Tag: Motley Fool

Brickworks Limited (ASX: BKW) could be a very interesting ASX dividend share for income-seekers.

The company boasts of creating significant shareholder value over the long-term. Since 1968, $1,000 invested in Brickworks shares could have turned into $470,000.

There are four different segments to Brickworks:

Australian building products

Brickworks has a diversified building products division in Australia. It manufactures and distributes building products across all Australian states.

Overall, this division has 29 manufacturing sites and more than 40 design centres and design studios across the country. The portfolio includes Austral Bricks, which is Australia’s largest clay brick manufacturer with significant market positions in every state. It says its concrete products portfolio comprises of names like Austral Masonry, Austral Precast and Southern Cross Cement. Bristle Roofing is another business within the Australian building products division.

This division currently has major capital projects ongoing to improve its competitive position in key markets.

Brickworks said that its Australian building products segment earnings in the first quarter of FY21 were “well ahead” of the corresponding period on steady sales revenue.

Investment

Brickworks now owns a 39.4% stake in ASX 100 company Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Brickworks has been invested in Soul Patts shares for around half a century.

Major investments within Soul Patts’ portfolio include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Brickworks and Australian Pharmaceutical Industries Ltd (ASX: API).

Soul Patts has a diversified portfolio with sectors like telecommunications, IT, financial services, mining, energy and pharmaceuticals.

Brickworks received $56 million of dividends in FY20. Soul Patts is steadily paying higher dividends to Brickworks (and all other shareholders).

At the time of the Brickworks annual general meeting (AGM), the Soul Patts shares were worth around $2.6 billion to Brickworks.

Industrial property trust

Brickworks operates a joint venture trust with Goodman Group (ASX: GMG). The idea of the trust is for Brickworks to sell surplus operational land into the trust at market value and Goodman will fund the infrastructure works, to crate serviced land ready for development.

Once a lease pre-commitment is secured, the serviced land can then be used as security, with debt funding used to cover the cost of constructing the facilities.

The relationship is mutually beneficial, with Brickworks gaining access to Goodman’s development expertise and network of customers, and Goodman gaining access to Brickworks prime industrial land.

At the end of the FY20, the gross asset value of the property trust was $2.1 billion.

This trust is currently building two large warehouses for both Amazon and Coles Group Ltd (ASX: COL). The Amazon facility is expected to be completed by September 2021 and the Coles warehouse is expected to start construction in early 2021.

When these warehouses are finished, the property trust assets are expected to exceed $3 billion and the net rental distributions to Brickworks are expected to increase by more than 25%.

However, the Amazon and Coles facilities will cover less than 40% of the available area at Oakdale West, providing a pipeline for the trust for the next five years.

American building products

The final division of Brickworks is its building products in North America. This is made up of three acquired businesses – Glen Gery, Sioux City Brick and Lawrenceville Brick. Brickworks already has market share leadership across key states across the Northeast, Midwest and Mid-Atlantic regions.

It has 10 operating brick plants and one manufactured stone plant.

Brickworks has a plan to make this division more efficient. At the time of the AGM update, the brick plants were at a utilisation rate of 80%, up from 50%. Unit cost reductions have been achieved at most plants.

However, sales were below expectations in the first quarter of FY21.

Brickworks dividend

Brickworks hasn’t cut its dividend since 1976, it has been reliable during this time.

Construction product profit can be cyclical over time, so Brickworks just funds its dividend from the cashflow received from its Soul Patts shares and the property trust.

It was one of the few companies in the ASX 200 to increase the dividend to shareholders during the worst of the COVID-19 pandemic in Australia.

At the current Brickworks share price it has a grossed-up dividend yield of 4.5%.

More reading

• 3 ASX dividend shares with yields above 4%
• 2 strong blue chip ASX shares rated as buys by brokers
• 2 ASX 200 shares to buy for dividends
• 3 ASX dividend shares rated as strong buys by brokers
• 3 ASX shares rated as strong buys by brokers

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 dividend investors should be interested in Brickworks (ASX:BKW) shares appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3tdbgvB

There are some ASX growth shares that may be able to generate good long-term returns.

