Tag: Motley Fool

The Link Administration Holdings Ltd (ASX: LNK) share price is under pressure on Monday after providing an update on its takeover approach.

At the time of writing, the administration services company’s shares are down 11% to $4.91.

What did Link announce?

This morning Link provided the market with an update on the conditional, non-binding indicative proposal from SS&C Technology Holdings that it received on 7 December.

The NASDAQ listed global provider of investment and financial software enabled services and software had made an offer of $5.65 per share to acquire 100% of Link.

This was subject to SS&C Technology receiving confirmatory due diligence, debt financing on acceptable terms, the negotiation and execution of transaction documentation, and necessary corporate and regulatory approvals.

While the Link board did not believe the proposal represented compelling value for shareholders, it considered it appropriate to provide SS&C Technology with due diligence information on a non-exclusive basis. This was so that it could develop a proposal that may be capable of being recommended to shareholders.

However, this morning the company revealed that it has received a letter from SS&C Technology stating that it has withdrawn its proposal. No reason was given for the withdrawal.

Management advised that shareholders do not need to take any action in relation to this or any proposal. Furthermore, if there are material developments in the future, it intends to inform shareholders as required under its continuous disclosure obligations.

What now?

The Link board has advised that it will continue to consider all alternatives to maximise value for shareholders.

As it has previously announced, this includes a potential separation by way of demerger of its interest in the PEXA business. Link will also explore a trade sale of its interest from 18 January 2021.

More reading

• Here’s how the S&P/ASX All Technology Index fared in 2020
• ASX 200 Weekly Wrap: ASX 200 hits a 6! Thank iron ore
• These were the best performing ASX 200 shares last week
• ASX 200 drops on Thursday
• Link (ASX:LNK) share price in focus after takeover update

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 Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings 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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Online retailer Kogan.com Ltd (ASX: KGN) has been among the best ASX shares to own over the last 12 months, with its share price soaring almost 160% higher. Valued at just $7.34 a year ago, the Kogan share price has skyrocketed to $19 as at the time of writing, and even briefly touched an all-time high price of $25.57 back in mid-October.

What’s been driving the Kogan share price?

Arguably Australia’s answer to United States internet giant Amazon.com, Inc. (NASDAQ: AMZN), Kogan saw its revenues soar in 2020. This occurred as lockdown measures imposed by governments to curb the spread of coronavirus encouraged more consumers to shop online from home.

As far back as April, around the time COVID-19 panic-selling was wreaking havoc on global markets, Kogan was already reassuring shareholders that it was seeing no ill-effects from the virus. In fact, most of the impact on Kogan’s business stemming from lockdowns had been positive, helping to propel the Kogan share price higher. 

In a market update issued at the time, Kogan revealed that March had been a record month for the company, with the largest monthly increase in active customer numbers since the company listed on the ASX. March gross sales, which included sales made by third parties through Kogan’s online marketplace, and gross profit both increased by a whopping 50% year on year.

This positive momentum continued throughout the second half of the financial year. Kogan’s total revenues surged over 13% year on year to $497.9 million, while net profit after tax jumped almost 56% to $26.8 million.

The company capitalised on this strong business momentum so shore up its balance sheet through a series of capital raises. $100 million was raised via institutional investors, while a further $20 million came from retail investors.

More recent news

Kogan’s strong FY20 performance has carried over into FY21. At the company’s annual general meeting (AGM) held in November, Kogan CEO and founder Ruslan Kogan touched on a few aspects of the company’s year-to-date FY21 performance. As of October 2020, year-to-date gross sales were up almost 100% year on year, while gross profit had skyrocketed 132%.

Kogan was also ramping up its marketing spend in anticipation of the Christmas retail trading period. This included a series of record-breaking monthly marketing investments already made in FY21.

At the AGM, company chair Greg Ridder had flagged the potential for increased M&A activity. Then, in early December, Kogan announced it had acquired leading New Zealand online gaming and entertainment retailer Mighty Ape for $122.4 million. Kogan expected the acquisition to deliver significant revenue and cost synergies, as well as add immediate scale to Kogan’s New Zealand operations. The Kogan share price rallied almost 8% on the day the acquisition was announced.

