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The ASX is set to welcome a new exchange-traded fund (ETF). Hyperion Asset Management has made a name for itself in recent years with its top-performing managed funds.

Hyperion, which focuses on growth investing as its primary strategy, currently offers 2 managed funds, a “Global Growth Companies fund” and an “Australian Growth Companies Fund”. Both funds have delivered objectively impressive performances.

Hyperion tells us that the Global Growth Fund has returned an average of 23.49% per annum since its inception in 2014 (net of fees). The Australian Growth Companies Fund has delivered 12.75% per annum since its inception in 2002.

Perhaps it’s this success that is sparking some growth plans at Hyperion. According to reporting in the Australian Financial Review (AFR) this week, Hyperion is on the move. The report states the fundie is “readying to launch” an active ETF to “capture growing demand to invest in its top-performing global strategy”.

The Fund Manager reckons the new global growth ETF will hit the ASX boards around late March, and will reportedly have the ticker code HYGG. The AFR reports that the move is coming as Hyperion is experiencing fund inflows of “more than $100 million a month” into the unlisted Global Growth Fund.

The new listed fund will apparently charge the same management fee as its unlisted cousin – a 0.7% per annum management fee as well as a 20% performance fee if the fund exceeds its global benchmark.

Hyperion’s Deputy Chief Investment Officer, Jason Orthman, stated the following on the fee structure: “It’s pretty disruptive when a lot of our larger (peers) are (charging) well over 100 basis points and some of them are double the 70 basis points“.

Going for growth with Tesla

Hyperion attributes much of its Global Growth Fund’s outperformance to a “high-conviction bet” on Tesla Inc (NASDAQ: TSLA). Tesla is the electric car and battery manufacturer headed by the famous Elon Musk. Its share price has exploded in recent years – up more than 654% in the past year alone, and up more than 2,000% since May 2019. Hyperion reports that Tesla still makes up around 12% of its portfolio, and Hyperion isn’t selling yet.

The AFR quotes Hyperion’s Chief Investment Officer, Mark Arnold, on Tesla:

Our view is that it will be the most disruptive business that existed for a long period of time because it is attacking really large addressable markets…Tesla is actually way more innovative than Amazon. That’s bad news for the existing incumbent companies in those industries. They’ve been sort of asleep at the wheel for a long period of time.

Tesla isn’t the only high-octane growth stock that Hyperion loves right now either. According to the report, Mr Arnold is shunning the “old growth favourites” in the FAANG stocks Alphabet Inc (NASDAQ: GOOGL) and Facebook Inc (NASDAQ: FB) for more “controversial” holdings like Square Inc (NASDAQ: SQ) and PayPal Holdings Inc (NASDAQ: PYPL).

“Companies like Square and PayPal, with their electronic wallets, really have the potential to completely flip the whole banking industry on its head,” Mr Arnold told the AFR. “Our view has always been that we’re interested in only investing in the highest quality businesses we can find”.

More reading

• The worst mistake Tesla investors can make right now
• Stop worrying about a market crash: Do this instead
• Cathie Wood announces space ETF, what about the ASX space sector?
• Signal share price? An Elon Musk tweet and a WhatsApp controversy
• These ASX stocks just got a big upgrade on the back of Tesla (NASDAQ:TSLA)

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings, Square, and Tesla and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. 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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ASX gold stocks have lost their shine with investors but this is the time to be snapping up bargains in the sector.

That’s the view of Goldman Sachs who believe these stocks have been oversold despite today’s bounce.

While many ASX gold miners are outpacing the 1.1% jump in the S&P/ASX 200 Index (Index:^AXJO) this afternoon, most are still scrapping the bottom of their six-month trading range.

Why ASX gold stocks have lost their lustre

The bounce back in global economic growth and the start of mass COVID-19 vaccinations in countries like the UK and US have prompted investors to dump safe haven assets for cyclical stocks

This explains why the gold price has been falling over the past few months after hitting a record high of over US2,000 an ounce.

But Goldman Sachs doesn’t think the dip will last. If anything, the broker expects the gold price to shoot towards US$2,300 an ounce as early as this quarter!

New record gold prices for 2021

This is where the gold price is forecast to average for the entire 2021 calendar year. The gold price is currently trading around US$1,825 an ounce, suggesting there is significant upside if Goldman is right.

However, the broker believes the best bang for your investment dollar won’t be with the gold sector leaders. These heavyweights include the Newcrest Mining Ltd (ASX: NCM) share price and Evolution Mining Ltd (ASX: EVN) share price.

