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If you’re an investor looking for momentum going into the new year, you may be eyeing off shares in the S&P/ASX All Technology Index (ASX: XTX).

The sector has gained positive momentum as we count down the final days of 2020, with the All Tech Index rising by 8% in December. 

Information technology (IT) shares have, in general, been the major winners in the pandemic – as people and businesses increasingly moved online due to coronavirus restrictions.

The sector includes some of the market’s biggest names, including Afterpay Ltd (ASX: APT), which has increased by 15% this month alone.

Given an effective vaccine and full reopening could be around the corner however, can this sector keep up its momentum in 2021?

We take a look at three ASX IT shares that have gained in December, and consider their prospects for 2021.

Megaport Ltd (ASX: MP1)

The Megaport share price has risen by over 15% in December.

In fact, the company has been an ASX success story in 2020, with its share price gaining by over 43% year to date (at the time of writing).

Megaport gives corporate clients the flexibility to manage their bandwidth usage. Customers can scale up their bandwidth when demands are high, and then reduce consumption during off-peak periods.

The platform also leverages cloud-based technology to expand company networks beyond the reaches of traditional infrastructure.

As people and businesses increasingly worked, shopped and communicated online this year, these services have been high in demand. As a result, Megaport’s revenues jumped 66% year on year to $58 million in FY20.

This momentum has, so far, been carried into FY21. Megaport reported a record first-quarter increase in customer numbers, with most of the growth coming from the United States.

Arguably, the performance of the Megaport share price in 2021 will largely depend on whether the move to online is ramped up or scaled down as the economy heads ‘back to normal’.

EML Payments Ltd (ASX: EML)

This fintech company is cruising nicely in December, with the EML share price rising by 12%.

The company has been riding on its solid first-quarter FY21 results, with revenue rising from FY20 by 75% to $40.6 million. Its earnings before interest, tax, depreciation and amortisation (EBITDA) also leapt 215% year on year.

EML provides payment technology solutions for payouts, gifts, incentives and rewards, and supplier payments.

The majority of the company’s profits can be attributed to its shopping mall gift card segment, where its gift cards are sold throughout 1,200 malls across Europe and North America.

The EML share price performance in 2021 will, therefore, likely be dependent on whether Europe and the US are able to successfully navigate their way out of the pandemic early next year.

Codan Limited (ASX: CDA)

The Codan share price has picked up good momentum during the month of December, rising by 10%.

It’s been gaining pace particularly after the company announced it’s expecting to deliver another record first half profit for the six months ending 31 December.

The company said it expects net profit after tax (NPAT) to be $40 million for the half, which is up by 33% from $30 million a year earlier.

Codan provides a range of electronic products and software such as radio communications and metal detections to governments and businesses. 

The company advised that demand has been strong for its metal detectors in FY20, in both recreational and mining markets. 

Although its communications business is significantly down this year, Codan expects it to pick up significantly in 2021 – noting the company has an order book of more than $30 million for that segment due in the second half of FY21.

The Codan share price has been a solid performer over the past five years, reflecting gains of more than 1,300%.

More reading

• 4 ASX shares with sturdy balance sheets
• Are these the 2 best ASX shares to buy right now?
• ASX 200 Weekly Wrap: ASX hits new post-March high
• 3 recovery ASX shares to buy for 2021
• 4 leading ASX growth shares to buy for 2021

Eddy Sunarto 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 EML Payments and MEGAPORT FPO. The Motley Fool Australia has recommended EML Payments and MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Can these ASX IT shares carry their momentum into 2021? appeared first on The Motley Fool Australia.

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Deciding what are the best shares to buy now is clearly very subjective. Different investors are likely to have differing views on what traits are most attractive in a specific company.

However, the most attractive stocks to purchase today could be those businesses with solid financial positions and competitive advantages that provide less risk and greater return potential.

Furthermore, they are likely to trade at low prices that mean there is significant scope for capital growth in 2021 and over the long run.

Financially-sound businesses may be among the best shares to buy now

The best shares to buy now could include those companies that are likely to overcome short-term economic and political risks. Threats such as coronavirus and Brexit could weigh on investor sentiment in the early part of 2021. They may even cause a market downturn that is catalysed by challenging operating conditions across many sectors.

