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Some ASX growth shares grew their operating profit by a lot in FY20. Some of them more than doubled the earnings before interest, tax, depreciation and amortisation (EBITDA).

As described in the linked EBITDA guide above, this profit measure is used to show the day to day profitability of a business.

Businesses that grow EBITDA usually grow net profit and earnings per share (EPS) too. EPS growth is a key factor that many investors focus on to determine the appropriate share price for a business.

Here are two ASX growth shares that grew the EBITDA by more than 100% in FY20:

Redbubble Ltd (ASX: RBL)

Redbubble managed to increase its operating EBITDA by 141% to $15.3 million in FY20 and EBITDA went up by 358% to $5.1 million.

The e-commerce ASX share is an online marketplace which sells artist-produced products like phone cases, wall art, clothing and masks. It operates both the Redbubble and TeePublic online sites.

In FY20 there was a significant increase in activity, partly due to COVID-19. Marketplace revenue grew 36%, gross profit went up 42% and free cashflow improved to $38 million.

At the time of the FY20 result, Redbubble Martin Hosking said: “RB Group’s on-demand fulfilment model and differentiated consumer offerings provide us with distinctive advantages. The strong financial performance follows from these fundamentals. It has been pleasing to see the acceleration of existing trends in the last few months. 2021 represents a year of opportunity for the business. We are positioned to build on a decade of momentum and aggressively pursue the global opportunity presented by the shift to online activity and increasing adoption of e-commerce platforms.”

The ASX share recently told investors about its FY21 first quarter performance. Marketplace revenue went up 116% to $147.5 million, gross profit grew 149% and it generated EBIT of $22.1 million.

The Redbubble share price has gone up by 453% over the past six months.

Kogan.com Ltd (ASX: KGN)

Kogan.com is another business that is generating large profit growth under the current circumstances.

The ASX share revealed that in FY20 its gross sales went up 39.3% to $768.9 million with revenue rising 13.5% to $497.9 million. Active customers increased by 35.7% to 2.18 million in FY20.

Kogan.com’s gross profit went up by 39.6% to $126.5 million. Adjusted EBITDA went up 57.6% to $49.7 million. Net profit after tax (NPAT) grew by 55.9% to $26.8 million.

COVID-19 physical retail effects saw growth accelerate for the ASX share in the second half of FY20. Gross sales, gross profit and adjusted EBITDA grew by 62.5%, 68.3% and 74.1% respectively.

The CEO and founder of Kogan.com, Ruslan Kogan, said with the FY20 report release: “There is a retail revolution taking place as more and more shoppers learn about the benefits of e-commerce. We’re seeing record numbers of first time customers, who then go on to make repeat purchases at a 40% faster pace than previously. For us this is a very exciting trend that shows that once customers learn about shopping online, they change their ongoing behaviour. Once someone discovers the benefits of online hopping, I struggle to see why they would ever go back to the old way of doing things. After almost 15 years of preparation, the revolution occurring in retail represents a significant opportunity for Kogan.com.”

Mr Kogan also referred to the benefit to the company of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”

In Kogan.com’s most recent business update – being the month of August 2020 – active customers has grown to 2.46 million (up 12.8% from 30 June 2020). Year on year, gross sales grew 117%, gross profit went up 165% and adjusted EBITDA rocketed 466%.

The Kogan.com share price has gone up 166% by over the past six months.

More reading

• Here are 2 rapidly growing ASX growth shares
• Summer is coming, and none too soon for ASX retail landlords
• Here’s what the US election means for investors
• Is the Adore Beauty (ASX:ABY) share price in the buy zone?
• I plan to invest heavily in ASX shares next week

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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It was a great day of trade for the S&P/ASX 200 Index (ASX: XJO) on Thursday. The benchmark index stormed 1.3% higher to 6,139.6 points.      

Will the market be able to build on this on Friday? Here are five things to watch:

ASX 200 expected to rise.

It looks set to be another positive day for the Australian share market. According to the latest SPI futures, the ASX 200 is poised to open the day 38 points or 0.6% higher this morning. In late trade in the United States, the Dow Jones is up 2%, the S&P 500 has jumped 2.2%%, and the Nasdaq has stormed 2.7% higher.

U.S. election result nears.

