Tag: Motley Fool

Hub24 Ltd (ASX: HUB) is one of few ASX shares to not only break above its pre-COVID highs, but almost double in year-to-date returns. The investment and superannuation portfolio administrator has experienced significant growth in its platform revenue and funds under administration (FUA) over the past five years.

But, despite the Hub24 share price currently sitting at over $20, according to one broker, the company still has a significant market share opportunity at hand. Here’s the Hub24 growth story so far and why this broker thinks the company still has a solid runway ahead of it. 

Hub24 highlights 

Hub24’s investment and superannuation platform offers a comprehensive range of investment options, with enhanced transaction and reporting solutions, for all types of investors, individuals, companies, trusts, associations or self-managed super funds. 

The platform has continued to scale with a 5-year compound annual growth rate (CAGR) for FUA of 59% and a 5-year CAGR for platform revenue of 55%. More recently, in FY20, the company achieved a 37% increase in platform revenue to $74.3 million and a 34% increase in FUA to $17.2 billion whilst underlying net profit after tax (NPAT) soared 49% to $10.1 million. 

The company made a series of compelling acquisitions in FY20 to strengthen its position as a leading platform provider. Three companies including Xplore Wealth Ltd (ASX: XPL), PARS and an investment of up to 40% of Easton Investments Ltd (ASX: EAS) were added under the Hub24 brand for a total consideration of $93 million. These acquisitions are expected to result in approximately 13% earnings per share (EPS) accretion in FY22 and expected synergies of $10 million per annum by FY24. 

Despite the company’s record growth, acquisitions and achievements to date, according to Citi, the market share opportunity for Hub24 is still significant. In FY20, the company’s market share increased from 1.5% to 2.1%. 

IOOF agreement 

Last Friday, Hub24 announced it had entered into a binding heads of agreement with IOOF Holdings Limited (ASX: IFL) to collaborate on developing a range of solutions. These include an investment and superannuation wrap platform, utilising HUB24’s custody, administration and technology capabilities, as well as a suite of managed portfolios. 

Under this proposed arrangement, Hub24 will provide custody and administration services for IOOF’s new private label investment and superannuation solution that will extend the range of products and services offered to the IOOF adviser network and its clients. This is expected to be launched by the second quarter of calendar year 2021.

Citi bullish on Hub24 share price 

On Monday, Citi retained its Hub24 share price target of $24.00 as well as its buy rating. The broker believes the company is well placed to take advantage of the ongoing structural shifts in the wealth management sector. It also sees the agreement with IOOF as a positive which will allow the business to build additional volume and scale. 

More reading

• Why the IOOF (ASX:IFL) share price is one to watch on Friday
• ASX stock of the day: Why are Netwealth (ASX:NWL) shares up 7%?
• Here are the best 5 ASX financials shares of 2020
• Easton Investments (ASX:EAS) share price up 8%, hits 52-week high
• IOOF (ASX:IFL) share price lifts after investor briefing

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Cimic Group Ltd (ASX: CIM) share price is treading lower today despite the company announcing another positive release to the market. Just yesterday, the group advised its affiliate, Ventia, won two significant contracts. Today, its minerals processing company, Sedgman was granted an extended contract award.

However, the upbeat news is still not enough to lift the Cimic share price today, which is 2.04% down to $24.96 at the time of writing.

What did Cimic announce?

In early afternoon trade, Cimic advised the market that Sedgman has secured an extended contract with Mach Energy. The agreement will see the latter perform operations and maintenances services at the Mount Pleasant mine in New South Wales.

Mach Energy provides energy management solutions for commercial real estate property managers, operators, engineers, and owners. The company looks after some of Australia’s most iconic buildings, with properties across the country.

Terms of the deal

Sedgman will operate and maintain Mach Energy’s Mount Pleasant coal handing and preparation facilities for an additional 3-year period. The company completed construction of the facility in 2019 and has been operating ever since

The contract extension is estimated to generate revenue of around $120 million to Sedgman based on work volumes. This will bring the total revenue from the entire contract to $200 million.