“Looking out to 2021, we think companies that can demonstrate production growth and advancing project pipelines in a supportive pricing environment will benefit,” said Goldman.

“We continue to view brownfields production and reserve growth as the clearest opportunity for value creation particularly in the mid-cap space.”

The best ASX gold stock to buy now

The ASX mid-cap gold stock that stands out is the St Barbara Ltd (ASX: SBM) share price. The stock is on Goldman’s “conviction buy” list as it’s trading at a wide discount. The SBM share price stands at around 0.52 times net asset value, or a 39% discount to the sector.

What’s more, the broker believes St Barbara will increase gold production by 36% by FY25 thanks to its brownfield projects.

Other ASX gold shares to buy

Another mid-tier gold producer on Goldman’s list of ASX stocks to buy is the Resolute Mining Limited (ASX: RSG) share price.

Resolute has the best free cashflow (FCF) generation potential among all the gold stocks under Goldman’s coverage. It’s expected FCF yield is 39% for this calendar year and there’s cost and production upside from its various projects.

The third emerging ASX gold stock to watch is the OceanaGold Corp (ASX: OGC) share price. Goldman is urging investors to buy the OGC share price as it’s trading at around a 33% discount to the sector.

The stock is also trading on a decent FCF yield of 11% in 2021 despite having to invest in Waihi and Haile underground projects.

More reading

• Here’s why the Newcrest (ASX:NCM) share price is underperforming
• ASX 200 up 1.2%: Bingo rockets, Rio Tinto update, Domino’s jumps
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX 200 shares that keep growing their dividends
• Chimeric Therapeutics (ASX:CHM) share price jumps 88% following its IPO

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited and Newcrest Mining Limited. Connect with me on Twitter @brenlau.

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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Shares in Rhythm Biosciences Ltd (ASX: RHY) are soaring higher during early afternoon trade. This comes after the company announced it has added two extra clinical trial sites for its ColoSTAT study.

Rhythm’s ColoSTAT is an experimental test-kit that is being trialled as a low-cost, easy-to-use blood test to detect colorectal cancer.

At the time of writing, the Rhythm share price is advancing 7.5% to $1.43 after reaching an-all time high of $1.47 around midday. In comparison, the All Ordinaries Index (ASX: XAO) is also moving higher, up 1.1% to 7,014 points.

Why is the Rhythm share price climbing?

Rhythm advised today that the Concord Repatriation General Hospital in Sydney’s inner west will participate in the ColoSTAT clinical trial. Run by principal investigator, Dr Emily He, the hospital is internationally recognised for colorectal surgery.

The building services a large portion of the Sydney inner city population, and has become a lead teaching hospital. Conducting more than 50 trials over the last 5 years, the gastroenterology department is understood to have the required skillset to run clinical trials.

The second addition is the Bendigo Cancer Centre inside the Bendigo Hospital, a modern facility equipped with a dedicated clinical trials research unit. The centre participates in both national and international studies associated with cancer trials.

Bendigo Hospital itself caters for a large swath of population towns, covering up to quarter of the size of Victoria. This includes major regional hubs like Mildura, Echuca, Swan Hill, Kyneton, and Castlemaine.

With the recent inclusions, Rhythm now has total number of 9 clinical trials sites testing its ColoSTAT device. The company revealed that both additional trial sites have recruited their first patients for the ColoSTAT study.

Comments from management

Rhythm CEO Glenn Gilbert, welcomed the new additions, saying:

The addition of Concord and the Bendigo Cancer Centre to the ColoSTAT clinical trial continues to build on our momentum toward delivering an important world-leading and mass-market simple blood test for the early detection of colorectal cancer.

Concord Hospital’s Dr He added:

With colorectal cancer now the leading cause of cancer related deaths for 30–35-year-olds in both male and females in Australia, the time is right for a simple and effective blood test for early detection that can be adopted by all ages of the population on a mass scale.

And Dr Sam Harris reiterated the important participation from the Bendigo Cancer Centre, saying:

As a leading regional cancer centre specialising in diagnosing and treating cancer patients, we see first-hand the social, physical and mental impacts that colorectal cancer can have on families, particularly when diagnosed late.

With such low participation rates under the current screening system, we are eager to be part of the development of a new simple blood test that has the potential to increase screening compliance and ultimately save lives.

