Tag: Motley Fool

If you’re interested in adding a few blue chip ASX shares to your portfolio, then I think you should look at the ones listed below.

I believe both companies have the potential to generate solid returns for investors over the next decade.

Here’s why I would buy these ASX blue chip shares today:

Cochlear Limited (ASX: COH)

Cochlear is a global leader in implantable hearing devices. I think it would be a great long term option due to its exposure to the ageing populations tailwinds. With the number of over 65s globally expected to rise materially over the next few decades, I expect Cochlear’s sales to grow along with it.

Another reason I like the company is its high level of investment in research and development (R&D). In FY 2020, Cochlear spent $185 million or ~14% of revenue on R&D. This is expected to increase to between $190 million and $195 million in FY 2021 as it focuses on internet-connected devices. I believe this investment will ensure that Cochlear maintains its strong market position for a long time to come and allow it to capture a large slice of the growing market.

Goodman Group (ASX: GMG)

Goodman Group is an integrated commercial and industrial property company. I believe it is well placed for growth over the 2020s thanks to the quality of property portfolio. Goodman’s portfolio comprises strategically located modern, high quality properties in key gateway cities around the world.

These properties have shortened the distance between businesses and consumers and, according to management, has put Goodman’s customers ahead of the market. I believe a real testament to the quality of its portfolio is its tenant base. Among its tenants you will find the likes Amazon, Coles Group Ltd (ASX: COL), DHL, and Walmart. All in all, I expect Goodman to deliver solid earnings and distribution growth over the 2020s. This could make it a great buy and hold option.

More reading

• 2 robust ASX 200 blue chip shares to buy today
• 3 excellent ASX growth shares to invest $3,000 immediately
• 4 high quality ASX blue chip shares to buy right now
• Here’s where you could invest your Woolworths (ASX:WOW) dividends today
• Could industrial REITs be the best ASX shares to buy for dividends?

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 Cochlear Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Cochlear 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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Shares in Betmakers Technology Group Ltd (ASX: BET) are trading flat after the company released its quarterly report this morning. The Betmakers share price reached a high of 45 cents in early trade but has since pulled back to 43 cents at the time of writing, the same price at which it closed Monday’s session.

What Betmakers does

Betmakers is a racing data supplier based in Australia. The company is involved in the development and provision of data and analytics products. It also specialises in the production and distribution of racing content.

The info tech company is focused on providing innovative industry and bookmaker solutions to improve industry coverage and the consumer experience. The group’s main revenue channels include Australia, the United Kingdom and the United States.

Quarterly report

Today, the Betmakers share price is trading flat despite a strong quarterly update from the company. Betmakers continued its growth through Q1 FY21 based on strong activity in the Australian market.

One of the highlights from the report was the strong increase in cash receipts, which came in at $3.9 million, 63% above the last quarter. Revenues also increased to $3.9 million, up from $2.7 million last quarter. Furthermore, the strong increase in cash receipts and revenue are expected to continue within the Australian domestic market. Betmakers also noted that it saw strong demand for its managed trading services, content distribution and acquisition tool products.

Betmakers finished the first quarter of the financial year with more than $32.8 million in cash. Impressively, the company also boasts no debt and management is exploring organic and inorganic growth opportunities in Australia and internationally, including in the US market.

What now for the Betmakers share price?

The Betmakers share price has been performing exceptionally this year and is up 207% year to date. This is a huge rise, particularly in comparison with the 6% drop seen in the All Ordinaries Index (ASX: XAO) this year. I believe a large part of the impressive rise in the Betmakers share price is down to its considerable growth in cash receipts, up by 132%.

Betmakers CEO, Todd Buckingham, was pleased with the results, stating:

The impressive growth we are seeing over the past two quarters is a result of the successful development, launch and implementation of our products and services in the Australian market over the past few years.

Furthermore, as mentioned above, Betmakers shareholders have plenty to look forward with a potential US market expansion in store.