The result of the U.S. is getting closer. As things stand Joe Biden is leading Donal Trump by 253 to 214 with the result largely dependant on four key battleground states. The first to 270 will be crowned the U.S. President. The U.S. dollar weakened overnight on the belief that Biden is on the verge of winning.

Macquarie half year results.

The Macquarie Group Ltd (ASX: MQG) share price could be on the move today when it hands in its half year results. According to a note out of Goldman Sachs, its analysts have forecast net profit after tax of $957 million. This will be down 34% on the prior corresponding period and in line with the company’s guidance. The consensus estimate is for a net profit after tax $953 million.

Oil prices drop lower.

Energy shares such as Beach Energy Ltd (ASX: BPT) and Oil Search Limited (ASX: OSH) could miss out on the push higher today after oil prices weakened. According to Bloomberg, the WTI crude oil price is down 1.15% to US$38.70 a barrel and the Brent crude oil price is down 0.95% to US$40.84 a barrel. Oil prices snapped their three-day winning streak amid concerns over European lockdowns.

Gold price races higher.

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a great finish to the week after the gold price raced higher. According to CNBC, the spot gold price has stormed 2.8% higher to US$1,950.30 an ounce. Traders have been buying gold after the U.S. dollar softened on the belief that Joe Biden will win the US election.

More reading

• Andromeda Metals (ASX:ADN) share price climbs 18%
• ASX 200 shoots 1.3% higher on Thursday
• Latest ASX small cap buy calls from top brokers
• Why share markets are shrugging off this uncertainty, and what to expect next
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Today the Andromeda Metals Ltd (ASX: ADN) share price climbed 18.75% to 19 cents before dropping back to close at 18 cents per share. This gain comes 4 days after the company released a number of announcements to the market.

What did Andromeda Metals announce recently?

During the quarter ended 30 September, the Great White Kaolin joint venture in which Andromeda Metals has a 75% interest revealed the following:

• Maiden reserve of 12.5 million tonnes of kaolinized granite classified as a probable reserve, comprising 15% halloysite and 78% kaolinite.
• Assay results from aircore drilling revealed an extensive area of kaolin consisting of 2.4 kms by 0.5  kms. 
• An inferred resource of 51.5 million tonnes of kaolinized granite

Elsewhere, at the company’s Mount Hope kaolin project, a new inferred resource of 18 million tonnes of kaolinised granite was estimated during the last quarter.

Drilling of the Andromeda Metals Drummond Epithermal gold joint venture commenced in late September by Evolution Mining Ltd (ASX: EVN), with results pending.

At the company’s Eyre Peninsula gold joint venture, an RC drilling program of up to 6,750 metres recently commenced across a number of targets. 

Additional updates from the most recent quarter September included:

• The company spent $1.22 million on exploration and evaluation
• Andromeda Metals received cash of $2.03 million from the exercise of options 
• Cash on hand was $3.66 million at 30 September 2020

Andromeda Metals also announced that it had appointed financial services firm Taylor Collison to advise it on mergers and acquisitions along with equity capital markets transactions. 

About the Andromeda Metals share price

Andromeda Metals is a minerals exploration company with a focus on halloysite-kaolin, gold and copper. The company has assets in South Australia, Western Australia and Queensland. Andromeda Metals has been listed on the ASX since 1996.

Andromeda Metals shares are up 873.68 % since their 52-week low of 1.9 cents and up 270% since the beginning of the year. The Andromeda Metals share price is up 362.5% since this time last year.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• Is it time to buy ASX gold shares?
• 5 things to watch on the ASX 200 on Friday
• How did ASX gold shares perform in the last quarter? 

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Nine Entertainment Co Holdings Ltd (ASX: NEC) has been riding high for the past 3 months, with its share price gaining more than 30%. This is despite the company reporting a 17% decline in its full year FY20 results in August. 

Let’s look at what’s driving this rise in the Nine share price. 

First, what does Nine Entertainment own?

Nine is a media conglomerate which owns the Channel 9 television channels and assets, as well as the 9Now online streaming service. The company also owns the old Fairfax Media Group, publisher of several newspapers such as The Sydney Morning Herald, The Age and The Australian Financial Review. Additionally, the company owns the Stan streaming service and a 60% chunk of Domain Holdings Australia Ltd (ASX: DHG).

