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The A2 Milk Company Ltd (ASX: A2M) share price was uncharacteristically among the worst performers on the S&P/ASX 200 Index (ASX: XJO) in September.

The infant formula and fresh milk company’s shares lost approximately 17.5% of their value during the period.

Why did the a2 Milk share price sink lower in September?

The entirety of the a2 Milk share price decline came in the final week of the month following the release of a trading update.

That update revealed that the company has started to observe emerging disruption to the corporate daigou and reseller channel. This was particularly the case during the Stage 4 lockdown in Victoria.

As a result of this disruption, management advised that it is witnessing a contraction in the daigou channel beyond its previous expectations. It is also not seeing the replenishment orders that would typically be anticipated at this point.

Combined with headwinds associated with pantry destocking following panic buying during the height of the pandemic, a2 Milk expects its first half sales to be lower than the prior corresponding period.

Management explained: “This disruption in the daigou channel is impacting our September sales and it is currently anticipated that this will continue for the remainder of the first half of FY21. Sales in the daigou channel represent a significant proportion of infant formula sales in our Australia & New Zealand (ANZ) business and, as such, we now expect ANZ revenue to be materially below plan for the first half.”

FY 2021 guidance.

It is forecasting first half sales in the range of NZ$725 million to NZ$775 million, which will be down 3.9% to 10.1% from NZ$806.7 million a year earlier.

And while it expects things to pick up in the second half and lead to full year sales and profit growth, the level of growth is much slower than investors have become accustomed to.

In FY 2021 sales are expected to be NZ$1.8 billion to NZ$1.9 billion, which represents a 4% to 9.8% increase year on year.

As for its earnings, the company is forecasting an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 31%. This would result in EBITDA of NZ$558 million to NZ$589 million for FY 2021, up 1.5% to 7.1% from NZ$549.7 million a year earlier.

Is this a buying opportunity?

I expect trading conditions will remain subdued in the daigou channel for a little while to come due to international tourism restrictions, however, this appears to have been factored into its share price now.

In light of this, I think this share price weakness could be a good opportunity for investors looking to make a buy and hold investment.

Especially given its very positive long term growth outlook. This is thanks to its expanding fresh milk footprint, its growing distribution network in China, and its modest market share in the key market.

More reading

• 2 top ASX shares I’d buy with $2,000 for October and beyond
• Top brokers name 3 ASX shares to buy today
• Why a2 Milk, BrainChip, Oil Search, & Starpharma shares are dropping lower
• Could the Bubs (ASX:BUB) share price be an A2 Milk (ASX:A2M) contender? 
• These are the ASX blue chip shares I’d buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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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Healthcare shares have long been outperformers on the S&P/ASX 200 Index (ASX: XJO) and in the general sharemarket. But in recent weeks, many ASX 200 healthcare shares have faced setbacks in the wake of significant share price run ups, weaker than expected earnings and sharp selloffs.

Could these 2 ASX 200 healthcare shares be in the buy zone yet? Let’s take a look.

1. Nanosonics Ltd (ASX: NAN) 

Nanosonics has been able to trade at an eye-watering valuation on the hopes that it would become the next CSL Limited (ASX: CSL) within the ultrasound probe disinfection market. The company boasts a $1.75 billion valuation with a price-to-earnings (P/E) ratio of 180. 

Following a weak FY20 earnings report on 25 August, the Nanosonics share price has drifted 10% lower. The company delivered a 19% increase in revenue to $100.1 million while profit before tax fell to $12.4 million. This compared to $16.8 million in FY19.

In the first three quarters of the year, total revenue was up 26% on pcp. In Q4, when the main impacts of COVID-19 were experienced, revenue increased by only 1%. While Nanosonics has experienced a weak earnings period, the significant global market opportunity remains intact. The company has approximately 20% global market penetration of the ultrasound probe disinfection market.

Key geographic opportunities include North America, Europe, the Middle East and Asia. The business continues to focus on its Japan market development strategy with distribution agreements in place with five key distributors and the continued development of a China market entry strategy. Nanosonics could be a solid ASX 200 healthcare share to own for long-term investors given the significant global market opportunity at hand. 

2. Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) 

The Fisher & Paykel share price has soared more than 45% this year following the tailwinds that COVID-19 has brought for its business. In its latest business update announced on 18 August, the company cited strong demand for its hospital respiratory care products with hospital hardware sales in the first four months of FY21 increasing 390% on pcp. The company is seeing that revenue by geography tends to follow the incidence of COVID-19 cases and the recent resurgence of COVID-19 cases across Europe, India and US could see further earnings tailwinds for its respiratory products. 

The business update also forecasted FY21 operating revenue to be approximately $1.61bn and net profit after tax to be within the range of $365 million to $385 million. This would represent an increase of 27-34% on FY20. I believe Fisher & Paykel could see an elevated growth trajectory for the short to medium term driven by COVID-19 related tailwinds. I believe its recent pullback could be a buying opportunity. 

More reading

• 5 ASX shares held by leading fund managers
• Are these blue chip ASX 200 shares worth buying?
• ASX 200 falls 0.7%, UK and travel shares drop
• Why Collins Foods, ResMed, Regional Express, & Xero shares are pushing higher
• ASX technology stocks to buy during this global tech sell-off

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 CSL Ltd. and 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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Vanguard Australian Share ETF (ASX: VAS) is one of the biggest and most popular ETF investments for Aussie investors. But should you buy it?

A quick overview of Vanguard Australian Share ETF

An exchange-traded fund (ETF) allows you, through a stock exchange, to buy a fund which enables you to own lots of assets in a single investment.

This particular one aims to track the S&P/ASX 300 Index (ASX: XKO). So you get the exposure to the large caps like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and CSL Limited (ASX: CSL). But you also get a little bit of exposure to names like ELMO Software Ltd (ASX: ELO), Integrated Research Limited (ASX: IRI) and Lovisa Holdings Ltd (ASX: LOV).

It has an annual management fee of 0.10% per annum. This is one of the lowest that ASX investors can get access to. 

Why it’s a good investment

One of the best reasons to consider Vanguard ETFs is that they have extremely low fees compared to their active management competitors. The lower the fees, the more net returns that are left in the hands of the investors like you and me.

Diversification is a key part of investing in ETFs. Diversification is great at lowering company-specific risks if you own hundreds of businesses. Vanguard Australian Share ETF gives you exposure to 300 names for a very cheap fee.

Australia has been a good place to be invested over the past century, giving returns of about 10% per annum. Perhaps Australia won’t be the best place over the next 100 years, but I expect it will do reasonably well for ASX investors.

During normal, non-COVID-19 times, the ASX is a good place for dividend income because of the fairly high dividend payout ratios as well as the bonus of franking credits. However, banks in-particular are paying out smaller dividends at the moment because of the COVID-19 recession.

Why I believe there are better alternatives

The Vanguard Australian Share ETF is weighted towards the largest businesses in Australia which are typically resource businesses like Rio Tinto Limited (ASX: RIO) and banks like Westpac Banking Corp (ASX: WBC). Australia has been the lucky country for a long time. But I don’t think these are the best industries to be invested in for the coming years and decades ahead.

There are some promising smaller ASX shares like A2 Milk Company Ltd (ASX: A2M), REA Group Limited (ASX: REA) and Magellan Financial Group Ltd (ASX: MFG). But they don’t move the needle enough to make a large impact on the returns of the ETF.

For me, there are better alternatives. You don’t have to pick individual shares yourself. There are other ETFs and listed investment companies (LIC) that offer more growth potential in my opinion.

These other options may have higher management fees, but it’s the net returns that I’m focused on. More earnings growth will hopefully continue to generate better investment returns.

I prefer other portfolio investment options like Betashares Global Quality Leaders ETF (ASX: QLTY), BetaShares Global Sustainability Leaders ETF (ASX: ETHI), WAM Microcap Limited (ASX: WMI), Ophir High Conviction Fund (ASX: OPH), MFF Capital Investments Ltd (ASX: MFF), Magellan Global Trust (ASX: MGG) and Magellan High Conviction Trust (ASX: MHH).