Mighty Ape expected revenues for the 12 months ended 31 March 2021 to be $137.7 million, while gross profit was anticipated to be approximately $45.7 million. This is a significant addition to Kogan’s revenue pool and is before consideration of potential cross-selling opportunities and other synergies.

Foolish takeaway

Whilst the Kogan share price delivered a spectacular performance in 2020, it is still currently trading more than 25% below its all time high. With the economy continuing to open up, it will be interesting to see what 2021 has in store for Kogan shares. 

More reading

• These ASX shares are growing rapidly in FY 2021
• The 5 best performing ASX 200 shares of 2020
• 2020 ASX recap of the year we’ll never forget
• 3 ASX shares to buy for 2021
• Here’s how the S&P/ASX All Technology Index fared in 2020

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rhys Brock owns shares of Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon and 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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At the start of each week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) continues to be the most shorted share on the ASX despite its short interest easing slightly to 14.9%. There are concerns that a recent outbreak of COVID-19 in New South Wales and Victoria and escalating cases across the world could delay the recovery of the travel market.
• Tassal Group Limited (ASX: TGR) has seen its short interest fall to 10.8%. Short sellers have been going after the salmon producer amid concerns that China could put tariffs on Australian salmon exports in the future.
• Mesoblast limited (ASX: MSB) has seen its short interest ease to 9.3%. This biotech company’s shares have come under pressure recently after the release of a series of very disappointing updates.
• Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest rise to 8.2%. As with Webjet, the recent COVID outbreak in New South Wales and Victoria appears to be weighing on sentiment in the travel sector.
• Myer Holdings Ltd (ASX: MYR) has seen its short interest fall to 8.2%. This department store operator has been hit hard this year after the pandemic accelerated the shift to online shopping. This could have a big impact on the company’s turnaround plans.
• Inghams Group Ltd (ASX: ING) has 8.1% of its shares held short, which is down week on week. The poultry producer was a very disappointing performer in FY 2020 and it appears as though short sellers don’t believe the worst is over.
• InvoCare Limited (ASX: IVC) has short interest of 8.1%, which is also down week on week. There are concerns that this funeral company is losing market share to rivals. This could weigh on its performance in FY 2021.
• Zip Co Ltd (ASX: Z1P) has seen its short interest increase to 7.8%. Short sellers may be going after Zip due to rising competition in the United States from the likes of Shopify and PayPal.
• Metcash Limited (ASX: MTS) is back in the top ten with short interest of 7.8%. Short sellers aren’t giving up on this one despite its very strong performance over the last few months. They may now believe its shares are overvalued.
• A2 Milk Company Ltd (ASX: A2M) has also returned to the top ten with short interest of 7.6%. This infant formula company’s shares have recovered strongly since crashing lower following a guidance downgrade. It appears as though short sellers aren’t convinced that its operational recovery will be as quick.

More reading

• 5 things to watch on the ASX 200 on Monday
• 3 exciting ASX payment shares to buy in January
• Disappointments from the ASX 200’s best ever December quarter
• ASX sector of the year: BNPL goes from strength to strength
• These were the best performing ASX 200 shares last week

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 owns shares of and has recommended A2 Milk and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and InvoCare 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 Afterpay Ltd (ASX: APT) share price was the best performer on the S&P/ASX 200 Index (ASX: XJO) in 2020 by some distance.

In fact, the payments company’s shares recorded a gain of 303%, which was more than double that of the next best performer – the Kogan.com Ltd (ASX: KGN) share price with a 150% gain.

Why did the Afterpay share price quadruple in 2020?

Investors were buying Afterpay’s shares for a number of reasons in 2020.

One of those was the company’s exceptionally strong performance during the pandemic. There were fears that the crisis would cause a spike in bad debts and a collapse in sales. However, those fears couldn’t have been any more wrong.

Instead, Afterpay benefited greatly from the accelerating shift to online shopping, adjusted its business model slightly (first payment upfront), and continued to grow its sales at an explosive rate without compromising its bad debts.

The company also announced a number of expansion plans. This includes its first foray into mainland Europe, an expansion into Canada, and plans to test the waters in Asia.

What else helped drive the Afterpay share price higher?

Other factors supporting the Afterpay share price include its recent addition to the exclusive ASX 20 and ASX 50 indices and the announcement of new product launches in partnership with Westpac Banking Corp (ASX: WBC).

