Tag: Motley Fool

The Zip Co Ltd (ASX: Z1P) share price is pushing higher on Tuesday morning following the release of a positive announcement.

At the time of writing, the buy now pay later provider’s shares are up 1.5% to $5.35.

What did Zip Co announce?

Investors have been buying Zip Co’s shares this morning after it announced a partnership with one of Australia’s largest retailers.

According to the release, the company has entered into a partnership with the franchisees of Harvey Norman Holdings Limited (ASX: HVN) and its subsidiaries Domayne and Joyce Mayne.

The partnership will see the retailers offer their customers the ability to pay with Zip’s BNPL payment solutions.

Zip’s Co-Founder and Chief Operations Officer, Peter Gray, was pleased with the partnership.

He said: “We are thrilled to partner with such iconic brands. We look forward to providing customers with additional choice and better ways to pay as they ‘Shop with Confidence’ at Harvey Norman, Domayne, and Joyce Mayne.”

Management also notes that the partnership with Harvey Norman continues to deliver on the company’s strategic vision of providing customers with convenience and choice in how they choose to pay.

Furthermore, it supports Zip’s bold mission to be the first payment choice everywhere and every day.

Where now for the Zip share price?

Despite today’s gain, the Zip share price is still down ~50% from its 52-week high of $10.64.

This underperformance has been driven by concerns over increasing competition in the US buy now pay later market following launches by PayPal and Shopify. There is also speculation that the company may need to raise capital in the near future, which is adding to the negative sentiment.

Nevertheless, a recent broker note out of Ord Minnett reveals that its analysts believe this share price weakness is a buying opportunity. Earlier this month the broker put an accumulate rating and $6.50 price target on its shares.

More reading

• 3 ASX growth shares to add to your portfolio in 2021
• ASX 200 drops on Friday
• ASX 200 down 0.3%: CSL sinks, Zip’s Facebook deal, IGO rockets
• Why Eagers Automotive, IGO, Marley Spoon, & Zip shares are charging higher
• Aussie dollar breaking to new 30-month high will boost these ASX stocks

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 ZIPCOLTD FPO. 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 Zip (ASX:Z1P) share price rises on Harvey Norman (ASX:HVN) partnership appeared first on The Motley Fool Australia.

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With the end of the year almost upon us, we asked our Foolish contributors to compile a list of some of the ASX shares experts are saying to Buy in 2021.

Here is what the team have come up with…

Tristan Harrison: A2 Milk Company Ltd (ASX: A2M)  

In addition to my December ASX share pick, A2 Milk could be another potential growth share to find its feet again after a strong first half of 2020 but weaker second half. COVID-19 impacts and Chinese concerns have sent the A2 Milk share price down to around the $13 mark. But at that price, it’s valued at 23x FY22’s estimated earnings.

The local Chinese business is growing quickly to compensate for lost daigou sales and the United States business is gaining traction. A2 Milk has also started generating earnings from Canada. Furthermore, the company has (or had, prior to announcing its proposed $385 million purchase of Mataura Valley Milk in August) close to NZ$1 billion of cash on its balance sheet. 

Motley Fool contributor Tristan Harrison does not own shares of A2 Milk Company Ltd.

Sebastian Bowen: Treasury Wine Estates Ltd (ASX: TWE) 

My ASX share pick for 2021 is Treasury Wines. Treasury, which owns brands like Wolf Blass and the famous Penfolds, is an ASX company that has had a difficult year in 2020.

At the time of writing, Treasury shares remain down around 42% year to date. This company had a major focus on exporting to the Chinese market, which is now in shreds thanks to new Chinese tariffs. However, it’s possible that the market has overreacted here, given Treasury’s strong brands and a plethora of remaining export opportunities. Thus, Treasury could be a potentially lucrative turnaround play next year. 

Motley Fool contributor Sebastian Bowen does not own shares of Treasury Wine Estates Ltd.

Bernd Struben: Brickworks Limited (ASX: BKW)

Brickworks focuses on property, investments, and supplying building products for the residential and commercial markets in Australia and the United States. Both the Australian and US Governments are supporting infrastructure and building construction in 2021.

Brickworks has a long history of share price appreciation (though not in a straight line!). In 2020, at the time of writing, the Brickworks share price is up 3.2% for the year thanks to a 57% surge since 22 April. It trades at a trailing price-to-earnings (P/E) ratio of 9.09 times.

Brickworks is also a reliable ASX dividend share, paying out both dividends this year for a yield of 3.1%, fully franked.

Motley Fool contributor Bernd Struben does not own shares of Brickworks Limited.