Companies with strong balance sheets may be able to capitalise on difficult industry outlooks. For example, they may have access to capital that enables them to make acquisitions to strengthen their market position. Or, they may be able to outlast weaker peers to increase their market share. This could lead to them enjoying stronger profit growth in the long run as a likely economic recovery takes hold.

Sound strategies and a competitive advantage

The most appealing shares to buy today may also have competitive advantages versus their sector peers. For example, they could have a unique product or enjoy strong customer loyalty. This may mean they produce more resilient levels of sales and profitability in challenging economic conditions, and benefit to a greater extent than rivals from improving operating conditions.

Companies that have flexible strategies may also be more attractive buying opportunities at the present time. The world economy is undergoing rapid change that could fundamentally shift consumer demand within many industries. Those businesses with a low proportion of fixed costs and strategies that can adapt easily may find it less costly to adjust to a ‘new normal’ in the coming years. This may lead to greater profitability and a higher share price over time.

A wide margin of safety

The best shares to buy now are likely to have wide margins of safety. In other words, their present valuations are unlikely to accurately value their long-term financial prospects. This may be due to weak investor sentiment, or an uncertain near-term operating outlook. As a result, investors may be able to generate high returns as market sentiment improves and operating conditions do likewise.

Even after the stock market rally in the final three quarters of 2020, many stocks trade at attractive prices. Buying a diverse range of them may produce impressive returns over the coming years that are ahead of the wider market.

More reading

• Key risks and rewards for ASX share investors heading into 2021
• 2 of the best ASX 50 shares to buy today
• Why the Pharmaxis (ASX:PXS) share price jumped 6% today
• The Xero (ASX:XRO) share price is up 82% in 2020
• 4 ASX shares with sturdy balance sheets

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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Whatever your feelings on 2020, it was certainly an exciting year for ASX share investors.

The speed of the market crash and subsequent rapid rebound is something we’ll likely be sharing with our grandchildren. And something we hope not to see repeated.

As a quick recap, from 20 February through to 23 March the S&P/ASX 200 Index (ASX: XJO) plummeted 37%. Since that low, it’s come roaring back, up 47%. That’s largely been driven by unprecedented government stimulus spending alongside near zero interest rates and massive quantitative easing (QE) packages from the world’s top central banks.

Investors who were swept up in the wider COVID-driven market panic and sold after the ASX 200 was already tanking are likely nursing some hefty losses heading into the new year. Especially if they spent too much time on the sidelines before joining in the remarkable share price gains that followed the 23 March lows.

Of course, there are those few investors who sold their ASX shares in the days before the crash. And an even smaller group who bought back in during the early days of the market rebound. Hats off to them, though in truth that type of fortuitous market timing is largely, if not all, luck.

Long-term investors also deserve a tip of the hat. It wasn’t easy watching your shares tumble for four straight weeks. But history demonstrates that holding onto the right shares for the long haul has proven to deliver gains to patient investors.

Now the ASX 200 is only up a slender 0.2% year to date. But many forecasts see Aussie shares outperforming their global peers in 2021. This could, in theory, mean new all-time highs for the ASX 200 are just around the bend.

With that said, let’s endeavour to take a peek around that bend.

Risks for ASX share prices

The predominant risk often expressed by analysts and fund managers is rising interest rates. Few believe that governments will scale back the extraordinary levels of fiscal support unleashed in the wake of the pandemic. But not everyone is convinced that inflation won’t make an untimely reappearance.

Let’s face it, we’re treading in unknown territory here, with tens of trillions of dollars unleashed across the globe to keep economies afloat. If inflation does begin to tick higher than desired, say above the 3% rate, central banks will have little choice but to raise rates to keep it in check.

Andrew Law, the CEO of hedge fund Caxton Associates, is among those concerned that investors haven’t paid enough heed to the ‘great reflation’. According to Law (as quoted by the Australian Financial Review):

The stage may well be set for a great reflation.

Many of the expressions [of this reflation] have been out of favour for the best part of a decade. Most market participants, and consequently their portfolios, are heavily conditioned from decades of disinflation or low inflation.

The change in the inflation regime, and subsequently the investor mindset, will likely have profound implications for asset allocations.