Businesses that are predominately software in nature may be a good hunting place to look:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This is an exchange-traded fund (ETF) which invests in 100 of the biggest businesses on the NASDAQ, which is a stock exchange in North America.

You’ll find many of the world’s biggest technology companies within its holdings including Apple, Microsoft, Amazon, Tesla, Facebook and Alphabet. These businesses have been delivering outperformance over the long-term as the profits grow higher over time.

There are plenty of other large tech stocks within this ASX growth share’s portfolio that you’ve probably heard of including Nvidia, PayPal, Netflix, Intel and Adobe. There are also names like Broadcom, Qualcomm, Texas Instruments, Advanced Micro Devices, Intuit, Applied Materials, Booking Holdings, Intuitive Surgical, MercadoLibre, Micron Technology, Automatic Data Processing, Activision Blizzard and Zoom.

The above businesses are spread across different services like semiconductors, travel, communication, gaming, e-commerce, healthcare and so on.

Betashares Nasdaq 100 ETF has an annual management fee cost of 0.48% per annum, which is cheaper than many active fund managers, although there are some ETFs on the ASX that have lower annual fees.

The net returns of this ETF have been stronger than the ASX over the last few years. Over the last year to 31 December 2020 the net return was 34.8%. In the prior three years, the average net return was 27.4% per annum. Since inception in May 2015, Betashares Nasdaq 100 ETF has made average returns per annum of 21.4%.

Redbubble Ltd (ASX: RBL)

Redbubble is an ASX growth share that is well liked by some fund managers. It is an e-commerce platform that sells a large array of artist-produced products like apparel, stationery, housewares, bags, wall art, masks and so on. Redbubble operates both Redbubble.com and TeePublic.com.

Joseph Kim from Montgomery Investment Management said that: “While Redbubble has clearly been a “stay-at-home” trade, we believe the business has the opportunity to emerge a longer-term structural winner from COVID-19 should it capitalise in the recent spike in user and customer interest as a result of recent lockdown measures.”

At the end of FY20, Redbubble had a diversified network of 37 fulfillers across 10 countries and 41 locations. The group fulfils products close to customers, keeping shipping timelines and costs competitive. During FY20, fulfilment capacity was added in Europe, Canada and the United States.

The company added 16 new products across Redbubble in FY20, including face masks in April 2020. Each time Redbubble adds a new product line, it opens up more addressable market for the company to target.

In FY20, Redbubble saw 36% growth of marketplace revenue to $349 million. Gross profit went up 42% to $134 million. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew 141% to $15.3 million and the ASX growth share generated $38 million of free cashflow.

At the time of the FY20 report release, Redbubble CEO Martin Hosking said: “2021 represents a year of opportunity for the business. We are positioned to build on a decade of momentum and aggressively pursue the global opportunity presented by the shift to online activity and increasing adoption of e-commerce platforms.”

In the FY21 first quarter, the company saw growth continue at a fast pace. Excluding a positive adjustment relating to delivery times, normalised marketplace revenue (paid) grew by 98% to $139.3 million and gross profit went up 118% to $59.6 million. Redbubble generated earnings before interest and tax (EBIT) of $17.2 million.

The ASX growth share plans to continue to invest in the customer experience to improve loyalty, retention and ensure long-term higher levels of growth. It wants to extend the market leadership that it currently has.

More reading

• 3 ASX tech shares to buy in February 2021
• 3 ASX growth shares to buy in February 2021
• How to buy US shares from Australia right now
• 2 excellent ETFs for ASX investors in February
• Bernie meme, mittens and merch: 2 shares that are selling the trend

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

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

from The Motley Fool Australia https://ift.tt/3pu2Yxj

It certainly was a fantastic month for the Vulcan Energy Resources Ltd (ASX: VUL) share price in January.

The clean lithium-focused mineral exploration company’s shares rocketed 186% higher over the month.

This latest gain means the Vulcan Energy share price is now up a remarkable 3,800% since this time last year. 

Why did the Vulcan Energy share price rocket 186% higher in January?

There were a couple of catalysts helping to drive the Vulcan share price materially higher in January.

