60.00. According to the note, the broker believes Wesfarmers will benefit from strong consumer spending this year. It also suspects that low interest rates could give the housing market a big boost and support businesses like Bunnings, Target, and Kmart. The Wesfarmers share price is fetching $55.81 this afternoon.

Westpac Banking Corp (ASX: WBC)

Analysts at Morgans have retained their add rating and lifted the price target on this banking giant’s shares to $25.50. According to the note, the broker believes that credit impairment charges could surprise positively during earnings season. Especially given recent APRA data in relation to COVID-19 loan deferrals. Westpac is Morgans top pick in the sector and notes that its shares offer strong potential returns. It is expecting the bank to pay a $1.24 per share fully franked dividend in FY 2021. The Westpac share price is trading at $22.14 on Friday afternoon.

More reading

• Why the Wesfarmers (ASX:WES) share price has soared 24% in a year
• CBA (ASX:CBA) share price rises as bank cuts savings rate
• Westpac (ASX:WBC) share price to close gap with CBA (ASX:CBA) says Morgans
• 2 ASX dividend shares with very attractive yields
• ASX 200 falls 0.9%, Nick Scali reports, Vulcan jumps

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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The Genex Power Ltd (ASX: GNX) share price is up over 5.5% today and currently trading at 28 cents.

Genex Power is focused on developing a portfolio of renewable energy generation and storage projects across Australia.

The company’s flagship Kidston Clean Energy Hub, located in north Queensland, will integrate large-scale solar generation with pumped storage hydro.

Genex share price pumps after company locks in funding

The Genex share price bumped up after the company confirmed that the Queensland Government is going to provide a $147 million funding package. 

The funding will go toward the construction of a new 275kV single circuit, 185.9km transmission line from Kidston to Mt Fox, and a new substation at Mt Fox.

The new infrastructure will facilitate the connection of the company’s Kidston Pumped Storage Hydro Project to the national electricity market.

Powerlink Queensland will build, own, and operate the project, which is expected to support over 400 new jobs during construction. The funding package will be advanced directly to Powerlink.

Positioning for future growth

Genex believes that the new transmission infrastructure will underpin fresh potential for future sustainable energy projects. 

The company stated that the transmission line will facilitate the creation of a new renewable energy zone in north Queensland, which is a location that’s abundant with strong wind and solar resources.

Genex CEO James Harding commented:

The Transmission Line will support not only our flagship Kidston Pumped Storage Hydro Project, but the broader Kidston Clean Energy Hub including the Kidston Stage 3 Wind Project and the Kidston Stage 2 Solar Project, with the creation of a new North Queensland Renewable Energy Zone.

The funding package announced today is $15 million more than the original $132 million package offered by the Queensland Government in September 2020.

Over the past 12 months, the Genex share price has climbed more than 28%.

More reading

• Here’s why the Icetana (ASX:ICE) share price is up 19% today
• Why the Wesfarmers (ASX:WES) share price has soared 24% in a year
• Why the Dicker Data (ASX:DDR) share price almost hit a record high today
• American Pacific Borates (ASX:ABR) share price pops following latest presentation
• Afterpay (ASX:APT) share price higher following PayPal’s BNPL update

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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The Icetana Ltd (ASX: ICE) share price has soared 19.23% today and is trading at 16 cents at the time of writing.

Icetana is a global software company providing video analytics solutions designed to automatically identify inconsistent actions in real-time for large scale surveillance networks.

The software integrates with customers’ existing video management systems and IP cameras.

Icetana share price soars after announcing new contract

Prior to the Icetana share price soaring, the company announced it secured a three-year contract with a Singapore resort. The contract is worth $536,000 and will be operated through security services vendor Prosegur Singapore Pte Ltd.

This is the first time that Icetana has worked with an integrated resort customer outside of Australia. The company believes there will be more international opportunities.

The contract has been priced on a software-as-a-service (SaaS) basis and will contribute to Icetana’s annual recurring revenue.

In November, Icetana reported that the company entered a contract with a Canadian power utility. The five-year contract is valued at CAD$90,000.

In its December 2020 quarter-end report, Icetana reported $231,000 in receipts from customers for the quarter. As at 31 December 2020, there was approximately $134,000 in receivables due.

Comments from the Icetana CEO

Sharing his insight about the Singapore deal, Icetana CEO Matt Macfarlane said:

This order represents the culmination of an extended process undertaken by the icetana and Prosegur teams. This was one of the COVID-19 affected projects that we are very pleased to see progress to an implementation stage. Particularly encouraging is the clear choice of the icetana motion intelligence platform over direct competitors. This represents icetana’s largest SaaS based recurring revenue contract to date. The opportunity to expand the number of cameras at this Singapore site and in other locations controlled by this end-user is potentially very significant to icetana.

Icetana share price snapshot

The Icetana share price has fallen more than 43% over the past 12 months. Year-to-date, it’s dropped nearly 13%.

At current prices, Icetana has a market capitalisation of $13.9 million.

More reading

• Why the Wesfarmers (ASX:WES) share price has soared 24% in a year
• Why the Dicker Data (ASX:DDR) share price almost hit a record high today
• American Pacific Borates (ASX:ABR) share price pops following latest presentation
• Afterpay (ASX:APT) share price higher following PayPal’s BNPL update
• CBA (ASX:CBA) share price rises as bank cuts savings rate

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.

The post Here’s why the Icetana (ASX:ICE) share price is up 19% today appeared first on The Motley Fool Australia.

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Wesfarmers Ltd (ASX: WES) shares have proven to be among the ASX’s most dependable achievers over the past year, rising by more than 24%. Since its lows of 23 March last year, the Wesfarmers share price is up a staggering 87.5%.

