Tag: Motley Fool

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

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

It’s arguably the world’s most recognizable chain of restaurants, with over 39,000 locations found in more than 100 countries. Its golden arches remind consumers they can enjoy a familiar, comforting meal almost anytime and anywhere they want.

The chain in question is, of course, McDonald’s (NYSE: MCD). It’s evolved over the years, but its appeal — and success — has effectively leveraged the idea of sameness. That is to say, customers like the fact that eating at a McDonald’s is at least a partial nod to the past; the value isn’t too shabby, either. This foundation is a big reason investors can look forward to more growth from the restaurant chain in the future.

Still, there’s one development that would-be shareholders would be wise to put on their radar.

Plenty of growth

Not every business idea McDonald’s comes up with is a winner. For example, the live-action Hamburglar meant to modernize the hamburger-stealing cartoon character and introduced in 2015 ended up being more creepy than cool. And, although the company would probably like to, let’s not forget McDonald’s once dabbled in pizza (back in the late 1980s).

By and large, though, the restaurant chain boasts more hits than misses, especially when it needs them the most. One only has to look four months back to find an example of the chain’s frequent strokes of brilliance.

While life in parts of the country is somewhat getting back to (the new) normal, as of early September, the fallout from the COVID-19 pandemic was still in full swing. Debates over the risk of restarting school were heated, while restaurants and retailers were still very restricted as to what they could and couldn’t do. Millions were still unemployed all over the world, and discretionary spending was crimped … even if just for logistical reasons. The fast-food giant’s second-quarter numbers proved it. Sales for the three-month stretch ending in June were down 29% year over year. Income fell 67%. Simply put, the company needed help.

Travis Scott came to the rescue.

You may not know who the relatively new musician and entertainer is, but younger fans of pop and rap music do. His star power was enlisted to help McDonald’s sell a $6 meal combo in September. The promotion was so successful that the company struggled to fully meet demand. McDonald’s eventually reported that September’s sales marked the best single month in almost a decade.

One good month or one savvy promotion doesn’t inherently make a company a winner. The fact that McDonald’s was able to act as well as it did when it did is a microcosm of its entire operation, though. Not every idea is a winner, but the ones that are end up being very big deals.

This reality is evident in the numbers. Earnings aren’t growing in a perfectly straight line, but they are growing pretty consistently, and are expected to keep growing from here.

As for revenue, yes, it’s been shrinking, but that’s by design. The organization has been paring back its ownership of restaurants by selling them to franchisees. As of September, 36,438 of the world’s 39,096 locations (6.8%) were franchise properties, up from 29,851 of the 36,405 McDonald’s locales (18%) five years ago. The move ultimately means lower sales but potentially more profits since franchisees’ fees and royalties are higher-margin revenue. This transition is largely complete now, translating into sales and earnings growth going forward.

Just keep tabs on franchisees’ frustration levels

That said, the company’s strategic shift away from restaurant ownership and toward a more profitable franchising focus has coincided with what some would characterize as an increasingly unfair burden on local operators.

Franchising is usually a symbiotic relationship within the fast-food industry. A well-known outfit like McDonald’s or rivals such as Wendy’s or Subway bring brand recognition and national advertising to the table, while localized businesspeople offer labor and remote management. These entrepreneurs also supply franchisors with recurring royalty revenue.

Being a McDonald’s franchisee is neither cheap nor easy, though. Not every operator wants to serve every menu item the corporation pushes its restaurants to offer. Ever-increasing promotional costs and required remodels have also become more and more common, as have frustrations regarding rent payments; the parent company owns its restaurant real estate and then leases it to franchisees at rates based on that store’s sales. And, despite coronavirus-related headwinds, early this month the parent unveiled new, additional franchise fees to be imposed beginning in 2021 at the same time as some operator subsidies were altogether canceled.

In response to new fees announced this month, some franchisees are rethinking their willingness to continue offering value-oriented parts of their menu. Others are mulling increased prices for Happy Meals, while still others are reportedly considering slightly higher prices across the entire menu.

And rather than cooling off over time, this infighting still appears to be ramping up.

Bottom line for McDonald’s

It’s not a fatal flaw, and certainly not one that could prove immediately disastrous. Even on its worst days, McDonald’s is a more reliable cash collection mechanism than many other fast-food chains. As was already noted, it’s the most recognizable name in the business for a reason. It’s also been a great investment for the same reason.

