Tag: Motley Fool

One-fifth of Australian share investors would own shares that went against their personal beliefs if it meant reaping a higher return.

The finding came out of an international study conducted by UK company SaveOnEnergy, which showed US and Japanese investors were the most concerned about holding sustainable investments.

The data, sourced from investment firm Schroders (LON: SDR), showed Australians were ranked 5th.

Although 80% of Australian investors would never buy into a company that went against their moral code, 20% were willing to go for it in the search for higher returns.

The environmental issue that the most Australian investors thought companies should be focusing on this year was global warming.

Environmental priorities for Australian investors

Rank	Issue	% of Australian investors
1	Global warming (climate change)	59%
2	Plastic pollution	55%
3	Air pollution	52%
4	Biodiversity loss	47%
5	Food waste	44%
6	Deforestation	40%
7	Water pollution	36%
Source: SaveOnEnergy; Table created by author

Plastic pollution and air pollution were not far behind, with 55% and 52% respectively judging it as a high priority in 2021.

Almost 2-in-3 Australian investors thought companies can do “much more” this year to improve environmental sustainability.

World is moving on to a new era

Despite the significant number willing to sacrifice the environment for higher returns, the world seems to be moving on with finances and sustainability increasingly linked to each other.

The rise-and-rise of Tesla Inc (NASDAQ: TSLA) shares is a case in point.

Investors savvy enough to bet that zero-emission electric cars are the way of the future saw their stocks rise almost 700% during 2020. Tesla shares have soared another 4% on top of that in the first few days of this year.

A more local example is AGL Energy Limited (ASX: AGL)’s Liddell power plant.

Last month investor groups called for the coal-powered station to be shut down.

An AGL employee suffered a serious injury after an incident at one of Liddell’s power generation units, causing it to be temporarily closed. The unit could be inactive for 2.5 months, skipping over the entire high-demand summer season.

Australasian Centre for Corporate Responsibility director Dan Gocher said at the time maintenance costs for ageing coal plants increased from 25% of AGL’s total capital spend in 2013 to 74% in the 2020 financial year.

“Investors must question whether this expenditure is in the long-term interests of shareholders,” he said.

“AGL intends to operate Bayswater beyond 50 years, and Loy Yang A beyond 64 years. It’s ridiculous and completely out of step with Australia’s climate goals and it will continue to risk the safety of its workers.”

More reading

• Why ASX lithium shares are running hot in 2021
• Why the AGL Energy (ASX:AGL) share price is climbing today
• Tesla’s Q4 deliveries soar
• Forget Tesla. Facebook is a better buy now
• These were the worst performers on the ASX 200 last week

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

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

Coming into 2020, Moderna Inc (NASDAQ: MRNA) was a $6.5 billion biotech with the goal of using messenger RNA (mRNA) — the molecule that tells cells what proteins to make — to fight and prevent disease. Not much was known about the company’s technology or even the diseases its drugs would target, but that changed in 2020 as the company became one of the leaders in the fight against COVID-19. 

A breakout year

Moderna’s stock rose 434% during 2020, but that number doesn’t capture how eventful the year was, or the ups and downs shareholders experienced. After receiving funding from the Coalition for Epidemic Preparedness Innovations in late January, the company worked with the National Institute of Allergy and Infectious Diseases to deliver a COVID-19 vaccine candidate a month later.

Positive phase 1 data were released in mid-May, and management promptly raised $1.34 billion through a secondary share offering. On 30 November, the company provided analysis from phase 3 data showing its vaccine was 94.1% effective at preventing COVID-19. Three weeks later, on 18 December, the Food and Drug Administration (FDA) granted emergency use authorization (EUA). 

Although the stock’s rise has been tremendous, its overall uneven progress offers a lesson in perseverance for shareholders. While everyone would welcome a more than 400% rise in a stock, holders had to endure a 25% sell-off (or more) four different times.

MRNA data by YCharts

Looking ahead, the company is well positioned for the future. Moderna had $3.3 billion in cash and investments on its balance sheet as of 30 September and recently increased the number of COVID-19 vaccine doses it expects to make in 2021 from 500 million to 600 million. The company has already supplied 18 million of an agreed-upon 200 million doses to the US Government and has additional deals with Canada, Israel, South Korea, and the European Commission, among other recipients . Despite this good news already priced into shares, the company has said it could produce as many as a billion doses this year. If so, last year’s gains in the share price could continue through 2021.