Valentijn van Nieuwenhuijzen, the CIO at NN Investment Partners, isn’t overly concerned with inflation in the medium term. But he warns that if it does arise, there will be serious consequences for share prices:

I don’t think central banks will have to look through inflation, because I don’t think there will be any. If I’m wrong and it does accelerate, that’s a meaningful game-changer for markets.

It would mean that a lot of losers in markets that have been left behind could really catch up — think of banks and financials, but also the broader value factor that has suffered secular underperformance over the past decade.

Growth stocks would suffer from rising interest rates. They might still rise but less than value. And obviously government bonds would suffer.

The potential for rising interest rates isn’t the only uncertainty we take with us into 2021.

I thought the US elections were over!

If you thought the mayhem unleashed by the United States elections in November was done and dusted, you’ve forgotten about the US state of Georgia.

The state is holding two runoff races on 5 January, as no Senate candidates received the needed majority the first time around. The outcome will determine whether President-elect Joe Biden’s Democrats can take control of the Senate, giving him the support of both Houses.

If the Republicans lose the Senate, the outcome will likely drag on fossil fuel shares while lifting shares involved in renewable energy. Democrats are also eager to raise the US corporate tax rate, which was cut under Donald Trump.

According to Bloomberg, options and volatility futures are indicating increased investor angst over the potential for market turbulence due to the election.

Addressing the election, Phil Camporeale, managing director of multi-asset solutions for JPMorgan Asset Management, said:

There’s no doubt, if you go from red to blue, you’ve got to price in something that looks less favorable because of markets liking gridlock, markets liking status quo.

And Cowen analyst Chris Krueger wrote in a note that, “It is impossible to overstate how important these elections are for the size, scale, and speed of 2021 fiscal, tax, and regulatory policy.”

Despite that uncertainty…

Markets may hate uncertainty, but you certainly wouldn’t gather that from the US share market performance yesterday (overnight Aussie time). All three major US benchmarks closed for new all-time highs…again!

The gains were supported by news that Trump had signed off on a US$2.3 trillion (AU$3.0 trillion) coronavirus and government funding package. Trump approved the deal despite his demand that the US$600 in direct stimulus payments be increased to US$2,000. Congress is set to vote on his demands this week.

However, whether US residents receive US$600 or US$2,000, Dennis DeBusschere, head of portfolio strategy at Evercore Inc, is bullish on the outlook for the US economy in 2021. In a note to clients, he wrote (from Bloomberg):

The new law is large enough to make a significant difference for individuals. Ignore the noise about the “disappointing” checks and focus on the setup for a robust economic recovery in 2021, particularly in the services sector.

If 2020 has taught us anything, it’s that no one can predict what the next 12 months will bring.

But if the global economy can continue its recovery as the virus is brought under control, and if inflation remains muted, the outlook for ASX shares appears bright.

More reading

• 2020 was good for investors, will 2021 be even better?
• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps
• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX 200 shares to buy in January
• 3 reliable ASX 200 shares that keep growing

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

The post Key risks and rewards for ASX share investors heading into 2021 appeared first on The Motley Fool Australia.

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The S&P/ASX 50 index is home to 50 of the largest listed companies on the Australian share market. This means the index is home to many of the highest quality and most well-known companies that the ANZ region has to offer.

Two ASX 50 shares that are highly rated are listed below:

a2 Milk Company Ltd (ASX: A2M)

The first ASX 50 share to look at is A2 Milk Company. It is a New Zealand-based infant formula and fresh milk company which has been growing its earnings at a quick rate over the last few years. This has been driven by strong demand for its infant formula. This has particularly been the case in the China market and through the daigou channel.

Unfortunately, the pandemic has impacted the latter channel greatly this year. With no Chinese tourists hitting Australian shores, sales in this channel have collapsed and are weighing heavily on its performance and recently led to a guidance downgrade.

Pleasingly, management appears optimistic that this is a short term headwind and expects the channel to rebound when trading conditions return to normal. It also notes that demand in China remains strong and the company continues to grow its market share in Mother and Baby stores.

One broker that believes it is worth sticking with a2 Milk Company is Morgans. Following its guidance downgrade, the broker put an add rating and $12.20 price target on its shares.