James Mickleboro: Appen Ltd (ASX: APX)

Appen is a leading provider of solutions to the artificial intelligence (AI) market. Through its team of over 1 million skilled contractors across the world, the company provides and prepares the data that goes into AI models. Among its customer base you will find the likes of Amazon, Facebook, Google, and Microsoft.

While FY2020 has been underwhelming because of COVID-19 headwinds, Appen’s management is confident the company’s performance will rebound strongly in 2021. After which, increased spending on AI is expected to underpin strong demand for Appen’s services over the long term. This sentiment has been echoed by analysts at Macquarie. Macquarie believes the recent weakness in the Appen share price presents a buying opportunity and has held firm with its outperform rating and $43.00 price target.

Motley Fool contributor James Mickleboro does not own shares of Appen Ltd.

Brendon Lau: Ansell Limited (ASX: ANN)

The Ansell share price has corrected by around 20% since hitting a record high in early November. Ansell has been one of the big COVID winners this year and news of promising COVID-19 vaccines has prompted some investors to lock in profits.

But one could argue demand for gloves is unlikely to abate even as vaccines are rolled out since people are likely to remain more safety conscious than prior to the pandemic. Furthermore, with no vaccine guaranteed to be 100% effective, consumers may be reluctant to throw away their protective consumables just yet.

Motley Fool contributor Brendon Lau owns shares of Ansell Limited.  

Regan Pearson: Pushpay Holdings Ltd (ASX: PPH)

Payments platform company Pushpay was one of the big winners of 2020. As public gatherings were restricted, new churches rushed to sign up and move donations away from cash to digital platforms. Not only did Pushpay increase its customers by 38% in the first half of FY21, its revenue jumped by a huge 51% to US$86.6 million.

Although this growth was spurred by lock-downs and will likely slow in 2021, the healthy free cash flow Pushpay has built will put the company on a strong footing to reinvest into sales or prepare for larger acquisitions to keep up momentum in 2021.

Motley Fool contributor Regan Pearson does not own shares of Pushpay Holdings Ltd. 

Rhys Brock: Pointsbet Holdings Ltd (ASX: PBH) 

Back in March, things were looking pretty bad for online sports betting company Pointsbet. Sports leagues across the world were grinding to a halt due to COVID-19 restrictions, and the company’s share price was in freefall.  

However, Pointsbet has still found a way to achieve several key milestones in 2020, not least of which was signing a new five-year marketing contract with US sports media giant NBC Universal.  

Pointsbet is also heading into 2021 with a significant war chest. After a round of capital raisings from institutional and retail investors, Pointsbet now has over $430 million in total corporate cash and cash equivalents on its balance sheet. 

Motley Fool contributor Rhys Brock owns shares of Pointsbet Holdings Ltd.

More reading

• Should you buy the Appen (ASX:APX) share price dip?
• These are 8 of the best performing ASX healthcare shares of 2020 so far
• Why the Pushpay (ASX:PPH) share price is in a trading halt
• Why I’m sticking with my Afterpay shares: fundie
• Leading brokers name 3 ASX shares to buy today

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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd, Pointsbet Holdings Ltd, and PUSHPAY FPO NZX and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended A2 Milk, Brickworks, Macquarie Group Limited, and Treasury Wine Estates Limited. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Ansell Ltd., Facebook, Pointsbet Holdings 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.

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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.

Any investor expectations for 2020 were soundly destroyed by March, when the COVID-19 pandemic started to spread in earnest across the United States. Shutdowns forced everyone to rethink their priorities — simply getting the basic things you needed to shelter in place proved a challenge in itself.

The coronavirus pandemic is still with us, but the world and its consumers have adapted. Look for people to start applying their new preferences to how they think and shop. Four trends, in particular, are poised to take centerstage. Investors would be wise to note them for the year to come.

1. Private-label mania

So-called store brands have been gaining traction for years, when retailers stopped treating them like mere white-label goods and starting putting them in packages that look more like the national brands they compete with. But the economic fallout from the COVID pandemic sparked something of an awakening among consumers. A poll taken by marketing and branding agency Ketchum in the middle of the year indicated that 63% of U.S. consumers intend to purchase more private-label goods in the future after a lack of availability of their usual brand of goods forced them to try the alternative.

Big grocers like Costco and Walmart have done well with private-label goods, leaning heavily on their flagship brands Kirkland Signature and Great Value, respectively. Target can do the most with the growing disinterest in recognized brand names and has created almost 50 of its own in-house brands of food, clothing, and home goods.