Management commentary

Commenting on the alliance, Cimic group executive chair and CEO Juan Santamaria said:

Sedgman and the CIMIC Group have a strong history with MACH Energy which we’re pleased to continue. Sedgman’s leadership in minerals processing will ensure maximum resource recovery for our long-term client.

Sedgman managing director Grant Fraser said the contract was testament to the partnership forged with MACH Energy, and the integration of its engineering and operations capability.

How has the Cimic share price performed in 2020?

The Cimic share price has lost more than 24% of its value since the start of 2020. Although COVID-19 played a part in the overall downturn across Cimic’s industries, its share has yet to fully recover.

The Cimic share price reached a 52-week high of $35.75 in January before falling to a 52-week low of $11.87 in the months after.

More reading

• Cimic (ASX:CIM) share price falls despite positive update
• Why the Cimic Group (ASX:CIM) share price is on watch today
• Cimic (ASX:CIM) share price flat despite another contract win
• ASX 200 goes up on Friday
• Cimic (ASX:CIM) share price inches up on $112 million contract wins

Motley Fool contributor Aaron Teboneras 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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The second best performing ASX sector this year is well placed to take the top position in 2021.

I am talking about the Materials sector, which is dominated by ASX mining stocks. This group rallied nearly 13% in 2020 when the S&P/ASX 200 Index (Index:^AXJO) is struggling to reach breakeven.

Only the ASX Technology sector is beating Materials. This is largely due to to the big surge in the Afterpay Ltd (ASX: APT) share price and Xero Limited (ASX: XRO) share price.

ASX miners to outperform ASX tech stocks?

But while the outperformance of ASX tech stocks have pushed these stars into the valuation stratosphere, many ASX miners are still looking cheap.

It’s for this reason I think mining stocks will overtake tech stocks in 2021, particularly given the outlook for commodity prices.

Citigroup believes miners could keep their edge in 2021. If the broker is right, it will mark the sector’s fifth year of outperformance against the general market.

Monetary policy a lead indicator

“Key markets China and the US are running supportive monetary policy,” said the broker.

“Citi expects China M2 and TSF [total social financing] to grow around 9% and 11% in 2021. Global central bank policy rates point to the potential for upside surprise in Global Mining equity indices in CY21 should we see a strong coordinated recovery in global growth across key metal intensive economies.”

TSF purports to measure the total amount of funds going into the real economy from the entire financial system.

Easing commodity prices not a big threat

While analysts believe the record high iron ore price of over US$170 a tonne is not sustainable through 2021, our iron ore producers will still be generating a lot of cash.

Citi believes the price of the commodity will average US$115 a tonne in 2021 before gradually slipping to US$74 a tonne in 2024.

Even then, the broker estimates that Rio Tinto Limited (ASX: RIO) will make enough to repurchase around 13% of its shares. That would put the Rio Tinto share price on a price to cashflow (PCF) multiple of 7.2 times, which is cheaper than the through cycle average.

How to get the best return from ASX mining sector

UBS is also upbeat on the sector as it sees material valuation upgrades across the sector if spot prices can be sustained.

However, to get the best bang for your investment dollar, the broker believes you should sell the strongly performing base metal miners and buy precious metal miners.

It is also urging investors to hang on to bulk miners like the iron ore producers.

Some miners that UBS prefers include the Fortescue Metals Group Limited (ASX: FMG) share price, Newcrest Mining Ltd (ASX: NCM) share price and South32 Ltd (ASX: S32) share price.

More reading

• In a record-breaking year, here are some of the world’s most popular shares
• With an 8% dividend yield, is the AGL (ASX:AGL) share price a buy?
• Here’s why a big broker thinks you should avoid these ASX gold shares 
• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• 2 of the best ASX 50 shares to buy today

Brendon Lau owns shares of Newcrest Mining Limited, Rio Tinto Ltd., and South32 Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 compelling reasons why the share price of Magellan Financial Group Ltd (ASX: MFG) looks attractive, according to a couple of fund managers.

A quick overview of Magellan

Magellan describes itself as a specialist funds management business established in 2006 and it’s based in Sydney. Magellan Asset Management managed approximately $103 billion of funds under management (FUM) at 30 November 2020 across its global equities, global listed infrastructure strategies and Australian equities for retail, high net worth and institutional investors. Magellan employs over 120 staff across the world.

