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What a year it was for the S&P/ASX 200 Index (ASX: XJO) in 2020. The benchmark index lost 1.4% of its value over the 12 months to end it at 6,587.1 points.

But it could have been so much worse. At the height of the pandemic the index had lost a third of its value.

Unfortunately, not all shares on the index rebounded as strongly and some recorded very disappointing declines.

Here’s why these were the worst performing ASX 200 shares of 2020:

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price was the worst performer on the ASX 200 in 2020 with a 60% decline. With the pandemic bringing both domestic and international travel to a standstill earlier this year, this travel agent giant’s bookings collapsed to previously unthinkable levels. So with little to no revenue coming in, Flight Centre was forced to raise funds to keep its operations going. Significant cost cutting means that its cash burn has reduced materially, but recent COVID outbreaks in Australia have sparked fears that its recovery could take a bit longer than hoped.

Unibail-Rodamco-Westfield CDI (ASX: URW)

The Unibail-Rodamco-Westfield share price wasn’t far behind and crashed 54.4% lower in 2020. The shopping centre operator is another company that was impacted negatively by the pandemic. Lockdowns, social distancing initiatives, and the shift to online shopping, meant that the company’s shopping centres were like ghost towns for much of 2020. This put a lot of pressure on rental collections and occupancy rates.

IOOF Holdings Limited (ASX: IFL)

The IOOF share price was out of form in 2020 and sank 51.4% lower. This financial services company’s shares came under pressure for a couple of reasons. One was its $1,040 million capital raising, which was undertaken at a 24.4% discount (at the time) of $3.50. This was launched to fund the acquisition of the National Australia Bank Ltd (ASX: NAB) wealth business, MLC Wealth for $1,440 million. Also weighing on its shares was its poor performance in FY 2020. IOOF reported a 34.9% decline in underlying net profit after tax to $128.8 million.

Oil Search Ltd (ASX: OSH)

The Oil Search share price was a poor performer and dropped 47.5% over the 12 months. Investors were selling this energy producer’s shares last year after oil prices collapsed amid demand concerns. Incredibly, at one stage in 2020 oil futures were actually in negative territory, which meant buyers were being paid to take oil off their hands. And while prices have been recovering in recent months, it hasn’t been enough to drive the Oil Search share price back to previous levels.

Webjet Limited (ASX: WEB)

The Webjet share price wasn’t far behind with a 46.4% decline in 2020. As with Flight Centre, this decline was driven by the pandemic’s impact on travel markets and the company’s need for a cash injection to keep it afloat. The good news for Webjet is that it looks set to come out of the crisis in a stronger market position and has seen its bookings recover twice as quickly as the market average.

More reading

• The ASX sectors hardest hit by COVID-19 in 2020
• ASX 200 drops 1.4%
• 2020 ASX recap of the year we’ll never forget
• Cimic (ASX:CIM) share price wobbles on $2.2 billion sale news
• Here’s how the S&P/ASX All Technology Index fared in 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. 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.

The post The 5 worst performing ASX 200 shares of 2020 appeared first on The Motley Fool Australia.

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It certainly was an eventful year for the S&P/ASX 200 Index (ASX: XJO) in 2020.

After losing as much as a third of its value at the height of the pandemic, the benchmark index was on course to finish the year flat until a last minute selloff on 31 December. This ultimately led to the ASX 200 index recording a 1.4% decline for the year.

The COVID-19 pandemic dominated the headlines last year and had a major impact on the performance of Australian companies.

While some companies were impacted negatively, others benefited greatly from changing consumer behaviours, the working from home initiative, and other tailwinds.

Listed below are the five best performing ASX 200 shares in 2020. Here’s why they were on fire over the 12 months:

Afterpay Ltd (ASX: APT)

The Afterpay share price was the best performer on the ASX 200 in 2020 with a whopping 303% gain. However, that gain is only telling you half the story. At the peak of the crisis, the Afterpay share price had plunged to a two-year low of $8.01 after investors panicked that bad debts would spike and underlying sales would collapse. However, those fears were extremely wide of the mark and Afterpay recorded exceptionally strong growth in the ANZ and US markets without compromising its bad debts. This led to the Afterpay share price ending the year at $118.00, which is a staggering ~1400% higher than its March low.

Kogan.com Ltd (ASX: KGN)

The Kogan share price was the next best performer with a 150% gain. This ecommerce company was one of the biggest winners from the pandemic thanks to the dramatic shift to online shopping. With bricks and mortar stores forced to close during lockdowns, consumers flocked online for their shopping. Many for the first time. This resulted in Kogan reporting explosive customer, sales, and profit growth. According to a report by IBM, the pandemic has accelerated the shift away from physical stores to online stores by approximately five years.