More reading

• Insiders have been buying NEXTDC (ASX:NXT) and this ASX share

Motley Fool contributor Daniel Ewing 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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S&P/ASX 200 Index (ASX: XJO) shares have been on a mini-tear as of late. Over the month of October so far, the ASX 200 is up around 6.5% and is sitting at a new post-March high today of 6,201 points (at the time of writing). For many value investors out there, this represents a mixed blessing. Sure, ASX 200 shares are going up and making us all a little richer on paper. But the higher share prices climb, the less attractive it is to buy more. It’s the classic investing ‘double-edged sword’. 

But luckily for those investors, a rising tide rarely lifts every boat on the ASX. So here are two ASX shares that I still think are looking dirt-cheap today

2 ASX shares looking dirt-cheap today

South32 Ltd (ASX: S32)

South32 is a mining company that used to be a part of BHP Group Ltd (ASX: BHP). That is until it was spun-off back in 2015.

South32 holds the mining operations of the ‘old BHP’ that are outside the four ‘pillar commodities’ of coal, iron ore, copper and oil which BHP focuses on today. As such, it holds a range of commodity projects, which include everything from aluminium and lead to silver and nickel. This gives South32 a nicely diversified asset base in my view.

South32 shares are not expensive today. In fact, I would call them dirt cheap at the current share price (at the time of writing) of $2.15. Although South32 has recovered from the $1.58 levels it plumbed during March, it’s still well below the $4.20-ish prices it was commanding just two years ago. Thus, I think this company is pretty cheap today and would make a good long-term investment in a diversified dividend portfolio.

BetaShares FTSE 100 ETF (ASX: F100)

This exchange-traded fund (ETF) is another ASX share that I think is looking dirt-cheap today. F100 is an ETF that tracks the 100 largest companies listed on the London Stock Exchange. The United Kingdom is not a country that features heavily in most ASX investors’ portfolios. And yet it houses many top-tier global companies. You’ll find pharma giants AstraZeneca plc (LSE: AZN) and GlaxoSmithKline plc (LSE: GSK) here, as well as HSBC Holdings plc (LES: HSBA), sin stocks British American Tobacco plc (LSE: BATS) and Diageo plc (LSE: DGE), and household essentials king Unilever plc (LSE: ULVR) among its top holdings. These are all companies that you won’t find likenesses of on the ASX, which lends some great diversification in my view. 

I believe this ETF is looking very cheap at the moment. Its 52-week range stands at $7.20-$11.50, and yet today, the F100 unit price is asking $8.33. Yes, the UK is currently dealing with a plethora of problems, including the calamitous Brexit process, as well as a nasty second wave of coronavirus infections. Even so, for a long-term investment, I think these can be looked beyond. As such, F100 is a fund I would be very happy to buy shares in today.

More reading

• New Chinese government threat leaves these ASX mining stocks on tenterhooks
• I don’t normally buy ETFs, but I would buy these 2
• I’d buy this ASX share this week
• Where I’d invest $10,000 into ETFs right now
• Why I just bought shares of this ASX ETF

Sebastian Bowen owns shares of Betashares FTSE 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Diageo, GlaxoSmithKline, HSBC Holdings, and Unilever. 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

Evolution Mining Ltd (ASX: EVN)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $5.00 price target on this gold miner’s shares. This follows the release of Evolution’s quarterly update. Although the company’s production was in line with expectations and its costs were better than predicted, it isn’t enough for a change of rating. It continues to believe its shares are overvalued at the current level. The Evolution share price is trading at $6.13 this afternoon.

Pilbara Minerals Ltd (ASX: PLS)

Analysts at Citi have retained their sell rating and 32 cents per share price target on this lithium miner’s shares. Citi notes that Pilbara Minerals delivered shipments in line with its expectations in the September quarter. It also sees the company’s Pilgangoora mine as a key part of the lithium supply chain. However, until it sees a sustained improvement in lithium prices, it will be holding firm with its sell rating. The Pilbara Minerals share price is changing hands for 36 cents on Tuesday.