One of those was the improving outlook for lithium prices and demand thanks to President Biden’s policies on renewable energy and the growing adoption of electric vehicles.

This has given the whole lithium sector a major lift in recent months.

What else drove its shares higher?

Another catalyst is company-specific and involves the release of Vulcan’s Pre Feasibility Study (PFS) this month for its Zero Carbon Lithium Project.

This project is home to Europe’s largest lithium resource, located in the Upper Rhine Valley of Germany.

According to the study, the Zero Carbon Lithium Project has the potential to be a cutting edge, combined renewable energy and lithium hydroxide project, in the centre of Europe, with net zero carbon footprint.

The study estimates that the project has an after tax net asset value of 2.25 billion euros. This equates to approximately A$3.5 billion and is considerably more than its current market capitalisation.

Management plans to use its unique Zero Carbon Lithium process to produce both renewable geothermal energy, and lithium hydroxide, from the same deep brine source.

In doing so, it believes it will be addressing EU market requirements for lithium by reducing the high carbon and water footprint of production, and total reliance on imports, mostly from China.

Ultimately, it believes its resource can satisfy Europe’s needs for the electric vehicle transition, from a zero-carbon source, for many years to come.

Though, it will be some time before it is doing that. If everything goes to plan, management is aiming to have the project operational in 2024.

More reading

• Bright day for Sun Cable after inking giant solar farm development deal
• What’s with the Vulcan (ASX:VUL) share price today?
• The Piedmont Lithium (ASX:PLL) share price just rocketed 32% to a record high
• Zip and Vulcan were among the most traded ASX shares last week
• Why Booktopia, Nitro, Reliance, & Vulcan shares are charging higher

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 Why the Vulcan Energy (ASX:VUL) share price stormed 186% higher in January appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2YuAAiK

Rural Funds Group (ASX: RFF) could be one of the most compelling ASX dividend shares available to Aussie investors.

Rural Funds is a farmland landlord operating through a real estate investment trust (REIT) structure.

Here are three reasons why Rural Funds could be considered as such a strong ASX dividend share:

1: Diversification

Owning Rural Funds shares isn’t like owning one farm in one location. Its properties are spread across five sectors: cattle, cropping (cotton and sugar), vineyards, almonds and macadamias.

Not only are the farms diversified by farm type, but they are also spread across different states and different climactic conditions. So far, its farms are located in five different states.

The recent tough drought period has shown why being located in different conditions is important, though none of Rural Funds’ farms were in the worst-hit areas. However, Rural Funds does own a significant number of water entitlements for tenants to use.

Rural Funds doesn’t carry any of the operational risks of the farms, that’s on the tenant.

The ASX dividend share recently announced that it was acquiring a 21,600 ML medium priority lower Fitzroy River water allocation for $32.4 million. The water will be sourced from the Rookwood Weir, which is being constructed 66km south-west of Rockhampton. This water will be applied to the development of up to 2,500 hectares of macadamia orchards and development of irrigation for cropping and cattle production.

2: Long rental contracts with quality tenants

One of the statistics to look at with REITs is the weighted average lease expiry (WALE).

That essentially means: how long does the average rental contract have left to run within the portfolio? The longer the WALE, the more income visibility and stability that the REIT has to offer.

According to Rural Funds, at 30 June 2020 (which was the end of FY20) its WALE was 10.9 years. Almonds, macadamias and cattle are the sectors with the longest leases. There are some almond farm leases that go to 2038.

3: Rental growth leading to distribution growth

Rural Funds is a particularly strong ASX dividend share because of the consistent distribution growth that it’s able to achieve. Management aim to increase the distribution by 4% per annum.

It has successfully increased its distribution by 4% each year since it listed several years ago.

Rental increases are built into the rental contracts. At the end of FY20, 41% of the rental income was subject to fixed annual rental increases of 2.5% with market reviews. Another 4% of the rental income is subject to just a fixed 2.5% annual increase per annum.

Then the next 46% of rental income has CPI linked rental increases, with another 7% being linked to CPI inflation with market reviews. The final 2% is classified as ‘other’.  