About the Rhythm share price

The Rhythm share price has accelerated in the last 3 months, reflecting gains of more than 670% for shareholders.

Moving on an upwards trajectory, shares in the company have surged strongly since its 4.1 cent low in March. Today’s rise sees the Rhythm share price hit a new all-time record of $1.47.

More reading

• Why the Bod (ASX:BDA) share price is tracking 5% higher today
• ASX 200 Weekly Wrap: ASX drops despite promises of more US stimulus
• Rhythm Biosciences (ASX: RHY) share price soars 1300% in 6 months
• Why the OptiScan (ASX:OIL) share price is climbing higher
• What’s with the Legend Mining (ASX:LEG) share price 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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The Newcrest Mining Ltd (ASX: NCM) share price is having a fun day today. Newcrest shares are up 1.07% at the time of writing to $26.51 a share. But that doesn’t paper over the last few months. The Newcrest share price is down more than 17% over the past year, and almost 28% since early August.

On one hand, one might be able to explain this move by a commensurate fall in the price of gold. Price movements of a resources companies’ underlying commodity are normally what’s to blame for these kinds of moves.

And looking at the gold price, it has been in a downward spiral since August. That was when gold broke it’s all-time high and climbed over US$2,000 an ounce for the first time. Since then, gold has retreated somewhat and is currently buying roughly US$1,840 an ounce today (although the effect has been mollified here in Australia somewhat by our rising dollar).

The simple fact is that demand for ‘safe-haven’ assets like gold is falling. Yes, gold is still at levels considered historically high. But the market is likely anticipating a more stable political environment in the United States come 20 January, as well as a successful coronavirus vaccine rollout over the year ahead. As such, it’s easy to see why investors have taken the gold price off the boil.

Newcrest still underperforms

But Newcrest has seemed to underperform many other ASX gold miners too. So between 6 August and today, Newcrest shares are down approximately 27.9%. Over the same period, Northern Star Resources Ltd (ASX: NST) is down 19%, Saracen Mineral Holdings Limited (ASX: SAR) is down 16.47% and Perseus Mining Limited (ASX: PRU) has lost 24.5%.

To be fair, a couple of gold miners have done worse than Newcrest. Gold Road Resources Ltd (ASX: GOR) is one, Regis Resources Limited (ASX: RRL) is another.

But Newcrest, the ASX’s largest gold digger, has certainly been taking investors’ money a little more than the average gold miner.

So why are investors not too enamoured with Newcrest?

It’s probably a legacy from the woes that this company faced last year. Back in January, Newcrest warned that production might have to be curtailed due to drought. Subsequently,  the company had to undertake a series of planned shutdowns across its network of mines. That timing was unfortunate, considering it coincided with the run-up in the gold price.

It may just be a lack of spotlight too. The ASX gold mining sector has been dominated by news of a blockbuster merger of late.

Northern Star Resources and Saracen are set to merge soon after shareholders of both companies’ overwhelmingly voted in favour of the marriage. If this goes ahead, the newly merged company would be a top 10 global gold miner and second largest on the ASX after Newcrest. Perhaps Newcrest simply looks boring in comparison right now.

Regardless, Newcrest shareholders are probably hoping that the next 6 months will be better than the last 6.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Think you saw growth in 2020? Just wait for 2021: fundie
• ASX 200 Weekly Wrap: ASX drops despite promises of more US stimulus
• 5 things to watch on the ASX 200 on Monday
• Why the Northern Star and Saracen Mineral merger is getting closer

Motley Fool contributor Sebastian Bowen owns shares of Newcrest Mining 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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The JB Hi-Fi Limited (ASX: JBH) share price has continued its positive run on Tuesday.

Earlier today the retail giant’s shares climbed to a new record high of $53.34.

When the JB Hi-Fi share price hit that level, it meant it was up 43% since this time last year.

Can the JB Hi-Fi share price continue to climb higher?

One leading broker that isn’t betting on the JB Hi-Fi share price going higher from here is Goldman Sachs.

According to a note out of the investment bank this morning, the broker has retained its neutral rating and lifted its price target on the retailer’s shares to $51.60.

This follows the release of its guidance for the first half of FY 2021 on Monday.

What did Goldman Sachs say?

Goldman notes that JB Hi-Fi’s first half performance was ahead of its expectations for both sales and earnings growth thanks to the stay at home trend.

And while it is forecasting a strong full year result in August and a better than previously expected result in FY 2022, it is still expecting its earnings to decline next year and then again in FY 2023 as the tailwinds it is experiencing ease.