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

More reading

• The worst mistake Moderna investors can make right now
• Why Moderna stock fell 32% in December
• Moderna’s stock has surged 488% in 2020: Is it a buy for 2021?
• Here are the US shares ASX investors are buying
• How the 21st century actually started in 2020

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

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The Wesfarmers Ltd (ASX: WES) share price has rallied in recent weeks to a record all-time high of $51.90.

Its diversified business has proved to be resilient and in demand throughout COVID-19, as reflected by its strong earnings growth and dividend. At the time of writing, the Wesfarmers share price is trading 0.74% down at $50.87.

Wesfarmers share price higher on strong earnings 

The Wesfarmers business generated revenue growth of 10.5% to $30.85 billion with net profit after tax increasing 8.2% to $2.1 billion in FY20. Bunnings, Kmart, Officeworks and Catch delivered strong sales growth for the year. Earnings in Bunnings and Officeworks were particularly strong and demonstrated the ability of these businesses to rapidly adapt to the changing needs of customers. 

Bunnings achieved strong sales and earnings growth as customers spent more time at home and undertaking projects at home. Bunnings contributed $14.99 billion, or almost half the group’s revenue in FY20.

Throughout the year, Bunnings continued to execute its strategic agenda and accelerate the development of its digital offer. The Australian rollout of Click and Deliver was completed, the New Zealand e-commerce platform was launched and Drive and Collect offering was developed. 

Kmart Group’s revenue from continuing operations increased 7.2% over the year. However, earnings were impacted by significant items associated with the restructure of target and payroll mediation costs. Kmart generated $9.2 billion in revenue, or 29.8% of the Group’s revenue. 

In contrast, the financial performance of Target has been unsatisfactory and loss-making in FY20, said Wesfarmers managing director, Rob Scott. In May 2020, the company announced a number of actions to address its structural challenges, simplify Target’s operating model and deliver more value from the store network. 

Officeworks was a standout performer in FY20 with earnings increasing 13.8%, driven by strong sales growth in stores and online. Officeworks contributes just under 10% of the Group’s total revenue. In the second half, it saw significant demand for technology, office furniture and learning and education products, as people spent more time working and learning from home. 

Foolish takeaway

The Wesfarmers share price went from strength to strength in 2020. Its strong earnings meant that the company could continue to pay a dividend, in a year where many companies had to slash or defer payments.

While Wesfarmers could not provide an outlook for FY21, it did note that the performance of Bunnings is expected to moderate following the extraordinary growth in the second half of 2020. 

More reading

• Investors caught in crossfire as ASX retailers battle ASX property stocks in 2021
• 5 ways to lose your money forever
• How does fiscal stimulus impact ASX share prices?
• Why the Wesfarmers (ASX:WES) share price is up 24% in 2020
• 3 ASX shares that were unlikely winners in 2020

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

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has failed to follow the lead of U.S. markets and is dropping lower. The benchmark index is currently down 0.2% to 6,669.1 points.

Four shares that have not let that hold them back are listed below. Here’s why they are charging higher:

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is up 2% to $25.69. This appears to have been driven by another rise in the iron ore price. According to CommSec, the spot iron ore price rose by a further 1.6% overnight to US$167.15 a tonne. Robust demand for the steel making ingredient in China has helped drive prices higher.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price has jumped a further 9.5% higher to $11.51. Investors have been fighting to buy the furniture retailer’s shares after it provided guidance for the first half of FY 2021. Nick Scali revealed that it has performed very strongly during the half and expects to report a net profit of $40.5 million for the six months. This will be double what it recorded in the prior corresponding period.

Santos Ltd (ASX: STO)

The Santos share price is up over 4% to $6.60. This follows a jump in oil prices overnight after Saudi Arabia announced a surprise plan to cut its oil production in February and March. The world’s second largest energy producer plans to cut production by 1 million barrels per day to combat lower demand because of COVID-19 lockdowns.

Zip Co Ltd (ASX: Z1P)

The Zip share price has risen 3% to $5.47. This appears to have been driven by news that it has signed a partnership with AsiaPay. AsiaPay is the leading digital payment service and technology player in Asia. The deal will see AsiaPay offer merchants the ability to accept digital mobile wallet payment via Zip, with a simple, secure, and private way to pay that’s fast and convenient.

More reading

• How to invest in ASX shares in a post-COVID world 
• Why the Zip (ASX:Z1P) share price is pushing higher today
• Insiders have been buying these ASX shares
• ASX energy shares on watch after oil prices surge higher
• 5 things to watch on the ASX 200 on Wednesday

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.