Mineral Resources Limited (ASX: MIN)

The Mineral Resource share price was a strong performer and stormed 127% higher in 2020. The catalyst for this was the mining and mining services company’s exposure to two of the hottest commodities of 2020. A rebound in lithium prices due to electric vehicle optimism and a surging iron ore price got investors excited.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price wasn’t far behind with an impressive 119% gain in 2020. As one of the world’s leading iron ore producers, investors were fighting to get hold of its shares after the price of the steel making ingredient jumped to multi-year highs. This was driven by supply constraints in Brazil and robust demand in China as it invests heavily in infrastructure to boost its economic growth. The iron ore price ended the year at US$155.84 per tonne. This compares incredibly favourably to Fortescue’s C1 costs of US$12.74 per wet metric tonne.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price was on form in 2020 and recorded a 104% gain. The investment platform provider was a strong performer in FY 2020 despite the pandemic. For the 12 months ended 30 September, Netwealth delivered a 21.7% increase in underlying net profit after tax to $43.8 million. The catalyst for this was a 35% increase in funds under administration (FUA) over the 12 months to $31.5 billion. Pleasingly, this strong form has continued since then, with Netwealth ending the first quarter of FY 2021 with FUA of $34 billion.

More reading

• Top ASX shares to buy in January 2021
• Here are the best All Ordinaries performers of 2020
• The ASX sectors hardest hit by COVID-19 in 2020
• 2020 ASX recap of the year we’ll never forget
• 3 ASX shares to buy for 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Netwealth. 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.

The post The 5 best performing ASX 200 shares of 2020 appeared first on The Motley Fool Australia.

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The stock market rally following the 2020 market crash has caused many shares to double in value over recent months.

Despite this, there are still a wide range of companies that appear to offer good value for money. Since the stock market has historically produced a sustained recovery following its declines, there may be scope for investors to double their money through buying shares today.

By taking a long-term view and purchasing high-quality companies at low prices, an investor could capitalise on the stock market’s likely long-term growth prospects.

Caution after the recent stock market rally

While the recent stock market rally may have caused optimism to rise among investors, a number of risks could negatively affect share prices in the short run. For example, political change in Europe and the US may negatively impact investor sentiment. Meanwhile, coronavirus is set to remain a threat to the operating environments of many companies. This may lead to disappointing share price performances in the coming months.

Therefore, it is crucial to take a long-term view of any investments made today. Certainly, there is potential for a number of shares to double in price from their current levels. However, expecting the recent stock market recovery to continue unabated in 2021 may lead to disappointment for investors, as well as paper losses in the short run.

The past performance of the stock market

Despite threats to the 2020 stock market rally, the long-term outlook for shares is relatively positive. Even after gains made in recent months, there continue to be a number of high-quality companies trading at low prices. Historically, they have offered the greatest scope for capital gains. Not only do they offer less risk in the short run due to the strength of the company’s market position and financial situation, their low prices offer capital growth potential.

Furthermore, the stock market has always produced new record highs following even its most challenging periods. For example, indexes such as the FTSE 100 Index (FTSE: UKX) have recorded total annual returns of around 8% since inception. Assuming the same return in future would mean it takes around nine years for an investment today to double in price. But, through purchasing undervalued stocks, it is possible to outperform the index and generate 100% returns over a shorter time period.

Building a solid portfolio of shares

It can be tempting to forget about risk management following a stock market rally such as that seen in 2020. However, it is important to always bear risk in mind, since the stock market can experience rapid change without warning.

As such, building a diverse portfolio of high-quality shares trading at low prices could be a shrewd move. It may allow an investor to capitalise on the stock market’s likely growth in the coming years, while reducing company-specific risk.

More reading

• Top ASX shares to buy in January 2021
• Here are the best All Ordinaries performers of 2020
• The ASX sectors hardest hit by COVID-19 in 2020
• ASX 200 drops 1.4%
• 2 ASX dividend shares with 4%+ yields

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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With the year that was 2020 finally behind us, we asked our Foolish contributors to compile a list of some of the ASX shares experts are saying to Buy in January.

Here is what the team have come up with…

Bernd Struben: Nitro Software Ltd (ASX: NTO)

Nitro Software is a document productivity software company. Nitro’s list of global customers in 2019 included 65% of the Fortune 500 list. The company’s product line features Nitro Pro, Nitro Cloud, Nitro Analytics, and its recently launched Nitro Sign.

With a market capitalisation of around $615 million at the time of writing, Nitro falls into the ASX small-cap category. As with all ASX small-cap shares, Nitro arguably carries more risk while offering the potential for higher growth.

Indeed, 2020 saw Nitro Software deliver on that growth. With the pandemic resulting in the work-from-home shift, the company’s subscription revenue grew 60% year over year, as at September. At the time of writing, the Nitro share price was up 98% in 2020.