CSL Limited (ASX: CSL)

Another ASX 50 share to look at is CSL. This biotherapeutics giant could be a great long term investment option due to the quality of its CSL Behring and Seqirus businesses. CSL Behring is the biotech business behind immunoglobulins products such as Privgen and Hizentra, and haemophilia products Idelvion and Afstyla. Whereas the Seqirus business is the second-largest player in the influenza vaccines industry and is assisting with the development and manufacture of a COVID-19 vaccine.

Although the pandemic is causing headwinds for plasma collections and increasing the production costs of immunoglobulins, strong demand for flu vaccines looks set to offset this. So much so, CSL continues to forecast profit growth in FY 2021. It is guiding to a net profit after tax of approximately US$2.170 to US$2.265 billion in constant currency, which implies growth of 3% to 8%.

Looking further ahead, CSL appears to be in a strong position for growth thanks to its current product portfolio and its significant investment in research and development (R&D). In FY 2021, CSL is expecting to invest approximately US$1 billion in its R&D activities. This should ensure its pipeline remains full of potentially lucrative therapies and keeps the company at the top of the game over the long term.

Analysts at UBS are positive on the company and have a buy rating and $346.00 price target on its shares. This compares to the current CSL share price of $287.99.

More reading

• Why a2 Milk, Adacel, Dusk, & Nuheara shares are charging higher
• Why the CSL (ASX:CSL) share price will be on watch today
• 2 ASX healthcare shares to buy next week
• 3 unstoppable ASX shares to buy
• Top brokers name 3 ASX shares to buy next 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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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 Pharmaxis Ltd (ASX: PXS) share price is up today on the news it has received a substantial payment from a strategic partner.

The Pharmaxis share price reached an intraday high of 9.9 cents in late morning trade, but has since pulled back. At the time of writing, the Pharmaxis shares are up 6.8% to 9.3 cents.

What does Pharmaxis do?

Pharmaxis is an Australian biotechnology company committed to research and drug development for diseases involving inflammation and fibrosis including cystic fibrosis, pulmonary fibrosis and liver disease.

The company currently has two respiratory products approved in international markets that are generating recurring revenue. In addition, Pharmaxis has a diversified range of products at various stages of development.

Milestone payment

Pharmaxis advised this morning that it’s received a milestone payment of US$7 million ($9.2 million) from its United States licensee, Chiesi.

According to the company, the credited funds follow the recent approval by the United States Food and Drug Administration (FDA) for Bronchitol.

Bronchitol is used for the treatment of cystic fibrosis in helping a patient clear mucus from their lungs. A spray-dried form of the active ingredient, mannitol, is delivered to the lungs by a specially designed, portable inhaler. Bronchitol works by rehydrating the airway/lung surface and promoting a productive cough.

The product is also sold and marketed across Europe, Russia, and Australia.

With the first payment received, Pharmaxis is anticipating a further US$3 million from Chiesi on the shipment of Bronchitol. The United States bound delivery is scheduled for the first quarter of 2021.

Reporting a cash holding of $10 million at the end of the last September period, the company has since bulked up its coffers. Pharmaxis recently added a $5 million R&D tax incentive in October, bringing its total cash balance to $24.2 million, including the $9.2 million payment.

How has the Pharmaxis share price performed in 2020?

The Pharmaxis share price is down almost 40% over the past 12 months. Its shares reached an all-time low of 5.3 cents in March and have failed to recover from its highs recorded at the start of the year.

The height of the Pharmaxis share price reached was 11 cents in April, straight after the pandemic took the world hostage. Since then, Pharmaxis shareholders have been going on a mini-rollercoaster ride.

More reading

• The Xero (ASX:XRO) share price is up 82% in 2020
• 4 ASX shares with sturdy balance sheets
• 2020 was good for investors, will 2021 be even better?
• Why Beach (ASX:BPT) and Cue Energy (ASX:CUE) shares are sinking lower
• Why the Rhythm Biosciences (ASX:RHY) share price jumped over 600% this year

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

The post Why the Pharmaxis (ASX:PXS) share price jumped 6% today appeared first on The Motley Fool Australia.

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Although the Xero Limited (ASX: XRO) share price is underperforming on Tuesday, it isn’t taking any of the shine off its incredible performance in 2020.

Since the start of the year, the cloud-based business and accounting software platform provider’s shares are up an impressive 82%.

Why is the Xero share price beating the market in 2020?

There have been a number of catalysts for Xero’s strong share price gain in 2020.