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Insurance Australia Group Ltd (ASX: IAG) shares are on the rise this morning after the company announced the finalisation of its catastrophe reinsurance program for 2021. As part of the same update, the company also clarified its business interruption provisions on its balance sheet.

At the time of writing, the Insurance Australia Group (IAG) share price is trading 0.43% higher at $4.68.

Reinsurance program finalised

Insurance Australia Group revealed today it has finalised its catastrophe reinsurance program for the 2021 calendar year, maintaining its gross reinsurance protection cover at up to $10 billion, the same level as 2020.

Reinsurance is basically insurance for insurers. It’s the practice whereby insurers transfer portions of their risk portfolios to other parties to reduce the likelihood of paying a large obligation resulting from an insurance claim.

The main features of this program include Insurance Australia Group retaining the first $250 million of each loss, as well as an aggregate sideways cover for the 12-month period to 30 June 2021, which provides $350 million of protection in excess of $400 million.

Also, with effect from 1 January 2021, qualifying events are capped at $50 million per event.

The company says it experienced a modest increase in reinsurance rates during this renewal process, with the overall expense outcome in line with expectations.

Business interruption provisions update

For the purposes of preparing its management reports, IAG has reported it will include the $1.15 billion pre-tax earnings impact from the provision for business interruption claims announced on 20 November 2020 as part of net corporate expenses.

Insurance Australia Group says it will report this expense item during its FY21 first half reporting on 10 February 2021.

About the IAG share price

Insurance Australia Group surprised the market in November by announcing a $750 million capital raising to repair the capital damage expected from business interruption claims related to COVID-19.

The company said it has provided its best estimate for potential claims, but the risk that claims have been underestimated, or additional lockdowns occur before old policies are replaced with new wording, has left a degree of uncertainty.

As a result of potential COVID-19 claims, the IAG share price has lost almost 40% of its value over the past year. At the current price, the company commands a market capitalisation of around $11.5 billion.

More reading

• 2020 ASX recap of the year we’ll never forget
• Why the Afterpay (ASX:APT) share price is not the only rising star this year
• ASX 200 up 0.55%: Altium update, Afterpay jumps, NAB given ACCC approval
• Quarterly rebalance: Afterpay (ASX:APT) added to ASX 20, Kogan (ASX:KGN) joins the ASX 200

Motley Fool contributor Eddy Sunarto 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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COVID-19 emerged in 2020 and changed the world as we know it. Our lives and habits were disrupted suddenly and without warning, changing the way we live, work, and spend. While the end of the pandemic is hopefully in sight thanks to promising vaccines, COVID-19 will have lasting impacts.

Financial markets were not immune to the effects of COVID. The pandemic laid waste to some sectors of the ASX, but provided an unexpected boost to others. So if you’re looking to start investing, or add to your portfolio, how do you invest in a post-COVID world? 

Perhaps surprisingly, investing in a post-COVID world involves many of the same considerations that applied pre-pandemic. Fundamentally, share prices should reflect the current value of future earnings. The pandemic has not changed this.

What it has changed is the expected future earnings of a variety of ASX shares. For some sectors, such as travel, the future remains uncertain. But for others, trends which took hold thanks to COVID look set to continue to boost the bottom line. 

The rise of digital transacting

With shops shuttered during the height of the pandemic and customers confined to the home, many turned to online shopping to meet their needs. This has provided tailwinds to retailers with a strong online presence as well as those facilitating digital shopping, such as buy now, pay later (BNPL) providers.

The likes of Kogan.com Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW) saw a surge in sales during 2020 which in turn lifted share prices. Kogan reported a 39.3% increase in gross sales in FY20, which led to a 55.9% increase in net profit after tax. Temple and Webster saw revenue grow 74% over the same period, with second half revenue up 96% versus the prior corresponding period and fourth quarter revenue up 130%.

Online shopping in Australia has grown tremendously over the past 5 years, with growth accelerating further in 2020. Revenue in the Australia’s e-commerce market is expected to grow at a compound annual growth rate of 4.3% between 2021–2025 according to Statista.

All this online shopping requires online payment solutions. Traditionally, customers have used credit cards for online purchases, but in 2020 BNPL providers established themselves as a mainstream alternative. With more people than ever shopping online, many turned to BNPL solutions for convenience as well as to assist with budgeting. 

