Tag: Motley Fool

The BPH Energy Ltd (ASX: BPH) share price was a very strong performer on Wednesday.

At one stage, the biotechnology and mineral exploration company’s shares were up as much as 32% to 22.5 cents.

The BPH Energy share price ultimately gave back some of these gains and ended the day 23.5% higher at 21 cents.

Why did the BPH Energy share price rocket higher?

Investors were buying BPH Energy shares this morning after they returned from a trading half following the successful completion of a placement.

According to the release, the company has raised a total of $9 million via the placement of ~69.2 million shares to sophisticated and professional investors at a price of 13 cents per share. This placement price represents a 23.5% discount to its last close price.

The placement was led by Everblu Capital, which placed $7 million and will receive a fee of 6% of the funds raised together with 6 million share options. These options have an exercise price of 26 cents per share and an expiry date of 8 February 2023.

In addition to this, 62 Capital placed $1.5 million and will also receive 6% of the funds raised together with 1,285,714 share options.

Finally, an amount of $500,000 was placed by Grandbridge Securities, which will receive a fee of 6% of these funds raised.

BPH Energy’s Managing Director, David Breeze, commented: “The Company is pleased to receive funding from a range of investors including existing and new shareholders, and others who participated in the Placement through Everblu Capital and 62 Capital.”

Everblu Capital added: “We were extremely pleased to see the quality of new investors on the register. The level of demand highlights the company’s current growth trajectory, and we look forward to BPH continuing to deliver to shareholders.“

How will the company spend the proceeds?

Management advised that the majority of the proceeds will be used to invest in Advent Energy.

These funds will then be used by Advent to progress well planning, engineering, and environmental approvals for drilling at the Baleen drill target in the PEP11 offshore permit in NSW. Approximately $5.75 million of the capital raised is expected to be used for this purpose.

It will increase its shareholding in Advent from 22% to approximately 33%, subject to any required approvals.

In addition to this, the company intends to use $0.5 million of the proceeds to increase its shareholding in Cortical Dynamics from 16% to 18%. These funds will then help Cortical Dynamics to further develop its Brain Anesthesia Response Monitor (BARM).

More reading

• BHP Energy and Zip were among the most traded ASX shares last week
• Why BPH Energy (ASX:BPH) shares are in a trading halt

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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Yesterday marked one of the most anticipated Reserve Bank of Australia (RBA) meetings in recent months.

Speculation was swirling whether RBA governor Dr Philip Lowe would induce a ‘taper tantrum’ on the share market by hinting that its unprecedented levels of monetary stimulus would start to be wound back.

The phrase ‘taper tantrum’ entered the investing vernacular back in 2013. Back then, the chair of the US Federal Reserve Ben Bernanke hinted that the US’s quantitative easing (QE) programs would have to be unwound. The share market plunged on the news, and the ‘tantrum’ was born.

But there are no signs of a tantrum on the ASX today, quite the opposite in fact. At the time of writing, the S&P/ASX 200 Index (ASX: JXO) looks set to finish the trading day up a healthy 1.1% to 6,840 points, close to a new post-coronavirus crash high. Why? You guessed it, Dr Lowe didn’t exactly make investors’ worst fears come alive yesterday.

RBA doubles down on QE

Contrary to the rumours, the RBA has doubled down on stimulus and QE. It announced that far from winding up Australia’s first QE program, it would double it. The RBA will initiate another $100 billion of government bond purchases when the current QE program winds up in April, with the RBA set to buy $5 billion worth of bonds every week. 

Even though Dr Lowe is pleased that the progress the Australian economy is making in the face of the coronavirus-induced recession, it has decided that more assistance is necessary. Here’s some of what he had to say yesterday:

The board remains committed to maintaining highly supportive monetary conditions until its goals are achieved. Given the current outlook for inflation and jobs, this is still some way off…

The board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The board does not expect these conditions to be met until 2024 at the earliest.

Today, the Australian Financial Review (AFR) reports that Dr Lowe subsequently stated that a partial reason behind these moves is also to depress the Australian dollar. Since other central banks around the world have also been pursuing ultra-easy monetary policy, failure to match these policies puts upward pressure on our currency. And that’s something the RBA does not want since it dampens export competitiveness.