Data from market-research outfit Numerator indicates more than 13% of U.S. households bought one of Target’s Good & Gather branded food items in 2019, though the label only launched in August of that year. Just a couple of months ago, Target unveiled premium versions of Good & Gather items to appeal to consumers seeking above-average quality but who are not interested in paying above-average prices.

2. Corporate responsibility matters more than ever

The public has always kept a fairly close eye on corporate behavior. But in the wake of this year’s social and political turbulence, consumers have become keenly aware that some corporations may be doing the world more harm than good. Brand-management agency Zero Group’s “2020 Strength of Purpose” study quantifies the premise, suggesting that consumers are four times more likely to do business with a company with a strong purpose no matter what that (presumably good) purpose may be.

Investors looking for a simple way to find ethically oriented companies don’t necessarily have to dig into every available data nugget about every organization. Environmental, social, and corporate governance, or ESG, ratings are readily available for most companies, easily indicating a corporation’s contribution to society beyond its bottom line. It will therefore come as little surprise that stocks with strong ESG scores tend to outperform stocks of less-responsible companies.

3. Direct-to-consumer is getting traction

The rise of direct-to-consumer (D2C) shopping and shipping has been deemed a threat to Amazon.com for years now, but it hasn’t yet rattled the king of e-commerce. Market-research company eMarketer estimated earlier this year that D2C sales would only reach a little less than $18 billion this year, en route to $21 billion next year. For perspective, Amazon’s generated around $350 billion worth of revenue over the course of the past four reported quarters.

The D2C market may be poised to expand much faster much sooner than one might expect, however, thanks to this year’s COVID-19 nudge. Consumer-monitoring outfit Diffusion reports that 30% of U.S. consumers purchased an item directly from the manufacturer within the past year. It’s not a lot, but that proportion is growing.

This trend puts names like Shopify and BigCommerce in the spotlight, as both companies help small and large manufacturers sell directly to consumers outside of Amazon’s ecosystem.

4. Beyond omnichannel, into personalization

Finally, most major brick-and-mortar retailers also offer online shopping and at-home delivery. Many offer at-store pickup of items bought via the internet, as well. These multiple paths to a purchase and pickup are the seamless omnichannel experiences so many chain stores have been working to build for several years. But consumers expect more now.

Shoppers are no longer impressed by being able to buy and receive products in any imaginable way (sometimes getting their online order delivered the same day it’s placed). They increasingly expect retailers to also act as service providers and even predict what they’ll need and how they’ll want to get it.

What this looks like in practice depends on the consumer and the company in question. For Amazon, it’s teaching its Alexa-powered assistant technology to think proactively about what a particular person might want to buy in the future based on that person’s current vocalized requests. For athletic-apparel name Nike, it’s the ability to fabricate a shoe that’s custom-designed online exclusively for and by that consumer. For Walmart, it’s the use of in-store tech that turns a shopper’s smartphone into a tour guide of sorts to create “an instant omni-shopping experience in the customer’s mind.”

However it manifests, the companies that can deliver a seamless, customized, hassle-free shopping experience for consumers stand to win market share.

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

More reading

• Should you buy the Appen (ASX:APX) share price dip?
• Why Berkshire Hathaway is a retiree’s dream stock
• Why the Afterpay (ASX:APT) share price is not the only rising star this year
• These are 8 of the best performing ASX healthcare shares of 2020 so far
• Is the Altium (ASX:ALU) share price in the buy zone?

James Brumley has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Nike, and Shopify and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon and Nike. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here are the 4 biggest consumer trends to look for in 2021 appeared first on The Motley Fool Australia.

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

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The Appen Ltd (ASX: APX) share price has struggled on all fronts of late. Not only has it underperformed the S&P/ASX 200 Index (ASX: XJO) in recent weeks, but it’s also been subject to the rotation away from tech shares into cyclicals, and delivered an earnings downgrade.

Could the recent weakness in the Appen share price be a buying opportunity? Here’s what Citigroup Inc (NYSE: C) is thinking. 

What’s been impacting the Appen share price? 

Appen previously advised the market back in April that the pandemic may dampen its 2020 performance. This was expected to play out through a slowdown in digital ad spending, a reduction in IT/digital spending, the reduction or cancellation of services from Appen’s smallest customers, interruptions to global hardware supply chains, and suspension of face-to-face projects such as audio data collection. 

The business remained resilient throughout the first half of FY20 with strong growth despite a slowdown in new business development and deferred revenues. While third quarter (Q3) revenue came in lower than expected, its major customers released strong Q3 results and online advertising bounced back. This raised the company’s optimism for Q4, especially taking into consideration how Q4 revenue has historically averaged 30% of Appen’s full year results.