Australia’s biggest BNPL provider, Afterpay Ltd (ASX: APT) grew customer numbers by more than 5 million over 2020, reaching 11.2 million customers in September 2020. Other BNPL providers saw similar increases in customer numbers. Zip Co Ltd (ASX: Z1P) grew customer numbers from 1.8 million at the end of 2019 to 5.3 million in November 2020. Sezzle Inc (ASX: SZL) saw customer numbers grow from 644,509 in Q1 FY20 to 1.79 million at Q1 FY21. The pandemic pushed customers towards digital finance solutions, in turn pushing BNPL solutions into the mainstream. 

Remote working solutions gain traction

The majority of office workers spent much of 2020 working from home. Many took to it with gusto, enjoying the additional flexibility. Many companies also recognised the potential benefits of supporting flexible working arrangements, including lower office space requirements and a more engaged workforce.

This means demand for solutions that enable remote working is likely to remain heightened. ASX shares like Livetiles Ltd (ASX: LVT), Whispir Ltd (ASX: WSP), and Megaport Ltd (ASX: MP1) are set to benefit from this demand.

Livetiles supplies software used to create employee dashboards and corporate intranets. The company’s annualised recurring revenue (ARR) increased 33% between September 2019 and September 2020, reaching $57.1 million. Both customer numbers and average ARR per customer were up, with Livetiles seeing an acceleration in its sales pipeline. 

Whispir is behind a software-as-a-service communications workflow platform which automates interactions between business and people. The software was used by the Victorian government to communicate with the population about COVID. Whispir’s ARR grew by 26.7% between Q1 FY20 and Q1 FY21 thanks to increased platform use by existing customers and strong new customer growth.

Megaport, which operates in the network-as-a-service sector, saw global revenue increase by 66% in FY20. Megaport provides bandwidth which allows customers to connect to cloud services and data centres. Customer numbers had increased to 1980 by 30 September 2020, and included companies such as Amazon, Facebook, and Disney. 

Safety in staples

Consumer staples proved their worth in 2020 as customers rushed to stock up in the face of the pandemic. Regardless of what is happening in the economy, people will always need food and basic groceries.

Supermarket giants Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) continue to offer stable revenues and decent dividend yields. Coles saw sales revenue increase nearly 7% in FY20 to $37.4 billion while Woolworths saw sales rise 8.1% to more than $63 billion. 

What will 2021 bring? 

Many of the trends that accelerated in 2020 are expected to continue into 2021. Although an end to the pandemic may be in sight, the social changes wrought by the pandemic look set to have a lasting impact.

This will provide tailwinds to some ASX shares which will figure into investment decisions. Expected returns on certain ASX shares will increase, while returns on others will decrease, impacting share prices in 2021. 

More reading

• Why the Zip (ASX:Z1P) share price is pushing higher today
• The Coles (ASX:COL) share price jumped 22% in 2020 (and could still go higher)
• 3 great ASX tech shares to buy
• 5 things to watch on the ASX 200 on Wednesday
• 2 exciting small cap ASX shares growing fast

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Kate O’Brien owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Facebook, MEGAPORT FPO, Walt Disney, and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd, LIVETILES FPO, Temple & Webster Group Ltd, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc and recommends the following options: short January 2021 $135 calls on Walt Disney, long January 2022 $1920 calls on Amazon, long January 2021 $60 calls on Walt Disney, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended Amazon, Facebook, Kogan.com ltd, LIVETILES FPO, MEGAPORT FPO, Sezzle Inc, Temple & Webster Group Ltd, Walt Disney, and Whispir 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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The REA Group Limited (ASX: REA) share price was a strong performer in 2020 despite the pandemic’s impact on the housing market.

The property listings company’s shares recorded a gain of 44% over the 12 months.

Why did the REA Group share price storm higher?

There were a couple of catalysts for the outperformance of the REA Group share price in 2020.

One of those was the company’s solid performance during the COVID-19 crisis.

Despite the significant disruption caused by COVID-19, REA Group still delivered a robust FY 2020 result.

REA Group may have experienced a sizeable 12% reduction in national listings in FY 2020, but it only reported a 6% decline in revenue to $820.3 million and a 5% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to $492.1 million. The latter was supported by a 9% reduction in operating expenses to $328.2 million.

REA Group’s CEO, Owen Wilson, was very pleased with the company’s performance during a difficult 12 months.

