Tag: Motley Fool

The four leading ASX growth shares in this article could be worth watching for the long-term.

Here are those interesting stocks:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a payments business which facilitates electronic donations, mostly to large and medium US churches.

Ben Griffiths from fund manager Eley Griffiths said: “Over the last 12 months it has become clear Pushpay is at an inflection point for both cashflow and earnings. Under the stewardship of CEO Bruce Gordon, Pushpay has transitioned from a founder-led investment phase into an optimize/monetization phase. What is more surprising is the very conservative nature of the accounts (a rarity in small cap tech, outside Iress Ltd (ASX: IRE). We believe the next few years for Pushpay will be rewarding and that COVID-19 will accelerate the already entrenched trend to digital giving/engagement from cash.”

Pushpay recently reported in its FY21 half year result that its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin increased from 17% to 31%. Pushpay expects “significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.”

In FY21 the ASX growth share is guiding that it can deliver EBITDAF in the range of US$54 million to US$58 million, which would represent growth of more than 100%. Over the long-term it’s aiming for annual revenue of US$1 billion as it gains market share.

At the current Pushpay share price it’s valued at 25x FY23’s estimated earnings.

Redbubble Ltd (ASX: RBL)

Redbubble is an online marketplace for products created by artists. It sells a wide array of items like wall art, phone cases, clothes and masks.

In FY20 Redbubble grew its marketplace revenue by 36% to $349 million and operating EBITDA surged 141% to $15.3 million. It generated $38 million of total free cashflow in FY20. During the locked-down fourth quarter of FY20, the ASX tech share’s marketplace revenue grew 73%, gross profit rose 88% and it made $8.4 million of operating EBITDA.

The ASX share said growth in the first quarter of FY21 has continued strongly – marketplace revenue was up 116% to $147.5 million, gross profit grew 149% to $64.5 million, it made $22.1 million of earnings before interest and tax (EBIT) and Redbubble generated $27.1 million of operating cashflow.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

This is an exchange-traded fund (ETF) that invests in a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.

The ASX share has produced growth over the last five years with a total return of an average of 16% per annum. It has an annual management fee per annum of 0.49%.

At the moment the largest 10 holdings are: Applied Materials, Corteva, Charles Schwab, Microchip Technology, Boeing, Compass Minerals International, Aspen Technology, Yum! Brands, Cheniere Energy and American Express.

EML Payments Ltd (ASX: EML)

This ASX growth share has a number of different payment services for clients to use. EML Payments has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, it offers virtual account numbers.

EML Payments shares have gone up 51% since the start of November 2020, which is since the COVID-19 vaccine development news came out. Physical gift cards and shopping centre gift cards generated higher earnings before COVID-19 came along.

In the first quarter of FY21, EML revenue grew 75% to $40.6 million compared to the prior corresponding period and that was 20% higher than the fourth quarter of FY20. It generated $10 million of EBITDA in the first quarter, which was up 215% compared to the prior corresponding period and up 69% compared to the FY20 fourth quarter.

More reading

• These were the best performing ASX 200 shares last week
• 2 ETFs offering strong international diversification
• These are the 7 best ASX retail shares in 2020
• 2 high quality ETFs for ASX investors to buy
• 3 exciting ASX tech shares to buy

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 and recommends EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended EML Payments, PUSHPAY FPO NZX, 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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I’m a big fan of buy and hold investing and believe it is the best way for investors to grow their wealth.

To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

This time around I have picked out the three ASX shares that are listed below:

Corporate Travel Management Ltd (ASX: CTD)

Although this corporate travel booking company’s shares are down 43% from their all-time high, that hasn’t stopped them from smashing the market since 2010. The catalyst for this has been the success of its growth through acquisition strategy and focus on technology. This has underpinned strong sales and earnings growth over the last decade. For example, in FY 2011, its first full year since listing, Corporate Travel Management generated revenue of $46.8 million. Whereas in FY 2020, the company’s revenue had grown more than seven times to $350 million. This led to the Corporate Travel Management share price providing investors with a total return of 29.3% per annum over the period, which would have turned a $20,000 investment into just over $261,000.

Reece Ltd (ASX: REH)

Investing in a plumbing parts company may not be the most exciting place to put your money, but it has reaped rewards for investors. Its positive performance and successful expansion internationally has led to its shares beating the market over the last 10 years. Over the period, the Reece share price has generated an average total return of 15.1% per annum. This means a $20,000 investment in its shares in 2010 would now be worth $81,600 today.