One of the main catalysts has been the company’s strong performance during the COVID-19 pandemic.

Despite the disruption that small businesses have faced from the crisis, this hasn’t been able to put a dampener on Xero’s growth. In fact, its subscriber numbers have continued to grow as though there was no pandemic.

During the first half of FY 2021, the company reported a 19% increase in total subscribers to 2.45 million.

This helped underpin a 21% increase in operating revenue to NZ$409.8 million.

And thanks to management’s excellent COVID-related costs control, its profits grew even quicker. For the six months ended 30 September, Xero’s net profit after tax came in 26 times greater than the prior corresponding period at NZ$34.5 million.

Bullish brokers.

This strong operating performance didn’t go unnoticed in the broker community.

While a number of brokers put out bullish notes, one of the most positive brokers was Goldman Sachs. It initiated coverage on Xero with a buy rating and $157.00 price target.

The broker was impressed with its performance and believes it is well placed to continue this strong form for a long time to come.

According to the note, Goldman Sachs is positive on Xero due to the quality of its product, its large and growing total addressable market (TAM), and its attractive unit economics.

Currently, the broker estimates that Xero has a core TAM of NZ$14 billion across its key markets. Based on its FY 2020 results, this means it has only captured 4.6% of its TAM.

While this alone gives it a long runway for growth, Goldman believes its TAM can increase materially in the future by broadening and monetising its app ecosystem and expanding into new geographies.

So much so, if Xero executes its growth plans successfully, the broker expects this to open a further NZ$62 billion in addressable TAM. It feels this provides it with “a multi-decade runway for strong revenue growth.”

More reading

• 2 ASX tech shares to buy and hold until 2030
• 3 unstoppable ASX shares to buy
• 2 rapidly growing ASX tech shares to buy
• 3 reliable ASX 200 shares that keep growing
• 3 of the best ASX shares to buy right now

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 Xero. 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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We have come to learn this year that share market crashes still exist and will continue into the future. Some investors may start looking for shares that make money and have a healthy balance sheet, as opposed to pre-revenue cash burners.

Any company can go bust in a major economic downturn, but having a good balance sheet makes it less likely. Let’s take a look at 4 financially fortified ASX companies.

Fortescue Metals Group Ltd (ASX: FMG)

The iron ore producer has had a bumper year as a result of the sky-high price of the commodity used to produce steel. Shareholders would be chuffed with their trailing dividend yield of 7.45% for the year.

Despite paying generous dividends, Fortescue has still grown its own cash. Taking a look at the company’s balance sheet, cash and cash equivalents grew to US$4.855 billion from US$1.874 billion the previous year – a 159% increase. Meanwhile, total debt only increased to US$5.133 billion from US$3.952 billion – a 29.4% increase.

Although iron ore prices are cyclical, and Fortescue’s future will be highly dependent on the supply and demand of the commodity – there is no doubt Fortescue currently has a well-capitalised balance sheet that should allow the company to batten down the hatches if we find ourselves in another recession.

Magellan Financial Group Ltd (ASX: MFG)

The Sydney based fund manager has received multiple awards over its time for its global equities and global listed infrastructure. Unsurprisingly, Magellan knows the importance of a clean balance sheet.

Magellan currently has $437.5 million of cash and cash equivalents, and not a single dollar of debt. Given the company’s operating expenses for the last year were $39.23 million, it would seem it has plenty of runway in the event of another black swan.

Realistically, Magellan is using these funds for acquiring future investment opportunities – such as its recent 10% stake in the Mexican cuisine restaurant chain, Guzman y Gomez.

Pro Medicus Ltd (ASX: PME)

This healthcare technology company offers a suite of medical software products for managing medical imaging and providing advanced visualisation tools. Pro Medicus’s products and services span across Australia, Europe, and North America. The Software-as-a-Service business lends itself well to predictable, long-term cash generation.

Pro Medicus’s balance sheets are as clean as the sterilised hospital halls that its software is used in, with zero debt. The company’s profit margins have ranged from 30% to 40%, helping it grow cash reserves from $22.796 million at the end of 2017, to $43.413 million as of June 2020.

New contracts continue to be signed for Pro Medicus’s offerings, most recently the five-year contract with MedStar Health.