What’s driving the Nine share price up?

Shrugging off a disappointing full year result back in August, Nine Entertainment has continued on its upward trajectory momentum. 

The increase in Nine’s share price is mainly driven by an improving landscape in advertiser and consumer sentiment. For instance, the Westpac-Melbourne Institute Index of Consumer Sentiment , was 105.0 in October, up from 93.8 in September, and 86.4 six months earlier. Clearly consumer confidence and spending is starting to rise again. The survey also noted that the lift of COVID-19 restrictions has increased confidence for investors. 

The company has also benefited from the cost restructuring program it conducted in response to COVID-19. In its financial year reporting, it advised it would step up its three-year cost-out initiative from $150 million to $230 million by 2024.

Growth opportunities

According to its financial report, Nine generates 90% of its earnings from its Nine Network channel – one of only three television channels licensed to broadcast free-to-air in Australia. The total market for free-to-air advertising is $2.7 billion, of which Nine commands the number one position at 39%.

This market is gradually dwindling as advertisers move to digital platforms. However, management said Nine’s investments in digital platforms such as 9Now, Stan, and Domain had gradually increased its market share in the fragmented digital market. That’s where it expects to see future growth.

Nine’s share price performance in 2020

As noted earlier, Nine’s share price has been on the rise for the past three months, gaining more than 30%. Today, The Nine share price is $2.36, up 2.36%, and commands a market cap of $3.8 billion.

More reading

• Here’s what the US election means for investors

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The US election results are nearly over – the S&P/ASX 200 Index (ASX: XJO) has gone up 1.3% to 6,140 points in reaction to the ongoing political situation.

Here are some of the highlights from the ASX:

Ingham’s Group Ltd (ASX: ING) jumps higher

The Ingham’s share price jumped higher today by around 16%.

The poultry business held its annual general meeting (AGM) today. It gave a couple of updates at the meeting.

It said that poultry demand has strengthened, with trading volumes in the first quarter of FY21 up 6.3% compared to the first quarter of FY20 and up 7.5% on the last quarter of FY20.

Management said that there has been solid progress in the reduction of poultry inventory levels resulting from COVID-19 impacts in FY20 with initiatives continuing to deliver further reductions in inventory levels by the end of FY21, supported by Christmas demand.

The ASX 200 poultry business anticipates feed cost reductions in the second half of FY21, Ingham’s expects to fully realise the benefits in its cost of sales by the last quarter of FY21.

The board of Ingham’s has reviewed its dividend policy after adopting the new accounting lease standard AASB 16 and revised the policy to a range of 60% to 80% of underlying net profit after tax (NPAT). The board said it recognised the importance of dividends to shareholders.

The FY21 interim dividend, which will use this new policy, is expected to be paid in April 2021.

It was the best performer in the ASX 200 today.

National Australia Bank Ltd (ASX: NAB)

The big ASX bank released its full year result for the 2020 financial year to September 2020.

NAB reported that its statutory profit after tax was $2.56 billion, which was significantly impacted by COVID-19 effects.

The cash earnings were also hurt heavily, down 36.6% to $3.71 billion. Even after excluding the large notable items, cash earnings dropped by 25.9% to $4.73 billion. The $1 billion of notable items including things like royal commission remediation and changes to accounting policies for software amortisation.

NAB’s board decided to declare a final dividend of 30 cents per share, bringing the full year dividend to 60 cents per share. That was a cut of around 64%.

The ASX 200 bank disclosed that its ratio of loans that are over 90 days past due rose 10 basis points to 1.03%, largely due to rising delinquencies in the Australia home loan portfolio where customers are not part of the COVID-19 deferral program.

On the economy, NAB said: “Economic activity in Australia has been materially impacted by COVID-19 with GDP falling 7% in the June quarter 2020 and forecast to decline 4.7% over the year to December 2020. Recovery is likely to be gradual, supported by stimulatory fiscal and monetary policy combined with an expected relaxation of Victorian restrictions and a more complete reopening of state borders. This sees forecast GDP growth of 4.6% over 2021 and 2.9% over 2022, albeit the outlook for the business sector remains highly uncertain and the pace of the recovery is likely to be uneven across industries.”

The NAB share price went up 3.25% in reaction today.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine Estates share price fell by around 8% today in reaction to an update.