However, after finalising Q4 performance, the pandemic has clearly disrupted and reshaped the priorities and activities of Appen’s customers and the traditional ramp up in Q4 has not occurred. 

The company now expects FY20 underlying earnings before interest, taxes, depreciation and amortisation (EBTIDA) to be in the range of $106 million to $109 million compared to the $125 million to $130 million outlined in its half year results. 

Appen cites that its major clients are reprioritising resources towards new product areas that enhance their long-term resilience and value which is currently impacting work volumes on some large mature projects. 

The company reiterates that the long-term trends for its business are positive with spending on artificial intelligence (AI) growing rapidly at 28% annually and the expectation that AI adoption should accelerate in a post-pandemic environment. 

Broker update

Citi reacted negatively to Appen’s profit guidance by lowering its price target from $45.00 to $32.60 but retains its buy rating. The broker notes that the company is in a strong position to take advantage of the expected increase in expenditure on AI and earnings growth could return to circa 20% if pandemic conditions in the United States ease. This price target represents a 30% upside to Monday’s closing Appen share price of $25.25. However, it makes a number of assumptions including the US flattening its COVID curve. 

More reading

• Leading brokers name 3 ASX shares to buy today
• These are 10 of the best performing ASX tech shares of 2020 so far
• 2 of the best ASX tech shares to buy and hold
• ASX 200 Weekly Wrap: ASX 200 hits a 6! Thank iron ore
• Top brokers name 3 ASX shares to buy next week

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

The post Should you buy the Appen (ASX:APX) share price dip? appeared first on The Motley Fool Australia.

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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.

There’s no denying that the past couple of years have been relatively disappointing ones for Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders. Stock in the Warren Buffett-led multinational conglomerate has soundly outperformed the broader market since its inception (as we know it) in 1964. But since the end of 2018, the S&P 500 index has gained nearly 48%, while Berkshire is up less than 12%. The fund has also merely — and uncharacteristically — matched the broad market’s performance over the course of the past 10 years.

Before jumping to sweeping conclusions about a bleak Berkshire future, though, take a breath and take a step back. This stock is still a great pick for pre-retirees looking to build a nest egg, and it’s still a solid pick for retirees who have room in their portfolios for a non-dividend-paying growth holding.

Berkshire Hathaway’s subpar performance

It would certainly be easy to fear the worst. At 90 years old, Warren Buffett is certainly no spring chicken. Much has changed about the market since he began using the textile company called Berkshire Hathaway as a holding vehicle more than five decades ago. Everything moves much faster now, and it’s more difficult to identify the value he’s sought out for so many years.

One also has to wonder how much stock-picking Buffett is actually doing these days. Apple has been Berkshire’s biggest stock holding for some time now, in conflict with the Oracle of Omaha’s long-standing stance that he won’t own a company he doesn’t fully understand. That’s largely been technology stocks — mostly growth names, which have led the overall market for several years.

BRK.A data by YCharts

Except, comparing Berkshire’s results in recent years to the broad market’s performance is in itself an unfair comparison. The past few years have decidedly rewarded growth stories rather than actual earnings, at the expense of value stocks that continue to crank out cash regardless of the environment. The idea bears out in the data. The iShares S&P 500 Growth Fund has outperformed the iShares S&P 500 Value Fund by a margin of more than two to one since 2014.

This weakness hits Buffett’s value-focused strategy close to home, in a manner of speaking, but it’s not a permanent headwind.

Environmental change afoot

Superficially, the disparity makes sense. Growth names are by definition meant to offer growth, even if that also means greater risk and more volatility. Value stocks, on the other hand, offer more reliability and impose less risk.

Largely lost in the noise of the recent growth-stock mania, however, is how growth and value names take turns leading the market. Not once in the modern market era have value stocks as a group failed to eventually catch up with gains from growth names.

Not once.

It’s also worth mentioning that cyclical periods of leadership (and laggardship) can last for several years, as has growth’s leadership since 2014.

That’s not to suggest value’s rebound and growth’s demise is slated to materialize in 2021. It is to say, however, that it’s likely to happen sometime. And for retirees or near-retirees playing the odds, it’s likely to happen sooner than later. That’s when Berkshire and Buffett’s acolytes should really start to shine as they have in the past.