Platinum Asset Management Ltd (ASX: PTM)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating and $3.45 price target on this fund manager’s shares. This follows the release of Platinum’s latest funds under management update. This update was a bit of a mixed bag for Goldman. It notes that its fund outflows were worse than expected, but its investment returns were ahead of its forecasts. While the latter is a positive, it isn’t enough for a change of rating just yet. The Platinum share price is trading below this price target at $3.26 today.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Pilbara Minerals (ASX:PLS) share price edges higher on operational update
• ASX 200 down 0.1%: CBA’s COVID-19 loan deferrals improve, Link receives takeover approach
• Evolution (ASX:EVN) share price is punching higher. Here’s why.
• Why Evolution, Link, Newcrest, & NEXTDC shares are charging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Indoor Skydive Australia Group Ltd (ASX: IDZ) share price is surging today, up 300%. The rocketing share price comes after the microcap company released a progress report to the ASX market this morning.

What does Indoor Skydive Australia do?

Established in 2011, Indoor Skydive Australia Group shares first began trading on the ASX in 2013. The adventure and leisure company specialises in experiential, training and simulation solutions. It counts tourists, thrill seekers and the military among its clients.

The company has two indoor skydiving facilities; iFLY Downunder in Penrith New South Wales and iFLY Gold Coast in Queensland. Additionally, Indoor Skydive Australia owns and operates FREAK Entertainment, specialising in virtual reality (VR).

Why is the Indoor Skydive share price rocketing up today?

The company announced this morning that its FREAK Entertainment branch was opening a third venue. The new venue, FREAK Westfield Bondi Junction, is scheduled to open by mid-November.

The company has signed agreements with Scentre Group (ASX: SCG) for an initial 14-month pilot program. The goal is to expand into additional retail sites in New South Wales in 2021.

Scentre Group’s Bondi Junction shopping mall has an annual turnover of more than $1 billion. The new 211sq m facility includes 2 of FREAK’s signature free-roam VR ‘Arena’ spaces, marking Westfield’s first free-roam VR centre in Australia.

The technology is provided by HP and HTC, which the company reports having formed strategic partnerships with over the last year.

Commenting on the new venue opening, Indoor Skydive chief executive officer Wayne Jones said:

This is a significant step forward for FREAK Entertainment to be moving into Westfield Centres, with the first location being a prominent position within one of the most successful centres being Bondi Junction. The team at FREAK have been working extremely hard with the other two sites to ensure the product is ready for the high throughput expected.

Lyn Hutcheson of Scentre Group also welcomed the move:

We are excited to be working with ISA Group through FREAK Entertainment to bring free-roam virtual reality into our Westfield Living Centres. Our customer-focused strategy means we are always seeking to partner with innovative retailers to offer new and engaging experiences in our centres. This is a great example of this in action.

More reading

• Why you may not need ASX REITs for dividends
• Could industrial REITs be the best ASX shares to buy for dividends?
• Are these 3 ASX shares strong recovery opportunities?
• Why Mirvac (ASX:MGR) and these ASX REITs could boom in 2020
• The ASX shares that fund managers were buying this month

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 AGL Energy Limited (ASX: AGL) share price has not been a solid performer as of late. At the time of writing, AGL shares are trading for just $13.54. We haven’t seen the market assign such a low price to this power company since December 2014. With the energy giant basically sitting at its 52-week low today, is the AGL share price a buy?

Why are AGL shares hated right now?

With the current share price, plus the fact that AGL has fallen more than 50% in value since 2017, I think it’s fair to say AGL shares are pretty much hated by the market right now.