The other key way that Rural Funds achieves distribution growth is through investing in productivity improvements. For example, for cattle properties it has improved farms with water points, pasture improvements and cultivation areas. For the cropping properties it has invested in water storage and irrigated cropping.

Current yield

At the current Rural Funds share price, it has a forward FY21 distribution yield of 4.6% based on distribution guidance of 11.28 cents per unit. Another 4% increase of the distribution in FY22 would mean a yield of 4.8%.

More reading

• 3 ASX dividend shares with yields above 4%
• 2 reliable ASX dividend shares for income investors to buy
• 3 top ASX dividend shares to buy for income
• 2 ASX dividend shares with 4%+ yields
• 3 ASX dividend shares with large yields and consistent payouts

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 reasons why Rural Funds (ASX:RFF) is a strong ASX dividend share appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2NRxvqY

Are you looking to add some exposure to the small side of the market to your portfolio? Then you might want to get better acquainted with the ASX shares listed below. 

Here’s why these small cap ASX shares could be ones to watch:

MyDeal.com.au Limited (ASX: MYD)

MyDeal.com.au is an online retail marketplace. Thanks to the shift to online shopping, which has accelerated because of the pandemic, MyDeal has been growing very strongly over the last 12 months. For example, MyDeal’s first half gross sales increased 217% over the same period last year to $126.7 million. This was driven by a strong increase in active customers to a record 813,764 and repeat use.

PlaySide Studios Limited (ASX: PLY)

PlaySide Studios is one of the largest independent video game developers in the country. Its portfolio includes games based on its own original intellectual property and games developed with Hollywood studios. The latter comprises titles relating to Jumanji, The Walking Dead, Batman, Superman, Teenage Mutant Ninja Turtles, and Disney Pixar’s Cars. In FY 2020, the company delivered a 55% increase in revenue to $7 million. This is only a fraction of the global mobile games market which is estimated to be worth $77.2 billion per annum.

SILK Laser Australia Limited (ASX: SLA)

As its name implies, SILK Laser is a laser, skin care, and cosmetic injections company. It has been a strong performer in FY 2021 despite the pandemic. As of the end of the first five months of the financial year, its unaudited network cash sales were up 63% on the prior corresponding period to $38 million. This means the company is on track to beat its forecasts for the year. Looking ahead, management sees plenty of room for growth. At present, SILK has a total of 53 clinics in operation, but management intends to grow its network by 6 to 10 new clinics per annum up to a total of approximately 150 clinics.

More reading

• 4 growing small cap ASX shares to watch
• Why Afterpay, Ansell, MyDeal, & PolyNovo shares are storming higher today
• Here’s why the MyDeal (ASX:MYD) share price surged 7% higher today
• 2 very exciting small cap ASX shares to watch
• 2 buy-rated small cap ASX shares for your watchlist

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 3 growing small cap ASX shares to watch appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/39y3Z1N

The Zip Co Ltd (ASX: Z1P) share price was on form in January and surged higher.

In fact, the buy now pay provider’s shares were the best performers on the S&P/ASX 200 Index (ASX: XJO) with a 37.4% gain.

Why did the Zip share price rocket higher in January?

Investors were buying Zip shares in January following the release of its second quarter update.

As you might have guessed from the share price reaction, Zip delivered a very positive update which revealed further strong growth across both its ANZ and US operations.

According to the release, for the three months ended 31 December, Zip delivered a 103% increase in transaction volume to a record of $1.6 billion. From this, the company generated an 88% increase in quarterly revenue to $102 million.

A key driver of this growth was its exceptionally strong performance during the month of December.

During the month, Zip posted monthly transaction volume of $628.4 million. This was a 104% increase over the same period last year and annualises to transaction value of over $7.5 billion.

The majority of this growth came from the key US market. 

Zip’s QuadPay business recorded a 217% increase in second quarter transaction volume to $673.1 million. This was underpinned by a 180% lift in customer numbers to 3.2 million and a 655% jump in merchants to 8,400.

Supporting this was its ANZ business, which recorded a 60% increase in transaction value to $908.7 million. ANZ customer numbers grew 39% over the prior corresponding period to 2.5 million and merchants lifted 43% to 30,100.