Berkshire’s most unique edge is still intact

As for Buffett’s day-to-day involvement in Berkshire Hathaway’s stock-picking, he’s probably not all that involved anymore. He and Charlie Munger appear to have mostly passed the torch to Todd Combs and Ted Weschler, while relatively new board members Ajit Jain and Gregory Abel have been pegged as potential successors to Buffett. They all bring their own viewpoints to the table, which seemingly poses a threat to Berkshire’s long-standing investment approach.

This sort of style drift need not be a major concern for current and prospective retirees, however.

For good or ill, Warren Buffett has become bigger than life — a rockstar investing icon almost everyone respects, even if they don’t follow his advice. It would be difficult for any manager or Berkshire chief to assume such a role and not strive to continue doing what Buffett himself would most likely do. The Oracle of Omaha’s legacy is worth keeping alive.

Then there’s perhaps the most overlooked (but most important) nuance of the Berkshire Hathaway portfolio — it’s not all stocks. The fund only owns about a quarter of a trillion dollars’ worth of the same equities any other investor can own. But it’s got around twice that amount’s worth of privately owned, cash-generating companies like See’s Candies, Duracell batteries, GEICO auto insurance, Pampered Chef kitchenware, Acme bricks, and more. These are makers of consumer goods that people tend to buy over and over again.

This is the sort of flexible, cash-driving portfolio that allows any manager to prioritize bigger-picture value creation. Not only does Berkshire not have to worry about stock price volatility for those organizations, it can buy, sell, and manage companies as needed so retirees don’t have to worry about doing the same.

Bottom line

It’s admittedly tough to keep faith in what Buffett and his proteges are doing when it feels like they’re underperforming the overall market. As the old saying goes, though, things are always darkest before dawn. Berkshire Hathaway is still unlike any other investment opportunity out there, even if it can take years for it to pan out and pay off. Retirement planning should focus on the years ahead rather than months or even weeks.

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

More reading

• Here’s how world’s 10 richest made $1.5 trillion from COVID-19
• Want to invest like Warren Buffett? This ASX ETF is all about ‘the moat’
• Here are the stocks Warren Buffett has been buying and selling
• Warren Buffett bought 4 pharma giants in Q3

James Brumley 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 Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short December 2020 $210 calls on Berkshire Hathaway (B shares), and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Berkshire Hathaway is a retiree’s dream stock appeared first on The Motley Fool Australia.

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

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The Afterpay Ltd (ASX: APT) share price surged higher on Monday as the Aussie tech share looks set to join the S&P/ASX 20 Index (ASX: XTL) in 2021.

Afterpay shares closed up 8.8% at $109.93 per share, 258.9% higher than where they started the year.

Most ASX investors would be familiar with the Afterpay story, but what about the other rising stars of the ASX? Let’s take a look at some of the top performers ahead of 2021.

Why the Afterpay share price isn’t the only rising star

While the Afterpay share price has grabbed many of the headlines, there have been plenty of top stocks climbing higher.

That’s been recognised in the latest ASX 20 rebalancing, with Afterpay joining Fortescue Metals Group Limited (ASX: FMG), Coles Group Ltd (ASX: COL) and Aristocrat Leisure Limited (ASX: ALL) in the top stocks club.

It’s been a big year on the markets with the S&P/ASX 200 Index (ASX: XJO) currently on track for one of its best quarters in the last 20 years. 

Strong iron ore prices have been supportive of the Fortescue share price in 2020. In fact, the Fortescue share price has rocketed 105.6% higher this year to a market capitalisation of $68.2 billion.

The Coles share price has jumped 21.0% higher this year to $18.18 per share on the back of strong sales and profitability.

The outlier is Aristocrat, with the Australian gambling machine manufacturer actually seeing a 12.3% decline to $30.01 per share.

The wagering sector has been hit hard by coronavirus restrictions which has reduced demand for new machines. That makes the addition of Aristocrat into the exclusive ASX 20 club a curious one.

However, that’s more to do with some of the current constituents. Insurance Australia Group Ltd (ASX: IAG) has been turfed out of the index with a market capitalisation of $12.5 billion compared to Aristocrat’s $19.2 billion.

Foolish takeaway

It’s always worth keeping an eye on both the rising stars and “fallen angels” in an index rebalancing. That’s especially the case given the meteoric rise of Afterpay and other ASX tech shares in 2020.

More reading

• These are 8 of the best performing ASX healthcare shares of 2020 so far
• How the 21st century actually started in 2020
• Sell now or hold forever? What to do with shares like Afterpay (ASX:APT)
• Here’s why Bubs (ASX:BUB) and this ASX share are underperforming in 2020
• 5 things to watch on the ASX 200 on Tuesday

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. 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 healthcare sector has been an interesting one to watch in 2020. Almost all ASX shares have been defined by how they have been affected, and perhaps reacted to, the coronavirus pandemic in 2020. But healthcare, especially so, for obvious reasons.