Motley Fool contributor Bernd Struben does not own shares of Nitro Software Ltd.

Tristan Harrison: Pushpay Holdings Ltd (ASX: PPH)

This digital donation business is expecting to more than double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) in FY21.  

In its recent FY21 half-year result the company demonstrated operating leverage with the EBITDAF margin rising from 17% to 31%. Pushpay expects “significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.” 

Over the long term, Pushpay is aiming to reach US$1 billion of annual revenue. It’s currently servicing large and medium United States churches, but the company is now also looking at targeting its services to smaller churches.  

Motley Fool contributor Tristan Harrison does not own shares of Pushpay Holdings Ltd. 

Sebastian Bowen: CSL Limited (ASX: CSL) 

CSL should be an interesting ASX share to watch in this first month of the new year. Compared with 2018 and 2019 (which saw double-digit appreciation in the CSL share price), in 2020 CSL shares had a pretty muted year, and have been stuck in neutral for a while now.

Top notch shares like CSL often draw attention when this occurs, as the market doesn’t usually punish quality companies for long. Even with this healthcare giant’s arguably-lofty price-to-earnings (P/E) ratio at present, the company is still growing revenues, earnings and dividends at a healthy pace.  

 Motley Fool contributor Sebastian Bowen does not own shares of CSL Limited.

James Mickleboro: Xero Limited (ASX: XRO)

Another option for investors to look at in January is Xero. Over the last few years, Xero has evolved from a cloud-based accounting platform to a full service small business solution. This has underpinned strong customer growth and even stronger revenue growth.

Pleasingly, analysts at Goldman Sachs believe Xero’s growth is still only getting started and believe it has a “multi-decade runway for strong revenue growth.” This is thanks to its already sizeable addressable market and the potential for it to broaden and monetise its app ecosystem and expand into new geographies. Goldman Sachs has a buy rating and $157.00 price target on its shares.

Motley Fool contributor James Mickleboro does not own shares of Xero Limited.

Tristan Harrison: Pacific Current Group Ltd (ASX: PAC) 

Pacific is a business that wants to partner and invest in “exceptional” investment managers, it helps with expertise to grow.  

Speaking to Livewire, Dean Fremder of Perpetual Limited (ASX: PPT) said: “The stock’s really cheap. It’s on nine times earnings. It’s growing earnings at double digits, so more than 10% a year… we think they can pay out a much larger portion of their earnings as dividends.” 

In FY20 underlying earnings per share (EPS) grew by 18% to $0.51 cents and the dividend grew by 40% to $0.35 per share. In the FY21 first quarter, funds under management grew 14% to $106.4 billion. 

Motley Fool contributor Tristan Harrison does not own shares of Pacific Current Group Ltd. 

Sebastian Bowen: Afterpay Ltd (ASX: APT)

Another stock to consider in 2021 is Afterpay. This buy now, pay later (BNPL) pioneer has continued to confound its critics and delight its shareholders in 2020.

After announcing a very well-received partnership with Chinese e-commerce giant Tencent back in May, Afterpay has gone from strength to strength. Its knockout numbers for the 2020 financial year only added to this momentum.

As the clear global leader in this growing space, it’s hard to believe Afterpay will take its foot off the gas next year. Betting against this company in recent years has not been a good move. I wouldn’t start in 2021. 

Motley Fool contributor Sebastian Bowen does not own shares of Afterpay.

James Mickleboro: CSL Limited (ASX: CSL)

This biotherapeutics giant could be a top option in January following a recent pullback in its share price. This weakness has been driven by concerns over plasma collection headwinds and disappointment over the termination of a COVID-19 vaccine trial with University of Queensland. The latter was due to the vaccine interfering with certain HIV diagnostic assays.

Pleasingly, this hasn’t had an impact on its guidance for FY 2021. Management continues to forecast a net profit after tax of US$2.170 to US$2.265 billion in constant currency. This represents growth of 3% to 8%.

One broker that believes the CSL share price is in the buy zone is UBS. It is positive on its outlook and has a buy rating and $346.00 price target on its shares.

Motley Fool contributor James Mickleboro does not own shares of CSL Limited.

More reading

• Here are the best All Ordinaries performers of 2020
• The ASX sectors hardest hit by COVID-19 in 2020
• 2 ASX dividend shares to buy for 2021
• 3 ASX shares to buy for 2021
• Top brokers name 3 ASX shares to sell today

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., PUSHPAY FPO NZX, and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nitro Software Limited and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Top ASX shares to buy in January 2021 appeared first on The Motley Fool Australia.

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There were plenty of strong performers in the All Ordinaries (ASX: XAO) during 2020.