Goldman said: “JBH has benefited from a strong spending trend in “stay at home” products, but also continues to execute strongly in store and online, remaining at the forefront of technology categories as they continue to deliver growth.”

“We anticipate conditions to remain elevated over 2H21 before normalising back to a more sustainable trend over FY22 and FY23. However, the underlying level of earnings have also been revised upwards in FY22 reflecting the slower decline in conditions than previously anticipated in our forecasts as the outlook for other spending alternatives (e.g. international travel) remain constrained,” it added.

Goldman Sachs is forecasting earnings per share of $4.18 in FY 2021, $3.02 in FY 2022, and then $2.90 in FY 2023. This compares to earnings per share of $2.81 last year.

This means its shares are trading at approximately 18x FY 2022 and FY 2023 earnings, which it feels makes them fully valued at the current level.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX 200 shares that keep growing their dividends
• ASX 200 drops 0.8%
• JB Hi-Fi (ASX:JBH) share price soaring on record sales
• Why Data#3, JB Hi-Fi, Ramsay, & Zip 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.

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The National Australia Bank Ltd (ASX: NAB) share price is pushing higher on Tuesday.

In afternoon trade the banking giant’s shares are up 1.5% to $24.02.

Why is the NAB share price pushing higher?

Investors have been buying NAB’s shares on Tuesday after analysts at Goldman Sachs took another look at the banking sector and became more positive on its outlook.

According to the note, the broker is expecting housing loan growth to rise towards 5% in the second half of 2021 from the current level of ~3%.

Goldman explained: “Our forecast is for a growth rate of 3.1% through to Mar-21 (flat yoy vs. 2H20) after which we see a gradual rise to 4.9% in Sep-21 and then 5% by CY year end. These expectations are supported by: i) recent mortgage approvals having trended strongly in recent months; ii) the four RBA cash rate cuts since Jun-19; and iii) amortisation of the books remaining broadly unchanged despite expectations of it rising.”

Another positive is that its lead indicator is suggesting that the banks have reached an inflection point for loan impairment expense and this metric is now trending lower. It believes this supports its view that the credit cycle is gradually reverting to long-run levels.

And finally, the broker sees potential for net interest margin (NIM) upside in the short-term.

It commented: “Overall, our expectation is for a negative margin trajectory into FY21E as we currently forecast the majors’ NIM to contract by 5-9bp vs. FY20. However, with the recent deposit pricing trends in mind, we see potential for some upside risk in the shorter-term.”

What does this mean for investors?

After taking all this into account, the broker has reiterated its conviction buy rating on NAB’s shares and lifted the price target on them to $24.72.

Goldman explained: “NAB remains our preferred bank exposure based on: i) our view of better-than-peer revenue growth, supported by superior management of the volume/margin trade-off; ii) investment spend which appears further progressed vs. peers allowing for more selective distribution of resources (contributing to a broadly flat FY21 cost target (c.0-2%)); and iii) when combined, drives our forecast for NAB to deliver top of peer PPOP per share growth. relative NIM performance versus peers.”

And for those interested in dividends, Goldman Sachs estimates that its shares offer a 3.8% FY 2021 yield and a 5.1% FY 2022 yield.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX dividends: Are miners the new bank shares?
• ASX 200 Weekly Wrap: ASX drops despite promises of more US stimulus
• ASX banks to steal the dividend crown from mining stocks by next year
• Brokers name 3 ASX shares to buy right now

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

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The Archtis Ltd (ASX: AR9) share price is climbing today after the software security provider announced a contract renewal with the Australian Department of Defence.

At the time of writing, the archTIS share price is edging 0.6% higher to 30.7 cents.

What’s pushing the archTIS share price higher?

According to this morning’s release, the Australian Department of Defence has renewed its annual software subscription licence with archTIS’ subsidiary, Nucleus Cyber.

archTIS completed the acquisition of Nucleus Cyber in December last year for $9.75 million.

Under the deal, Nucleus Cyber will continue to provide its NC Protect product to the Defence Department. The contract value for the year-long licence is $148,866.

The NC Protect is a cybersecurity tool that allows sensitive data spread across on-premises and cloud-based platforms to be secured. In essence, it protects against breaches, data misuse and unauthorised file access enabling companies to operate without outside intrusions. This enables safe file sharing, messaging, and chat across programs such as Microsoft Office 365—SharePoint, OneDrive, Exchange and others.