I think all of the above options would make better long-term investments than Vanguard Australian Share ETF, aside from any short-term US election volatility. In my opinion, the above options provide more growth potential than what ASX blue chip shares can provide.

Over the long-term, I believe it’s growth of earnings that help deliver the best returns for investors. If you want Australian dividends, then I think ASX shares like Brickworks Limited (ASX: BKW) could be more reliable options.

More reading

• Here are the 10 most popular ETFs on the ASX
• 3 top ASX ETFs to buy for long-term growth
• Why you’re better off investing in ASX shares in 2020 than paying off the mortgage faster
• Buy Fortescue and this ASX dividend share for a source of income
• The 3 best ETFs for passive investing

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Integrated Research Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk and Brickworks. The Motley Fool Australia has recommended Elmo Software and REA 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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On Thursday eligible shareholders of Wesfarmers Ltd (ASX: WES) will be paid the conglomerate’s final dividend.

The Bunnings owner is rewarding shareholders with a fully franked 95 cents per share final dividend, which was up almost 22% year on year.

If you’re planning to reinvest these funds back into the share market, then you might want to consider the shares listed below.

I believe all three of these ASX shares could be great options for these funds. Here’s why I like them:

Bravura Solutions Ltd (ASX: BVS)

If you’re interested in a combination of growth and income, then you might want to take a closer look at Bravura Solutions. It is the financial technology company behind the Sonata wealth management platform and a number of other solutions with large addressable markets. Combined, I believe they have positioned Bravura perfectly for growth over the 2020s. And due to a pullback in its share price, Bravura’s shares currently offer an attractive estimated forward 3.2% dividend yield.

BWP Trust (ASX: BWP)

Investors that are looking purely for more dividends might want to look at BWP. It is a real estate investment trust (REIT) that invests in and manages commercial assets across Australia. The majority of these assets are leased to Wesfarmers’ home improvement business, Bunnings Warehouse. I believe BWP is well-placed to grow its distribution at a solid rate over the next decade thanks to the strength of the Bunnings business. For now, based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield.

PolyNovo Ltd (ASX: PNV)

Finally, if you’re interested in investing these funds into a growth share, then you may want to consider PolyNovo. I think the medical device company has a very bright future ahead of it. This is thanks to its NovoSorb Biodegradable Temporising Matrix (BTM) product. This wound dressing product is designed to treat full-thickness wounds and burns and has a sizeable $1.5 billion addressable market. PolyNovo is also looking to expand its usage into other markets, which would add a further $6 billion to its addressable market.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Forget term deposits and buy these ASX dividend shares for income
• 3 ASX shares for growth, income, and value investors to buy in October
• Why I would buy these ASX dividend shares today
• Which ASX REITs are still worth buying in a post-COVID-19 world?

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 POLYNOVO FPO. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia owns shares of Wesfarmers 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 Envirosuite Ltd (ASX: EVS) share price strapped a rocket on today, zooming 25.8% higher to reach 20 cents in early afternoon trade. This follows a positive market update on its first quarter sales performance for the 2021 financial year.

What does Envirosuite do? 

Envirosuite is a global leader in environmental solutions, monitoring and managing weather impacts. The company uses its combination of air quality and metrology consultancy thoughreal-time and predictive technologies to reduce risk and improve efficiency and safety among industry and communities throughout the world.

The company operates in various sectors including construction, industrial, mining, wastewater, airports and cities.

First quarter update

Envirosuite reported total sales of $14.7 million in the three-month period ending September 30. This is despite the global impact of COVID-19 resulting in some deferral of spending by customers.

The company achieved strong contract renewals and new sales volumes for Q1 FY21 which was reflected by $12.2 million from ongoing business and $1.2 million in new targeted recurring sales. An additional $1.2 million was generated in one-off sales of equipment and services.

Customers remained active across all geographical regions and industry sectors. Most notably, Envirosuite secured an airport contract renewal by the AENA group, which manages 46 airports in Spain.

In the mining sector, the company carried out additional work for Vale Brazil and BHP Chile. Waste sector highlights included an odour monitoring project with the City of Denver, Colorado, and an outdoor management system for Verde South America in Chile.