So let’s have a look at which ASX healthcare shares have been the best performers of the year so far. As a benchmark, the S&P/ASX 200 Index (ASX: XJO) is currently down 0.5% for the year to date – not exactly a hard benchmark to beat, but it puts things into perspective for healthcare shares. So, here are 8 top performers of the sector:

ASX Healthcare Share	YTD share price gain (as of 14 December)	Market Capitalisation
Mesoblast Limited (ASX: MSB)	121.46%	$2.67 billion
Polynovo Ltd (ASX: PNV)	106.45%	$2.54 billion
Healius Ltd (ASX: HLS)	40.94%	$2.42 billion
Pro Medicus Limited (ASX: PME)	37.28%	$3.19 billion
Resmed Inc (ASX: RMD)	23.52%	$39.79 billion
Ansell Limited (ASX: ANN)	18.36%	$4.44 billion
Nanosonics Ltd (ASX: NAN)	12.74%	$2.16 billion
CSL Limited (ASX: CSL)	4.17%	$130.35 billion

Evidently, some ASX healthcare shares have done better than others. This is for various reasons that we shall dive into momentarily.

COVID brings opportunities

So, the overarching theme here is how companies that have been able to adapt their products or services towards fighting the pandemic have been rewarded.

Take top performer Mesoblast for instance. It recently signed a deal with Swiss giant Novartis to use its ‘remestemcel-L’ product for the treatment of respiratory difficulties experienced by COVID-19 patients. Remestemcel-L has also recently managed to get a tick of approval from the notoriously-strict US Food and Drug Administration (FDA). Optimism over potential FDA approval has been boosting this company all year.

Similarly, Helius saw rising revenues and cash flow for FY2020, which was supplemented by revenue growth of 17.5% in the first quarter of FY2021. The company told investors that its pathology division, which assists with COVID testing, was keeping the business strong.

We also see it through raw medical supplies that some of these companies have been providing. Ancell, for example, develops, manufactures, and sells medical gloves and other protective personal equipment. Last month, this company reported a 7.6% increase in sales for FY2020, including a 13.4% increase in its healthcare unit.

It was a similar story with sleep device manufacturer ResMed. ResMed pivoted to manufacturing ventilators and masks early in the year in response to the pandemic, as well as acute ventilator shortages around the world. As a result, this company was able to report revenue growth of 15% for FY2020 back in August, which was supplemented by a strong quarterly update in October.

Other ASX healthcare shares simply saw strong gains because they were able to weather the ‘COVID storm’ without taking a hit to the bottom lines.

ASX healthcare shares show resilience

For example, the second-best performer, Polynovo, has received endorsement after endorsement for its flagship ‘Novosorb’ product, which assists burn victims in recovering skin damage and loss. Last month, Polynovo informed the markets that it was expanding this product into countries like Belgium, Luxemburg and Sweden. That came after it was given the green light by the FDA for a trial in the US. 

We see a similar trajectory with Pro Medicus and Nanosonics. Pro Medicus announced a $10 million contract win last month with LMU Klinikum, which will see its Visage 7 technology across Europe. That came after the company reported revenue growth of 23.9% for FY2020 and a 20.7% increase in profits over FY2019 back in August.

Turning to Nanosonics, we can see this is another company that isn’t letting 2020 drag it down. Last month, the company reported that, after an initial dip,  installation of its flagship Trophon disinfectant machines was up 16% in the first four months of FY2021 (July-October) compared to the last four months of FY2020 (March-June). All that came on top of FY2020 revenue of $100.1 million, up 195 from FY2019.

Some exceptions

So, it’s worth noting first up that a few of the ASX’s more well-known healthcare shares aren’t actually doing too well this year. The ‘big dog’ is of course CSL, the ASX’s second-largest company overall behind Commonwealth Bank of Australia (ASX: CBA).

CSL does make this list, but only just. Far from the recent performance investors are used to, this healthcare giant is ‘only’ up 4.48% for the year. In 2019, CSL managed to grow almost 50% in value, coming after 2018’s increase of around 30%.

The year 2020 has delivered a reality check here for CSL shareholders. In 2020, disruptions to the company’s plasma business, as well as the recent failure of the vaccine candidate CSL was working on with the University of Queensland, have dampened investor enthusiasm with this giant.