ResMed Inc. (ASX: RMD)

The ResMed share price has been a consistently strong performer over the last decade. This has been driven by increasing demand for the medical device company’s market-leading sleep treatment products and the growing awareness of sleep disorders like sleep apnoea. This has led to ResMed’s shares generating an average total return of 23.6% per annum since 2010. This would have turned a $20,000 investment into ~$166,500 today.

More reading

• ASX 200 up 1.1%: ANZ AGM, Resolute jumps, travel shares soar
• The ResMed (ASX:RMD) share price is up 25% in 2020
• Wesfarmers and these ASX shares just hit 52-week highs or better
• ASX healthcare shares could outperform in 2021: Fundie
• These are 8 of the best performing ASX healthcare shares of 2020 so far

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

The post How to turn $20,000 into over $250,000 in 10 years with ASX shares appeared first on The Motley Fool Australia.

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Despite a disappointing end to the week, the S&P/ASX 200 Index (ASX: XJO) managed to record its seventh successive weekly gain last week. The benchmark index rose 0.5% to 6,675.5 points.

While a good number of shares climbed higher last week, some rose more than most.

Here’s why these were the best performers on the ASX 200 over the period:

EML Payments Ltd (ASX: EML)

The EML Payments share price was the best performer on the ASX 200 last week with a 13% gain. This was despite there being no news out of the payments company. However, a change of interests of substantial holder notice last week revealed that First Sentier Investors has been increasing its stake in the company. According to the notice, the fund manager has lifted its holding by almost 4 million shares to the equivalent of a 6.07% stake.

Perseus Mining Limited (ASX: PRU)

The Perseus share price wasn’t far behind with a 12.5% gain over the five days. Investors were buying Perseus and other gold miners after the spot gold price rebounded. This was driven by a weaker US dollar and optimism that major COVID stimulus is coming in the United States. For the same reason, the Resolute Mining Limited (ASX: RSG) share price rose 12.2% last week.

Megaport Ltd (ASX: MP1)

The Megaport share price was on form and jumped 11.5% last week. Once again, this was despite there being no news out of the software-based elastic connectivity provider. However, as of the end of the previous week, the Megaport share price was down 24% from its 52-week high. This may have led to bargain hunters swooping in on the belief they had been oversold.

Afterpay Ltd (ASX: APT)

The Afterpay share price was a strong performer and rose 10.2% over the five days. The catalyst for this was news that the buy now pay later provider will be added to both the ASX 20 and ASX 50 indices at the December rebalance. This meant that fund managers with strict investment mandates could now invest and index-tracking funds had to buy shares. Afterpay is replacing insurance giant Insurance Australia Group Ltd (ASX: IAG) in the exclusive ASX 20 index.

More reading

• Why the Perseus Mining (ASX:PRU) share price is gaining today
• Here’s how ASX buy now, pay later (BNPL) shares have performed in 2020
• Why Afterpay (ASX:APT) and these ASX shares just hit 52-week highs or better
• Why the Afterpay (ASX:APT) share price just smashed its record high
• Why 2021 may be an even better year for ASX investors

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 and recommends EML Payments and MEGAPORT FPO. The Motley Fool Australia owns shares of AFTERPAY T 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.

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The S&P/ASX 200 Index (ASX: XJO) may have ended the week with a decline on Friday, but that didn’t stop it from recording its seventh consecutive weekly gain. The benchmark index climbed 0.5% to 6,675.5 points.

Although a good number of shares climbed higher, not all were on form.  Here’s why these were the worst performers on the ASX 200 last week:

Mesoblast limited (ASX: MSB)

The Mesoblast share price was far and away the worst performer on the ASX 200 last week with a massive 47.6% decline. The majority of this decline came on Friday after investors sold off the biotech company’s shares following the release of an update from its COVID-19 trial. That update revealed that its remestemcel-L product was unlikely to meet its 30-day mortality reduction endpoint. This prompted the US Data Safety Monitoring Board to essentially advise Mesoblast to end the trial early and recruit no further patients. This news has sparked concerns that its ~US$1.2 billion deal with Novartis for remestemcel-L could hit the rocks.