He commented: “I am proud of the way REA has responded to the COVID-19 crisis, quickly adapting our products and experiences to enable Australians to continue to find, buy and sell property. In these challenging conditions, our products and services are playing an increasingly vital role in supporting our customers and vendors.”

What about FY 2021?

With the worst of the pandemic appearing to be behind us, there has been a notable improvement in property listings since the end of FY 2020.

National residential listings recovered to almost pre-COVID levels during the first quarter of FY 2021 and were down just 2% on the prior corresponding period.

In light of this and a reduction in REA Group’s cost base, the company returned to earnings growth during the quarter.

For the three months ended 30 September, REA Group delivered an 8% increase in first quarter EBITDA to $123.8 million. Pleasingly, listing volumes have improved further in the second quarter.

And with house prices tipped to hit record highs this year, this has many in the market believing that REA Group’s growth will accelerate and it will deliver a strong half year result in February and an even stronger full year result in August.

It certainly will be one to watch in 2021.

More reading

• 4 of the best-performing ASX media shares in 2020
• Here’s how the S&P/ASX All Technology Index fared in 2020
• Why the REA Group (ASX:REA) share price has stormed 43% higher in 2020
• 3 of the best ASX shares to buy in January
• The most crazy ASX chart of 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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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If you are on the hunt for the next shooting star in the small-cap tech sector, Citigroup may have just the trick for you.

Appetite for such stocks is strong after Brainchip Holdings Ltd (ASX: BRN) share price, Pointerra Ltd (ASX:3DP) share price and Tesserent Ltd (ASX: TNT) shot out the lights in 2020.

These stocks gained more than 700% over the past 12 months when the S&P/ASX 200 Index (Index:^AXJO) is standing at breakeven at best.

Big rewards and risks for this ASX small cap tech stock

If you want big rewards, you have to be prepared to stomach big risks. On that front, Citigroup reckons the Control Bionics Ltd (ASX: CBL) could be worth a punt.

The broker just initiated coverage on the CBL share price and slapped a “speculative buy” recommendation on it.

Control Bionics makes a wearable device that helps the disabled operate and communicate via a computer using only neural or visual signals.

Does CBL have a competitive advantage?

The company’s technology, called NeuroNode, has an edge over the competition. Traditional systems use the movement of an arm or finger to activate a keyboard. Other visual/neural devices are harder to use and isn’t as flexible.

“CBL has received regulatory clearance for the NeuroNode technology in key regions of US, Australia, Canada and Europe,” explained Citi.

“A key target market is Japan and steps are in progress to secure relevant approvals.”

Key revenue driver

Another noteworthy point is that Control Bionics is an approved provider under the National Disability Insurance Scheme (NDIS).

It is also approved by the US Veterans’ Administration and Medicaid (in most states) as well as relationships with several private payors.

Around 78% of its revenues come from health insurers, according to Citi. That is a good thing as it makes the device accessible to the masses.

What is the CBL share price worth?

Control Bionics raised $15 million from its initial public offer in December last year as it sold shares at 60 cents a piece.

Those who jumped in have plenty to smile about as the CBL share price is currently trading at 97 cents.

But Citi believes it could go a lot higher in 2021 as it has a 12-month price target of $1.42 a share.

This leaves a lot of the profit on the table, but just remember that small cap tech stocks aren’t for the fainthearted.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls on Tuesday
• Citi sees bigger takeover offer coming for Coca-Cola Amatil (ASX:CCL) share price
• Investors caught in crossfire as ASX retailers battle ASX property stocks in 2021
• ASX 200 down 0.3%: BHP & Rio Tinto rise, big four banks drop, Zip sinks

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 Pointerra Limited. The Motley Fool Australia owns shares of CBL Limited. The Motley Fool Australia has recommended Pointerra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The PolyNovo Ltd (ASX: PNV) share price was one of the best performers on the S&P/ASX 200 Index (ASX: XJO) in 2020.

Over the 12 months, the medical device company’s shares almost doubled in value with a 97% gain.

Why did the PolyNovo share price rocket higher in 2020?

A series of positive announcements by PolyNovo during 2020 helped drive its shares higher.

One of those was the announcement of its full year results for FY 2020. Which, despite the COVID-19 pandemic, saw the company double its NovoSorb BTM sales revenue to $19.1 million.

This was driven by strong growth in all markets, but particularly in the United States. The company’s US business delivered a record quarterly sales result in the March quarter and then followed it up with a 36% increase in sales compared to the prior corresponding period during the June quarter.