Another positive that went down well with investors was its bad debts metric in the ANZ market. Its net bad debts decreased from 2.43% to 1.93% over the three months, which was in line with management’s expectations. Monthly arrears in the ANZ market remain steady at 0.95%.

Zip’s Managing Director and CEO, Larry Diamond, was pleased with the quarter and appears confident on the company’s growth trajectory.

He said: “We are extremely pleased to deliver another exceptional set of numbers with the quarter really delivering a significant step change for the Company, confirming our position as one of the fastest growing players in the sector.”

Adding that Zip is “extremely well placed to continue this momentum into 2021 as the global shift away from the broken credit card model continues.”

Zip will be releasing its half year results in the coming weeks and providing more colour on its financials. All eyes will be on the Zip share price when that is released. 

More reading

• 3 reasons to consider Sezzle (ASX:SZL) at this share price
• Zip and Vulcan were among the most traded ASX shares last week
• 2 ASX growth shares to buy in February
• Leading brokers name 3 ASX shares to sell today
• These ASX 200 shares are on fire in 2021

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 ZIPCOLTD FPO. 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 Zip (ASX:Z1P) share price rocketed 37% higher in January appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2MCGxHG

There are some ASX dividend shares that have income yields of more than 4%.

The Reserve Bank of Australia (RBA) has lowered the official interest rate to just 0.25%, which is making it difficult for investors who are looking for income.

Here are three businesses that have dividend yields of more than 4%:

Brickworks Limited (ASX: BKW)

Brickworks is an ASX dividend share with one of the longest dividend records on the ASX – it hasn’t cut its dividend for over four decades.

Whilst the company is best known for being a building products business, its dividend is actually supported by two asset groups.

One asset group is its 50% stake of the industrial property trust with partner Goodman Group (ASX: GMG). Industrial property is in higher demand these days with an elevated level of online shopping from consumers and logistics needs from businesses. This trust provides growing rental profit distributions to Brickworks and Goodman.

There are currently two high-tech warehouses being built by the trust for Amazon and Coles Group Ltd (ASX: COL) at the Oakdale site in Sydney. These new buildings will send the gross asset value of the trust to more than $3 billion once they’re completed. It will increase the rental profit distributions to Brickworks by more than 25%. That could help fund the ASX dividend share’s payout in the coming years.

Brickworks also owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has a diversified portfolio. Soul Patts has been steadily growing its dividend and capital value for Brickworks over time. 

At the current Brickworks share price it has a trailing grossed-up dividend yield of 4.5%.

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi Australia is one of the largest retailers on the ASX. It operates JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys.

At the current JB Hi-Fi share price, it has a trailing grossed-up dividend yield of 5.2%. This dividend came about after a 76.5% increase to the final FY20 dividend to 90 cents per share, bringing the total FY20 dividend to 189 cents per share, an increase of 33.1% compared to FY20.

The ASX dividend share has delivered more growth in the first half of FY21 with sales growth of 23.7% to $4.94 billion, a 75.9% increase of earnings before interest and tax (EBIT) to $462.7 million and an 86.2% increase of net profit after tax (NPAT) to $317.7 million.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT). It owns a diverse portfolio of farms across different sectors including almonds, macadamias, cropping (sugar and cotton), vineyards and cattle.

One of the main aims of Rural Funds is to increase its distribution by 4% per annum for investors, which is comfortably more than annual inflation.

There are two main ways that Rural Funds achieves that distribution growth.

Firstly, it has rental growth built into its contracts with high-quality tenants. The rental income at some farms grows by a fixed 2.5% per annum. At other farms the rental income growth is linked to CPI inflation. There are also occasional market reviews at some farms.

The ASX dividend share has a number of high quality tenants like Olam, JBS, Select Harvests Limited (ASX: SHV) and Australian Agricultural Company Ltd (ASX: AAC).

The other way that Rural Funds is growing its rental income is by investing in rental productivity improvements at some of its farms, particularly cattle in recent years. This has the benefit of increasing the farm value and also hopefully increasing the rental potential of that farm.