Nevertheless, the tensions between the parent company and franchisees not only seem to never end but may even be worsening. This sort of adversarial dynamic poses the risk of pushing franchisees out of the McDonald’s network while preventing other prospective franchisees from ever teaming up with the company.

It’s still not a reason to avoid the stock, though … at least not yet.

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

More reading

• 3 of the best ASX shares to buy in January
• 3 recents ASX IPOs to watch
• Why I think a growing passive income is the key to financial freedom
• 2 buy-rated ASX dividend shares for income investors to snap up
• 3 ASX growth shares to buy this week

James Brumley 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 Is McDonald’s stock a buy? appeared first on The Motley Fool Australia.

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

from The Motley Fool Australia https://ift.tt/2KX1LPF

If you’re looking for a few shares to add to your portfolio in 2021, then you could do a lot worse than the ones listed below.

Here’s why these ASX shares come highly rated right now:

Bravura Solutions Ltd (ASX: BVS)

Bravura Solution is a provider of software and services to the wealth management and funds administration industries. It has a number of quality products in its portfolio that are being used by many large financial institutions. This includes the Sonata wealth management platform and the Midwinter financial planning software. While the pandemic has hit the company (and its share price hard), analysts at Goldman Sachs believe it is worth sticking with the company. The broker has a buy rating and $4.50 price target on Bravura’s shares.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is a donor management platform provider that has been growing its share of the United States church market at a rapid rate over the last few years. This has led to the company delivering stellar revenue and operating earnings growth. Pleasingly, management doesn’t expect its strong growth to end in FY 2021. At the end of the first half, Pushpay increased its EBITDAF guidance for the year ending 31 March 2021 to between US$54 million and US$58 million. This will be more than 115% higher than FY 2020’s EBITDAF of US$25.1 million. Goldman Sachs is positive on the company and believes it is well-positioned for growth. The broker has a conviction buy rating and $10.35 price target (now $2.59 after its 4-1 share split) on its shares.

REA Group Limited (ASX: REA)

REA Group is the property listings company behind the market-leading realestate.com.au website. It also owns and operates several equivalents in growing international markets such as India. The company has been a strong performer over the last few years despite contending with a housing market downturn and the pandemic. Pleasingly, with the housing market tipped to rebound in 2021, its outlook is looking particularly positive. Analysts at Morgan Stanley are bullish on the company. They expect price increases, volume growth, and good cost control to underpin strong earnings growth in the coming years. The broker has an overweight rating and $150.00 price target on its shares.

More reading

• 2 rapidly growing ASX tech shares to buy
• 5 fantastic ASX shares to buy in 2021
• Why a2 Milk and these ASX shares have been smashed in 2020
• The most crazy ASX chart of 2020
• 3 fantastic ASX growth shares to buy in 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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd 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 3 of the best ASX shares to buy in January appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/34NurSk

Over the last couple of months there have been countless companies hitting the ASX boards after completing their initial public offerings (IPOs).

Three that could be worth watching are listed below. Here’s what you need to know about them:

PlaySide Studios Limited (ASX: PLY)

Melbourne-based PlaySide is one of Australia’s largest independent video game developers with over 52 titles developed. This includes games based on original intellectual property and games developed with Hollywood studios such as Disney, Warner Bros, and Nickelodeon. It operates in a mobile games market which is estimated to be worth $77.2 billion after growing at 13.3% year on year. The company’s IPO raised $15 million from investors at 20 cents per share, giving it a market capitalisation of $73 million. The PlaySide share price ended the week at 32.5 cents.

SILK Laser Australia Limited (ASX: SLA)

This laser, skin care, and cosmetic injections company’s shares have been positive performers since raising $83.5 million at $3.45 per share through its IPO. At the end of the week, SILK Laser’s shares were changing hands for $3.65. Investors appear to have been impressed with its solid performance so far in FY 2021. As of the end of the first five months of FY 2021, management revealed that it is on track to beat its forecasts. It advised that unaudited network cash sales remain well ahead of last year and are up 63% on the prior corresponding period to $38 million.

Universal Store Holdings Limited (ASX: UNI)

Universal Store is a leading fashion retailer which landed on the Australian share market after raising $147.8 million at $3.80 per share. This gave the fashion retailer a market capitalisation of $278.1 million. It has been a strong performer in FY 2021. After meeting its prospectus forecast in the first quarter, its strong growth continued in the second quarter. Between 28 September and 15 November, the company achieved group comparable sales growth of 33% versus the prior corresponding period.