Despite the huge disruption caused by COVID-19 and the associated impacts, these businesses more than tripled the share price:

Gold miners

The gold price had already performed strongly during 2019 and it went up more than 10% in 2020 in Australian dollar terms.

The best performer in the All Ords was De Grey Mining Ltd (ASX: DEG), its share price went up around 1,900%. De Grey is a Western Australia-based mining company engaged in gold exploration and development activities. The company’s primary focus is the 100% owned Mallina Gold Project (MGP) in the Pilbara region of WA.

Chalice Mining Ltd’s (ASX: CHN) share price was another strong performer, rising more than 1,500%. In March 2020 it made a discovery at the Julimar Project in Western Australia.

The Cardinal Resources Ltd (ASX: CDV) share price went up 238% over 2020. Cardinal Resources is a West African gold‐focused exploration and development company that holds interests in tenements within Ghana, West Africa. The Namdini Project has a proved and probable ore reserve of 5.1 million ounces and is now advancing the feasibility study.

Online retailers

The share prices of Redbubble Ltd (ASX: RBL) and Temple & Webster Group Ltd (ASX: TPW) were two of the strongest performers in 2020, rising 406% and 319% respectively.

Both of these businesses benefited from the large shift to online shopping during 2020.

Afterpay Ltd (ASX: APT)

The Afterpay share price went up 285% in 2020. Afterpay was one of the most volatile businesses in 2020 after falling to just $8.90 during the COVID-19 crash. It has rebounded significantly since then. 

Investors quickly regained their bullishness about Afterpay in the following months.

In the FY20 result Afterpay reported 112% underlying sales growth to $11.1 billion, 116% growth of active customers to 9.9 million and 72% growth of active merchants to 55,400. Group total income grew by 97% to $519.2 million.

Investors may have looked at profitability metrics. Afterpay’s net transaction margin went up 110% to $250.2 million, with the net transaction margin as a percentage of underlying sales remaining stable at 2.3%.

Afterpay’s FY20 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by another 73% to $44.4 million.

In the first quarter of FY21, underlying sales grew by 115% to $4.1 billion. This was 9% higher than the fourth quarter of FY20. Its margins remained strong during the first three months of FY21.

Lithium miners

Excitement about Tesla and electric cars in general continues to help demand grow. This tide is lifting many boats in the lithium mining sector.

The Liontown Resources Ltd (ASX: LTR) share price grew by 278% in 2020. Liontown is a battery metals exploration and development company with a discovery at its flagship Kathleen Valley Lithium-Tantalum Project in Western Australia.

Avz Minerals Ltd’s (ASX: AVZ) share price rose 240% last year. AVZ is a mineral exploration company focused on developing the Manono Lithium and Tin Project located in the south of the Democratic Republic of Congo (DRC) in central Africa. AVZ has a 60 per cent interest in the Manono Project.

The Pilbara Minerals Ltd (ASX: PLS) share price went up around 210% in 2020. Pilbara wholly owns the Pilgangoora Lithium-Tantalum Project in Pilbara, WA.

More reading

• The ASX sectors hardest hit by COVID-19 in 2020
• 3 small cap ASX shares to buy for 2021
• Top brokers name 3 ASX shares to sell today
• Here’s how the S&P/ASX All Technology Index fared in 2020
• How does fiscal stimulus impact ASX share prices?

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 Temple & Webster Group Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended 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.

The post Here are the best All Ordinaries performers of 2020 appeared first on The Motley Fool Australia.

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COVID-19 has dominated 2020, irrevocably disrupting life as we knew it and changing how we live in ways that will arguably become permanent. While hope in the form of a vaccine is on the horizon, 2020 will always be remembered as the year of the pandemic.

We’ve seen our borders close, been confined to our homes, and been forced to discover new means of working, learning, and living. As our priorities shifted suddenly in the face of the pandemic, so too did our spending patterns. This has resulted in increased cash flows towards some sectors of the economy, while others have seen a cash drain. 

The Australian share market has largely recovered the ground it lost in the March market crash. The S&P/ASX 200 Index (ASX: XJO) was trading on par with January by mid-December. But there have been winners and losers among ASX shares as a result of COVID.

Some shares have boomed as the pandemic provided unexpected tailwinds. ASX shares like Afterpay Ltd (ASX: APT) have seen their share prices soar as consumers move to digital shopping and payment methods. But others have suffered badly as the pandemic disrupts travel and spending patterns. Sectors like travel and shopping malls have seen serious reductions in customer numbers which have flowed through to lower share prices.

Let’s take a look at which ASX sectors were hit hardest by COVID in 2020.

ASX travel shares 

The travel industry was an early victim of the pandemic and will likely be one of the last industries to recover. Australian borders were closed in March and international travel remains off the cards for now.