This partnership will see Afterpay provide Westpac transaction and savings accounts and other cashflow management tools to its 3.3 million customers in Australia from the second quarter of 2021. The company expects the service to empower customers to have greater control over their budget, with an efficient and seamless digital user experience.

Furthermore, the company may not stop at Australia as it sees potential to take this offering globally in the future.

What’s next for Afterpay?

While the company could provide investors with an update on its performance during the holiday season in the coming weeks, the next scheduled update isn’t until February when it releases it half year results.

Given how far its shares have climbed over the last 12 months, expectations are high. But fortunately for shareholders, Afterpay has a habit of delivering on them and more.

More reading

• 3 exciting ASX payment shares to buy in January
• Disappointments from the ASX 200’s best ever December quarter
• Highlights from the ASX 200’s best ever December quarter
• ASX sector of the year: BNPL goes from strength to strength
• 2 important investment lessons from 2020

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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2020 was a memorable year.

Why? Because there were a flood of initial public offerings (IPOs)!

I kid — of course, COVID-19 will dominate the chapter when historians write about last year. But the pandemic actually played an important role in encouraging private companies to go public.

This is because after the February–March crash, we saw one of the fastest share market recoveries ever seen.

The market heated up because much of the money handed out from government support and near-zero interest rates headed to shares.

That’s probably not the result that governments and central banks wanted. They would rather the cash be spent on goods and services.

But with Australians feeling uneasy and uncertain about the future, they were saving and investing more than spending.

Anyway, all that money on the share markets meant private companies queued up to cash in. Here are some of the most memorable — the most anticipated IPOs and those with massive market capitalisations.

Nuix Ltd (ASX: NXL)

The December float of this software company was remarkable for many reasons.

First, it had built up a massive market capitalisation over almost 2 decades as a private business. In fact, at $1.7 billion, it was a rare Australian unicorn.

Second, its work is shrouded in secrecy as it assists clients like law enforcement organisations and big government agencies in processing unstructured data. It even had a hand in helping investigative journalists wade through 11.5 million documents known as The Panama Papers.

Third, Macquarie Group Ltd (ASX: MQG) was an early investor that was estimated to have made $1 billion out of the ASX listing.

Fourth, Nuix is currently involved in courtroom drama with its former chief executive Eddie Sheehy over his share holdings. The result of that could impact Nuix financially, as noted in the prospectus and in the media.

Fifth, professional investors absolutely love this company.

Both Tribeca Investment Partners’ Alpha Plus portfolio manager Jun Bei Liu and Prime Value portfolio manager Richard Ivers picked it as the headline IPO of 2020.

“We believe the company will have a long run way of sustained growth for many years to come,” Liu told The Motley Fool last week.

“This company has attracted long-term quality investors to its register and will underpin its outperformance.”

Ivers expected “strong revenue growth and margin expansion” to drive earnings upwards in the coming years.

“It’s in a high growth market, with quality customers that are very sticky,” he told The Motley Fool.

Nuix shares sold for $5.31 during the IPO, but went for $8.24 before markets opened on 31 December 2020. That’s a tidy 55% return in less than a month.

Playside Studios (ASX: PLY)

The electronic games developer, as a private company, had already produced titles in partnership with multinational brands like Walt Disney Co (NYSE: DIS), Warner Bros and Nickelodeon.

So its ASX listing was highly anticipated, and it didn’t disappoint after floating on 16 December.

As of market open on 31 December 2020, Playside had more than doubled its IPO price of 20 cents per share.

“Given the massive growth in the global gaming industry and Playside’s established positioning and strong commercial ties with multinational media companies, we believe 2021 could be a huge year for the company,” Cyan Investment Management director Dean Fergie told The Motley Fool last week.

After the COVID-19 risk settles down, the Melbourne company is set to open an office in Los Angeles to manage its relationships with Hollywood studios.

“PlaySide has in the past few years proven its ability to make games that millions of people love to play while sustainably building a profitable business on a global stage,” said Playside chief executive Gerry Sakkas.

“Having now listed on the ASX, we believe we’ll be able to scale our skills, science and art to unlock significant value for PlaySide shareholders.”