So what does all of this have to do with ASX shares?

Fuel to the ASX fire

Well, quite a lot. The share market prices companies based on their profits, and the potential to keep delivering and growing said profits.

But another factor in market price discovery is risk versus reward. And with near-zero interest rates and an expanding QE program, the RBA is ensuring that there are no risk-free alternatives to shares.

QE programs deliberately lower the yields investors can expect from ‘risk-free’ government bonds. This phenomenon directly cascades into other ‘safe’ investments like bank accounts and term deposits. Have you wondered why your savings account used to give you 4%, but now offers 1% if you’re lucky? Low interest rates and QE are responsible.

So because investors have almost nowhere else to turn for a real return on their cash, the share market and property markets are where most investors find themselves turning to. That’s probably why our share market has all-but shaken off the coronavirus pandemic and is today higher than it was in January last year before the virus even struck.

Same with the property market. Over in the US, the S&P 500 Index (INDEXSP: .INX) is more than 13% higher today than where it was at its pre-pandemic peak.

Party at Phil’s

And the RBA has just all-but promised that it will keep the stimulus taps open… until 2024! Nothing is guaranteed in investing of course. But this strongly indicates that the ASX 200 has just been given the green light to push even higher. If any ‘taper tantrum’ is only coming in 2024, then there’s not much that will stand in the way of rising asset prices until then.

William Martin, a former chair of the US Federal Reserve, famously once said that, “the Federal Reserve’s job is to take away the punch bowl just as the party gets going”. Well, Dr Lowe has just rolled out a few kegs for the ASX. Let’s see how long this party lasts.

More reading

• ASX 200 up 1.1%: Amcor jumps, South32 sinks, Virgin Money UK rockets
• ASX coal stocks increasingly isolated with rise of start-ups like MGA Thermal
• 5 things to watch on the ASX 200 on Wednesday
• 2 ASX 200 shares to buy for dividends
• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars

Motley Fool contributor Sebastian Bowen 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 NRW Holdings Limited (ASX: NWH) share price is close to retesting its one-year high after declaring its bid for Primero Group Ltd (ASX: PGX) unconditional.

The NWH share price jumped 3.7% to $3.10 in late afternoon trade while the PGX share price added around the same amount to 60 cents a share.

NRW Holdings is trying to entice any Primero shareholders holding out from accepting the $100 million offer with accelerated payment terms.

NWH takeover of PGX fait accompli?

The bidder is promising to pay PGX shareholders within 10 days of valid acceptances and the share price of the target suggests that the takeover is all but a done deal.

NRW is offering 27.5 cents cash plus 0.106 of NRW shares in exchange for each PGX share. At the current NWH share price, this implies an offer price of 60 cents for the target.

If NRW gets 90% of PGX, it can compulsorily acquire PGX. Any target shareholders who do not tip their stock into the bidder’s hat before then will have to wait longer to receive their payment.

NRW share price growing via acquisitions

Some of Primero’s shareholders were holding out hope that NRW would increase its offer price. But the highly acquisitive NRW board held firm. The buyer recently bought BGC Contracting in December 2019 and parts of RCR Tomlinson’s businesses in January of that year.

The latest takeover will help NRW expand its capabilities across civil, mining, mining technology and drill and blast contracting.

There’s been a fair bit of mergers and acquisitions (M&As) in the mining services space recently. Both Downer EDI Limited (ASX: DOW) and Lendlease Group (ASX: LLC) have or are in the process of selling these businesses to other trade buyers.

What’s driving strong M&A activity

But M&A activity won’t be confined to this sector. Record low interest rates are one big factor behind the expected pick-up in takeovers.

Money has never been this cheap before and would-be acquirers should have a relatively easy time to raise needed funds.

Further, cashed up companies (and there are quite a few of them despite COVID-19) are looking to grow revenues and profit.

They will see acquisitions as a relatively quick way to achieve this goal. Just be conscious that most M&As actually leave shareholders of bidders worst off.