Management advised that it has been building a solid revenue base in trauma, reconstructive surgery, hand surgery, necrotising fasciitis, and general surgery. Its Burn sales are also strong, with significant account penetration in accredited burn centres in all regions.

Though, this is still only scratching at the surface of its current addressable market of $1.5 billion. Furthermore, it is worth noting that management is seeking to expand the usage of the product, which would lift its addressable market to a total of $7.5 billion if successful.

What else drove the PolyNovo share price higher?

Another major catalyst was an announcement in November which revealed that the United States Food and Drug Administration (FDA) has approved the pivotal trial IDE for NovoSorb BTM for the treatment of full thickness burns.

This authorisation meant PolyNovo could begin patient recruitment, once various hospital Independent Review Boards grant approval.

Recruitment is expected to start in early 2021 and conclude around the end of 2023. This program is being supported by Biomedical Advanced Research and Development Authority (BARDA) funding of $150 million.

Also giving its shares a lift was another announcement that month which revealed its entry into Belgium, Netherlands, Luxemburg (Benelux), and Sweden. This was achieved through an extension of its partnership with PolyMedics Innovations in Germany.

Management explained that PMI has been an excellent partner for it in Germany, Switzerland, and Austria. Sales in these markets are exceeding projections to date and are showing signs of further growth.

PolyNovo’s Managing Director, Paul Brennan, commented: “We are very pleased to extend our partnership with PMI. They are an excellent sales organisation with very good relationships with surgeons not only in DACH (Germany, Austria, Switzerland) but also in Sweden, Belgium and the Netherlands.”

Investors appear optimistic this could be supportive of further strong sales growth in FY 2021. They won’t have to wait long to find out if this is the case, with PolyNovo’s half year results due to be released next month.

More reading

• Which ASX 200 healthcare shares delivered the top returns in 2020?
• Is the Avita (ASX:AVH) share price a buy after diving 60% in 2020?
• 7 top ASX biomedical shares in 2020
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• These are 8 of the best performing ASX healthcare shares of 2020 so far

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 POLYNOVO 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.

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Cheap dividend stocks could offer a potent mix of a generous passive income and capital growth potential in 2021.

Their low price levels may mean that they offer high yields relative to other income-producing assets. In an era of low interest rates, this may make them more attractive to investors. The end result could be share price growth.

Furthermore, the potential for an economic recovery means that dividend shares may benefit from improving investor sentiment and stronger operating conditions. As such, they could deliver impressive total returns in 2021 and in the coming years.

The relative appeal of cheap dividend stocks

Cheap dividend stocks could have significant appeal in 2021 relative to other income-producing assets. Their low prices after the 2020 stock market crash means that, in many cases, they offer dividend yields that are above their long-term averages. As a result, they offer a far more generous passive income than other mainstream assets.

For example, cash and bonds have low income returns at the present time because of a loose monetary policy. With the global economic outlook continuing to be uncertain, it seems unlikely that there will be a substantial increase in interest rates before the end of the year. This could hold back the return profiles of cash and bonds.

Meanwhile, property price growth over the past decade means that the yields on investment property are relatively unattractive compared to many dividend shares.

The high passive income on offer from cheap dividend stocks means that investor demand for them could increase significantly. This may drive their prices higher, which would benefit investors through improving capital returns over the long run.

Dividend growth in a recovering economy

While cheap dividend stocks offer a relatively generous income return today, they could deliver strong growth in shareholder payouts in the coming years. The world economy is widely expected to recover from its 2020 woes over the next few years. Its strong track record of recovery suggests that this may prompt improving operating conditions for many dividend stocks that means they can afford rising shareholder payments.

As such, the passive income potential of dividend stocks appears to be high. At a time when higher inflation could become a reality due to a prolonged period of low interest rates and quantitative easing across many major economies, the high dividend growth rates that may be available on cheap dividend stocks could make them increasingly attractive.

Buying and holding a diverse range of dividend shares

Of course, it is crucial to buy and hold a diverse range of cheap dividend stocks. Some sectors and regions may continue to struggle in 2021 due to ongoing challenges such as political instability in Europe and the ongoing coronavirus pandemic.

Therefore, a portfolio that contains a broad range of stocks could be less risky than a concentrated group of holdings. Over time, it could deliver a higher passive income and stronger dividend growth.

More reading

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• Why the Breville (ASX:BRG) share price stormed 46% higher in 2020

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.

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