Envirosuite signed water contracts with Welsh Water UK, and with the City of Garland Water Utilities Texas for odour monitoring and sewage treatment plants.

Envirosuite advised that its forward sales pipeline remains strong and currently stands at $28 million for FY21.

What did management say

Envirosuite CEO Peter White was happy with the result given the current climate, and upbeat about the company’s future growth. He said:

Contract renewals and new sales growth were spread across all the regions and industry sectors in which we operate. Q1 marks the commencement of the sales and marketing efforts post-integration which are steadily gathering momentum as noted in our latest release with a 300% increase in new sales leads from July to September. Coupled with the strong forward pipeline, this augers well for our sales growth to accelerate in coming quarters

Mr White highlighted the importance in Envirosuite’ presence to communities, saying:

One of the effects of COVID-19 for Envirosuite has been that the world is more aware than ever of the importance of not only ensuring environmental compliance, but of going beyond compliance and actively managing outcomes for the benefit of communities.

Envirosuite’s ability to help our customers maintain and enhance their social licence to operate will be a major focus of our sales growth strategy in the years ahead.

Foolish takeaway

Envirosuite has thrived throughout the COVID-19 pandemic, achieving robust sales so far this year. With the company looking to accelerate its growing revenue in FY21, I think Envirosuite is worth keeping an eye on for future investment.

More reading

• Why the Envirosuite (ASX: EVS) share price is up 9% today
• ASX All Technology Index swells with new additions
• The Envirosuite share price dropped 5% today. Here’s why

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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

BHP Group Ltd (ASX: BHP)

According to a note out of Credit Suisse, its analysts have upgraded this mining giant’s shares to an outperform rating with a $39.00 price target. The broker made the move after increasing its estimates for Chinese steel consumption over the next couple of years. It expects this to support demand for iron ore and keep prices elevated for longer. In addition to this, Credit Suisse has a positive view on coking coal. I agree with the broker on BHP and would be a buyer of its shares.

Corporate Travel Management Ltd (ASX: CTD)

Analysts at UBS have retained their buy rating and lifted the price target on this corporate travel specialist’s shares to $18.70. The broker appears pleased with the company’s business-changing acquisition of US-based Travel & Transport for $274.5 million. As well as the synergies it will provide, UBS believes that the increased scale will help it win a greater share of the North American market. I think UBS makes some great points and Corporate Travel Management could be worth considering.

Jumbo Interactive Ltd (ASX: JIN)

A note out of Morgans reveals that its analysts have retained their add rating and trimmed the price target on this online lottery ticket seller’s shares slightly to $13.89. This follows the announcement of an agreement with Lotterywest in Western Australia for its Powered by Jumbo SaaS platform. Although the broker expects softer revenue margins from the deal, it still sees it as a positive and believes it could help with its discussions with international lotteries. I agree with Morgans and think Jumbo would be a great long term option due to its SaaS business.

More reading

• Why EOS, Jumbo, Nearmap, & OceanaGold shares are dropping lower today
• Why BHP, Paradigm, Reliance, & SeaLink shares are charging higher today
• ASX 200 sinks 2%, Corporate Travel (ASX:CTD) soars 8%
• 2 exciting ASX mid cap ASX growth shares to buy for the long term
• Top brokers name 3 ASX shares to buy today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Jumbo Interactive 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 Hydrix Ltd (ASX: HYD) share price is soaring higher today after the company announced its ‘AngelMed’ platform has successfully carried out its first implant. At the time of writing, the Hydrix share price is trading 53.57% higher at 43 cents.

What Hydrix does

Hydrix is essentially a product innovation company. The company states its purpose as enhancing the health, safety, and wellbeing of one billion people. In order to do this, Hydrix leverages its product innovation capability across multiple growth platforms; services, ventures and medical.

The most notable of these platforms is Hydrix Medical. The medical platform aims to bring innovative medical technologies to market such as the implantable heart attack warning system driving the Hydrix share price today.

What happened?

The Hydrix share price took off again after the medical product innovation company released an announcement to the ASX today. The announcement was regarding the company’s AngelMed System that can be used to prevent silent heart attacks.

It was announced that a patient had received the first implant of the AngelMed Guardian System as part of the ALERTS continued access study.