Other ASX stocks in the spotlight

But this won’t stop a flurry of activity in 2021. The Tabcorp Holdings Limited (ASX: TAH) share price is the latest to be touched by such speculation as it could divest its struggling wagering division.

Other ASX stocks in the M&A or divestment spotlight include the AMP Limited (ASX: AMP) share price and Suncorp Group Ltd (ASX: SUN) share price – just to name a few.

More reading

• Tabcorp (ASX:TAH) share price soars 10% on potential buyout
• Why the NRW (ASX:NWH) share price is flying higher today
• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• IOOF exec says she was sacked for mental illness
• Broker lists the best ASX stocks to own for an up to 30% gain in 2021

Motley Fool contributor Brendon Lau owns shares of AMP Limited. 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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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

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:

Corporate Travel Management Ltd (ASX: CTD)

According to a note out of Ord Minnett, its analysts have upgraded this travel company’s shares to a buy rating with an improved price target of $22.11. The broker made the move on valuation grounds after a recent pullback in the company’s share price. It believes this has brought the company’s shares down to an attractive level, especially given its positive growth outlook once the pandemic passes. The Corporate Travel Management share price is trading at $18.36 on Wednesday.

Healius Ltd (ASX: HLS)

A note out of UBS reveals that its analysts have upgraded this healthcare company’s shares to a buy rating with a $4.40 price target. According to the note, the broker believes Healius is in a strong position to benefit from increased demand for COVID-19 testing. In addition to this, the broker notes that its strong form and a recent asset sale has brought back the possibility of a resumption in dividend payments and also potential share buybacks. The Healius share price is fetching $4.16 on Wednesday afternoon.

Volpara Health Technologies Ltd (ASX: VHT)

Analysts at Morgans have retained their add rating and lifted the price target on this healthcare technology company’s shares to $1.92. This follows Volpara’s announcement of the acquisition of breast cancer risk assessment company CRA Health for US$22 million. According to the note, Morgans believes the company has paid a fair price and expects the acquisition to broaden its reach. The Volpara share price is currently trading at $1.56.

More reading

• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars
• Why Afterpay, Credit Corp, Healius, & Volpara shares are storming higher
• 2 little known ASX growth shares to buy
• These 2 ASX stocks jumped after a broker upgrade to “buy” today
• Here’s why the Volpara (ASX:VHT) share price is surging 5% higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited 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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The AWN Holdings Ltd (ASX: AWN) share price is rocketing today. This comes after the company provided investors with an update on its 46.8% owned subsidiary, VivoPower.

Headquartered in London, VivoPower is an international company that delivers comprehensive suite of sustainable energy solutions. This includes battery technology, electric vehicle, solar and critical power services.

The AWN share price touched a 52-week high of $1.70 in morning trade, before retracing after some profit taking. At the time of writing, the funds management company’s shares are up 14.49% to $1.58.

What’s pushing the AWN share price higher?

In today’s release, the company advised its subsidiary, VivoPower has completed its acquisition of Tembo. This follows the recent board decision which gave the green light for the remaining 49% stake in the specialist electric battery and off-road vehicle company. VivoPower paid US$2.2 million and issued 15,793 VivoPower shares to Tembo management.

Previously, VivoPower took a 51% ownership of Tembo during October last year.

As a result of the latest acquisition, VivoPower will allocated US$10.9 million of its capital to invest in Tembo. The funds will be injected in stages, dependent on Tembo reaching its quarterly commercial targets. This will allow Tembo to ramp up production efforts to fulfil customer orders and deliveries in a timely manner.

In addition, VivoPower recently reached a distribution agreement with partner, GB Auto Group, in Australia.

The landmark deal is expected to provide revenues of up to US$250 million during the first 4 years. VivoPower highlighted that when factoring in the converted Toyota vehicles, the contract is the largest of its kind in Australia.

Under the terms of the contract, GB Auto will be exclusive distributor of the Tembo electric Toyota Land Cruiser, electric Toyota Hilux, and Tembo electric vehicle conversion kits.