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price was a poor performer and sank 22.4% lower over the five days. Once again, this decline came on the final day of the week when the infant formula and fresh milk company’s shares crashed lower following a guidance downgrade. Due to weakness in the daigou channel, a2 Milk has downgraded its revenue guidance to be in the range of NZ$1.4 billion to NZ$1.55 billion. This is down from its previous guidance of NZ$1.8 billion to NZ$1.9 billion. Management also reduced its EBITDA margin guidance to between 26% and 29% from ~31%.

Service Stream Limited (ASX: SSM)

The Service Stream share price wasn’t far behind with a 20.4% decline last week. Investors were selling the essential network services company’s shares after it announced that it has been awarded a multi-year contract with the NBN. While this would ordinarily be a positive, the company revealed that it would be sharing the work with three other providers. This means it will be generating notably less revenue that the market was previously expecting.

AVITA Therapeutics Inc (ASX: AVH)

The AVITA share price was out of form and dropped 13.8% lower over the five days. Investors were selling the regenerative medicine company’s shares after S&P Dow Jones Indices announced its quarterly rebalance of the S&P/ASX Indices. This rebalance will see AVITA’s shares dumped out of the ASX 200 index on 21 December.

More reading

• How to invest in US shares in 2021
• Why did the Synlait (ASX:SM1) share price drop 2% then enter a trading halt today?
• ASX 200 falls 1.2% on Friday
• Boral (ASX:BLD) share price falls on sale of its US bricks business
• UBS unveils its latest ASX “buy” idea for 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Avita Medical Limited and Service Stream Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investing in the United States and its markets has become increasingly popular in recent years. It’s easy to understand why. As technology and globalisation become ever more prevalent, we can’t help noticing brands like Apple Inc (NASDAQ: AAPL) and Alphabet Inc‘s (NASDAQ: GOOG)(NASDAQ: GOOGL) Google pop up in the everyday household. Or cars made by Tesla Inc (NASDAQ: TSLA) or even Ford Motor Company (NYSE: F) appear on our roads, perhaps driven by an Uber Technologies Inc (NYSE: UBER) driver. Or apps that Netflix Inc (NASDAQ: NFLX), Walt Disney Co (NYSE: DIS), or Amazon.com Inc (NASDAQ: AMZN) supply on our TVs.

If you dig a little deeper in your own cupboard, you might find Kellogg Company (NYSE: K) cereal or razors made by Procter & Gamble Co‘s (NYSE: PG) Gillette.

American companies are everywhere in Australian life, often hiding under familiar brands. Take the popular ice creams Paddle Pop and Golden Gaytime. They are actually owned by the British-Dutch company Unilever UN (NYSE: UL), listed in the US.

So it’s understandable that Aussie investors might want a slice of the pie. And they do. You can take a look at our coverage of some of the most popular US shares that Aussie are buying.

Recently, we covered how the rising Australian dollar was making investing in US shares more attractive. So if you’ve never taken the plunge across the Pacific, it might be a good time to have a think about it. There’s nothing wrong with our own S&P/ASX 200 Index (ASX: XJO) of course. But the reality is that our market is a minnow in the ocean of global markets. The US markets are, by comparison, a pod of whales. I say a pod because the US has a few different markets you can invest in. Rather than just one major index, like our ASX 200, American investors have a few choices. There’s the old-school Dow Jones Industrial Average (INDEXDJX: .DJI), the uber-popular S&P 500 Index (INDEXSP: .INX), and the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX).

Buying US shares on the ASX

You can always buy US shares directly through your ordinary broker. Many of the most popular Aussie share brokers, like Commonwealth Bank of Australia‘s (ASX: CBA) CommSec, or National Australia Bank Ltd‘s (ASX: NAB) NABtrade offer the opportunity to buy US shares like Apple or Netflix directly. There are also newer dedicated US brokers, like the popular Stake, which do the same.

However, if you don’t want to buy these shares directly, there are other options. Various managed funds and Listed Investment Companies (LICs) that are listed on the ASX invest in US shares. Some popular examples include the Magellan Global Fund (ASX: MGF) and MFF Captial Investments Ltd (ASX: MFF).