Booktopia Group Limited (ASX: BKG)

The online bookseller often dubbed ‘Australia’s Amazon’ finally made it on the ASX in December.

Ironically it was that reputation that saw its first float attempt scuttled, back in 2016.

Soon after Booktopia announced its intentions to pull off an IPO, Amazon.com Inc (NASDAQ: AMZN) revealed it would start an Australian arm.

With potential investors spooked, the Australian company had no choice to abandon its plans.

“People needed to see that they weren’t going to annihilate us,” Booktopia founder and chief Tony Nash told The Motley Fool.

“We’ve gone from $80 million to over $200 million [of revenue] during that time.”

Nash never considered Amazon a threat, as the US company had long ago moved away from bookselling.

“Books are not a priority for Amazon anymore,” he said.

“It’s less than 3% of their revenue now. Sure, it was 100% when they started out, and is a part of their DNA, but it’s not a priority for them.”

Booktopia’s IPO price was $2.30 per share, with it trading at $2.64 before market open on 31 December 2020.

More reading

• 2 exciting small cap ASX shares to watch in 2021
• 2 newly listed ASX shares to watch in 2021
• If you thought 2020’s tech share rally was impressive, hold on for 2021!
• The PlaySide Studios (ASX:PLY) share price is up 100% since its IPO
• Amazon makes bank from marketplace seller ads

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Amazon, Macquarie Group Limited, and Nuix Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Walt Disney 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 and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Amazon and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The good news for income investors right now is that the Australian share market is home to a large number of shares with generous dividend yields.

For example, two dividend shares that provide investors with yields that smash savings accounts and term deposits are listed below:

National Storage REIT (ASX: NSR)

The first dividend share to look at is National Storage. It is one of the ANZ region’s leading self-storage operators and has been growing at a solid rate over the last few years. This has been driven largely by its strong position in a fragmented market and its growth through acquisition strategy.

Pleasingly, its performance has remained solid this year despite the pandemic. At its annual general meeting, management revealed that it expects to report underlying earnings per share of 7.7 cents to 8.3 cents in FY 2021. It also advised that it intends to pay 90% to 100% of its earnings out to shareholders as distributions.

Based on the middle of both ranges and the current National Storage share price, this represents a 4% yield.

Westpac Banking Corp (ASX: WBC)

The banking sector may have been on fire in the final quarter, but a number of brokers still see plenty of gains and generous dividends ahead. Especially now worst of the pandemic is behind us and responsible lending rules have been eased.

In addition to this, APRA’s recent decision to scrap its dividend restrictions is a win for shareholders and should see payout ratios increasing in the coming periods. It did this after stress testing the banking sector and finding it able to withstand even the most shocking economic downturn. 

Another positive is the housing market, which has been improving greatly in recent month. So much so, house prices have been tipped to hit record highs this year. This could give home loans a boost in 2021.

One broker that is positive on Westpac is UBS. It currently has a buy rating and $22.00 price target on its shares. It is also forecasting a 100 cents per share fully franked dividend in FY 2021. Based on the Westpac share price, this represents a 5.15% dividend yield.

More reading

• Disappointments from the ASX 200’s best ever December quarter
• Highlights from the ASX 200’s best ever December quarter
• 2 ASX dividend shares with 4%+ yields
• These ASX dividend shares offer investors attractive yields
• Top brokers name 3 ASX shares to sell next week

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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Although the market tumbled lower on New Year’s Eve, that didn’t stop some shares from pushing higher.

A few even managed to climb to new 52-week highs or better. Here’s why these ASX shares are on fire right now:

City Chic Collective Ltd (ASX: CCX)

The City Chic share price hit a multi-year high of $4.08 at the end of last week. Investors have been fighting to get hold of the retailer’s shares since it announced a major new acquisition. Last month City Chic revealed an agreement to acquire UK-based women’s plus-size clothing retailer Evans for 23.1 million pounds (A$41 million). The acquisition, which has since completed, is expected to be highly accretive to earnings in the future.

Dusk Group Ltd (ASX: DSK)

The Dusk share price jumped to a record high of $2.09. The catalyst for this was a recent trading update by the home fragrance product retailer. According to the release, management expects sales for the first half of FY 2021 to be in the range of $90 million to $90.5 million. This compares to its sales of $58.7 million for the first half of FY 2020. In respect to earnings, Dusk is expecting earnings before interest and tax (EBIT) to be between $26 million and $27 million. This is more than double FY 2020’s first half EBIT of $9.7 million.