Management commentary

Commenting on the acquisition, VivoPower executive chair and CEO, Kevin Chin, said:

Our intention has always been to move to 100% ownership of Tembo, and the GB Auto deal has enabled this to occur at least two years ahead of plan. We are pleased to be able to fund this from existing cash reserves and the issuance of 15,793 VivoPower shares to Tembo’s management shareholders.

We are now focused on scaling up capabilities and executing at pace in order to meet strong customer interest and demand.

More reading

• The AWN Holdings (ASX:AWN) share price is up 36% today. Here’s why

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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A glance at my screens this morning revealed another welcome sea of green for the major share market indexes in Europe and the United States.

In the US, the Dow Jones Industrial Average (DJX: .DJI) led the charge higher closing up 1.57%. That was just enough to edge out the 1.56% gains of the tech-heavy Nasdaq Composite (NASDAQ: .IXIC).

Australia’s share markets are following their overseas peers’ lead, enjoying another positive day. The S&P/ASX 200 Index (ASX: XJO) is up 1.1% in afternoon trading, bringing this week’s gains to 3.6% so far.

Stimulus versus coronavirus

In the ongoing battle between coronavirus and massive government stimulus packages, stimulus appears to be in the driver’s seat, boosting investor sentiment.

News on the pandemic front is mixed.

On the positive side, more than 100 million people have now been vaccinated around the world. And new infection numbers in the virus-ravaged US were down again last week, the third weekly decline in a row.

On the negative side, the COVID variant in the United Kingdom is beginning to mimic the mutations of the South African variant. That strain has proven significantly more resistant to existing vaccines, which could stall the global reopening and economic growth outlook.

However, investor optimism has been stirred by the massive US$1.9 trillion (AU$2.5 trillion) COVID-19 relief package spruiked by President Joe Biden.

That stimulus package is more than double the Republicans’ counter offer. But the Republicans may not be able to stop its passage. Senate Majority Leader Chuck Schumer, a Democrat, said the Senate will soon commence a process to enable passage of the relief package without Republican support.

Also buoying investor sentiment is the apparent early demise of the Reddit army’s market rattling influence.

The Reddit army’s Waterloo moment

There was a time when Napoleon Bonaparte appeared unstoppable. As the Emperor of France from 1804–1815, his armies swept across much of continental Europe. He was, without a doubt, the most disruptive force of his time.

Then came Waterloo, a small town in what’s now Belgium. The Battle of Waterloo would be his last.

The Reddit army, the collective of retail investors linked through Reddit’s WallStreetBets, emerged only a few weeks ago as its own highly disruptive force. At least as far as share markets and hedge funds are concerned.

Targeting institutional short sellers (mainly hedge funds betting against a company’s share price), the group of retail investors drove the price of a handful of highly shorted shares through the roof.

Gaming vendor GameStop Corp (NYSE: GME) drew some of the most investor interest and media attention. The GameStop share price peaked last Wednesday 27 January at a record high of US$347.51. That represented an eye-popping 1,915% gain in 2021.

But in a sign the Reddit army looks to be having its own Waterloo moment, the GameStop share price has crashed 74% since last Wednesday’s close. Shares plummeted 60% yesterday (overnight Aussie time) alone. And GameStop’s share price is down another 5% in afterhours trading. Though, mind you, that’s still up 394% in 2021.

Movie and entertainment company AMC Entertainment Holdings Inc (NYSE: AMC) was another highly shorted share the Reddit army sought to ‘rescue’. Last Wednesday the AMC Entertainment share price surged 301%. Yep, in one day

Since that high, AMC shares have lost 61%, dropping 41% yesterday. Despite the big retreat, for 2021 the AMC share price remains up 289%.

Even ASX-listed Unibail-Rodamco-Westfield (ASX: URW) shares got caught up in the action, via the company’s links to its European-listed shares which had been highly shorted. Last Thursday, shares of the retail landlord leapt 15% higher as the Reddit army took aim.

With a much smaller surge in its share price, Unibail has held up better with the Reddit army’s pullback, down 4% this week.

The massive losses in recent days for shares like AMC Entertainment and GameStop will come as bad news for investors arriving late to the party. But Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, points out that more broadly, investors will be relieved (quoted by Bloomberg):

There’s optimism brewing underneath. The fact that markets have cooled down a bit with the retail-trading frenzy, that’s giving a little bit of optimism. Anytime there’s more stability to markets, there’s a breath of relief of all investors.