Otherwise, there are always US market-tracking index funds available on the ASX as well. Some examples include the iShares S&P 500 ETF (ASX: IVV), the Vanguard US Total Market Shares Index ETF (ASX: VTS), and the BetaShares Nasdaq 100 ETF (ASX: NDQ). There’s also a couple of currency-hedged options for the investor who wants to take currency fluctuations out of the equation. These include the iShares S&P 500 AUD Hedged ETF (ASX: IHVV) and the BetaShares NASDAQ 100 ETF – Currency Hedged (ASX: HNDQ).

Foolish takeaway

For the investor who wants to branch out and invest in US shares, there are more options available than ever. In the end, it just depends on your individual preferences as to which route you wish to take.

More reading

• These were the worst performing ASX 200 shares last week
• ASX 200 falls 1.2% on Friday
• Boral (ASX:BLD) share price falls on sale of its US bricks business
• UBS unveils its latest ASX “buy” idea for 2021
• US fundie predicts 25% share market gain in 2021

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. Sebastian Bowen owns shares of Alphabet (A shares), Ford, Magellan Flagship Fund Ltd, National Australia Bank Limited, Procter & Gamble, Tesla, Uber Technologies, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, Netflix, Tesla, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Uber Technologies and recommends the following options: short January 2021 $135 calls on Walt Disney, long January 2022 $1920 calls on Amazon, long January 2021 $60 calls on Walt Disney, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, BETANASDAQ ETF UNITS, Netflix, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are at least three reasons why Brickworks Limited (ASX: BKW) shares are a compelling investment option.

Reason one: A construction recovery in Australia

Whilst the building products divisions may not make up a majority of the underlying value of Brickworks shares, the performance of its construction divisions are important for the Brickworks share price.

In recent months Brickworks has seen a recovery in the Australian construction industry after the initial impacts of COVID-19.

According to Brickworks’ most recent trading update, in Australia the company has made a strong start to FY21 with first quarter earnings well ahead of the prior corresponding period. Its home builder customers have a solid pipeline of work for the remainder of the financial year, underpinned by various government stimulus measures. Brickworks is making progress on its $75 million Austral Masonry plant as well as its $125 million face brick plant at Horsley Park.

However, there isn’t the same sort of recovery going on in the US. COVID-19 daily infections are above 200,000 in the US and the construction industry is being impacted. Sales have been below expectations in recent months with a number projects being deferred by state authorities due to financing concerns, as well as disruptions to manufacturing operations.

Reason two: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares

Soul Patts is an investment conglomerate that has been listed since 1903. Brickworks has owned shares of Soul Patts for decades at this point.

Soul Patts has a diversified portfolio of assets. Some of its positions include TPG Telecom Ltd (ASX: TPG), Brickworks, New Hope Corporation Limited (ASX: NHC), Australian Pharmaceutical Industries Ltd (ASX: API), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT). It also has private investments in areas like financial services, resources and swimming schools. 

Some of Soul Patts’ most recent investments have been focused on agriculture. It also recently tried to acquire aged care operator Regis Healthcare Ltd (ASX: REG), though its public offer was knocked back quickly.

Soul Patts makes up a big chunk of the underlying Brickworks asset value. The Soul Patts share price has risen by 17% over the past two months and by 54.8% over the last six months.

Reason three: A growing industrial property trust

Brickworks owns a 50% stake in an industrial property trust along with real estate giant Goodman Group (ASX: GMG).

The idea of the trust is for Brickworks to sell its excess land that it no longer needs into the trust and then industrial properties (like warehouses) are built on that land.

The warehouses can then benefit from long-term capital growth whilst also paying strong annual rental profit to Brickworks and Goodman.

The trust’s net asset growth has helped push the Brickworks share price higher over the years.

At the moment the trust is working on building two huge, high-tech warehouses for Coles Group Ltd (ASX: COL) and Amazon. Once the warehouses are completed it’s expected to increase the gross assets of the industrial property trust to at least $3 billion and it will grow the net profit distributions from the trust by at least 25%.

Brickworks said that the Amazon facility is due to be completed in September 2021. The construction of the Coles distribution warehouse is expected to commence in early calendar 2021.

The building products business said that it has sufficient remaining land to provide at least a further five-year development pipeline.

At the current Brickworks share price it offers a trailing grossed-up dividend yield of 4.3%. It’s also priced at 18x FY21’s estimated earnings.