Magellan’s investment in Guzman y Gomez (GYG)

Before I get to the reasons why fund managers like Magellan, the company announced a major investment today. It’s buying a 10% stake in GYG for $86.8 million. GYG is an Australian based quick service restaurant chain specialising in made to order, fresh Mexican food with 147 restaurants across Australia, Singapore, Japan and the US.

GYG is led by founder and CEO Steven Marks. The chairman is Guy Russo, who used to be the CEO of McDonalds as well as Kmart and Target.

Hamish Douglass, the chairman of Magellan, said: “We are extremely pleased to become a shareholder in GYG. Magellan has deep investment experience in the quick service restaurant industry and we believe Magellan can both add and gain considerable insights as a major investor and supportive shareholder. GYG is a world class business with enormous growth potential and represents a highly attractive investment opportunity for our principal investments business.”

GYG is aiming to become the best restaurant company in the world and it think it’s now entering the most exciting phase of growth.

Reasons to consider Magellan at this share price

Dr Don Hamson from Plato Investment Management, which specialises in maximising retirement income for retirees, said that Magellan was a good dividend share. He liked the Magellan FY20 result and pointed to the fact that Magellan increased its final dividend by 10% compared to last year.

In terms of the FUM and growth, he said that it bodes well for Magellan that the average FUM was up 26% over the year to $95.5 billion. Dr Hamson said that Magellan is doing really well in the current market COVID-19 environment. The growth stocks in the US, which Magellan is exposed to, is doing really well according to Plato.

In the Magellan FY20 result it also said that its adjusted net profit after tax (NPAT) grew by 20% to $438.3 million. Adjusted earnings per share (EPS) grew by 17% to 241.5 cents.

Meanwhile, James Gerrish from Market Matters thinks that Mr Douglass has steered the Magellan ship admirably over the years.

Mr Gerrish said that Magellan is a quality manager that called the transition to the US and global tech shares extremely well. Market Matters said that it’s valued at a premium to most of the fund management sector, but Market Matters thinks it’s deserving of this status.

Market Matters says that it likes Magellan shares in the mid $50 region. At the time of writing the Magellan share price is indeed at around $55 after the Guzman y Gomez investment news.

According to Commsec projections, at the current Magellan share price it’s valued at 17x FY23’s estimated earnings. It also offers a partially franked dividend yield of 3.9%.

More reading

• Why the Magellan (ASX:MFG) share price is on watch today
• Magellan (ASX:MFG) launches new ETF offerings
• How to turn $20,000 into $950,000 in 10 years with ASX shares
• These were the worst performing ASX 200 shares last week
• Why the Magellan (ASX:MFG) share price dipped lower today

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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Well, 2021 is just around the corner, and investors all over the world are wondering what it might bring to us. After one of the most dramatic years on the share market in living memory in 2020, it’s a fair question. Remember, this year has brought us both a 36% drop for the S&P/ASX 200 Index (ASX: XJO), and a 45% rise since 23 March (going off of today’s levels).

Over in the United States, American investors have a market that is currently near its new all-time highs, coming off of market that reached 4-year lows in March. What a rollercoaster!

So now that 2021 is looming, what should we expect? Well, if anyone tells you anything other than ‘who knows’, they’re lying to you! None of us can know what’s just around the corner. We could have a top year, a flat year or a disaster of a year. Only time will tell.

But how does one invest when we don’t know what’s around the corner?

Well, there’s an exchange-traded fund (ETF) that aims to invest in companies that are so strong, they can arguably absorb any crisis that comes their way. That ETF is the VanEck Vectors Wide Moat ETF (ASX: MOAT). Here’s how it works.

For every castle, a moat

The term ‘moat’ is one initially coined by the legendary investor Warren Buffett. It’s a metaphor that describes how a company with certain characteristics can use these attributes to fend off competition and protect its ‘castle’ against any attack. Hence the ‘moat’ analogy.

So Warren Buffett has talked extensively about what a ‘moat’ entails. But VanEck lists specific factors it looks for in its holdings for the MOAT ETF. These include characteristics such as brand strength, the switching cost of using a company’s product, the cost or scale advantages a company might have, and the ‘network effect’ a company’s product might create.