In Asia, Treasury Wine Estates said that in has seen a progressive and consistent recovery in consumer demand for its brands. It also saw “strong” consumption throughout the Golden Week holiday season and mid-autumn festival in September and into early October with business growth and a return of social gathering occasions.

The company referred to the fact that the Chinese Alcoholic Drinks Association has applied to MOFOCOM requesting that imports of Australian wine in containers of two litres or less into China be subject to retrospective tariffs. The ASX 200 wine maker is unsure if this will be successful. It wasn’t able to comment on a potential embargo of Australian exports, including wine, into China.

In the Americas, particularly in the US, the wine category is still seeing strong growth in retail channels with 12% value growth in the first quarter. Treasury Wine said the upcoming Thanksgiving and Christmas holidays will be very important.

In Australia, the business is seeing an elevated retail performance driven by the above $10 price points. The masstige portfolio is growing ahead of the market, up 21% in value in the first quarter.

In Europe, the Middle East and Africa the business saw continued strong performance in its retail channels in the UK, along with mainland Europe. However, COVID-19 impacts continue to hamper the Middle East and Africa.

It was the worst performer in the ASX 200 today.

More reading

• When ‘cutting rates’ doesn’t mean what you think it means
• Latest ASX small cap buy calls from top brokers
• Why share markets are shrugging off this uncertainty, and what to expect next
• Why Domino’s, Estia Health, Pendal, & Treasury Wine shares are dropping lower
• The Treasury Wines (ASX:TWE) share price tumbles lower. Here’s why.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Yes, yes. Apparently there’s an election going on. In the UK, or UPS or something.

But enough people are already writing more than enough words on that.

Instead, let’s talk about what’s happening while many of us are distracted by politics:

As we all know by now, the RBA threw the kitchen sink at the economy on Tuesday, including cutting the official cash rate by 0.15% to 0.1%.

(It also did a lot of other things which were far more important, economically!)

The rate cut will be bad news for long-suffering savers, who’ll likely now get even less interest on their savings (if that’s possible).

At least borrowers will benefit, right?

Not so fast, Skippy.

But didn’t the headline say:

“CBA, NAB and Westpac slash interest on home loans to lowest in history after Reserve Bank cut”

Oh, it did.

Unfortunately that headline was one of the more misleading ones in recent history (and that’s saying something). 

Saying the Big Four banks – Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) – have cut rates is like Donald Trump saying he won the election.

True, in part, but more smoke than fire.

Yes, Trump won some states. So I guess that counts as a ‘win’. But it doesn’t tell the whole story, does it?

Thankfully, some headline writers looked a little deeper when it came to interest rates.

Here’s the ‘whole truth’:

“Commonwealth Bank the first big four to slash fixed rate costs, but leaves variable rates untouched”

It was joined by the other three of the Big Four banks in doing exactly that: cutting fixed rates, but leaving the variable rate where it was.

It could be described as a classic bait and switch.

“We’ve cut rates”, they yell from the rooftops.

Funnily enough, they then whisper the details so that only those who are contravening social distancing rules can hear.

Maybe it was inevitable, given we’re in the middle of election season, that they were going to use some of the same tactics as the pollies, but it’s both disingenuous and misleading.

To take a single example – and CBA is far from alone in this – their interest rate announcement is full of the spin they want reported. And many an overworked journo took the headline information of the announcement and reported it just as it was written.

Indeed, you have to scroll a fair way before CommBank asks and answers its own Dorothy Dixer:

“Why haven’t you passed on the cash rate cuts to variable rate home loan customers?

The cash rate reduction announcement by the RBA will lower the structure of interest rates and provide confidence that Australians can borrow over the long term at historically low rates.

We have reflected this in our interest rate settings, offering customers our lowest ever fixed rate – 1.99% fixed for 4 years – providing customers who fix some or all of their home loan with certainty and confidence into the future. We have also reduced the 1, 2 and 3-year fixed rates for new owner-occupier loans by up to 0.15% p.a.

Did you notice what was missing in that answer?

Yep… an actual answer!

There is not even an attempt to answer the ‘why’ at all. It’s Spin 101: “Answer the question you wish you were asked”.

I wish I was surprised, but I’m not.

And, as I said, CommBank is far from the only example – it was just the one that stuck out.