More reading

• Top ASX shares to buy in 2021
• ASX 200 up again on Wednesday
• Washington H. Soul Pattinson (ASX:SOL) share price rises 2% after upbeat AGM
• 3 reasons why Soul Patts (ASX:SOL) is a great ASX dividend share
• Got money to invest? Here are 3 ASX dividend shares to buy

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 Synlait Milk Ltd (ASX: SM1) share price was trading down almost 2% at $4.61 this afternoon when the company requested a trading halt of its shares on the ASX.

Today’s drop follows a decrease of nearly 6% in the Synlait share price yesterday.

So what’s happening?

Yesterday’s share price drop prompted Synlait to release an announcement to the market. In that announcement, Synlait noted that one of its biggest customers, the a2 Milk Company Ltd (ASX: A2M), had entered into a trading halt after becoming aware of information affecting its previously issued guidance.

Put simply, the Synlait share price has been impacted by what’s happening to its customer, a2 Milk.

The a2 Milk shares returned from trading halt today, with its share price crashing 23% almost immediately after the company released a revised trading update.

a2 Milk advised that it had experienced a “more significant and protracted disruption in the daigou channel than expected”. Given this channel represents a major proportion of its infant nutrition sales in its ANZ business, this has had a negative impact on its sales.

Correspondingly, a2 Milk now expects to report first half revenue of NZ$670 million with an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 27%. This compares to its previous guidance of NZ$725 million to NZ$775 million.

For the full year, revenue is expected to be in the range of NZ$1.4 billion to NZ$1.55 billion with an EBITDA margin of 26% to 29%. As a comparison, its previous guidance for the full year was revenue in the range of NZ$1.8 billion to NZ$1.9 billion with an EBITDA margin of 31%.

With a2 Milk being one of Synlait’s biggest customers, the revised earnings will mean that Synlait will also have to revise its own earnings.

Synlait says that it will make an announcement to the market in the next few days.

About the Synlait share price

The Synlait share price has lost around 45% of its value this year. At the current share price, it has a mountain to climb to reach its 52-week high of $8.80.

The company commands a market cap of $1 billion.

More reading

• ASX 200 falls 1.2% on Friday
• Why the a2 Milk Company (ASX:A2M) share price crashed 26% lower today
• 5 things to watch on the ASX 200 on Friday
• ASX 200 up 0.7%: Zip capital raising, A2 Milk trading halt, Sydney Airport dividend update
• Why the a2 Milk Company (ASX:A2M) share price is in a trading halt

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.

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Volpara Health Technologies Ltd (ASX: VHT) shares failed to take off today despite the company revealing a major United States contract partner. Despite a lift in trading this afternoon, the Volpara share price has closed at $1.31, the same price it opened at this morning. By comparison, the All Ordinaries Index (ASX: XAO) has fallen by 1% in trading so far today.

Today’s announcement may come as welcome news for shareholders, with the Volpara share price having seen little movement recently. In fact, the ASX health share is trading at the same level it was this time 8 months ago. Furthermore, coronavirus-related issues have slowed down the company’s sales pipeline, causing the Volpara share price to slump by nearly 30% since the start of the year.

Major contract renewal

This afternoon, the Volpara share price edged higher after the company revealed that the major customer contract it renewed and extended in the second quarter of FY21 was with US Radiology Group.

The contract is for a 5-year term for delivery and ongoing use of the Volpara Breast Health Platform.

US Radiology is one of the largest radiology companies in the US, comprising more than 280 radiologists. The physician-led group aims to bring operational expertise together with state-of-the-art technology and infrastructure. 

Management comments

Volpara CEO Dr Ralph Highnam stated:

We are now pleased to be able to announce publicly that the major customer that moved to our integrated breast care platform is US Radiology, a very ambitious and acquisitive group in the US.

Our partnership will see Volpara’s Breast Health Platform driving the delivery of high-quality breast imaging outcomes and supporting patient-first healthcare. This is an important customer win and we expect our relationship to grow, in line with US Radiology’s rapid expansion.

About the Volpara share price

Founded in 2009 on research conducted at Oxford University, Volpara has since grown into a notable health technology company. Its software and services are used by customers in 39 countries and are supported by numerous patents and trademarks, including FDA clearance.

The company aims to prevent advanced stage breast cancer by using ‘Volpara Science’, a set of clinically validated algorithms that use x-ray physics and artificial intelligence to assess breast tissue composition.