And this approach has worked out pretty well so far. The MOAT ETF has returned an average of 16.04% per annum over the past 5 years, and 19.65% per annum since its inception.

Right now, MOAT holds 49 companies, all listed over in the United States. They include American Express Company (NYSE: AXP), Kellogg Company (NYSE: K), Intel Corporation (NASDAQ: INTC), Coca-Cola Co (NYSE: KO), Harley-Davidson Inc (NYSE: HOG), Amazon.com Inc (NASDAQ: AMZN) and even Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B).

All of these companies have clear brand strength, as well as displaying at least some of the other characteristics VanEck lists above. With a year of uncertainty ahead, such strengths could prove to be very advantageous to these companies and, by extension, their sharholders.

More reading

• 4 leading ASX growth shares to buy for 2021
• 2 ETFs offering strong international diversification
• 2 high quality ETFs for ASX investors to buy
• 2 ETFs delivering solid returns
• 2 quality ETFs to buy for long-term investing

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of American Express, Coca-Cola, Intel, Kellogg, and VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Intel and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, short January 2021 $200 puts on Berkshire Hathaway (B shares), and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon, Berkshire Hathaway (B shares), and VanEck Vectors Morningstar Wide Moat ETF. 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 Brainchip Holdings Ltd (ASX: BRN) share price won’t be moving for the rest of the day after being placed into a trading halt at the company’s request.

Why are the shares in trading halt?

This morning Brainchip requested an immediate trading halt pending an anticipated announcement of a ‘material customer contract’.

Shares in the company had already traded up 3.17% today before the trading halt commenced.

This comes after a whirlwind six months for the Brainchip share price, having gone from 8 cents a share at the end of June to 97 cents in September. Shares were changing hands for 32.5 cents today before being halted.

What does Brainchip Holdings do?

Brainchip Holdings focuses primarily on software and hardware development of edge-based artificial intelligence (AI) on its low powered processing chips.

The company has several software and hardware products in its arsenal. These range from software that can assist law enforcement and intelligence organisations in identifying people in footage through facial recognition, through to hardware such as the Akida Neuromorphic System-on-Chip (NSoC), which is geared towards IoT (Internet of Things) applications.

It has been a busy last few months for the AI company. In September Brainchip announced a collaboration with VORAGO Technologies on the Akida Early Access Program to develop a radiation-hardened neuromorphic processor that is suitable for spaceflight and aerospace applications.

In late September Brainchip announced the establishment of a software development centre in Hyderabad India, with the purpose of developing software and firmware for the Akida NSoC.

In December, the market was told that the company had been providing shipments of evaluation boards to Early Access Partners for manufacturers, such The Ford Motor Company, Valeo, Vorago Technologies, and National Aeronautics and Space Administration, to assess.

When will Brainchip shares resume trading?

In its announcement to the market today, the company stated that the trading halt is to remain in place until the earlier of the announcement regarding the ‘material customer contract’ being released, or the commencement of trading on Thursday 24 December 2020.

More reading

• Why the BrainChip (ASX:BRN) share price is charging higher
• ASX small caps could get a boost with the Aussie dollar hitting 28-month highs
• Here’s why the BrainChip (ASX:BRN) share price is zooming 8% higher

Motley Fool contributor Mitchell Lawler 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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2020 has seen some truly unprecedented events on the ASX (yes, I know that phrase is becoming cliched, but we’re nearly done with 2020).

We had one of the shortest and sharpest bear markets in history back in March and April. And that was of course followed by a remarkable recovery in global markets.

Our own S&P/ASX 200 Index (ASX: XJO) is up more than 45% since 23 March. American indexes like the Dow Jones Industrial Average (INDEXDJX: .DJI) are pretty much at record, all-time highs.

Data from popular broker Saxo Markets tells us that 2020 has been a record-breaking year, with “record levels of activity from both new and existing clients” using the broker.

Saxo gives a breakdown of the most popular stocks its investors were buying by country. And it makes for some interesting reading.