Qantas Airways Limited (ASX: QAN) cut all international flights and reduced domestic capacity by 60% in March with two thirds of employees temporarily stood down. State borders which had finally opened in time for Christmas slammed shut again with the December COVID outbreak in New South Wales. 

The Qantas share price is still more than 30% down from its January 2020 high, although it is up nearly 130% from its March low. But Qantas is not the only ASX travel share to feel the pain. Flight Centre Travel Group Ltd (ASX: FLT) is trading around 60% down from its January high but is ‘only’ 85% up from its March low. The travel business fell out of the S&P ASX 100 Index (ASX: XTO) in the most recent quarterly rebalance. The company also recorded a $510 million underlying loss before tax in FY20. Prior to restrictions, Flight Centre had achieved a $150 million underlying profit for the eight months to February 2020.  

Other travel booking companies are in a similar position. Webjet Limited (ASX: WEB) is trading at 50% of its January high having recorded a $153 million loss for FY20. The company saw total transaction volumes fall to $687 million in the second half from $2.3 billion in the first half.

Corporate Travel Management Ltd (ASX: CTD) likewise recorded a statutory loss for FY20, but has been more resilient. The Corporate Travel Management share price has recovered to within 16% of its January high.

Sydney Airport Holdings Pty Ltd (ASX: SYD) has suffered from a lack of passengers with total passenger volumes down 97.5% in April, 97.4% in May, and 94.9% in June. Some recovery has been seen lately with volumes down 90.6% in November. The Sydney Airport share price is, however, still trading down around 27% from its January high as at 30 December. 

ASX shopping centre shares 

ASX listed shopping centre operators have also suffered from a lack of customers due to the pandemic. With all but essential shops closed in many Australian jurisdictions during the height of COVID-19, shopping centres became ghost towns. The lack of customers resulted in reductions in rents paid to the landlords of retail malls.

Vicinity Centres (ASX: VCX) fell out of the S&P/ASX 50 Index (ASX: XFL) in the most recent rebalance, with the share price down 35% from pre-COVID levels. The shopping centre operator reported September quarter sales were down 32% compared to September 2019, although it did pay a distribution for the 6 months to December 2020. 

At the time of writing, Unibail-Rodamco-Westfield (ASX: URW) is trading at around a 57% discount to its pre-COVID share price. With malls across Europe and the United States, Unibail’s business has been significantly impacted by the pandemic. Total tenant sales were down 51.1% through to 30 June 2020, mainly due to the impacts of COVID-19. The group reported an operating loss for the period to 30 June 2020 thanks to an increase in doubtful debt provisions and administrative expenses. 

Scentre Group (ASX: SCG) saw gross rent cash collection drop to 28% or $59 million in April and 35% or $74 million in May. But rent collections largely recovered by September and October, where rent of 88% or $187 million and 96% or $203 million was collected. Customer visits during the September quarter were 90% of the same time last year (excluding Victoria) and portfolio occupancy was at 98.4%. Nonetheless, the Scentre Group share price remains around 28% below pre-COVID levels at the time of writing. 

ASX entertainment shares 

The pandemic had a major impact on entertainment and gambling providers like Star Entertainment Group Ltd (ASX: SGR) and Crown Resorts Ltd (ASX: CWN). With venues and gaming floors closed to fight the spread of the virus, these ASX share prices took a tumble.

The Crown share price halved in March and is yet to regain pre-COVID levels, with gaming floors remaining closed between March and November in Melbourne.

Star Entertainment Group has benefitted from a recent easing of restrictions in Queensland and New South Wales which permitted increases in patronage. The Star Entertainment share price, however, remains more than 20% down from pre-COVID levels as at 30 December. 

Foolish takeaway

There’s no doubt 2020 will be a year for the record books. Unfortunately, this is for all the wrong reasons when it comes to these ASX shares. But hope is on the horizon in the form of a vaccine. Investors in the travel, shopping, and entertainment sectors will no doubt be hoping a vaccine will usher in a return of more ‘normal’ conditions for ASX shares operating in these industries. 

More reading

• 2020 ASX recap of the year we’ll never forget
• Top brokers name 3 ASX shares to sell today
• Here’s how the S&P/ASX All Technology Index fared in 2020
• Why BetMakers, Flight Centre, Monash IVF, & Sydney Airport are dropping lower
• Can the Flight Centre (ASX:FLT) share price fly again in 2021?

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Crown Resorts Limited and 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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The S&P/ASX 200 Index (ASX:XJO) fell by 1.4% today to 6,587 points.

The number of COVID-19 cases in NSW continues to rise and now Victoria has a cluster to deal with as well.