The United States Food and Drug Administration (FDA) granted Hydrix approval to re-implant 260 clinical trial patients under its continued access study. The objective of the ALERTS continued access study is to provide its former clinical trial patients access to the next generation device and its life-saving features. 

Earlier in the year, the initial supply of the device caused the Hydrix share price to jump 250%.

Groundbreaking technology driving the Hydrix share price

As discussed briefly above, the AngelMed Guardian system is designed to track significant changes in the heart’s electrical signals, which includes detection of silent heart attacks, and then alert patients to seek medical attention. It is an implantable cardiac monitor with patient alerting for patients who have had prior acute coronary syndromes, or other heart related diseases.

Hydrix’s device has received high praise from the medical community, with the implanting surgeon, Kelly Tucker, M.D., stating:

The AngelMed Guardian represents a real game changer in the management of coronary artery disease. This is the first ever surveillance tool for patients with a prior coronary event and has the potential to save countless lives and bring peace of mind to thousands of families. It is a great honour to be involved in this amazing technology.

With today’s gain, the Hydrix share price is now up 95% so far this year.

More reading

• Where should you invest your Wesfarmers (ASX:WES) dividends?
• Why the Envirosuite (ASX:EVS) share price is zooming up 26% today
• Brokers name 3 ASX shares to buy right now
• 3 ASX shares poised for huge growth in FY21
• Lynas (ASX: LYC) share price boosted 5% by PM’s budget plan

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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I think that some ASX shares are poised to generate huge growth in FY21 after displaying large growth in the first month or two of the new financial year.

Really low interest rates are helping boost business valuations, but they may still be opportunities. 

Who knows how long they can keep it up? But I think these ASX shares are definitely worth watching:

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi had a strong FY20 with total sales growth of 11.6% and underlying earnings per share (EPS) rising by 33.2% as lots of people spent more time working, learning and getting entertainment at home. The final dividend was impressive too, rising by 76.5% to 90 cents per share.

July 2020 sales, being the first month of FY21, were particularly strong. Total sales growth for JB Hi-Fi Australia was 42.1%. Total sales growth for JB Hi-Fi New Zealand was 9.1%. The Good Guys saw total sales growth of 40.4%.

It will be interesting to see if that level of growth can continue for the rest of FY21. Sales may have been impacted in Melbourne due to COVID-19 restrictions. Government stimulus is going to reduce over the next two quarters. This could also make things tricky for retailers.

The ASX share has continually impressed me over the years and FY21 could be another strong year, particularly if its FY21 first half result is strong enough to carry the full year result.

At the current JB Hi-Fi share price, it’s trading at 16x FY21’s estimated earnings.

Nick Scali Limited (ASX: NCK)

Nick Scali is another business that you’d assume wouldn’t do that well in a recession, but it’s showing astonishing growth.

The ASX share revealed July trading was very elevated with written order sales growing by 70% compared to the prior corresponding period. That growth was similar to the growth in May and June.

Typically, about two thirds of Nick Scali products are made to order with a typical delivery lead time of 9 to 13 weeks. The company said these orders will be delivered in the first quarter and contribute to FY21 revenue.

FY21 first half net profit is expected to be up by at least 50% to 60%. That would be astonishing in the current environment. Nick Scali hasn’t withdrawn that guidance.

As a useful bonus, Nick Scali has a grossed-up dividend yield of 8%.

Temple & Webster Group Ltd (ASX: TPW)

This has been one of the hottest ASX shares since the COVID-19 crash. Since 23 March 2020, the Temple & Webster share price has risen by 710%.

It was growing quite well before COVID-19. But the shift to e-commerce has really accelerated things. In FY20 it grew revenue by 74%, second half revenue rose 96% and fourth quarter revenue soared 130%.

Active customers rose 77% to 480,000 and earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 467% to $8.5 million.

It was the trading update for the first two months of FY21 that was particularly eye-opening. Revenue was up by 161% and it generated EBITDA of around $6 million – more than two thirds of FY20’s EBITDA.

The ASX share is in a strong financial position. In its announcement at the end of August 2020 the company said that it had $81 million of cash and no debt. It’s cashflow positive, so its balance sheet seems quite safe.