Clearly, its investors have been pretty good at picking winners. The top 5 stocks in terms of trading volume overall were the following:

1. Tesla Inc (NASDAQ: TSLA)
2. Apple Inc (NASDAQ: AAPL)
3. Nio Inc (NYSE: NIO)
4. Microsoft Corporation (NASDAQ: MSFT)
5. Amazon.com Inc (NASDAQ: AMZN)

All five of these companies are up at least 33% year to date, with Tesla up more than 600%, and Nio up more than 1,000%.

But let’s dig into some individual countries. Here are Australian’s most popular shares on Saxo:

1. Afterpay Ltd (ASX: APT)
2. CSL Limited (ASX: CSL)
3. Tesla
4. Flight Centre Travel Group Ltd (ASX: FLT)
5. Australia and New Zealand Banking GrpLtd (ASX: ANZ)

Some names would be familiar here, but it is interesting to note that a US company in Tesla comes in at No. 3. But Aussies evidently can’t shake that affinity for blue chip shares, with CSL and ANZ making the top 5. We also have a clear turnaround play here with travel company Flight Centre.

Saxo lists the most popular shares across a further 14 countries or regions, so I won’t bore you with all of them. I can tell you that similar themes do emerge. Tesla, for instance, is in more than half of these countries’ top 5 lists.

We also see other ‘big tech’ US companies in most of them, including Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Facebook Inc (NASDAQ: FB) and Amazon. Other ‘hyper-growth’ stocks like Beyond Meat Inc (NASDAQ: BYND), Virgin Galactic Holdings Inc (NYSE: SPCE) and Zoom Video Communications Inc (NASDAQ: ZM) were also popular across the board. As were ‘vaccine stocks’ like Moderna.

Saxo head of equity strategy, Peter Garnry, had this to say on these trends: 

This year was all about the online vs offline world as technology companies were catapulted into the future by the COVID-19 pandemic while many physical industries such as aviation, travel, leisure, hospitality and automobiles came under significant pressure due to the severe restrictions and lockdowns.

More reading

• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Transurban (ASX:TCL) share price wobbles on new CFO announcement
• ANZ (ASX:ANZ) share price under pressure after CFO resigns
• Why shares are less risky now than 30 years ago
• New BNPL enters ASX: How it promises to be different

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, Facebook, Microsoft, Tesla, Virgin Galactic Holdings Inc, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, Facebook, Flight Centre Travel Group Limited, 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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ASX retail shares have arguably been given a boost heading into Christmas. Retail sales data released today suggest the Australian economy might be heading ‘back to normal’ trading conditions.

In a media statement released today, the Australian Bureau of Statistics (ABS) reported that Australian retail turnover rose 7% in November, seasonally adjusted.

The latest data from Australia Post also suggested that the first week of December and the week of Black Friday recorded the biggest number of online purchases Australia has ever seen.

In today’s trading however, online retail shares have been hit hard amid a broader selloff on the ASX.

At the time of writing, online retailers Redbubble Ltd (ASX: RBL) and Kogan.com Ltd (ASX: KGN) have each fallen by almost 5%.

What did the stats say?

The ABS reported that the strong turnover in November also represents a 13.2% increase when compared to November 2019.

Victoria saw a large rise, up 21% compared to the previous month, as retail stores experienced a full month of trade following the easing of coronavirus restrictions in that state. Excluding Victoria, retail sales rose 2.7%.

By industry, household goods retailing led the gains, increasing by 13%, as Black Friday sales and major product releases in the electrical subgroup led to a spike in turnover across the country, the ABS said.

Online retail sales performed even stronger, with Australian households buying more items online in the first week of December than ever recorded before. This was reflected by a 42% increase in online purchases made compared to last year.

According to the latest report from Australia Post, Australians spent $3.2 billion online in October, a 70% increase on the $1.9 billion spent last October.

This report also suggested that the first week of December and the week of Black Friday recorded the biggest number of online purchases ever experienced in Australia. 

An Australia Post spokesperson said the company has “consistently been delivering over 13 million parcels each week in December”.

South Australia, which saw a short lockdown within November, had a flat result. Most South Australian retail industries saw falls as a result of temporary store closures, although these falls were offset by a rise in supermarket sales. 

The rises in Victoria, and Black Friday purchases, also led to large national monthly rises in clothing, footwear and personal accessories sectors as well as other retailing and department stores. 