Galaxy Resources Limited (ASX: GXY)

The Galaxy Resources share price continued its positive run and hit a two-year high of $2.33. Investors have been buying Galaxy and other lithium miners amid optimism over demand for the battery making ingredient. This is due to the growing adoption of electric vehicles and US President-elect Joe Biden’s plan to lead a transition to renewable energy. This latest gain meant the Galaxy share price rose over 120% during 2020.

More reading

• 3 small cap ASX shares to buy for 2021
• Why Costa, Galaxy, Oil Search, & Ramelius shares are pushing higher
• ASX 200 rises 0.5%
• Why a2 Milk, Adacel, Dusk, & Nuheara shares are charging higher
• Why the Dusk Group (ASX:DSK) share price is rocketing 14% higher

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources 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 share market has defied the real life gloom and doom to take investors upwards since March this year.

But eventually government stimulus will end, interest rates will rise, and the party will wind up.

So who will be left with a massive hangover afterwards?

Evans & Partners head of international equities Bob Desmond warned that there’s always a serious risk some investors could see their capital “permanently impaired”. 

Even in a bull market, some shares have certain hints that make it more likely that a devastating loss could come.

Desmond pointed out the 5 biggest warning signs to look out for:

Big debt

Borrowing money is a perfectly legitimate way to grow a business. 

But Desmond suggests keeping an eye on how much is borrowed and how the money is used.

He uses American Airlines Group Inc (NASDAQ: AAL) as an example to demonstrate how foolish some companies can be.

“In the five years to 2019, the company ‘returned’ US$13 billion in buybacks. This was despite the fact there was no capital to return, as free cash flow over the period was a NEGATIVE US$3.2 billion!” he said on Livewire.

“The ratio of debt to earnings before income, taxes, depreciation and amortisation (EBITDA) was 4.2 times in 2019 at the peak of the cycle.”

Share buybacks are a common way for US companies to return capital to shareholders, similar to how dividends are regularly used in Australia.

Desmond was scathing of an airline borrowing this much money only to give it away.

“In our opinion this is highly irresponsible, given the industry already has a high degree of operational gearing, has a large amount of off-balance sheet debt in the form of leases and is vulnerable to rising oil prices,” he said.

“And then when tough times hit, these companies go cap-in-hand to the government and/or shareholders to repair balance sheets at very depressed equity prices, resulting in severe value destruction.”

Relying on accurate forecasts of something that’s hard to forecast

There is always some risk when a stock is hyped up on a future assumption.

It’s fair enough if the forecast is reasonable, but it could spell disaster if it’s something that’s hard to predict.

“We deliberately avoid businesses that rely on us correctly forecasting commodity prices, interest rates, elections, drug discoveries, economic growth or political outcomes,” said Desmond.

“Experience has taught us that very few people are able to do this on a consistent basis.”

For example, he recalled back in 2016 very few investors expected Donald Trump to win the US presidential election.

“And for those who did, how many predicted that markets would rally?” Desmond said.

“Or in March of this year, who would have thought the market would be at an all-time high in December, when the global economic contraction has been the largest since the Great Depression?”

No moat

A proper competitive advantage is a basic investment axiom. But it can get lost in the fervour of a bull market.

“Superior returns on capital normally arise from some form of competitive advantage – be it a brand, network effect, scale, reputation, data, client relationships, IP or technology,” Desmond said.

“Over time, competition does a pretty good job of taking away excess returns for most businesses. And over time, it is very hard for an investor to earn a return much different than the underlying economics of the business one owns.”

Poor management burning through cash

Terrible business decisions can cost even the biggest of companies dearly.

Desmond takes the example of General Electric Company (NYSE: GE). It was for many decades an industrial giant, but then started diversifying into finance, real estate, insurance and media.

“The end result was to take a AAA rated balance sheet and turn it into one that is now barely above junk status.”

GE shares sold for about US$57 in the year 2000, but now trades for US$10.56.

In Australia, Desmond cites Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES)’s very expensive diversification attempts a few years ago.