The Reddit army’s Waterloo moment won’t come as a surprise to Mark Taylor, a sales trader at Mirabaud Securities. According to Taylor:

The short squeeze momentum met its inevitable end. It seems reasonably clear that as the cheerleading and rage against the machine dies down, the man on the street is left holding the bag again.

Personally, I watched the extraordinary share price surges in some of the shares targeted by the Reddit army from a safe distance.

Sure, the daily gains of several hundred percent were appealing. But so is watching someone win big in the casinos.

To me it’s like letting your roulette chips ride on black in hopes of doubling your money over and over. As Mirabaud Securities’ Taylor said in the quote above, that kind of investment philosophy is destined to meet its inevitable end.

More reading

• Millionaire maker! Rent.com.au (ASX:RNT) share price now up 300% in a week
• Here’s what could really feed a stock market bubble
• GameStop (NYSE:GME) dominates the US shares ASX investors have been buying
• Why investors should look beyond the Reddit army to these ASX fundamentals
• Why ASX silver shares like Silver Mines (ASX:SVL) are falling today

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

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The Raiz Invest Ltd (ASX: RZI) share price is flying more than 16% higher today, following a positive trading update from the company.

What did Raiz announce?

Raiz provided the market with an update on its performance for January 2021. The fintech company is a mobile-focused micro-investing platform that operates in Australia, Indonesia and Malaysia.

In its release, Raiz said total funds under management (FUM) in Australia had a growth spurt of 5.5% for the month, bringing total FUM to $639.08 million.

In addition, the company reported a 9.5% increase in active customers in Australia to a total of 376,198 users. Strong growth in active customers was also achieved in Indonesia and Malaysia, with the company reporting a 15.6% and 21.8% increase in users for January respectively.

The company also launched its custom portfolio in late January. According to management, more than 3,200 clients have engaged the new service, representing more than $14 million in Australian FUM.

More about Raiz

The company’s platform enables users to micro-invest the remaining round up of everyday purchases in exchange-traded funds (ETF). It also allows users to open a superannuation fund.

The company’s mobile financial platform offers users the ability to invest in a range of different funds, depending on the user’s risk tolerance. Each fund allocates across a wide variety of financial products including Australian and international shares, fixed-interest investments and cash. Raiz recently added a hyper-aggressive ‘Sapphire’ portfolio which included a 5% exposure to bitcoin.

Raiz charges a flat monthly investment fee for each user. As a result, FUM and active customers are key metrics to the company’s ability to generate recurring revenue.

The Raiz share price has surged more than 63% since December 2020. At the time of writing, the Raiz share price is trading at an intraday high of $1.54, up 16.16%.

More reading

• Why the Raiz (ASX:RZI) share price is climbing today

Motley Fool contributor Nikhil Gangaram 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 Rent.com.au Ltd (ASX: RNT) share price is at it again.  Rent shares are currently up a whopping 42.31% today to 18 cents a share. That kind of gain is pretty impressive in itself.

If you add the company’s stunning 200% share price bump yesterday, things look pretty good for Rent.com.au shareholders. After today’s rise, Rent’s share price gains just this week amount to more than 330%. That means a $10,000 investment just last week would be worth as much as $33,000 today. Not a bad return for 5 days of waiting!

Today’s Rent.com.au share price represents the highest valuation the company has traded at since June 2016. It gives Rent a market capitalisation of more than $63 million.

So what’s going on here?

Bond, rental bond

Rent.com.au is an online marketplace that seeks to connect renters and landlords. The site is in a similar vein to REA Group Ltd‘s (ASX: REA) realestate.com.au. It allows landlords to list their properties for lease, and gives renters the opportunity to find their ideal property. The company also has various online tools like RentPay and RentQuotes that aim to assist these processes.

Yesterday, we covered the reasons behind Rent.com.au’s sudden surge in value.

To recap, investors got very hot under the collar when the company announced that ‘Australian tech entrepreneur’ Bevan Slattery had made a $2.75 million investment in Rent.com.au. Mr. Slattery received 55 million shares under the agreement, priced at 5 cents apiece.