More reading

• Experts pick the best ASX IPO of 2020
• PlaySide Studios (ASX:PLY) share price doubles on ASX debut

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 3 recents ASX IPOs to watch appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3aMa6AI

For many people, achieving financial freedom is likely to be a main goal within their lifetimes. This will enable them to enjoy greater independence and, in some cases, a better quality of life.

However, a large sum of money does not necessarily lead to greater financial independence. Rather, it is the passive income it provides that can make the biggest impact on an individual’s financial outlook.

Therefore, now could be a good time to start investing in cheap dividend stocks with long-term growth potential. Over time, they could make a real difference to an investor’s quality of life.

Achieving financial freedom via a growing passive income

Building a large portfolio during a lifetime is likely to be viewed as a means of achieving financial freedom by many investors. While this is partially correct, the reality is that spending capital is rarely a good idea. Over time, the size of an investor’s portfolio will decline if they are spending capital, rather than the income it produces. This can mean that they eventually run out of money and face a tough financial situation.

As such, the passive income provided by a sum of capital is likely to have a bigger influence on an individual’s financial prospects. For example, a large sum invested in dividend shares is likely to provide greater financial independence through producing a larger income return compared to capital held in cash savings at a low interest rate.

Furthermore, the rate at which a passive income grows can have a significant impact on an individual’s financial freedom. Should it fail to rise at an above inflation pace, they may find that their spending power deteriorates over time. As a result, buying high-yielding shares with the potential to offer dividend growth over a sustained time period could be a sound move.

Investing today to achieve financial independence

Clearly, how an individual invests today depends on their stage in life. For those investors seeking to achieve financial freedom in the long run, buying a diverse range of high-quality businesses at low prices could lead to impressive capital returns. A stock market rally that causes valuations to revert to their long-term averages appears to be likely. This could produce high returns that catalyse an investor’s portfolio in the coming years.

For those investors who are seeking to make a passive income from their capital today, investing in stocks with dividend growth prospects could be the main priority. They could include companies that pay out a low proportion of their profit as a dividend, as well as those businesses that have bright financial futures. They may be able to afford to deliver strong dividend growth that makes a positive impact on an investor’s financial freedom in 2021 and beyond.

More reading

• 2 buy-rated ASX dividend shares for income investors to snap up
• 3 ASX growth shares to buy this week
• 3 unstoppable ASX shares to buy
• Here’s the 5 best performing ASX telecom shares in 2020
• Looking for the best shares to buy now? I’d take these 3 simple steps today

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.

The post Why I think a growing passive income is the key to financial freedom appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3mMvkAM

Thankfully in this ultra-low interest rate environment, the Australian share market is home to a large number of dividend shares for investors to choose from.

Two ASX dividend shares that could be great options for income investors are listed below. Here’s why they come highly rated:

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is one of the world’s leading iron ore producers and appears well-placed to deliver another robust result in FY 2021. This is thanks to its record shipments, ultra-low C1 production costs of US$12.74 per wet metric tonne, and the sky high iron ore price.

In respect to the latter, the iron ore price has been tipped to climb beyond US$180 a tonne next month. This is being driven by strong demand in China and production disruption in Brazil.

Analysts at Macquarie are expecting this to lead to Fortescue paying a very generous dividend in FY 2021. The broker has pencilled in a dividend of approximately $2.61 per share fully franked. Based on the current Fortescue share price, this equates to a massive 11% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share to look at is Telstra. With the end of the NBN rollout is sight, the arrival of 5G internet, cost cutting, and its T22 strategy, Telstra’s outlook is arguably the most positive it has been in a decade.

In addition to this, the company is aiming to unlock value for shareholders by splitting its business into three separate entities. Management believes the restructure would enable the company to take advantage of potential monetisation opportunities.

Goldman Sachs thinks Telstra would be a good option for income investors. It recently reiterated its buy rating and $3.60 price target on its shares. It has also reaffirmed its forecast for a 16 cents per share fully franked dividend in FY 2021 and beyond. Based on the current Telstra share price, this would provide investors with a 5.3% dividend yield.