Here are some of the highlights from the ASX:

Cimic Group Ltd (ASX: CIM)

The Cimic share price fell by 1% today despite announcing that it had completed the sale of 50% of Thiess, the world’s largest mining services provider.

The company has previously advised that the price for 50% of the equity interest in Thiess implied an enterprise valuation of approximately $4.3 billion, based on 100% value of Thiess.

This will generate approximately $2.2 billion in cash proceeds for Cimic. The increase in the transaction cash proceeds compared to the previously estimated range is due to transaction closing adjustments and the final financial position of the underlying Thiess business.

Cimic executive Chair and CEO Juan Santamaria said: “The sale of 50% of Thiess enables us to capitalise on the sector outlook and Thiess’ strong performance.

“The transaction proceeds will primarily be used to strengthen our balance sheet through the reduction of debt, while also providing additional capital to pursue organic growth prospects as well as broader capital allocation opportunities.

“Our retention of the remaining 50% reflects the ongoing strategic importance of Thiess to our business.”

AMA Group Ltd (ASX: AMA)

AMA describes itself as the leader in Australian and New Zealand autobody repair industry and the vehicle aftercare and accessories market.

The AMA share price was flat today after announcing that the sale of the ACAD businesses, including the ‘fully equipped’ business and excluding the ACM Auto Parts and Fluiddrive businesses, to GUD Holdings Limited (ASX: GUD) completed today.

The proceeds of the sale of approximately $70 million will be used to retire debt resulting in a net debt position of approximately $158 million at 31 December 2020. The company expects to be in full compliance with its banking covenants at 31 December 2020.

AMA said its strong performance in the first quarter of FY21 continued into the second quarter with all states fully operational, with the exception of Victoria which will be fully operational by early January 2021.

The ongoing trend towards private transport over public transport continues to benefit the business. Cost management and the revised contracts implemented from 1 July 2020 are expected to deliver earnings before interest, tax, depreciation and amortisation (EBITDA) margins within its targeted range of 9% to 10% in FY22.

AMA Group CEO Andy Hopkins said: “The business experienced a quicker than expected return to normal repair volume and operations following the lifting of restrictions. The business is well placed to pursue strategic aligned acquisitions in the second half of FY21 aimed at delivering its growth and performance targets for FY21 and beyond.”

More reading

• Cimic (ASX:CIM) share price wobbles on $2.2 billion sale news
• The one overlooked warning sign ASX investors should watch for in 2021
• How does fiscal stimulus impact ASX share prices?
• ASX 200 down 0.6%: Flight Centre sinks, big four banks lower, Ramelius jumps
• Why the Woodside (ASX:WPL) share price slumped 33% in 2020

Motley Fool contributor Tristan Harrison 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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In 2020 the Reserve Bank cut the cash rate to the lowest levels that we’ve ever seen in Australia. This was undoubtedly a bitter blow to income investors.

Fortunately, in this low interest rate environment, the Australian share market is home to dividend shares that offer investors generous yields.

For example, two ASX shares dividend shares with yields above 4% are listed below. Here’s what you need to know about them:

BWP Trust (ASX: BWP)

The first dividend share to look at is BWP Trust. It is the largest owner of Bunnings Warehouse sites in Australia. It currently owns 68 stores, with seven of these properties having adjoining retail showrooms that are leased to other retailers. At the last count, the company’s portfolio was valued at ~$2.5 billion and had an occupancy rate of 98%.

Due to the strength of its tenancies, BWP was a solid performer in FY 2020 and was able to grow its distribution to 18.3 cents per share. Management is also expecting a similar pay out in FY 2021. Based on the current BWP share price, this represents a 4.1% dividend yield.

Westpac Banking Corp (ASX: WBC)

The big four banks may have recovered strongly from their COVID lows, but they are still expected to provide investors with generous yields in 2021. Especially now APRA has removed its dividend restrictions on the sector.

Another positive is the way the economy, and particularly the housing market, is rebounding from the pandemic. This has many believing the worst is over for the banks and that they could deliver modest growth in the coming years.

In respect to dividends, analysts at UBS are forecasting a $1.00 per share dividend from Westpac in FY 2021 and then a $1.20 per share dividend in FY 2022. Based on the current Westpac share price, this represents fully franked ~5.2% and 6.2% dividend yields, respectively.

More reading

• ASX 200 down 0.8%: Big four banks and tech shares drag the market lower
• 2 ASX dividend shares to solve your income needs
• 2 ASX shares with huge fully franked yields
• ASX 200 Weekly Wrap: ASX hits new post-March high
• 2 ASX dividend shares with 4%+ yields

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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There are some small cap ASX shares that may be able to generate good returns in 2021.

Identifying a business that’s earlier on in its growth journey may mean it’s possible to capture more capital growth.