Perhaps the biggest winner on the ASX this week has indeed been Mr. Slattery. Since this investment is now worth more than triple what he laid out. As we discussed yesterday, Mr. Slattery has a long track record of investing in early-stage companies. His resume includes names like NextDC Ltd (ASX: NXT) and Megaport Ltd (ASX: MP1).

Why is the Rent.com.au share price rocketing again today?

There have been no major developments for Rent.com.au since yesterday.

That essentially means we can assume that investors might have noticed what went on with Rent shares yesterday, and are piling on to get a slice of the action.

As we saw with GameStop Corp (NYSE: GME) shares last week, and the short-lived ‘silver squeeze’ this week, the current market conditions are certainly encouraging many investors to chase the chance of a quick return.

More reading

• Why Amcor, Carsales, Rent.com.au, & Temple & Webster are surging higher
• Here’s what could really feed a stock market bubble
• 3 outstanding ASX shares growing rapidly
• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars
• GameStop (NYSE:GME) dominates the US shares ASX investors have been buying

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 and recommends MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and REA 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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Share investors love to talk about their successes. It doesn’t matter if they’re professional or retail investors — the stories you’ll hear at the barbecue are about those ASX shares that shot up to 5, 10 times their purchase price.

But every portfolio has duds and missed opportunities. No investor has a 100% strike rate.

So it’s refreshing to hear from professional investors which moves they regret.

Redpoint chief executive and head portfolio manager Max Cappetta wished he’d purchased Afterpay Ltd (ASX: APT) shares when they were cheap.

“I must admit it’s a little bit humbling when the stock that you choose in a sector, like Xero Limited (ASX: XRO), goes up 100% and it’s the under-performer in the sector by a factor of 10!”

Cappetta’s memories of the dot-com bubble possibly made him a bit shy about the buy now, pay later share.

“Having lived through and managed an Australian small caps product through 1999 and 2000, I’ve seen how the market can re-price some of these names,” he told The Motley Fool’s Ask A Fund Manager this week.

“We were a little bit slow, particularly in this portfolio, to get a position. We currently do [hold Afterpay], but we are underweight – it’s more there for risk purposes.”

The Afterpay share price was around $38 one year ago. Then during the COVID-19 market crash in March, it fell to as low as $8.01.

It is trading at $145.51 as of Wednesday afternoon.

Afterpay was a value share in March

“I do look at Afterpay and say, ‘In many ways at $10 in mid-March it was a value stock‘. It’s so easy to say now in hindsight,” said Cappetta.

“That’s probably the one stock that, if we had our timing in, we might have had a little bit more invested in it in April and May of last year.”

It’s not like Redpoint didn’t assess Afterpay’s numbers. It just never met the quantitative criteria that Cappetta’s team lives by.

“Its cash flow generation and lack of profitability is a red X for us. It’s hard to obviously get a value on the stock, but even across our metrics it doesn’t look like a valuation opportunity,” he said.

“Growth does seem to be turning more positive of late. That’s why we’ve taken a position over the last 6 months in the stock. Momentum has been quite strong… And the stock has responded very well or the market has responded to news and announcements from the company.”

The higher the Afterpay share price goes, the more polarising the opinions get about where it will end up.

“You know, some believing that the stock is headed to $200, others believing that it’s probably more fair value at $30. No doubt, the truth is somewhere in between,” Cappetta said.

“Exactly which side is going to win out, we’ll just have to wait and see.”

Getting rare earths at the ground level

Similarly, SG Hiscock portfolio manager Hamish Tadgell told The Motley Fool last month that he regrets not getting in on Lynas Rare Earths Ltd (ASX: LYC).

The Lynas share price has shot up 34% since mid-December and more than 100% since the start of October.

“It would have been nice to have get in at the ground level,” Tadgell said.

“I guess the question is whether you’ve missed it or whether it’s going to continue to go [up]. That’s I guess something we’re evaluating.”

Lynas is the only producer of rare earths minerals outside of China.

And that is becoming more of a political consideration for western companies that need the minerals to make electronic and electric devices.