The Volpara share price has had a challenging year, however, falling by 26% since this time last year.

More reading

• 3 quality SaaS ASX shares to buy
• 3 exciting small cap ASX shares to buy
• Volpara (ASX:VHT) share price falls on half-year results

Daniel Ewing owns shares of Volpara Health Technologies Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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 real estate sector started 2020 on a rather high note, but that all changed as the COVID-19 pandemic swept across the world, including Australia.

In fact, real estate was one of the worst performing sectors in the first half of the year.

The ASX 200 Real Estate Index (ASX: XRE) however, has rebounded strongly in the second half, as confidence seeps back to the market. Overall, the index is only down by 11% for the year.

Some real estate companies have even made the most of the situation, with strong share price returns over the year.

Here we’ll look into the 5 best performing ASX real estate shares in 2020.

Company	1-year share price return	Current share price	Market cap
1. Lifestyle Communities Limited (ASX: LIC)	43%	$12.64	$1.3 billion
2. Goodman Group (ASX: GMG)	36%	$18.82	$34.8 billion
3. Charter Hall Group (ASX: CHC)	30%	$14.72	$6.9 billion
4. Centuria Capital Limited (ASX: CNI)	14%	$2.52	$1.5 billion
5. Ingenia Communities Group (ASX: INA)	5%	$4.87	$1.6 billion

 

1. Lifestyle Communities

You may not have heard of this company, but the Lifestyle Community share price has been the best performer in the ASX real estate sector so far in 2020.  Although not part of the elite ASX 200 club, the company still commands a hefty market cap of over $1 billion.

The Lifestyle Communities share price has returned a cool 40% this year for its shareholders. This is after dropping by 43% in March at the height of the pandemic-induced market panic. So technically, the share price has returned 154% since March.

This means that if you had invested $10,000 in Lifestyle Communities shares on 23 March, your money would be worth $25,400 today.

So what does Lifestyles Communities do? Essentially, it’s a group 4,494 retirement villages, all located in Victoria, for people aged 50 and over.

However, the business doesn’t operate like a typical retirement village — instead it operates under a land lease model. Under the land lease model, homeowners own their home while leasing the land. In a retirement village on the other hand, you only have a license right to occupy a home.

The business has boomed this year due to retired or semi-retired people choosing to purchase and move into resort-like villages, where all necessities are available within the confines of the complex — eliminating the need to make trips to the grocery stores.

In its latest update to the market, the company said its full-year profit after tax for FY20 actually decreased from $55.1 million to $42.8 million.

It will be interesting to see how the Lifestyle Communities share price fares next year when the pandemic subsides.

2. Goodman Group

This gargantuan company is the biggest real estate company in Australia, hands down. 

The Goodman share price has gained 36% over the course of a year, reaching its all-time high of $20.07 in early November.

Goodman is one of the world’s premier developers and managers of industrial property projects and investments. The group was co-founded in Australia by Gregory Goodman, who remains CEO today.

It operates a unique real estate portfolio with a high concentration of industrial properties, compared to the more ‘traditional’ office and retail REITs. 

Goodman manages projects during build, charging development and leasing fees. Then it manages the completed assets, charging management fees. The company usually then holds a minority stake in most of its completed projects, earning potential upsides.

For FY20, the company reported an operating profit of $1,06 billion, up 12.5% on FY19. The solid result was mainly fuelled by strong demand for well-located industrial properties, such as warehouses for booming businesses like e-commerce.

3. Charter Hall

The Charter Hall share price rounds out the top 3 performers in the real sector this year, returning 30% for shareholders. The Charter Hall share had at one point plunged by as much as 55% in March, when it was trading at a 52-week low of $4.93.

The company owns some well-known retail shopping centre properties across regional Australia, including  Secret Harbour Square in Western Australia, Rockdale Plaza in New South Wales, and Campbellville Plaza in Victoria.

The company also invests in unlisted property investments, as well as listed REITs. It typically co-invests in its own funds, aligning itself with its own funds management customers. This gives Charter Hall exposure to a diversified property portfolio, and the relatively predictable rental income accounts for nearly a third of the group’s earnings.

Charter Hall reported announced solid full year results for FY20, with operating earnings topping $322.8 million, up 46.3% from Fy19.