But why? AGL, as a gas and electricity company, should be a pillar of strength for ASX investors, given that these kinds of companies offer enormous certainty for investors in a year full of uncertainty. We all need electricity to work and live, pandemic or no. Many people also need gas for heating and cooking.

Well, all of this is true to an extent. But that doesn’t mean AGL isn’t in trouble right now. In its earnings report for the 2020 financial year, AGL told investors that its profits after tax had dipped 22%. It gets better: AGL also said that it expects things to get worse before they get better in the coming years. No wonder investors hit the sell button!

A silver lining?

But one thing stood out in AGL’s earnings report: its commitment to paying out dividends. Normally, AGL has a ‘payout ratio policy’ for its dividends, meaning it aims to pay out a set proportion of its earnings each year (75% in this case). But given that AGL is not forecasting much in the way of earnings in FY2021 or FY2022, it has given a commitment to investors that it intends to pay out an additional 25% of earnings over FY21 and FY22 in the form of special dividends. In effect, this means AGL will be paying out 100% of its earnings. 

Unfortunately, these dividends won’t be coming with any franking credits attached. AGL is instead focusing on utilising historical tax losses over this time, which won’t generate franking credits. But it hopes to return to paying a franked dividend by FY2023.

So even though AGL is not in a comfortable situation right now, I think the company is virtually guaranteeing that the 98 cents per share that it paid out in 2020 will continue in FY21 and FY22. 

On current pricing, that would give AGL shares a forward dividend yield of 7.24%. 

Foolish takeaway

Personally, I wouldn’t be buying AGL shares today with any expectation of capital growth over the coming 3 to 5 years. Even so, I think AGL is offering a relatively sustainable dividend yield of 7.24%, which would certainly come in handy if dividend income is an important objective of your ASX share portfolio. Thus, I think AGL is a great buy for income investors today (if not for everyone else).

More reading

• Top brokers name 3 ASX shares to sell next week
• 3 ASX renewable energy shares to buy for 2021
• 3 reasons I like the AGL Energy (ASX:AGL) share price today
• Why AGL Energy (ASX:AGL) and these ASX shares just hit new lows

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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The Botanix Pharmaceuticals Ltd (ASX: BOT) share price is soaring higher today following the release of its September quarter update.

At the time of writing, the synthetic cannabinoid company’s shares are up 15% to a year-high of 11.5 cents.

What did Botanix announce?

Botanix recorded strong results for the period ending 30 September, the first quarter of FY21. During the quarter, net cash flows equated to $2.56 million, with $2.3 million invested in research and development activities.

Botanix reported a strong financial position, holding a cash balance of $22.1 million. Most notably, this represents more than 2 years of financing the company’s ongoing operations.

In addition, Botanix president Vince Ippolito participated in a company presentation at the 2020 ASX Small & Mid-Cap virtual conference last month. The presentation provided an overview of its development programs as well as new data supporting Botanix’s antimicrobial platform. The company said it was continuing to explore funding opportunities and partnerships that would help in the development of antimicrobial treatments.

Clinical development programs

BTX 1801

Botanix advised it was well-advanced for the recruitment of its BTX 1801 phase 2a clinical study. The trial will seek to evaluate the safety, tolerability and efficiency of BTX 1801 for the prevention of surgical site infections.

The enrolment will consist of 60 volunteers who will undergo twice-daily treatments across a five-day period. Botanix said the study would be done in a cost-effective manner, with target completion later this year.

BTX 1503

The company noted its BTX 1503 acne program achieved an important drug development milestone in July. The successful end of its phase 2 meeting with the United States Food and Drug Agency (FDA) highlighted the safety profile of BTX 1503. This allowed several waivers for studies that are normally required for dermatology drug registration.

Botanix said it was currently reviewing the timetable for its phase 3 study, pending the completion of its BTX 1702 phase 2 trial, and lifting of COVID-19 restrictions.