More reading

• Leading fund manager names the ASX dividend shares to buy in 2021
• These ASX dividend shares could be top Christmas gifts for income investors
• 3 top ASX dividend shares for a better retirement
• Iron ore prices poised to hit US$180 next month: Westpac
• 3 ASX shares for growth, income, and value investors

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

The post 2 buy-rated ASX dividend shares for income investors to snap up appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3hnrVao

Luckily for Australian growth investors, the ASX is not short of options when it comes to growth shares.

Three top growth shares for investors to look at today are listed below. Here’s what you need to know about them:

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat Leisure is a leading gaming technology company Although 2020 has been a very difficult year for its poker machine business, its digital business has performed positively and delivered strong growth. Analysts at Citi expect the company to bounce back in FY 2021 and then build on this in the years that follow. As a result. they have recently retained their buy rating and lifted the price target on its shares to $40.60.

Audinate Group Limited (ASX: AD8)

Audinate is a digital audio-visual networking technologies provider which has been delivering impressive sales growth over the last few years. This is thanks to its Dante product, which is the clear market leader with 8 times as many enabled devices as its nearest rival. And while FY 2020 was a tough year because of the pandemic, the company looks well-placed to bounce back strongly when the crisis passes. UBS has been encouraged by its recovery and notes its strong performance in the first quarter. It has a buy rating and $8.00 price target on its shares.

Kogan.com Ltd (ASX: KGN)

This ecommerce company could be an ASX share to buy, especially if you’re looking for long term options. Kogan could be a great buy and hold option due to the structural shift to online shopping and the growing popularity of its website. Management has also been making value accretive acquisitions recently that could accelerate its growth in the coming years. One broker that is positive on the company is Credit Suisse. It recently put an outperform rating and $20.60 price target on its shares.

More reading

• 3 ASX shares to buy for 2021 and beyond
• 2 great ASX growth shares that are rapidly expanding
• 2 ASX growth shares to buy when the market reopens
• Got cash to invest? Here are 3 ASX shares to buy
• 2 dirt cheap ASX shares to buy in 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 AUDINATEGL FPO and Kogan.com ltd. The Motley Fool Australia has recommended AUDINATEGL FPO 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.

The post 3 ASX growth shares to buy this week appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/37Sd3xB

There are some unstoppable ASX shares that manage to keep growing almost every year and could be worth considering for a growth-focused portfolio.

Here are some names that could be worth watching:

Xero Limited (ASX: XRO)

The Xero share price is up 83% this year and it has gone up 780% over the past five years.

The ASX share has been delivering subscriber growth and revenue growth for many years. Xero’s FY21 half-year result demonstrated that growth with subscriber numbers going up 19% to 2.45 million and operating revenue grew 21% to NZ$410 million.

COVID-19 conditions caused the company to be very disciplined with its costs and Xero showed how much profit growth it can make when it tries to limit expense growth. The half-year earnings before interest, tax, depreciation and amortisation (EBITDA) grew 86% to NZ$120.8 million, net profit after tax (NPAT) rose by approximately NZ$33 million to NZ$34.5 million and the free cash flow went up approximately NZ$49.4 million to NZ$54.3 million.

Xero CEO Steve Vamos said at the time of the FY21 half-year result: “This result demonstrates the value our customers attribute to their Xero subscription and the underlying strength of Xero’s business model. We continue to prioritise investment in customer growth and product development in line with the long term opportunity we see.”

Two areas of the world that Xero is growing strongly is in the UK and the ‘rest of world’. UK subscribers grew by 19% to 638,000 in the FY21 first half and rest of the world subscribers went up 37% to 136,000.

CSL Limited (ASX: CSL)

The CSL share price has gone up 180% over the past five years.

Ben Clark from TMS Capital recently said this about CSL: “The Seqirus flu business has been given a huge free kick by COVID. We’re going to see plasma collections get easier, more affordable, and the volume should really start to improve through 2021. The return of elective surgeries will be good for the demand side of the business. And then you’ve just got this phenomenal R&D pipeline that continues to flow sort of new products through to the market.”

The FY20 result was another year of growth for CSL. Revenue went up 9% in constant currency terms and net profit after tax went up 17% to US$2.1 billion. This allowed the company to grow its total dividend by 9% to US$2.02 per share.

In FY21 the company is expecting to strong demand from its plasma and recombinant therapies to continue. With Seqirus, CSL is expecting to benefit from its differentiated products and strong demand for influenza vaccines. Sales of albumin are expected to normalise after the successful transition to the new business model in China.