At the current Rural Funds share price, it has a distribution yield of 4.6% based on the guidance of a FY21 distribution of 11.28 cents per unit.

More reading

• 2 strong blue chip ASX shares rated as buys by brokers
• This ASX company will double its earnings this year: fundie
• 2 ASX 200 shares to buy for dividends
• 3 ASX dividend shares rated as strong buys by brokers
• 2 reliable ASX dividend shares for income investors to buy

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 ASX dividend shares with yields above 4% appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2Mn3PkZ

Last week saw a number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Nitro Software Ltd (ASX: NTO)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $3.50 price target on this document productivity software company’s shares. This follows the release of Nitro’s fourth quarter update last week. That update saw Nitro record a 64% increase in annualised recurring revenue (ARR) to US$27.7 million. Morgan Stanley was pleased with Nitro’s stronger than expected ARR and its growing proportion of subscription revenues. The broker believes the company is well-placed to continue its solid growth. The Nitro share price ended the week at $3.13.

Macquarie Group Ltd (ASX: MQG)

Another note out of Morgan Stanley reveals that its analysts have retained their overweight rating and lifted the price target on this investment bank’s shares to $155.00 ahead of its upcoming third quarter update. According to the note, the broker expects Macquarie’s third quarter profit to be roughly flat on the prior corresponding period. Looking further ahead, Morgan Stanley feels the company is positioned to outperform the market consensus estimate for FY 2021. The Macquarie share price last traded at $131.40.

Webjet Limited (ASX: WEB)

Analysts at Credit Suisse have upgraded this online travel agent’s shares to an outperform rating with an improved price target of $5.40. According to the note, the broker believes Webjet is well-positioned to bounce back in 2022 from pent-up demand and market share gains in both the B2C and B2B segments. Credit Suisse is still expecting a sizeable loss from Webjet in FY 2021, before forecasting a return to profitability in FY 2022. The Webjet share price ended the week at $4.78.

More reading

• 3 very impressive ASX quarterly updates from last week
• GameStop frenzy: 3 shorted ASX shares that could shoot up
• The latest ASX stocks to be hit by broker downgrades
• 2 small cap ASX shares growing at a quick rate
• 2 fantastic ASX tech shares to buy in February

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Webjet Ltd. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2MjGBfF

Building a nest egg large enough to produce a generous passive income in retirement is likely to be a key goal for many people.

Previously, it may have been possible to simply save money each month to achieve this aim. However, low interest rates over recent years, and especially after the 2020 market crash, mean that a cash savings account is unlikely to be helpful in building a retirement nest egg.

As such, now may be the right time to start buying shares on a regular basis. Even modest amounts invested in a diverse range of stocks could produce a generous income in older age.

Avoiding savings accounts

While having some cash on hand is always a good idea due to the potential for unforeseen circumstances, relying on savings to produce a retirement nest egg could lead to significant disappointment. They offer extremely low returns at the present time, as policymakers across the world have sought to stimulate the economy through a loose monetary policy.

In many cases, savings accounts may even struggle to keep up with inflation over the long run, as policymakers become more concerned about economic growth than a rising price level. As such, beyond having some emergency cash, avoiding savings accounts could be a sound means of improving the potential for a large retirement nest egg.

Making a passive income from shares

In place of savings accounts, a diverse portfolio of stocks could lead to a far more generous passive income. The stock market has a long track record of producing high single-digit returns that could provide growth to modest amounts of money invested on a regular basis.

Now may be an opportune moment to start investing in shares due to their low valuations. Many sectors have not yet fully recovered from the 2020 stock market crash. This could mean that they offer wide margins of safety that translate into high capital returns in the coming years. They may be able to catalyse a portfolio so that it produces a higher growth rate, and a larger nest egg, than investing in an index tracker fund that mirrors the performance of, for example, the FTSE 100 Index (FTSE: UKX) or S&P 500 Index (SP: .INX).

Building a $25,000 income

Even if an investor matches the performance of the wider stock market, they could invest a modest amount each month to produce a worthwhile passive income in retirement.