More reading

• Why the Universal Biosensors (ASX:UBI) share price is up 5% today
• Put these small cap ASX shares on your watchlists today
• Here’s why the Dubber (ASX:DUB) share price is jumping 8.5% higher
• With an 8% dividend yield, is the AGL (ASX:AGL) share price a buy?
• Why the Betmakers (ASX:BET) share price is seesawing today

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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Universal Biosensors, Inc. (ASX: UBI) share price is on the rise today after the company announced that it has signed a new deal with LifeScan.

During mid-morning trade, shares in the medical diagnostics company reached an intraday high of 46 cents. However, the Universal share price has since retreated to 41 cents, up 5.1%.

Quick take on Universal

Universal is a specialist medical diagnostics company that focuses on the research, development, manufacture and commercialisation of diagnostic devices. Used by both consumers and professionals, these test systems can be adopted in an array of point-of-care (POC) settings.

According to Universal, the POC diagnostic market is worth US$15 billion a year.

What’s driving the Universal share price higher?

According to its release, Universal advised that it entered in an exclusive licencing agreement with LifeScan Global Corporation. The agreement will see both parties work together to develop a device that is able to detect and monitor diabetes in animals.

Using LifeScan’s technology, Universal aims to manufacture and sell a discrete single point measurement to monitor glucose. The device will include a biosensor, test strip and a meter for diabetes management.

Under the terms, standard customary conditions apply to both Universal and LifeScan. However, once the product is launched, if annual sales drop below US$10 million, the term of the contract will end.

Previously, LifeScan worked with Universal in commercialising and developing a diabetes strip and meter. To date, the company has sold more than 10 billion diabetes strips worldwide.

CEO commentary

Universal CEO Mr John Sharman spoke of the partnership, saying:

LifeScan paid UBI A$44.6 million in 2019 to buy out UBI’s royalty stream which was based on the diabetes products developed using UBI technology. Our new deal with LifeScan means that we can use our existing know-how and combine it with the LifeScan technology to develop a new diabetes product for animals, which we will own.

Most if not all of the technology, know-how and manufacturing capability for diabetes strips and meters already exists at UBI and we expect to have a product available for sale within 18 – 24 months. Our ambition is to win a significant share of the animal diabetes market.

More reading

• Why the Universal (ASX:UBI) share price reached a multi-year high today

Motley Fool contributor Aaron Teboneras 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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If you’re looking for small cap ASX shares to add to your watchlist, then I think the two listed below could be worth considering.

Here’s why they should be on your watchlists:

Aerometrex Ltd (ASX: AMX)

Aerometrex is a growing aerial mapping business. It specialises in aerial photography, photogrammetry, LiDAR, 3D modelling, and aerial imagery subscription services. The latter is through its MetroMap offering, which provides access to high quality 2D imagery and 3D reality mesh models. The company has been busy developing new products to strengthen its offering and in October announced a new bush fire prevention product. This new technology is able to determine, in three dimensions, the exact fuel load densities in any bushfire prone region in Australia.

Analysts at Morgans are positive on the company’s prospects and currently have an add rating and $1.83 price target on its shares. This compares to the current Aerometrex share price of $1.13. It notes that the company’s shares are trading at a significant discount to rival Nearmap Ltd (ASX: NEA).

Audinate Group Limited (ASX: AD8)

Another small cap share to watch is Audinate. It is a digital audio-visual networking technologies provider that is best known for its innovative Dante audio over IP networking solution. This industry-leading product is used widely across the professional live sound, commercial installation, broadcast, and recording industries globally.

Management recently revealed that the number of Dante enabled products manufactured by its customers has now grown to 2,804. This is eight times greater than its nearest rival, making it the clear industry leader.

UBS is a fan of the company and has a buy rating and $8.00 price target on the company’s shares at present. It has been impressed with its recovery from the pandemic and notes that its first quarter result was well ahead of its expectations.

More reading

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• 2 exciting small cap ASX shares to watch
• 3 exciting small cap ASX shares rated as buys

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 Nearmap Ltd. The Motley Fool Australia has recommended AUDINATEGL FPO and Nearmap 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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