“Who can forget Woolworths’ ill-timed home improvement venture against the toughest of competitors, or even Bunnings themselves and their venture into the UK?” he said.

“Would it not have made sense to focus capital on the competitive advantage that made the company a market leader in the first place and then return excess capital to shareholders?”

Expensive share price

Buying shares cheaply sounds obvious. But again, in a mad ‘fear of missing out’ scramble, human nature can easily ignore ‘fair value’.

“Even the most disciplined can be lured into paying inflated prices, especially in the upper reaches of a bull market,” Desmond said.

“The narrative always follows a similar pattern that excess growth will last forever, interest rates will never rise, the company has changed (very few do), the company deserves a lower beta and the list goes on.”

More reading

• 2020 ASX recap of the year we’ll never forget
• 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
• 2 quality ASX dividend shares to buy

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) finished the year on a disappointing note. The benchmark index tumbled 1.4% to 6,587.1 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to tumble.

The Australian share market looks set to start the year in a disappointing fashion. According to the latest SPI futures, the ASX 200 is poised to open the week 80 points or 1.2% lower this morning. This is despite a positive finish to the year on Wall Street, which saw the Dow Jones rise 0.65%, the S&P 500 climb 0.65%, and the Nasdaq push 0.15% higher. This led to the Dow Jones finishing the year at a record high.

Travel shares on watch.

Australian travel shares will be on watch on Monday after more COVID-19 cases were reported across New South Wales and Victoria. There are concerns that this could delay the recovery of travel-related companies such as Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN).

Oil prices rise.

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could start the week positively after oil prices pushed higher. According to Bloomberg, the WTI crude oil price rose slightly to US$48.42 a barrel and the Brent crude oil price climbed 0.3% to US$51.80 a barrel. Despite their recent recovery, oil prices fell ~20% during 2020.

Gold price flat.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch today after the spot gold price traded flat. According to CNBC, the spot gold price closed the year at US$1,898.67 an ounce.

Iron ore rises.

BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) shares will be on watch after the iron ore price finished the year strongly. The steel making ingredient rose 0.4% in the final session of the year to end it at US$160.47 a tonne.

More reading

• 2 ASX dividend shares with generous yields
• Disappointments from the ASX 200’s best ever December quarter
• Highlights from the ASX 200’s best ever December quarter
• These were the worst performing ASX 200 shares last week
• 2 important investment lessons from 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel 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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While the pandemic has stifled the growth of a number of companies such as A2 Milk Company Ltd (ASX: A2M) and Appen Ltd (ASX: APX) this year, not all companies have been impacted.

In fact, the two companies listed below continue to go from strength to strength and are on course to deliver very strong results in FY 2021. Here’s what you need to know:

Kogan.com Ltd (ASX: KGN)

This ecommerce company has been a very strong performer in FY 2021 thanks to the shift to online shopping.

At its annual general meeting in November, Kogan revealed that its gross sales for the first four months of FY 2021 are up 99.8% on the prior corresponding period. Pleasingly, its margins have been expanding, leading to gross profit growth of 131.7% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 268.8%.

Also growing in FY 2021 has been its customer numbers. At the end of October, Kogan had 2,682,000 active customers. This is up 9% since the end of August.

Temple & Webster Group Ltd (ASX: TPW)

Fellow ecommerce company Temple & Webster has also been growing strongly.

The online homewares and furniture retailer delivered a very strong result in FY 2020 and has followed this up with stellar growth so far in the new financial year.

As of 19 October, Temple & Webster’s revenue was up 138% on the prior corresponding period.  Furthermore, this strong top line growth led to its EBITDA coming in at $8.6 million for the first quarter. This is more than the entire EBITDA it generated in FY 2020.

All in all, this appears to have positioned the company to deliver another impressive result in FY 2021. In light of this, it won’t come as a surprise to learn that the Temple & Webster share price is up over 300% since this time last year.

More reading

• Got money to invest? Here are 3 ASX shares to buy
• The 5 best performing ASX 200 shares of 2020
• Here are the best All Ordinaries performers of 2020
• 3 small cap ASX shares to buy for 2021
• 2020 ASX recap of the year we’ll never forget

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 Appen Ltd, Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group 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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