Further, the ASX’s third-largest healthcare share, private hospital operator Ramsay Health Care Limited (ASX: RHC), remains down almost 12% year to date. This company was affected by global hospitals pivoting to prioritise coronavirus cases, and in doing so suspending elective surgeries.

Foolish takeaway

As you can see, 2020 has brought challenges and opportunities to the ASX healthcare sector. While there have been some clear winners and losers here, it’s a great reminder of the ‘evergreen’ nature of this sector, and the benefits it can bring to us all.

More reading

• Why the Afterpay (ASX:APT) share price is not the only rising star this year
• 5 things to watch on the ASX 200 on Tuesday
• Why ASX oil stocks could replace the ASX tech boom in 2021
• ASX 200 rises on Monday
• Why the Webjet (ASX: WEB) share price is climbing higher

Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Ansell Ltd., Nanosonics Limited, Ramsay Health Care Limited, and ResMed Inc. 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 Altium Limited (ASX: ALU) share price was out of form on Monday and dropped slightly lower following a major announcement.

The electronic design software platform provider’s shares fell almost 0.5% to $36.03.

This compares to a 0.25% gain by the S&P/ASX 200 Index (ASX: XJO) and a 1.9% gain by the S&P/ASX All Technology Index (ASX: XTX).

What happened?

On Monday Altium announced an agreement to sell its TASKING business to European private equity firm FSN Capital for US$110 million.

The company revealed that it was selling the non-core asset so that it could focus on its new Altium 365 platform.

Altium’s Chairman, Sam Weiss, explained: “We are generating real momentum with Altium 365, the world’s first cloud platform for PCB design and realization, and we believe that Altium 365 is critical to enhance long term shareholder value. The divestment of TASKING enables us to singularly focus on our transformative vision and to fast track the building and acquisition of complementary assets.”

Altium expects the deal is to be finalised in the first quarter of 2021, subject to standard conditions and regulatory approval.

In addition to this, management revealed that its first half performance remains solid. And while ongoing COVID lockdowns in the US could impact its performance, it remains confident it will achieve its full year guidance for FY 2021.

Is this a buying opportunity?

One broker that believes this is a buying opportunity for investors is Morgan Stanley. This morning the broker retained its overweight rating and $40.00 price target on the company’s shares.

Based on the current Altium share price, this represents potential upside of 11% over the next 12 months.

It was happy to see the company reaffirm its guidance and was pleased with management’s positive commentary regarding its Altium 365 platform. It believes this platform will be the key driver of growth in the future.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises on Monday
• ASX 200 up 0.55%: Altium update, Afterpay jumps, NAB given ACCC approval
• These are 10 of the best performing ASX tech shares of 2020 so far
• Here’s why the Altium (ASX:ALU) share price is on watch today

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

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We’re already 20 years in, but the 21st century has finally arrived.

PayPal co-founder and early Facebook investor Peter Thiel told Forbes this month that many shares are way overvalued and it would take years for those companies to grow into their valuations.

“But I keep thinking the other side of it is that one should think of COVID and the crisis of this year as this giant watershed moment, where this is the first year of the 21st century,” he said.

“This is the year in which the new economy is actually replacing the old economy.”

And Sydney portfolio manager Michael Frazis couldn’t agree more.

“For all the trials and tragedies of 2020, this was a year when all kinds of technology accelerated,” he said in a memo to Frazis Capital clients.

“This was a year where those taking extraordinary risks to advance the human race were richly rewarded, and for that we can all be thankful.”

Be on the right side of history

He acknowledged investing in new trends and technological shifts is “often uncomfortable”, but investors want to be on the right side of history.

“Balance sheets and income statements are messy, and the extraordinarily talented people that build new businesses are often odd,” he said.

“But it’s far riskier, in our opinion, to be on the other side of these shifts. Simply look at the performance of Tesla Inc (NASDAQ: TSLA) and Carvana Co (NYSE: CVNA) versus the auto industry; Afterpay Ltd (ASX: APT) and Square Inc (NYSE: SQ) versus global banks; and Shopify Inc (NYSE: SHOP), Mercadolibre Inc (NASDAQ: MELI) and Sea Ltd (NYSE: SE) versus traditional retailers.”

Sectors for the new century

Frazis pointed to the extraordinary science behind the development of COVID-19 vaccines as proof that the world has now ticked over to a new era.

“Biology has always had data at its core, but in 2020 this data science reached new heights,” he said.

“Chinese scientists posted the genetic code of the coronavirus online, and within days Moderna Inc (NASDAQ: MRNA) developed the first of what will likely be many mRNA vaccines without any access to the virus itself. Truly science fiction stuff.”