Codan Ltd (ASX: CDA)

The long-standing designer, supplier, and manufacturer of mining and communications equipment have stood the test of time since 1959. It’s no fluke that Codan still exists today – it would partly be due to diligent cash management.

Debt-free and cashed-up – Codan is holding $92.83 million in cash and cash equivalents as of June 2020. This balance sheet gives Codan some wiggle room to continue investing in the research and development of new products. However, most importantly – the company would have just under a year’s worth of cash (based on operating expenses as of June 2020) to sustain it in the event of another crash.

In addition, Codan is still growing profits to record highs, as noted in its recent guidance for the first half of FY 2021.

More reading

• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps
• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX healthcare shares to buy next week
• 2 buy-rated ASX dividend shares for income investors to snap up
• Leading fund manager names the ASX dividend shares to buy in 2021

Mitchell Lawler owns shares of Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus 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 has been a terrible year for a number of reasons. But we all know that, so I won’t bore you with prolonging what some would argue is becoming a cliché.

But what I personally find very interesting in 2020 is how share markets have reacted to such a terrible year. You would think, with a still-raging global pandemic and all, that the markets might be subdued, perhaps ending the year far more muted and modest than where they began.

Cast your mind back to the recession-that-wasn’t of 2007-09, and you might remember the relative insignificance compared to the recession the country, and the world, is facing today. Australia was lucky enough to escape the global financial crisis with our record-breaking run of recession-free years still intact.

That record has not survived 2020. And yet, back in the global financial crisis, the S&P/ASX 200 Index (ASX: XJO) took almost 18 months to go from its top to its bottom. It was a long, slow and painful fall of roughly 53%, spread out from October 2007 to March 2009.

A wild ride for the ASX 200

That makes the nightmare that our markets went though back in March seem like a hazy daydream. Yes, we had a nasty fall in the ASX 200. But it was so fast that if you blinked, you might have missed it. The drop from the top to the bottom took just over a month, ending on 23 March. And for the rest of the year, the markets have been nothing but incredibly kind to investors (at least those who didn’t sell everything on 23 March). Since then, the ASX 200 is up more than 47%, and is now in the green on a year-to-date basis.

Across the Pacific in the United States, things are even better. Overnight, the S&P 500 Index (SP: .INX) hit another all-time record high on the back of outgoing President Donald Trump signing an additional round of stimulus spending. That index is up more than 14% year to date, and up almost 67% since 23 March. Happy New Year indeed.

But why is all this happening? It does seem a little incongruous, to say the least…

An ‘everything’ bubble?

Well ,according to reporting in the Australian Financial Review (AFR) today, we have stimulus programs orchestrated by central banks around the world to thank. The AFR calls the near-zero interest rate environment, egged on by massive quantitative easing (QE) programs, as the fuel for ‘the everything bubble’. It’s these massive injections of liquidity and stimulus spending that are reportedly the reasons markets of all stripes are at or near record highs.

These include the share market, the bond markets, property prices, gold prices and bitcoin. It’s not historically normal to see all of these markets rise in tandem, and yet that is pretty much what we’ve seen in 2020.

“The embrace of radical monetary policy has warped the valuation yardsticks relied upon by investors for generations. Value becomes a hard notion to grasp in a world of zero interest rates”, the report tells us.

So will the music ever stop? Well, history tells us it has to at some point. But whether or not that will be in 2021, 2023 or 2031 is anyone’s guess. But what we do know is that the primary factors that have led to this ‘everything bubble’ in 2020 will likely still be at play next year.

More reading

• ASX 200 up 0.65%: Big four banks rise, tech shares charge higher, Flight Centre jumps
• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX 200 shares to buy in January
• 3 reliable ASX 200 shares that keep growing
• These were the best performers on the ASX 200 last week

Motley Fool contributor Sebastian Bowen owns bitcoin. 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 Beach Energy Ltd (ASX: BPT) share price has come under pressure on Tuesday after the release of an announcement.

In afternoon trade the energy producer’s shares are down 5% to $1.77.

Why is the Beach Energy share price sinking lower?

Investors have been selling the company’s shares this afternoon following the release of an update on its drilling activities at the Ironbark 1 exploration well.

The Ironbark 1 well in WA-359-P is located in the North Carnarvon Basin, off the North West coast of Australia. The well was testing the Triassic Mungaroo Formation with multiple sand objectives. The reservoir has previously been explored nearby at comparably shallower depths and includes discoveries at the Gorgon, Goodwyn, and North Rankin gas condensate fields.