If anyone from CommBank is reading this, by the way, and wants to give me a straight answer, I’ll happily publish it. The same goes for ANZ, NAB and Westpac.

Perhaps the other thing going for the banks is that, frankly, no-one is surprised.

Where, you might ask, is the competition, when one bank can announce no change, and the other Big Four banks just meekly line up behind one another and parrot the same thing?

Yes, it’s partly a rhetorical question: there clearly is a massive lack of serious competition between our largest banks.

But it’s not completely rhetorical.

Let me give a wrap to two institutions I’ve seen advertise lower rates: ME Bank and Athena Home Loans. I have no affiliation with either, nor does The Motley Fool – I’m just mentioning them because they deserve a little free press for actually cutting rates.

I’m going to stop short of directly recommending them – I have no personal experience with either, and we also haven’t seen the dust settle on the rate cutting across the sector – but their actions should at least make them part of your consideration set when you’re looking to make sure you’re paying the best rate.

See, I have no inside knowledge of our Big Four, but I imagine the conversations they have about interest rates revolve around a single question: “How much can we charge before our customers start leaving?”

And, to be clear, that’s a perfectly rational and reasonable question.

The problem isn’t them – it’s you. And me.

I’m sorry if that’s hard to read.

But it’s true.

Because the answer, all too often, is: “A king’s ransom”.

Many Australians will donate something like $50,000 to their banks in unnecessarily high interest payments over the life of a loan.

$50,000

50 gorillas.

Fifty big ones.

Why?

Because we’re lazy, overwhelmed, uninformed, or all of the above.

You’d drive across town to save a few cents a litre.

You buy what’s on special at the supermarket.

But you might be donating the price of a new car to your bank.

That is, unless you take action.

The choice is yours.

Either stick with your current bank, almost certainly paying more than you have to (there are hundreds of loan products out there: what are the odds that yours is the lowest rate on offer?), or take action.

Jump online.

Compare rates.

Then call your bank.

Ask them to match the best rate you can get.

If not, walk away.

Take your business elsewhere.

Too hard? Don’t want to?

Then I guess you must have more money than you need, or you really, really like your local bank manager!

In all seriousness, I get it. I don’t want to do it either.

But I also reckon that money is better in my pocket than theirs.

So do it to save money.

Do it to get out of debt quicker.

Or, if you’re so inclined, do it to stick it to your bank.

Whatever you do, don’t let apathy cost you a small fortune.

Do it.

Call your bank.

#getabetterrate

Fool on!

More reading

• NAB (ASX:NAB) share price higher despite reporting 36.6% decline in cash earnings
• 5 things to watch on the ASX 200 on Thursday
• Analysts divided over future of Westpac (ASX:WBC) share price
• CBA (ASX:CBA) bans forced home sales until September
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Buyers might soon be flooding back into the market and these ASX small cap stocks could be major beneficiaries as they are the latest “buy” calls from brokers.

The highly anticipated market sell-off from the US presidential election didn’t materialise despite the worst-case scenario playing out.

Market watchers warned that unless we got a clear winner, Wall Street could tank and take the S&P/ASX 200 Index (Index:^AXJO) down with it.

Why ASX small caps look like good “buys” now

It’s 48 hours since the election and we won’t know who’s the next US president for at least another day. Adding to the uncertainty, Trump also launched legal proceedings to challenge the results.

But investors are taking all of this in their stride with equity markets rallying despite the less than predictable outcome.

Small caps could benefit more from this tailwind as high-risk investments outperform when fear gives way to greed.

In the overtaking lane

Following this train of thought, the Eagers Automotive Ltd (ASX: APE) share price is one to watch. The auto dealer announced two new property deals and UBS took the opportunity to repeat its “buy” recommendation on the stock.

Eagers bought three sites in Western Australia for $30.3 million and a 43,000m² strategic site in New South Wales from Charter Hall Group (ASX: CHC).

“The deals provide an immediate ~$8m PBT benefit (+4% vs FY21E) on lower occupancy costs, strengthen APE’s tangible asset base and provide significant optionality for APE to reconfigure existing franchises,” said UBS.

“APE remains highly leveraged to current robust trading conditions and we see further opportunities for upside across its business.”

The broker’s 12-month price target on the stock is $13 a share.