Here are three smaller businesses with growth potential:

City Chic Collective Ltd (ASX: CCX)

City Chic is a retail ASX share that sells plus-size clothing, footwear and accessories to women.

It adapted to COVID-19 conditions by ramping up its online sales, which grew 113.5% in FY20 and represented 65% of total sales. Fund manager Chris Prunty from QVG Capital thinks that the e-commerce theme will continue to grow after COVID-19 has passed. For a business like City Chic, the small cap ASX share’s ability to sell products online underlines its ability to build a market-leading position for itself.

Not only is the company organically growing its presence and sales internationally, but it also recently announced a UK acquisition called Evans, which also sells plus-size clothing. Evans’ e-commerce and wholesale businesses generated £26 million (A$46 million) of sales for the financial year to August 2020. City Chic wants to turn Evans into an online only operator and try to capture a portion of the $9 billion UK market. The small cap ASX share said that Evans has high online penetration with almost half of direct-to-consumer sales (stores and website) being through the digital channel.

According to Commsec numbers, the City Chic share price is valued at 25x FY23’s estimated earnings.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is an e-commerce business that sells furniture and homewares.

Products are directly sent to customers by suppliers which assists with fast delivery and reduces inventory needs. The small cap ASX share also has its own private label range.

Management have previously pointed out the economies of scale benefits that come with the growth. As it gets bigger, it becomes a more important part of suppliers’ business, which secures improved stock security, better terms and exclusive product ranges. Being larger also means that Temple & Webster can invest more in technology, data, marketing and private label products.

In FY20 it grew full year revenue by 74% to $176.3 million. The economies of scale previously mentioned helped grow earnings before interest, tax, depreciation and amortisation (EBITDA) by 483% compared to FY19 to $8.5 million, with the adjusted EBITDA margin growing from 2.5% to 5.3%.

Growth has continued into FY21 with revenue for the period of 1 July 2020 to 19 October 2020 up 138% compared to the prior corresponding period. FY21 first quarter EBITDA generated was $8.6 million, which was more than the whole of FY20.

Using Commsec numbers, the Temple & Webster share price is valued at 35x FY23’s estimated earnings.

Reject Shop Ltd (ASX: TRS)

Fund manager Eley Griffiths has conviction in the discount retail business, The Reject Shop. The fundie said: “The ASX share sits at the early stages of a planned multi-year turnaround. New management have a reset balance sheet, strong brand and an operating model awaiting refinement. We have identified several levers where value for shareholders should be unlocked.” WAM Microcap Limited (ASX: WMI) is another fund that owns Reject Shop shares.

In FY20 the small cap ASX share reported that its FY20 sales grew by 3.4% with comparable store sales growth of 3.5%. In the first half comparable sales rose 0.5% and in the second half it rose 7.1%.

Before AASB 16, FY20 EBITDA grew by 30.1% to $23.7 million. It generated $4.5 million of earnings before interest and tax (EBIT), up from a loss of $23.3 million in FY19, and it made $2.7 million of net profit after tax (NPAT), up from a $16.9 million loss in FY19.

At the end of FY20 it had $92.5 million of cash on the balance sheet and no drawn debt. It generated free cashflow of $61.6 million, up from a $1.9 million outflow in the prior corresponding period.

In FY21 the company will be focused on EBIT growth with cost reductions through business simplification and operational efficiency. At the annual general meeting (AGM), the leadership said it will consider whether to pay a dividend in FY21.

According to projections on Commsec, at the current Reject Shop share price it’s valued at 12x FY23’s estimated earnings.

More reading

• Wilson Asset Management thinks these 2 small cap ASX shares are a buy
• 3 exciting small cap ASX shares to buy
• 2 great ASX growth shares that are rapidly expanding
• Top brokers name 3 ASX shares to buy next week
• 3 top small cap ASX shares to buy

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended 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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A year that began with Australia ablaze from devastating bushfires perhaps set the pace for what would be a year of unprecedented times. Little did we know just how record-breaking the year would turn out to be.

The S&P/ASX 200 Index (ASX: XJO) inaugurated the year with a gain of 0.07% by the end of its first week of trading in 2020. At this time, coronavirus was only known as a ‘cluster of pneumonia cases’ with no deaths in Wuhan, as tweeted by the World Health Organisation.

Let’s recap this crazy year before we start the next trip around the sun.

Bushfires

Across December and January, Australia experienced devastating bushfires that burnt an estimated 18.6 million hectares. Economists have pegged the cost at over $103 billion, making it economically the biggest natural disaster Australia has ever experienced to date.

ASX listed insurance shares in Insurance Australia Group Ltd (ASX: IAG), Suncorp Group Ltd (ASX: SUN), and QBE Insurance Group Ltd (ASX: QBE) all had a shocker of a year – down 38%, 24%, and 33%, respectively.