Biological research received a lot of government and investment funding this year, according to Frazis.

“It has never been cooler to be a biological scientist. Talent and capital is a thrilling combination. The next decade should be a good one for the life sciences.”

Non-government space exploration also made tremendous progress in 2020, said Frazis, making private travel out of earth a possibility this century.

“It was also a good year for space, with Virgin Galactic Holdings Inc (NYSE: SPCE) (which we own) and SpaceX (which sadly we can’t) both laying down serious milestones in what will be one of the future’s largest industries.”

He also picked the hydrogen fuel industry as a winner in the coming years.

“In 2020 the use of hydrogen in transportation reached critical levels, much to the benefit of Plug Power Inc (NASDAQ: PLUG), whose fuel cells now transport [about] 30% of US retail food and groceries.”

Frazis Capital has returned more than 92% net for the year to date, according to the portfolio manager.

Frazis told his clients last month that he was calling the peak of “red hot tech stocks” and would be selling them down.

“Longer term yields have begun to rise, tech valuations are at record highs, and we believe a period of serious multiple compression has already begun.”

More reading

• Sell now or hold forever? What to do with shares like Afterpay (ASX:APT)
• Here’s why Bubs (ASX:BUB) and this ASX share are underperforming in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Better Buy: Square vs. Visa
• Why ASX oil stocks could replace the ASX tech boom in 2021

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. Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook, MercadoLibre, PayPal Holdings, Sea Limited, Shopify, Square, Tesla, and Virgin Galactic Holdings Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Facebook and PayPal Holdings. 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 Laybuy Holdings Ltd (ASX: LBY) share price has been out of form recently and sank to a 52-week low of $1.23 on Monday.

In light of this, the buy now pay later (BNPL) provider’s shareholders will be hoping that the release of a market update this morning will be enough to put its shares on a positive trajectory at long last.

What did Laybuy announce?

This morning Laybuy announced that it has achieved three major growth milestones.

One of these is its Tap to Pay product, which has been successfully released in New Zealand following the successful launch in Australia.

The company notes that it is the first BNPL provider to offer Tap to Pay in New Zealand thanks to the collaboration with Mastercard as part of the payment giant’s Fintech Express program.

Management advised that Laybuy is already seeing a strong interest from consumers and looks forward to a UK rollout early in the new year once COVID headwinds ease.

Acceptance from consumers in both Australia and NZ has been strong and Laybuy is expecting continued strong growth. Particularly given the increased potential for further take up of its BNPL offering via simple Tap to Pay in physical retail stores.

US launch.

Another milestone that has been achieved is the launch of the beta testing of its offering in the United States via its Laybuy Global product with selected retailers. A full rollout is expected across the country in April 2021.

Management commented: “The US market is extraordinarily large and represents a significant opportunity for Laybuy. The US Census Bureau estimates that for the 12 months ended September 2020, the total US Retail market was US$5.5 trillion with online e-commerce representing over US$730 billion. BNPL is at relatively early stages of penetration in the US market and represents a strong growth opportunity.”

Prezzee collaboration.

A third milestone the company announced is a collaboration with Prezzee.

This collaboration will see Laybuy offering customers the opportunity to ‘Pay in 6’ for gift cards at a huge variety of stores, initially across Australia and the UK.

It advised that via the Laybuy shop directory, consumers will be able to acquire gift cards, either for their own use or for gifts, from leading merchants. This includes ASOS (AU), Bunnings, Catch, Dymocks, Freedom, Ikea, Kogan.com Ltd (ASX: KGN), The Iconic, and Webjet Limited (ASX: WEB).

Laybuy’s Managing Director, Gary Rohloff, revealed that he was delighted with the pace at which the Laybuy team has been able to deliver these innovations to the market.

He added: “I also look forward to announcing further product feature enhancements in the first quarter of calendar year 2021. December trading has continued the strong momentum from November as customers use Laybuy as a budgeting tool in the lead up to Christmas, and I will be pleased to announce more record breaking performance as we continue into 2021.”

More reading

• Why the Afterpay (ASX:APT) share price continues to dominate
• Why Laybuy, Mesoblast, Sandfire, & Telix shares are charging higher
• Laybuy (ASX:LBY) share price on watch after delivering strong growth in November
• Laybuy (ASX:LBY) share price pushes higher following half year results
• Is buy now, pay later (BNPL) giving Aussies a headache?

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. The Motley Fool Australia owns shares of and has recommended Webjet 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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