COVID-19 restrictions are expected to impact CSL’s ability to collect plasma and add to the overall cost of collection, although CSL has several strategies to mitigate this impact. Its research and development response to COVID-19, and the new initiatives, will mean CSL is spending more on research and development but it will still be within the range of 10% to 11% of revenue as previously guided.

CSL is expecting to grow revenue by 6% to 10% in FY21, with net profit increasing by 3% to 8%.

JB Hi-Fi Limited (ASX: JBH)

The JB Hi-Fi share price is up 26.6% this year and it has risen by 142% over the last five years.

Demand for products from JB Hi-Fi and The Good Guys was elevated during FY20 as people decided to spend on items for their work, schooling and entertainment at home.

In FY20 the total sales were up 11.6% to $7.9 billion and underlying earnings per share (EPS) went up 33.2% to 289.6 cents. The underlying earnings before interest and tax (EBIT) margin improved by 89 basis points to 6.14%. That result helped grow the full year dividend by 33.1% to $1.89 per share.

In the first quarter of FY21, JB Hi-Fi Australia saw total sales growth of 27.3%, The Good Guys sales grew by 30.9% and JB Hi-Fi New Zealand sales dropped by 2.5%.

It’s the JB Hi-Fi dividend that is very attractive to Plato Asset Management which has JB Hi-Fi as a key holding, saying that businesses with fully franked dividends can achieve significant additional income for retirees. At the current JB Hi-Fi share price it has grossed-up dividend yield of 5.6%.

More reading

• 2 rapidly growing ASX tech shares to buy
• Leading fund manager names the ASX dividend shares to buy in 2021
• 3 reliable ASX 200 shares that keep growing
• 5 fantastic ASX shares to buy in 2021
• 2 of the best ASX healthcare shares to buy in 2021

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 CSL Ltd. and 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.

The post 3 unstoppable ASX shares to buy appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3aI4kjz

Telecom companies provide the technology that ties together our increasingly connected world. Companies in this sector provide phone, internet, and television services and the infrastructure to support them.

The sector is often attractive to more conservative investors looking for dividend-yielding shares, but it’s also full of companies with good potential for capital appreciation.

Here’s the top 5 ASX telecom shares that have performed particularly well in 2020.

Company	1-year share price performance	Current share price	Market cap
1. Macquarie Telecom Group Ltd (ASX: MAQ)	123%	$52.29	$1.13 billion
2. Vocus Group Ltd (ASX: VOC)	40%	$4.14	$2.5 billion
3. Chorus Ltd (ASX: CNU)	22%	$7.35	$3.27 billion
4. Uniti Group Ltd (ASX: UWL)	13%	$1.71	$1.05 billion
5. Vonex Ltd (ASX: VN8)	104%	$0.22	$41.2 million

Macquarie Telecom

Macquarie Telecom share price is the clear winner in the battle for top spot, returning more than 130% for shareholders over the year.

The company has had a strong FY20, delivering an 8% increase in revenue to $266.2 million. It’s also been growing steadily for the last 3 years, returning a compound annual growth rate (CAGR) of 6.8%.

Macquarie Telecom has benefited from the boom in cloud computing, generating most of its revenue from hosting and data centre business. Its customers include Fortune 500 companies as well as the Australian Federal Government.

Analysts believe that Macquarie Telecom is set to benefit further over the next few years as the move towards cloud computing gathers pace globally.

Vocus 

Vocus share price returned 40% for investors over the course of the year. The company was founded in 2008 by famed entrepreneur and venture capitalist James Spenceley. 

Its core growth engine is the Vocus Network Services (VNS) – a fibre network that encompasses all of Australia, the Pacific rim to Hong Kong and the east coast of the United States, as well as New Zealand.

The company’s retail offering, meanwhile, includes brands like Dodo and iPrimus.

FY20 was the first year in the company’s 3-year turnaround plan, where it delivered total recurring revenues of $1.75 billion, a 1% decline on the prior year.

The company is predicting an even brighter FY21, and expects earnings to grown between 8% to 12% in its VNS business.

Chorus

New Zealand-based Chorus share price returned an enviable 22% in one year. 

This company is a juggernaut back home, owning the majority of telephone lines and exchange equipment in New Zealand. It’s also responsible for building 70% of the new fibre optic Ultra-Fast Broadband (UFB) network in the country.By law, the company cannot sell UFB bandwidth directly to consumers, instead it provides wholesale services to retailers.