The company followed that up with a strong trading update for the first-quarter of FY21, where it reported $51.7 billion total assets under management, with a stable occupancy rate of 97.8%.

4. Centuria Capital

Centuria is another company on the list that has not made the cut for the ASX 200 club, however it still commands a market value north of $1 billion.

The Centuria share price has returned 14% for the past year.

This share is basically a pure REIT play, and through its REIT investments, the company owns a diversified portfolio in Australia as well as across the Tasman.

The company’s funds have made some major acquisitions this year, fuelled by extra low interest rates. 

Its Centuria Industrial REIT (ASX: CIP) for example, is Australia’s largest domestic, pure play listed industrial REIT.

This fund expanded its portfolio with over $300 million of acquisitions in FY20. Meanwhile, the company’s Centuria Office REIT (ASX: COF) also expanded its portfolio with $637 million of acquisitions in 2020.

As a result, for FY20 the company reported an increase in assets under management of 52% to over $9.4 billion, while its cash earnings per share was 12 cents, ahead of 11.5 cents in its earlier guidance.

5. Ingenia Communities

Rounding out the top 5 real estate shares in 2020, the Ingenia share price has returned a rather modest 5% for investors. 

This is despite the company reporting record FY20 earnings before interest, tax and depreciation and amortisation (EBITDA) of $71.9 million, which was up 7% on previous year. This bottom line result was based on a top line revenue of $244 million.

Ingenia may not have received widespread coverage in the media, but it’s a sizeable company with a market cap of $1.6 billion.

What does Ingenia do? It’s a property company that owns, operates and develops a portfolio of lifestyle and holiday properties across urban and coastal markets. The portfolio also includes parks, cabins, and camping areas.

Just like Lifestyle Communities, Ingenia has been able to take advantage of people’s preference to move away from major city centres during the pandemic.

It remains to be seen how the Ingenia share price will perform when the pandemic is declared over.

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• Charter Hall (ASX:CHC) share price higher on 555 Collins Street update
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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.

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The Hills Ltd (ASX: HIL) share price has slipped today as the company announced impairment plans and a trading update for FY21. At the time of writing, the Hills share price is down 2.8% to 17 cents.

Operating across Australia and New Zealand, Hills provides health solutions including nurse call solutions, patient engagement systems and wi-fi networks in hospital and aged care facilities. The company also operates a distribution division, working in integrated security, information technology and technical services.

What did Hills announce?

In today’s release, Hills advised that it will make financial amendments as it seeks to re-organise its accounting books. The assessment follows the group’s completion of the external foreign exchange review. 

As a result, Hills will make one-off adjustments of $4.9 million mostly comprising non-cash items. The revised figures will be implemented in the first-half of FY21, ending 31 December.

The impairments include:

• Write-off of assets relating to exited businesses – $1.7 million;
• Write-off of assets relating to exited vendor arrangements – $0.4 million;
• Reassessment of valuation of aged, slow-moving and demonstration stock – $1.4 million;
• Reassessment of asset lives and property settlements – $0.86 million; and
• Write-off of NZ deferred tax assets arising from the current poor trading conditions – $0.57 million

While these write-offs have been necessary, Hills said that its Australian distribution business was beginning to improve. This comes as the company experienced tough first quarter trading conditions due to COVID-19.

Furthermore, its Australian health solutions business has returned to normal trading levels during the current quarter.

In its New Zealand operations, Hills is still facing headwinds, as announced in its annual general meeting (AGM) early last month. It does not envisage recovery in the 2021 financial year – as opposed to its Australian business.

Previously, the company said its objective was to deliver shareholders a full-year net profit in FY21. However, due to asset impairments and mixed trading conditions, the company does not expect to meet this. Instead it will focus on delivering a second-half net profit.

Hills is scheduled to release its first half FY21 results early 2021, along with a further trading update.

What did management say?

Commenting on the accounting adjustment, Hills CEO and managing director David Lenz said:

While it is disappointing to have to recognise further one-off adjustments to our asset values, we are pleased that the underlying businesses are recovering from the impact of COVID-19 and remain well positioned to capitalise on market opportunities in the second half as Australia emerges from the pandemic and our cash position remains strong.

Hills share price summary

The Hills share price has been hit hard over the last 12 months, falling almost 50% year-to-date. The company reached a 52-week high of 48.5 cents in February.

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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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