However, unfortunately for Beach and its joint venture partners BP Developments Australia, Cue Energy Resources Limited (ASX: CUE), and New Zealand Oil & Gas Limited (ASX: NZO), drilling at the Ironbark 1 exploration well has been unsuccessful.

According to the release, the well was drilled to a total depth of 5,618 metres measured depth, intersecting the primary target of the Mungaroo Formation at 5,275 metres. But no significant hydrocarbon shows were encountered in the target sandstones.

As a result of this, the exploration well will be plugged and abandoned, in-line with pre-drill planning.

While this is certainly a disappointment for Beach, it still has plenty of other exploration activities to cushion the blow.

The same cannot necessarily be said for Cue Energy Resources. Unsurprisingly, the Cue Energy share price has crashed 60% lower on the news.

The company’s Chief Executive, Andrew Jefferies, commented on the news: “Bugger…. a very disappointing result for us all. Ironbark was a world scale prospect in a highly prospective address, and it needed drilling. We got an answer, but it was not the one we wanted.”

“While the operations are not over yet, I’d like to acknowledge the Operator BP for their safe and professional operations throughout the drilling of the well, as well as our JV partners and our shareholders for their continuing support,” he concluded.

More reading

• What’s moving the Beach Energy (ASX:BPT) share price today?
• Why the Woodside (ASX:WPL) share price is edging higher today
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Beach (ASX:BPT) and Cue Energy (ASX:CUE) shares are sinking lower appeared first on The Motley Fool Australia.

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The Rhythm Biosciences Ltd (ASX:RHY) share price has rocketed over 640% for the past twelve-month period. From the beginning of November alone, the share price has soared over 355%. 

For the past few weeks, we’ve been watching Rhythm Biosciences’ share price pop amid recent company achievements that might help explain the climbing share price. 

So how did Rhythm Biosciences slap over six hundred percent on its share price this year?

A one product focused company

Unlike other research and development (R&D) companies, Rhythm Biosciences is focused on one project only, ColoSTAT. According to the company’s latest investor presentation, the purpose of ColoSTAT is the early detection of colorectal cancer using a simple, accurate and low-cost blood test, designed for global mass-market screening.

The ‘global mass-market’ part here is important when assessing the ambitions of the company. The presentation further notes that across the company’s markets which include the US, Europe, Australia, China and Japan — the colorectal cancer screening market for the 50 – 74 year old population is worth roughly $38 billion. 

Bringing new technology into this space could be a real game changer for Rhythm Biosciences and a significant R&D breakthrough for the industry as a whole. 

So who’s in charge?

Rhythm Biosciences’ board and management team offer a mix of experience across the R&D and pharmaceutical spaces. The current CEO previously led up Medical Developments International Ltd (ASX: MVP). Other members of the board have worked senior roles in companies including Sonic Healthcare Ltd (ASX: SHL) and Imugene Ltd (ASX: IMU).

Notably, the board and management team also offer a breadth of global experience and international achievements. This is of specific relevance considering the company’s intention to make ColoSTAT available in so many parts of the world. 

What does 2021 look like for the Rhythm Biosciences share price?

I’m sure if many investors would have guessed that the Rhythm Biosciences share price was going to soar over 600% this year, the company would have sold a lot more shares twelve months back. Unfortunately, not even a crystal ball can predict what markets will do.

What we do know is that Rhythm Biosciences has noted its intentions for FY21 and FY22. According to current estimates by the company, the ‘final product make up’ is expected during FY21 and a clinical trial study targeting a ‘real-world population’ is scheduled for FY22.

As we make our way into 2021, we’ll just have to buckle up and see how these activities pan out for the company and what that will mean for its share price.

The Rhythm Biosciences share price opened today at 82 cents per share. 

More reading

• The Rhythm (ASX:RHY) share price is surging 5% higher today. Here’s why.
• Why the Rhythm Biosciences (ASX:RHY) share price rocketed 28% to a record high
• These small cap ASX shares delivered more than 100% returns in November

Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International Limited and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Rhythm Biosciences (ASX:RHY) share price jumped over 600% this year appeared first on The Motley Fool Australia.

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