BTX 1702

Travel restrictions have temporarily halted the BTX 1702 rosacea program. Botanix said once borders were eased between Australia and New Zealand, recruitment would begin. The six-week randomised study will aim to evaluate patients with moderate to severe papulopustular rosacea.

Given the overlapping characteristics between rosacea and acne, the study will also provide supporting information for the BTX 1503 program.

Botanix share price summary

The Botanix share price has performed strongly since the market meltdown in March. The synthetic cannabinoid company’s shares are up 500% for the period, from 2.3 cents to today’s price of 11.5 cents.

The company has a market capitalisation of $107 million, and still has a long way to go to reach its 52-week high of 26 cents.

More reading

• Why I think these small cap ASX shares will perform in 2021

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. 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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One of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Tuesday has been the Afterpay Ltd (ASX: APT) share price.

The payments company’s shares have continued their positive run and charged higher today.

In fact, at one stage the Afterpay share price was up 4.5% to a new record high of $96.08.

When its shares hit that level, it meant they were up an impressive 214% since the start of the year.

Why is the Afterpay share price at a record high?

There appears to be a few catalysts for Afterpay’s recent share price gains. These include a broker note out of Goldman Sachs, a quarterly update from rival Sezzle Inc (ASX: SZL), and a strong recovery by the Nasdaq index.

In respect to the latter, after a sharp pullback in September, the technology-centred Nasdaq index has been staging its recovery this month and now has its all-time high back in its sights.

This has given the local tech sector a big lift and helped drive tech shares higher. Incidentally, both NEXTDC Ltd (ASX: NXT) and Xero Limited (ASX: XRO) have reached record highs of their own today.

What about the broker note?

Last week Afterpay was the subject of a broker note out of Goldman Sachs.

Although the broker held firm with its neutral rating, its price target of $93.45 was around 17% higher than where its shares were trading at the time of release.

This, combined with some very positive comments by the broker, appears to have also boosted investor sentiment.

Goldman Sachs believes Afterpay had its strongest month of app downloads in history in the United States in September with approximately ~330,000 downloads. Based on this, the broker estimates that the company now has a user base of ~6.7 million in the country, which is up from 5.6 million at 30 June 2020.

Sezzle update.

Finally, an update by Sezzle last week confirmed that the buy now pay later industry is continuing to grow rapidly.

For the three months ended 30 September, Sezzle reported a massive 231.5% year on year increase in underlying merchant sales (UMS) to US$228 million (A$318 million).

This was driven by a 178.1% year on year increase in active customers to 1.79 million and a 178.3% lift in active merchants to 20,890.

Pleasingly, management also advised that “leading loss indicators have stabilized to better than pre-COVID levels.”

Is it too late to invest?

While Afterpay carries higher than normal risk due to its valuation, I still believe its shares offer value for long-term focused investors.

This is due to its leadership position in a rapidly growing industry and its international expansion plans. In light of this, I feel it could be a good idea to add Afterpay to a balanced portfolio today.

More reading

• Zip and Estrella Resources were among the most traded shares on the ASX last week
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs
• Why Afterpay, HUB24, NEXTDC, & Telstra shares are storming higher
• The Zip (ASX:Z1P) share price soars as Citigroup says 1Q update to surprise
• Ignore EBITDA and P/E ratios? This fundie does

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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I think there are some great S&P/ASX 200 Index (ASX: XJO) growth shares that are worth buying for your portfolio.

There aren’t many shares in the ASX 20 that display good growth potentials, though I did choose one for this article.

Here are three good ASX 200 growth shares worth buying today:

Magellan Financial Group Ltd (ASX: MFG)

Magellan is one of the best fund managers in Australia in my opinion. It is good at producing solid investment returns. The underlying business also has very good management that are always looking for further opportunities to grow the business.

Over the past decade it has grown its funds under management (FUM) to more than $100 billion thanks to the good investment performance as well as a good inflow of funds.

Magellan had a strong FY20 result. Revenue increased by 12.4% and adjusted net profit after tax (NPAT) grew by 20.3%.