Chorus reported a little-changed profit of NZ$52 million for the year to June. The company has been facing a few regulatory hurdles in New Zealand recently, the latest one being the proposal to impose levies totalling NZ$15 million a year on the telecommunication sector to fund the regulation of the industry.

Uniti

Uniti share price is up by a respectable 13% for the year. After crashing 53% during the February and March COVID-19 market panic, the Uniti share price came charging back, up 115% from its 19 March lows.

The company provides internet and telecommunication services, and was formerly called Uniti Wireless Limited.

Uniti is aggressively making a play into the fibre network business, acquiring Telstra Corporation Ltd (ASX: TLS) high broadband Velocity assets just last week. That acquisition represents Australia’s second largest private FTTP (fibre to the premises) network, with 65,000 connected premises of which 50,000 are active.

For the full year FY20, the company reported a 306% increase in year-on-year revenue, from $14.3 million to $58.2 million.

Vonex

I’ve put this share last on the list despite a superior return, as it’s an outlier being a small cap. The Vonex share price however has doubled, returning 104% for its shareholders in one year.

Vonex is a company on the move, acquiring various companies this year, while delivering solid revenues. In March, the company acquired 2SG Wholesale, bringing 150+ new wholesale customers and expanding its SME (small to medium enterprise) product offerings.

Last week, the company announced its intention to acquire Nextel, which it said would add $1 million to its recurring revenue stream.

Vonex posted healthy results for the September quarter, adding $1.64 million in new retail and wholesale business, and recording a 25% quarter-on-quarter increase.

More reading

• Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower
• Why Codan, Pro Medicus, Uniti, & Zip shares are storming higher
• Why the Uniti (ASX:UWL) share price is zooming 13% higher today
• Why the Uniti (ASX:UWL) share price is on watch today
• Vocus (ASX:VOC) founder: ASX is in ‘bubble territory’

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

The post Here’s the 5 best performing ASX telecom shares in 2020 appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3aOY3Cy

Telecom companies provide the technology that ties together our increasingly connected world. Companies in this sector provide phone, internet, and television services and the infrastructure to support them.

The sector is often attractive to more conservative investors looking for dividend-yielding shares, but it’s also full of companies with good potential for capital appreciation.

Here’s the top 5 ASX telecom shares that have performed particularly well in 2020.

Company	1-year share price performance	Current share price	Market cap
1. Macquarie Telecom Group Ltd (ASX: MAQ)	123%	$52.29	$1.13 billion
2. Vocus Group Ltd (ASX: VOC)	40%	$4.14	$2.5 billion
3. Chorus Ltd (ASX: CNU)	22%	$7.35	$3.27 billion
4. Uniti Group Ltd (ASX: UWL)	13%	$1.71	$1.05 billion
5. Vonex Ltd (ASX: VN8)	104%	$0.22	$41.2 million

Macquarie Telecom

Macquarie Telecom share price is the clear winner in the battle for top spot, returning more than 130% for shareholders over the year.

The company has had a strong FY20, delivering an 8% increase in revenue to $266.2 million. It’s also been growing steadily for the last 3 years, returning a compound annual growth rate (CAGR) of 6.8%.

Macquarie Telecom has benefited from the boom in cloud computing, generating most of its revenue from hosting and data centre business. Its customers include Fortune 500 companies as well as the Australian Federal Government.

Analysts believe that Macquarie Telecom is set to benefit further over the next few years as the move towards cloud computing gathers pace globally.

Vocus 

Vocus share price returned 40% for investors over the course of the year. The company was founded in 2008 by famed entrepreneur and venture capitalist James Spenceley. 

Its core growth engine is the Vocus Network Services (VNS) – a fibre network that encompasses all of Australia, the Pacific rim to Hong Kong and the east coast of the United States, as well as New Zealand.

The company’s retail offering, meanwhile, includes brands like Dodo and iPrimus.

FY20 was the first year in the company’s 3-year turnaround plan, where it delivered total recurring revenues of $1.75 billion, a 1% decline on the prior year.

The company is predicting an even brighter FY21, and expects earnings to grown between 8% to 12% in its VNS business.

Chorus

New Zealand-based Chorus share price returned an enviable 22% in one year. 

This company is a juggernaut back home, owning the majority of telephone lines and exchange equipment in New Zealand. It’s also responsible for building 70% of the new fibre optic Ultra-Fast Broadband (UFB) network in the country.By law, the company cannot sell UFB bandwidth directly to consumers, instead it provides wholesale services to retailers.