Key ASX small cap buy recommendation

Meanwhile, Morgans reiterated its “add” recommendation on the Nanosonics Ltd. (ASX: NAN) share price today following its trading update.

Management reported that consumables volumes and sales growth for its disinfection devices were returning to pre-COVID‐19 levels.

“This is an upgrade on previous commentary provided by management at the release of its FY20 results last August,” said Morgans.

“The key catalyst is the commercial launch of the new product which management are expecting in FY22.

“We recommend clients buy this quality growth stock.”

The broker’s 12-month price target on the NAN share price is $6.86 a share.

Attractive valuation drives upgrade

Finally, the Imdex Limited (ASX: IMD) share price jumped 3.7% to $1.26 ahead of the market close today after Bell Potter upgraded the stock to “buy” from “hold”.

The upgrade comes as the mining services company’s share price declined around 17% over the past three weeks despite an improving outlook.

The broker noted that capital raisings by junior explorers was strong, which should drive demand for Imdex’s drilling services.

Investors may have been disappointed by the delay in Imdex commercialising four new technologies, but this is more than reflected in the depressed stock.

“The steady recovery since Apr’20 and the strength of the tools business demonstrates the quality of IMD’s business, which should benefit from cyclical tailwinds,” said Bell Potter.

“Strength in capital raisings, as well as gold and copper prices indicate a very strong FY22e outlook.”

The broker’s 12-month price target is $1.45 a share.

More reading

• Top brokers name 3 ASX shares to buy today
• Why share markets are shrugging off this uncertainty, and what to expect next
• Why these 4 ASX tech shares surged today
• ASX 200 ends mixed on Wednesday
• With interest rates near zero these ASX income shares are in focus

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Encounter Resources Ltd (ASX: ENR) share price is up 3% in afternoon trading. This comes following the company’s drilling update at its Yeneena Copper-Cobalt Project in Western Australia.

By comparison, the All Ordinaries Index (ASX: XAO) is up 1.1% today.

Shareholders in Encounter Resources and other ASX-listed miners with a focus on copper, like Sandfire Resources Ltd (ASX: SFR), received some unwelcome rumours this week courtesy of China’s media outlets. Those rumours have it that copper could join wine, lobsters, coal and barley on the Chinese government’s growing list of restricted Australian commodities.

China’s government has yet to specifically say so. But the consensus in Australia is these restrictions are punitive measures put into place as diplomatic relations between the 2 nations have grown strained over spying allegations, Australia’s Huawei 5G ban, and frictions over China’s alleged detention of a million Uighurs.

Nonetheless, Encounter Resources is charging ahead. Today’s gains see the Encounter share price up 63% year-to-date.

What does Encounter Resources do?

Encounter Resources is an Australian gold and copper exploration company. Encounter is moving forward with a promising group of projects in the Tanami and West Arunta regions of Western Australia in joint ventures with Australia’s largest gold miner, Newcrest Mining Limited (ASX: NCM).

What sent the Encounter Resources share price higher?

This morning Encounter announced it had started a diamond drilling program (up to 1,900 metres) at its Yeneena Copper-Cobalt Project in the Patterson Province of Western Australia under the earn-in and joint venture agreement with IGO Ltd (ASX:IGO).

Under the terms of the agreement, IGO can sole fund $15 million in exploration costs over 7 years to earn a 70% interest in Yeneena.

The diamond drill program follows on magneto-telluric (MT) and electromagnetic (EM) surveys which identified a range of promising new copper drill targets at Yeneena. An initial diamond drill program will test Tarcunyah’s multi-point copper anomaly as well as the Windsor EM target.

Encounter managing director Will Robinson said:

We are excited to be under way with diamond drilling at Yeneena. The compelling copper-cobalt drill targets to be tested are a result of the innovative application of modern exploration technologies in a highly fertile but covered terrain.

With Encounter’s share price rallying on the drill announcement, the test hole results will be the next ones to watch for.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CogState Limited (ASX: CGS) share price has surged up 24.7% at the time of writing to $1.34 a share after closing at $1.09 yesterday and opening at $1.15 this morning.

This move represents a continuation of the stellar year Cogstate shareholders have enjoyed so far in 2020. Cogstate shares started 2020 at just 45 cents each. That means that, on today’s share price, shareholders have enjoyed year-to-date gains of more than 188%.