As the ASX 200 growth share continues to grow its FUM, its profit can continue to rise at a pleasing rate.

The move to combine three of its funds into one seems like a smart move, locking in more funds while giving investors the chance to buy more closed-ended fund units. This should be good for long-term profit.

I also like the recent move to invest in new investment bank Barrenjoey, which is getting a lot of quality people on board which should be attractive to prospective clients.

At the current Magellan share price it’s trading at 20x FY23’s estimated earnings. Magellan currently offers a grossed-up dividend yield of 4.8%.

Service Stream Limited (ASX: SSM)

Service Stream describes itself as a leading essential network services company. It is involved with the design, build and maintenance of various networks including water, gas, electricity, renewable energy and telecommunications.

Indeed, today it announced another win from the NBN which could be worth many millions of dollars.

The ASX 200 growth share delivered a solid FY20 result, with earnings before interest, tax, depreciation and amortisation (EBITDA) from operations rising by 15.9%.

Infrastructure spending will help Australia’s recovery from COVID-19 impacts, and Service Stream could be one of the better ways to play that theme.

At the current Service Stream share price it’s trading at under 15x FY22’s estimated earnings. It also offers a grossed-up dividend yield of around 6%.

CSL Limited (ASX: CSL)

CSL has been one of the best ASX 200 growth shares over the past decade. The CSL share price has gone from around $33 to today’s $300.

The company keeps delivering strong long-term profit growth. In FY20 it grew its net profit after tax by 17% to US$2.1 billion in constant currency terms, with revenue rising by 9%.

CSL is going to be a key part of Australia’s ability to recover from COVID-19 because it has been tasked by the Australian government to manufacture both the Oxford vaccine as well as the University of Queensland vaccine.

In FY21 CSL is expecting profit to grow by up to 8% to US$2.265 billion, though the bottom end of the guidance range was US$2.1 billion of net profit – this would mean profit would be flat for the year.

The ASX 200 growth share consistently invests into new products and this helps unlock future earnings streams for the healthcare giant. It’s this investment in new products that makes me confident for CSL’s future profit growth. It is currently spending around 10% of its revenue on research & development.

At the current CSL share price it’s trading at 34x FY23’s estimated earnings.

Foolish takeaway

I believe that each of these ASX 200 growth shares have good growth credentials over the next three to five years. Growing dividends could also be good.

Out of the three options I’d probably go for Magellan because of its diversifying earnings and its rising profit margins. Fund managers are very scalable businesses.

More reading

• The Unibail (ASX:URW) share price is climbing today. Here’s why.
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs
• Service Stream (ASX:SSM) share price higher on NBN update
• $10,000 invested in the CSL (ASX:CSL) IPO is worth how much now?
• 5 things to watch on the ASX 200 on Tuesday

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Service Stream 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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Do you remember when the tech boom was over? When would-be pundits were coming out of the woodwork proclaiming that the share price gains investors enjoyed during the tech-led share market recovery had run their course?

Those pundits are still out there. But they’ve gone suspiciously quiet.

To be fair, technology shares did, by and large, race ahead of the pack following the pandemic fuelled market rout. And fears that valuations were stretched did see tech share prices retrace.

In Australia, the S&P/ASX All Technology Index (ASX: XTX) — which tracks 50 of Australia’s leading and emerging technology shares — peaked on 25 August. At that point it was up 116% from the 23 March low. Then the index slid 11% through to 14 September. And the tech bears predicted more pain to come.

But, as you probably know, that didn’t happen.

Since 14 September, the All Tech Index is up 17% (at the time of writing). It hit new, all-time highs last Thursday 8 October. And it’s kept gaining since then, currently up 5% from its 25 August peak and an eye-popping 127% from the 23 March low.

Investors piling into cashed up tech shares

It’s the same story across most of the globe, just on a slightly different timeline.