With the latest contract renewal wrapped up, archTIS highlighted that this was its second licencing award from the Defence Department this year. The first, signed in September, was a $4.2 million risk reduction activity aimed at informing defence on future capability decisions and acquisitions. Spread over 3 annual licences, each value of the enterprise platform came to $760,000 per year.

In total, archTIS’ group recurring annual subscription revenue stands above $950,000 from the Defence Department.

The company noted that its recent success follows the Australian Government’s 10-year defence budget. A detailed plan that will seek to invest $15 billion on defence information management and cybersecurity.

What did management say?

archTIS managing director Daniel Lai, welcomed the renewed partnership, saying:

This renewal demonstrates the strategic value of the Nucleus Cyber acquisition. It provides our customers with a range of policy enforcement products to secure and share their information assets.

The merger now means archTIS can provide award-winning products to secure our clients Microsoft business applications. The Defence renewal validates the quality and uniqueness of NC Protect. This renewal and our recent Kojensi sales strongly position archTIS as a key provider of information security products to the Australian Department of Defence.

This is an exciting time for archTIS as it continues to successfully execute our strategy to become the global leader of policy enforcement in the protection and sharing of sensitive and classified information.

More reading

• 2 top ASX tech shares to buy that are growing rapidly
• The ASX small cap with the biggest catalyst during the February reporting season
• ASX 200 up 1.2%: Bingo rockets, Rio Tinto update, Domino’s jumps
• Why Bathurst Resources, Megaport, Orocobre, & Splitit shares are dropping lower
• Why Bingo, Creso Pharma, Domino’s, & Tyro shares are zooming higher 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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There are some top ASX tech shares that are growing rapidly and could be worth looking into.

Here they are:

Redbubble Ltd (ASX: RBL)

Redbubble is an e-commerce business focused on selling artist-produced products like masks, stationery, wall art, phone cases and masks. It operates two websites: Redbubble.com and TeePublic.com

The Redbubble share price has fallen 7.5% since 13 January 2021, but it is still reporting high levels of growth.

The high-growth ASX tech share said in its FY21 trading update for the first quarter showed normalised marketplace revenue growth of 98% to $139.3 million, gross profit rose by 118% to $59.6 million and the earnings before interest and tax (EBIT) generation amounted to $17.2 million.

Joseph Kim from Montgomery Investment Management said: “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.”

Redbubble CEO Martin Hosking is very optimistic about the long-term future of the company. He said: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and margin structure to ensure it can do so while remaining profitable.”

Redbubble is focused on four key initiatives. The first is artist acquisition, activation and retention. Second, Redbubble is focused on user acquisition and transaction optimisation. The third focus is customer understanding, loyalty and brand building. Finally, further physical product and fulfilment network expansion is the last focus.

Kogan.com Ltd (ASX: KGN)

Kogan.com is another e-commerce ASX tech share. It sells a large selection of products on its website including TVs, phones, computers, cameras, furniture, clothing, cars, insurance, travel, energy, internet and mobile services.

The company has been reporting continued growth in FY21, following on from FY20’s growth. FY20 saw gross sales go up 39.3% to $768.9 million, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew 57.6% to $49.7 million and earnings per share (EPS) went up 61.1%.

In the first four months of FY21, to the end of October, Kogan.com saw 99.8% growth of gross sales, 131.7% growth of gross profit and 268.8% growth of adjusted EBITDA. It saw strong performance from its product divisions and Kogan Marketplace. Active customers grew 61.4% year on year to 2.68 million.

Over the past four years the ASX tech share boasts of rising margins whilst investing into its platform, products and services. The EBITDA margin was 4.3% in FY17, but it had grown to 9.3% in FY20.

Mr Kogan, the founder of the company, has spoken about the benefit to the company of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”

The ASX tech share also recently announced the acquisition of New Zealand online retailer Mighty Ape, which is a leader in gaming, toys and other entertainment categories.

In FY20, Mighty Ape is expecting to make $137.7 million of revenue, gross profit of $45.7 million and EBITDA of $14.3 million, representing year on year growth of 43.7%, 58.1% and 254.1% respectively.

At the current Kogan.com share price it’s valued at 28x FY23’s estimated earnings.