Chorus reported a little-changed profit of NZ$52 million for the year to June. The company has been facing a few regulatory hurdles in New Zealand recently, the latest one being the proposal to impose levies totalling NZ$15 million a year on the telecommunication sector to fund the regulation of the industry.

Uniti

Uniti share price is up by a respectable 13% for the year. After crashing 53% during the February and March COVID-19 market panic, the Uniti share price came charging back, up 115% from its 19 March lows.

The company provides internet and telecommunication services, and was formerly called Uniti Wireless Limited.

Uniti is aggressively making a play into the fibre network business, acquiring Telstra Corporation Ltd (ASX: TLS) high broadband Velocity assets just last week. That acquisition represents Australia’s second largest private FTTP (fibre to the premises) network, with 65,000 connected premises of which 50,000 are active.

For the full year FY20, the company reported a 306% increase in year-on-year revenue, from $14.3 million to $58.2 million.

Vonex

I’ve put this share last on the list despite a superior return, as it’s an outlier being a small cap. The Vonex share price however has doubled, returning 104% for its shareholders in one year.

Vonex is a company on the move, acquiring various companies this year, while delivering solid revenues. In March, the company acquired 2SG Wholesale, bringing 150+ new wholesale customers and expanding its SME (small to medium enterprise) product offerings.

Last week, the company announced its intention to acquire Nextel, which it said would add $1 million to its recurring revenue stream.

Vonex posted healthy results for the September quarter, adding $1.64 million in new retail and wholesale business, and recording a 25% quarter-on-quarter increase.

More reading

• Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower
• Why Codan, Pro Medicus, Uniti, & Zip shares are storming higher
• Why the Uniti (ASX:UWL) share price is zooming 13% higher today
• Why the Uniti (ASX:UWL) share price is on watch today
• Vocus (ASX:VOC) founder: ASX is in ‘bubble territory’

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

The post Here’s the 5 best performing ASX telecom shares in 2020 appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3aOY3Cy

Determining the best shares to buy now is clearly very subjective. Every investor will have their own views on which companies provide the most attractive investment opportunities.

However, some of the most appealing stocks are likely to have a mix of solid fundamentals, sound strategies and track records that suggest they can perform well in a variety of operating conditions.

Buying such companies at fair prices could prove to be a profitable move. They may be more likely to outperform the stock market and deliver high capital returns.

The best shares to buy now may have solid track records

A solid track record of performance in a range of economic situations may differentiate the best shares to buy now from their peers. The economic outlook is currently very uncertain. Political risks are elevated, while the challenges faced in 2020 regarding coronavirus look set to continue at least in the early part of next year.

Therefore, companies that have been able to deliver impressive sales and profit growth in a variety of operating environments could be relatively attractive. They may be able to outperform their peers in the short run, which could equate to lower levels of risk. Meanwhile, they could be in a stronger position to capitalise on a likely economic recovery in the coming years that produces a higher valuation.

A sound growth strategy

The best shares to buy now may also have sound strategies that can lead to growing profitability in the coming years. The past 12 months have included major change across many industries. This could mean that companies with static business models that fail to innovate quickly become outdated.

By contrast, companies that are able to respond quickly to changing consumer tastes may be the major winners in the likely stock market recovery.

Clearly, it is difficult to assess whether a specific strategy will be successful or not. However, by analysing a company’s recent investor updates compared to those of its peers, it is possible to identify the most flexible and adaptable businesses within a specific sector. They may be able to adjust their operations to accommodate a rapidly-changing economic outlook over the long run.

Financial strength ahead of an uncertain 2021

As mentioned, the best shares to buy now are likely to have solid financial positions. While this is always the case, a solid balance sheet may be worth more than usual in the eyes of investors at the present time. Companies with low debt and strong cash flow may offer less risk during what could prove to be an uncertain period for the economy.

They may also be able to invest to a greater extent in new products and services. Over time, this could produce higher profit growth and a rising share price.

More reading

• 3 ASX shares to buy for 2021 and beyond
• Why Amazon’s stock is so expensive
• 2 great ASX growth shares that are rapidly expanding
• 2 ASX dividend shares to buy for 2021
• 2 rapidly growing ASX tech shares to buy

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.

The post Looking for the best shares to buy now? I’d take these 3 simple steps today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/34I7IqI