For example, assuming the same 8% annual total return managed by the stock market in recent decades, a $500 monthly investment could be worth $750,000 within 30 years. From this, a 3.5% annual withdrawal would produce an income of over $25,000. This could provide greater financial freedom and flexibility in retirement versus relying on cash. It could even allow an investor to retire earlier than would otherwise have been the case.

More reading

• 2 quality SaaS ASX shares to buy in February 2021
• Top brokers name 3 ASX shares to sell next week
• 2 explosive ASX tech shares to buy in February
• 2 ASX shares that this fundie really likes right now
• 2 strong blue chip ASX shares rated as buys by brokers

Motley Fool contributor Peter Stephens 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 Don’t ‘save’ for retirement! I’d invest $500 a month in shares for a $25,000 passive income appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/36thNZr

There are quite a few quality software as a service (SaaS) ASX shares that could be worth looking at in February 2021.

Businesses that make their money through a SaaS model usually have attractive levels of recurring business and the software nature of the company means it can have high operating profit margins.

Here are two examples:

ELMO Software Ltd (ASX: ELO)

ELMO describes itself as a cloud-based human resources (HR) and payroll software provider. The company offers customers a unified platform to streamline processes for HR and also manage payroll and rostering, time and attendance. It operates on a SaaS business model based on recurring subscription revenue.

The SaaS ASX share recently released its FY21 second quarter update to the market. It said that it achieved record cash receipts over a 12-month period of $64.5 million, which was up 23% compared to the prior comparative period.

For the quarter ending 31 December 2020, it received cash receipts of $18.8 million, which was an increase of 22.1% compared to the prior corresponding period.

The company has been busy with acquisitions over the last few months. In October 2020 it acquired Breathe, which expanded ELMO’s market opportunity with entry into the small business market in Australia, New Zealand and the UK. In December 2020 it acquired Webexpenses, which gave the SaaS ASX share entry into the expense management sector. Management also said this accelerated ELMO’s mid-market expansion into the UK market.

Annual recurring revenue (ARR) increased by 42.8% year on year to $74.2 million at 31 December 2020. This was driven by new customer growth, the cross-sell to the SaaS ASX share’s existing customer base and boosted by the acquisitions of Breathe and Webexpenses.

For FY21, ELMO is guiding that ARR will finish in a range of between $81.5 billion and $88.5 million. FY21 revenue is expected to be between $65 million and $71 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to finish as a loss somewhere in the range of negative $2.4 million to negative $7.4 million.

Altium Limited (ASX: ALU)

Altium is one of the world’s leading electronic PCB software businesses. It says that its software focuses on electronics design systems for 3D PCB design and embedded system development. It boasts that its products are found everywhere from world leading electronic design teams to the grassroots electronic design community.

A key focus of the SaaS ASX share is Altium 365, its new cloud platform.

The company is pivoting the business towards Altium 365 after separating its cloud operations from its software business and will focus on growing the market opportunity and expansion into the broader electronics ecosystem.

Altium’s management is referring to this change as Altium’s Netflix moment which is commonly referred to in the high-tech industry as a hard pivot to the cloud. Netflix started off as a DVD business.

Each Altium division will have its own leadership and organisational roadmap, which will allow the cloud business to develop at a different cadence and to form a SaaS-like organisational structure around its product and go-to-market processes.

One benefit from this change is that it will be able to separate high-volume sales from high-touch sales to support the SaaS ASX share’s journey to 100,000 subscribers by 2025 and dominate the PCB design industry.

Sergey Kostinsky has been appointed to the role of President and he will be responsible for driving high performance in the execution of all operational domains with a particular emphasis on the rapid development and adoption of Altium 365.

More reading

• 5 of the best ASX shares to buy in February
• 2 ASX growth shares to buy
• Brokers name 3 ASX shares to buy right now
• Here’s why the ELMO (ASX:ELO) share price is sinking lower today
• 2 exciting mid cap ASX shares to buy and hold

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium and Elmo Software. The Motley Fool Australia owns shares of and has recommended Elmo Software. The Motley Fool Australia owns shares of Altium. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 quality SaaS ASX shares to buy in February 2021 appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3t8khpU