This year alone, the industrial conglomerate has added more than 8% to its market capitalisation and has been clocking new all-time highs like The Flash over the past two months. As a point of comparison, the S&P/ASX 200 Index (ASX: XJO) is still down around 2.4% compared to where it was 12 months ago. So what is it about this ASX blue-chip share that has investors so eager to buy in?

What is Wesfarmers?

Wesfarmers is one of the most diversified large-cap businesses on the ASX. It owns many of Australia’s most well-known and profitable retail brands, such as Bunnings, Kmart, Target, and Officeworks. But that retail cornerstone is only one part of this company’s earnings base. It also owns a suite of other businesses.

These range from coal mines and lithium processors to a clothing line. There’s Kleenheat Gas, CSPB Fertilisers and Australian Vinyls. There are also the recently-developed ‘new world’ businesses like Decipher (offering cloud-based data services), Catch.com.au (an online retailer), and Geeks 2U (offering computer and tech repairs). Wesfarmers also retains a stake in the loyalty program Flybuys, as well as a ~5% stake in Coles Group Ltd (ASX: COL).

Coles sale works wonders

Let’s talk about Coles for a moment. It might seem like ancient history now, but for more than a decade, it was a fully-owned subsidiary of Wesfarmers. Wesfarmers spun-off the grocery giant in late 2018, resulting in Coles’ own ASX listing, with investors receiving one Coles share for every Wesfarmers share owned. At the time, Wesfarmers retained a 15% stake in Coles, but it has progressively sold down this stake to the 5% it still owns.

Even so, Wesfarmers (and its shareholders) have done very well out of this deal. Coles was spun-off at a price of roughly $12.80. Today, Coles shares are trading at $18.36 (at the time of writing), and have developed an impressive dividend track record.

Speaking of dividends, let’s turn to Wesfarmers. Today, at the time of writing, the Wesfarmers share price is sitting at $55.73. That represents a market cap of around $62 billion, a price-to-earnings (P/E) ratio of 38.46 and a trailing dividend yield of 2.76% (which comes fully franked).

A P/E ratio of 38.46 objectively looks very high for a company of this size and scale. For comparison, Coles shares currently have a P/E ratio of 24.81. The ASX 200 itself currently has an average P/E of 23.18. So why are investors still so keen to buy in?

Why is the Wesfarmers share price outperforming?

Well, the first thing to note is that Wesfarmers has been sitting happily in a number of tailwinds over the past year. The trading update it delivered in November 2020 informed investors that  Bunnings sales were up 25.2% over the previous corresponding period.

Kmart and Officeworks also had strong results, with sales up 3.7% and 23.4% respectively. Likewise, Catch.com.au recorded a 114% rise in transaction volume. It seems that Bunnings and Officeworks were beneficiaries of the coronavirus-induced lockdowns, with customers turning to home renovations, building home offices and other improvements to fill in their time.

Additionally, Wesfarmers’ acquisition of the lithium company Kidman Resources in 2019 appears to have been well-timed. Fellow lithium producers like Pilbara Minerals Ltd (ASX: PLS) and Galaxy Resources Limited (ASX: GXY) have boomed over the past year as lithium prices rose on the back of electric vehicle and battery demand. Pilbara shares alone are up more than 200% over the past 12 months. Investor enthusiasm surrounding lithium has arguably also flowed into the Wesfarmers share price as a result of its Kidman ownership.

Finally, investors may be just assuming that the Wesfarmers share price represents a solid, long-term investment. Afterall, the company boasts a diversified earnings base, long history of shareholder returns, and the fact it is leveraged to the growth of the Australian economy, to entice investors. 

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and 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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The Dicker Data Ltd (ASX: DDR) share price has been a positive performer on Friday.

In afternoon trade the technology hardware, software, and cloud distributor’s shares are up 1.5% to $11.76.

This leaves the Dicker Data share price trading just a stone’s throw away from its record high of $11.96.

Why is the Dicker Data share price on the rise today?

Investors have been buying Dicker Data’s shares on Friday following the release of an announcement after lunch.

According to the release, the company has been appointed as the newest Australian distributor for industry-leading cloud, networking, digital workspace, and security vendor, VMware.

The release explains that this appointment was made following a mammoth 16-month global tender process.

“A significant source of growth.”

Dicker Data’s Chairman and Chief Executive Officer, David Dicker, believes the deal with VMware could be a key driver of growth for the company.

He commented: “This partnership will be a significant source of growth for our company in FY21 and unlocks not only the direct VMware business, but an entire ecosystem of solutions through the large number of VMware’s strategic and technology alliance vendors we already work with.”

“It’s exceptionally gratifying to see all the hard work our people put into this project rewarded with us beating out all our competitors to what is a pivotal vendor alliance. I look forward to reporting the positive impacts of our new partnership with VMware throughout FY21,” Mr Dicker added.

And while the company is unable to quantify the revenue impact the new distribution partnership will have at this stage, management appears to believe it could be material in the future.

Executive Director and Chief Operating Officer, Vlad Mitnovetski, explained: “The opportunity ahead of us with VMware cannot be understated. We believe VMware will rise to be one of our top vendors within a few short years of joining our business.”

“Access to the VMware portfolio cements Dicker Data’s position as the leading corporate and commercial distributor in the APAC region. The partnership will enable Dicker Data to offer a range of market leading technology products and solutions and builds confidence in our business amongst the wider market as we now represent all major tier-one technology brands and hold strong majority market share across our portfolio,” he concluded.

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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 Dicker Data Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Dicker Data (ASX:DDR) share price almost hit a record high today appeared first on The Motley Fool Australia.

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