In the United States, the NASDAQ-100 (NASDAQ: NDX) didn’t peak until 2 September, up 77% from 23 March. By 23 September, it was down 13% from that peak, putting the index well into technical correction territory. And again, the tech bears forecast more share price losses to come.

But, following yesterday’s (overnight Aussie time) 3% gain, the Nasdaq 100 has instead climbed 12% since 23 September. That puts it only 3% below its 2 September all-time highs.

And that high looks like it won’t hold the record for long.

Deutsche Bank AG (NYSE: DB), among others, is upping its bullish outlook for some of the biggest technology shares. With an eye on the growth potential in digital advertising, the bank upgraded its outlook for Twitter Inc (NYSE: TWTR), Facebook, Inc. (NASDAQ: FB) and Google’s parent company, Alphabet Inc Class A (NASDAQ: GOOGL).

Keith Gangl, a portfolio manager of Gradient Investments noted that (quoted by Bloomberg), “People are going back to the trade that’s worked, and that’s the growth trade. People are worried about missing out, so they are going right to the tech leaders.”

Now there are all kinds of great technology shares on the All Ordinaries Index (ASX: XAO). But if you want exposure to the top US tech shares, you may want to consider the Betashares Nasdaq 100 ETF (ASX: NDQ).

The exchange-traded fund (ETF) is meant to mirror the returns of the Nasdaq 100. And it comes pretty close. The ETF is up 31% so far in 2020, compared to a 36% gain for the Nasdaq 100.

PC demand is booming

Sticking with technology, personal computer (PC) shipments increased 3.6% in the third quarter of 2020, reaching 71.4 million units. That’s according to preliminary results by research and advisory company Gartner Inc (NYSE: IT).

According to Mikako Kitagawa, research director at Gartner:

This quarter had the strongest consumer PC demand that Gartner has seen in five years. The market is no longer being measured in the number of PCs per household; rather, the dynamics have shifted to account for one PC per person…

Mobile PC demand in the U.S. market surged as the shift from desktop to mobile PCs became a common practice across public and private businesses, even with many companies partially bringing their workers back to the office. PC demands in the U.S. were also backed by the gradual economic recovery throughout the quarter, including a rebound in employment and an improved consumer confidence index.

Gartner does not include Chromebook shipments in its traditional PC market results. (Chromebooks run on Google’s Chrome operating system and are generally less expensive than most traditional PCs.)

If you include the 90% surge in Chromebook shipments in the third quarter, Gartner indicated the total worldwide PC market grew 9% year on year. Which hardly sounds like the end to the tech share boom.

The government’s recovery budget and ASX tech shares

We’ll wrap this up today with a look at how the government’s proposed instant asset write-off measures could impact ASX technology share prices.

For that, we turn to Fiona Hindmarsh, chief executive of venture capital firm Significant Capital Ventures. According to the Australian Financial Review, Hindmarsh believes the budget will increase the demand for high-tech equipment. She says:

This budget is a powerful confidence boost. The tax write-off won’t directly impact the start-ups that are sourced and funded by Significant as they are typically not yet profitable. It will however have a dramatic impact on the speed and scale of adoption of these technologies through industry engagement and investment…

Owners of heavy equipment are all seeking technology that will enable them to make autonomy in the field of construction, mining, remote environments a reality. The cost of taking on and accelerating this type of radical technology innovation is reduced with the tax benefits enabling more effective industry partnerships.

All of this doesn’t mean that tech share prices won’t fall again on any given day or week. But the growth outlook for well-placed technology shares remains robust.

More reading

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• 3 ASX shares to buy in a US election selloff

Suzanne Frey, an executive at Alphabet, 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. Bernd Struben 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 Alphabet (A shares), Facebook, and Twitter. 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 Gartner. The Motley Fool Australia has recommended Alphabet (A shares), BETANASDAQ ETF UNITS, and Facebook. 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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