“It’s just recently won a contract with the US Department of Defense to help build a heavy rare earths plant in the US,” said Tadgell.

“[There are] concerns that given China holds 90% of the world’s rare earths, or supplies 90% of the world’s rare earths, and 80% of the rare earths into places like the US – how do you find alternative supply?”

More reading

• Why the Afterpay (ASX:APT) share price is pushing higher again
• The growth of this BNPL ASX share has been outpacing Afterpay (ASX:APT)
• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars
• Why Afterpay, Credit Corp, Healius, & Volpara shares are storming higher
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The Fleetwood Corporation Limited (ASX: FWD) share price is soaring following the release of its preliminary half-year results for FY21. 

Today, the Fleetwood share price reached a 52 week high of $2.48. However, some profit taking has led its shares to slightly retreat to (at the time of writing) to $2.45, up 25%.

So, what did the company announce to cause the Fleetwood share price to push higher?

Performance update

In today’s release, the company highlighted that for the period ending December 31, it has continued its strong cash generation.

Preliminary results for the H1 FY21 term indicated Fleetwood has performed above expectations due to the impact caused by COVID-19.

Unaudited earnings before interest, tax, depreciation and amortisation (EBITDA) is predicted to jump between $15 million and $16 million. Previously, the company issued an EBITDA guidance of $12.8 million at its annual general meeting (AGM) held in November.

Strong cashflow generation is expected to net Fleetwood with a cash positive balance of $64 million. This comes after a first-dividend payment of $11.4 million that will be allocated to shareholders.

The board noted that it will reward investors with a dividend pay out ratio of 100% from its net profit after tax (NPAT) holdings.

The company is scheduled to release its half-year results on 25 February, 2021.

Let’s take a look at Fleetwood’s performance across the 3 business segments it operates in.

Accommodation solutions

In its accommodations solutions business, the Searipple Village in Karratha saw a recovery in occupancy rates early during the half. Major customer Rio Tinto Limited (ASX: RIO) renewed its tenancy contact for its workforce in December for 13 months.

Across to its Osprey Village, rooms remain fully booked, with the company holding a waiting list for potential tenants. Fleetwood said that the demand for its accommodation represents strength in the Port Hedland fly-in fly-out market.

Looking towards the second-half, the company noted that the strong performance will be unable to mimic its accommodation H1 earnings. This is because of rostering stability and additional village capacity at Karratha.

Building solutions

Despite a slow start to the first-half due to COVID-19 restrictions on building activity, the company rebounded later in the term.

Fleetwood secured two important contracts which boosted its order book to $140 million. The first includes a $41.5 million deal to manufacture and supply 460 modular cells for the Prison Infill Expansion Program in Victoria. The second, a $30 million project for Rio Tinto to upgrade its Ti Tree Rail Camp, located 170 kilometres south east of Karratha.

Fleetwood advised that the outlook for its building solutions is strong, and is well placed to benefit from anticipated Government stimulus spending.

RV solutions

Lastly, the RV solutions segment recorded a surge in monthly sales towards the back end of the first-half. The demand in domestic travel using an RV, away from large crowds and hotels, increased because of pandemic fears.

The company believes this market trend will continue to run into the second-half.

Words from the CEO

Fleetwood interim CEO, Andrew Wackett, reaffirmed the company’s continued performance by stating:

The first half result is shaping up as being very pleasing and one that continues our improving operational performance.

All businesses have continued to face significant challenges during the global pandemic, and we are pleased at the way our Company and people have responded. Having three business units and three diverse revenue streams has certainly helped us as a Company to weather the impact.

We continue to generate strong cashflow and our new dividend policy, increasing payouts to 100%, demonstrates to our shareholders we will continue to exercise restraint with our capital management.

Across the business we continue to prioritise sustainably improving margins, increasing utilisation and reducing overheads.

Fleetwood share price summary

The Fleetwood share has gained almost 20% when comparing the last 12 months. The company’s shares dipped to a multi-year low of $1.12 in March, before zooming higher on an upwards trajectory.

Based on the current share price, Fleetwood commands a market capitalisation of roughly $233 million.

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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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