More reading

• 3 great ASX tech shares to buy
• These ASX growth shares could give your portfolio a big boost
• What’s in store for the ASX tech sector in 2021?
• What does 2021 hold for ASX retail shares?
• 2 rapidly growing ASX ecommerce shares to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investors looking for big upside ahead of the reporting season may want to look at this ASX small cap. That’s the view from Morgan Stanley.

The stock in question is the Idp Education Ltd (ASX: IEL) share price. The broker described it as having the “biggest potential catalyst”.

The thing that’s getting Morgan Stanley excited is IDP’s tie up with British Council for the International English Language Testing System (IELTS) tests.

Good results from this ASX small cap

“We expect any deal to unify IDP + British Council distribution of the IELTS test to be highly cost synergistic and have the potential to enhance pricing power,” said the broker.

“We calculated c. A$120m synergy potential back in May 2018. We expect any agreement to be a first step towards transformational unified global distribution.”

Who would have thought that COVID-19 would turn out to be a good thing for the IEL share price?

COVID not all bad for the IDP share price

The pandemic probably prompted the deal between IDP and the British Council. What’s more, the mayhem the virus has caused in the education market will leave the ASX stock with greater market power.

Morgan Stanley believes the IDP share price is well placed to benefit from the COVID recovery too. Firstly, there is significant pent-up student demand, while universities around the world are cutting distribution capabilities to reduce costs due to financial stress.

Overseas student agents are themselves being squeezed with many of these businesses making next to no income. It’s logical to assume that IDP will be gaining market share as international student arrivals start to recover.

Buy the ASX small cap before the reporting season

But investors may not need to wait that long to see the IDP share price jump higher. Morgan Stanley believes this could happen as soon as management releases its first half earnings.

It is expecting the company to post a solid bounce in IELTS to between 75% and 80% of pre-COVID levels.

Salary reductions to lower the group’s cost base will also contribute to its bottom line and the broker highlighted the potential deep impact of MD student placement volumes of 25% to 30% as another positive.

What the IDP share price is really worth

“In short, we see less of a 2H EBIT skew vs market expectations and expect a positive reaction to the result,” added Morgan Stanley.

The broker is recommending the IDP share price as “overweight” (which means “buy”) with a 12-month price target of $24 a share.

More reading

• Leading brokers name 3 ASX shares to buy today
• 3 stellar ASX shares to buy in January
• 4 of the best ASX shares to buy in 2021
• Why AVITA, IDP Education, Over the Wire, & Viva Energy shares are dropping lower

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. 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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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. The benchmark index is currently up 1.2% to 6,741.9 points.

Here’s what is happening on the market today:

Bingo rockets on takeover approach.

The Bingo Industries Ltd (ASX: BIN) share price is rocketing higher on Tuesday. Investors have been fighting to get hold of the waste management company’s shares after it confirmed the receipt of a takeover approach. BINGO revealed that it has received an unsolicited, highly conditional, non-binding, indicative proposal from funds advised by CPE Capital. The indicative cash price currently offered to BINGO shareholders under the proposal is $3.50 per share.

Rio Tinto update.

The Rio Tinto Limited (ASX: RIO) share price is pushing higher today after releasing its four quarter and full year production update. According to the release, the mining giant’s Pilbara iron ore production came in 3% higher for the quarter to 86Mt, bringing its full year production to 333.4Mt. The latter was up 2% on the prior corresponding period despite negative impacts from Cyclone Damien in the first quarter and COVID-19 disruptions. Rio Tinto is aiming for iron ore shipments of up to 340Mt in FY 2021.

Domino’s jumps.

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is jumping higher today after being upgraded by a leading broker. According to a note out of Macquarie, its analysts have upgraded the pizza chain operator’s shares to an outperform rating with a $90.30 price target. Macquarie believes Domino’s is winning market share from its rivals and is well placed for further growth in the coming years.

Best and worst ASX 200 performers.

The best performer on the ASX 200 index today has been the BINGO share price with its 21% gain. This follows the receipt of a takeover approach. The Megaport Ltd (ASX: MP1) share price is the worst performer with a 3% decline. Investors have been selling the global elastic Interconnection services provider’s shares following the release of its second quarter update.

More reading

• Why Bathurst Resources, Megaport, Orocobre, & Splitit shares are dropping lower
• Why Bingo, Creso Pharma, Domino’s, & Tyro shares are zooming higher today
• Why the Megaport (ASX:MP1) share price is sliding lower today
• Why the Rio Tinto (ASX:RIO) share price will be on watch today
• 5 things to watch on the ASX 200 on Tuesday

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

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