Insurance is a profession of probabilities to determine how much needs to be provisioned for claimable events. Unfortunately, insurers could have never anticipated everything (and the kitchen sink) being thrown at them in one year.

IAG turned to the market in November to raise $750 million to strengthen its balance sheet, as a precautionary provision while court proceedings continue over ‘Business Interruption’ claims due to COVID-19. IAG has earmarked the potential impact of business interruption claims for FY21 at $805 million.

Coronavirus

Without a doubt the hardest hit to individuals and businesses globally this year – coronavirus. Estimates of the global economic impact are in the multiple trillions.

Broadly, the ASX 200 experienced a swift crash from 7162.5 pts on 20 February, to its low of 4546 pts on 23 March – a 36.53% fall in 32 days.

The pause button was hit on travel around the world. Business for the now colloquially termed “BEACH” shares (Booking, Entertainment, Airlines, Cruises and Casinos, and Hotels/Resorts) was switched off like a light switch.

Virgin Australia went into voluntary administration, Qantas Airways (ASX: QAN) started flying to ‘nowhere’ (literally), and Flight Centre Travel Group Ltd (ASX: FLT) had to undertake drastic cost-cutting measures to preserve the business.

In contrast, some companies have benefitted from the environment created by the pandemic. Online shopping experienced a substantial lift in traffic as consumers were limited to their homes. Shares in Kogan.com Ltd (ASX: KGN) have risen by 150% over the last year – as the online shopping frenzy helped lift the company’s gross sales for 2020 by 39.3% to $768.9 million.

Toilet paper madness

Toilet paper for a brief point in history became a precious commodity. The lockdowns and supply chain disruptions left shoppers anxious about running out of the previously little thought of essential.

The rampant panic buying resulted in the biggest rise in retail turnover recorded since the Australian Bureau of Statistics started tracking it.

This gave a short-term boost to the likes of Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL). However, many shoppers turned to online suppliers of toilet paper once the shelves were empty.

Although not listed, Australian founded ‘Who Gives A Crap’ sells sustainable branded toilet paper. Its previously niche market exploded, forcing it to close the doors to new customers when orders had the company doing a month of sales in a day. CEO and co-founder Simon Griffiths told the Australian Financial Review, “At our peak, we were selling 28 rolls of toilet paper every second.”

For a good news story – the increased sales meant it could donate $5.9 million to charities around the world. This was 5 times larger than the previous year’s donations.

Negative oil prices

Demand evaporated as airlines were grounded, cruise ships ported, and people were locked indoors. Meanwhile, production remained above consumption, and storage was running out fast.

It is a weird world when toilet paper is more in demand than oil. That was the case in April when Crude oil futures plummeted to negative $37.63 a barrel – it wasn’t enough to give it away, producers were paying people to take it.

ASX energy producer shares Woodside Petroleum (ASX: WPL) and Oil Search Ltd (ASX: OSH) felt the commodity price pinch. Both company’s reported half-year profits that had swung to large losses. Woodside shares are down 34% for the year, while Oil Search shares have dropped 47%.

Zoom entered the call

Zoom Video Communications Inc (NASDAQ: ZM) or more commonly, Zoom, has become almost synonymous with the events of 2020. As the world became more separated than ever, Zoom offered the conduit for connection.

Family members, schools, government officials, and businesses turned to the video conferencing app to continue to communicate with each other. Daily meeting participants skyrocketed, from 10 million in December 2019 to over 300 million by April this year.

The increase in users was accompanied by a meteoric increase in Zoom’s share price, which grew 731% from the start of the year to its peak in October at US$559.

It is now a game of catch up for the tech giants in 2021 – Cisco is already making acquisitions in an attempt to bolster its own video conferencing offering.

Foolish takeaway

This recap just scraped the surface of what felt like a century of events in 1 year. As an optimist – one way to look at it is, if you were involved in the share market this year, you likely learned first-hand lessons that would normally take many years.

If 2020 proved anything, it’s that our ingenuity and determination pulls us through even the most testing times. For instance, businesses persevered and adapted, some more successfully than others. 2021 will likely reveal which trends were temporary and which are here to stay. 

Fingers crossed 2021’s year in review has more Fleetwood Mac throwbacks and less toilet paper hoarding. Happy New Year!

More reading

• 2 ASX dividend shares to buy for 2021
• 3 ASX shares to buy for 2021
• Here’s how the S&P/ASX All Technology Index fared in 2020
• Why BetMakers, Flight Centre, Monash IVF, & Sydney Airport are dropping lower
• Can the Flight Centre (ASX:FLT) share price fly again in 2021?

Mitchell Lawler owns shares of Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited, Kogan.com ltd, and Zoom Video Communications. 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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