So what does Cogstate do? And why are its shares exploding today?

What is this company?

Cogstate is a company dedicated to brain health. Its reported mission is to “optimise cognitive assessments to support the development of new therapeutics and provide earlier brain health insights in clinical care”.

It has a market capitalisation of approximately $221 million on current prices with 5 global offices split between Australia (Melbourne), the United States (in Wisconsin, New York and Connecticut) and the United Kingdom (London).  Cogstate offers 3 core products and services: clinical trials, healthcare and academic research.

The clinical trials division provides “services and solutions” to help with decision making in drug development. The healthcare division revolves around providing innovative tools to screen and monitor cognitive changes, such as those arising from diseases like Alzheimer’s and from brain injuries. The academic research division offers assistance and solutions for researchers and academics studying cognition.

Cogstate has been around for roughly 2 decades and has given investors a wild time over that period. Its share price has always been highly volatile, but also essentially went nowhere between May 2006 and October 2014. However, in the past five years, Cogstate has been as high before as the levels we see today – back in January 2017. However, between that month and July 2019, the shares lost more than 88% of their value.

Why is the CogState share price exploding today?

To understand today’s pricing move, we first have to go back to a partnership Cogstate recently announced. Early last week, Cogstate advised the market that it has inked a 10-year agreement with Japanese pharmaceutical company Eisai. Eisai is a ~A$33 billion company with more than 10,000 employees worldwide.

The deal will see Eisai distribute Cogstate’s cognitive assessment technologies in healthcare and other markets worldwide (including in China, Japan, Europe and the US) on an exclusive basis. The clinical trials division does not fall under the arrangement. Cogstate will receive ongoing royalties for the use of its products and services. It will also see Eisai provide an upfront payment to Cogstate of US$15 million. Eisai will also fund product research and development to adapt Cogstate solutions for each market.

Today’s announcement has given investors additional details on this arrangement with Eisai. It told investors that Eisai’s Chinese subsidiary has established a joint venture with Chinese e-commerce company JD.com Inc‘s (NASDAQ: JD) subsidiary JD Health. The new joint venture will be called Jingyi Weixiang (Shanghai) Health Industry Development Company.

This company will reportedly build a “health service platform for the elderly in China”. This platform will be a “one-stop” platform where users can “select and use the most suitable individual service from a variety of information and medical services”. Some of the tools used in this development will be provided by CogState under the previously-discussed arrangement.

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• Why the CogState (ASX:CGS) share price is rocketing 36% higher today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Broker Goldman Sachs has upgraded building products manufacturer CSR Limited (ASX: CSR) to neutral. The revised 12-month target price has now increased by 20% to $4.64, from $3.86 previously. However, the CSR share price has been steadily dropping today, trading down 5.12% to the price of $4.72 at the time of writing. 

Why was CSR upgraded?

Goldman Sachs noted that CSR’s earnings have significant exposure to residential construction activity, and historically its share price is closely correlated to the housing cycle. 

However, the broker cited the recently released data for building approvals had indicated an improvement in the property sector. The data showed a rise in approvals for detached houses and private sector dwellings in the September quarter.

As a result, Goldman Sachs predicted that CSR’s building products revenue would improve modestly from a decrease of 6% in FY20, to a decrease of 5% in FY21.

The broker also expected a $20 million reduction in CSR’s selling, general administrative (SG&A) expenses in FY21, as a result of its ongoing cost restructuring programs. This ongoing “self-help” program is expected to improve CSR’s margins in FY21 and beyond.

Goldman Sachs also said the depreciating Australian dollar would have a positive impact on CSR’s bottom line, especially in its glass & aluminium unit where it competed against imported products. 

In summary

Goldman Sachs has outlined three important factors for CSR’s medium term recovery – a quicker-than-expected residential housing recovery, a weaker Australian dollar, and its continuing cost reductions programs.

CSR’s share price performance

The CSR share price has experienced a wild ride in 2020. It began the year trading at $4.58 before dipping to its nadir at $2.82 in March as COVID-19 impacts took hold. It has since bounced back to today’s level of $4.72, a modest 3% increase YTD.

At today’s price, CSR has a market cap value of $2.4 billion.

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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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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