At the current Temple & Webster share price it’s trading at 61x FY22’s estimated earnings.

Foolish takeaway

Each of these ASX shares have very interesting growth prospects over FY21. I’ve been pleasantly surprised by JB Hi-Fi and Nick Scali before, so it may be unwise to write them off. Of the three opportunities I’m probably most attracted to Temple & Webster because it’s growing so fast, becoming more profitable and there is an undeniable shift to online shopping. It could be one to watch for years to come. 

More reading

• 5 ASX shares held by leading fund managers
• 3 ASX shares making all-time highs today
• Why these ASX tech shares just hit record highs
• The ASX stocks most leveraged to the Victorian economy re-start
• Can the Harvey Norman (ASX:HVN) share price maintain its momentum?

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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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The Lynas Corporation Ltd (ASX: LYC) share price was up by 4.74% at the time of writing to $2.43. The rise in the Lynas share price came following media reports that Australia’s Prime Minister, Mr Scott Morrison, has promised to include stimulus for critical minerals processing in the coming budget.

What has been reported?

According to media reports, the Prime Minister will give an address at the Press Club in Canberra today that will outline a plan to boost the economy through stimulus for the manufacturing industry. Of the six key areas identified to receive government help, critical mineral processing was included.

The stimulus will be up to $1.6 billion in the form of grants. Additionally, the Prime Minister hinted toward more favourable industrial relations for manufacturers, coordination between different levels of government and assistance from the scientific and research community. 

All of these policies will be good news for the Lynas share price, with the company planning to build a rare earth processing centre in Western Australia.

In his pre-released speech, the Prime Minister outlined that his strategy has three main elements, all of which are relevant to Lynas. The elements include making manufacturers more competitive through a more favourable business environment, building scale in areas of competitive strength and securing sovereign capability in areas that are of national interest. Lynas could benefit from more favourable regulation. Additionally, rare earth production by Lynas is of importance to Australia’s national interest and it will be likely to benefit from the government’s ambition to create sovereign capability in critical mineral production.

Although the Prime Minister did not name any companies specifically, his speech seemed to target rare earth processing among a few other vital industries, which could explain the boost to the Lynas share price today.

About the Lynas share price

Lynas is a rare earths miner and processor with assets in Australia and Malaysia. It also has plans to build a processing plant in the United States. The company has been listed on the ASX since 1986.

Recently, Lynas raised capital through an institutional placement, an institutional rights issue and an underwritten retail entitlement offer, raising $425 million at $2.30 per share. 

Lynas had earnings before interest, tax, depreciation and amortisation (EBITDA) of $59.8 million in the 2020 financial year. This figure was affected by production halts due to COVID-19.

The Lynas share price is up 318.97% since its 52-week low of 58 cents, it has risen by 6.11% since the beginning of the year. 

More reading

• Potential ASX winners from government’s $1.5bn manufacturing blueprint
• Why I like Saracen (ASX:SAR) and these ASX mining shares today
• Lynas (ASX:LYC) share price stands its ground as retail offer finalised

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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The Zip Co Ltd (ASX: Z1P) share price was the worst performer on the S&P/ASX 200 Index (ASX: XJO) in September.

Over the 30 days, the buy now pay later provider’s shares lost a disappointing 33% of their value.

Why did the Zip share price crash 33% lower in September?

As well as getting dragged lower in a tech selloff that led to the S&P/ASX All Technology Index (ASX: XTX) falling 4.9% last month, investors were selling Zip and other buy now pay later providers due to increasing competition in the United States.

For example, the Afterpay Ltd (ASX: APT) share price fell 12.5% in September and the Sezzle Inc (ASX: SZL) share price lost almost 33% of its value.

What is happening in the US market?

At the start of September payments giant Paypal announced its intention to enter the buy now pay later market with its Pay in 4 product.

Pay in 4 is a short-term payment solution that will allow consumers to make a purchase and pay over four interest-free instalments. This is just like Afterpay Ltd (ASX: APT), Sezzle, and Zip’s US-based QuadPay business.

PayPal is due to launch Pay in 4 in the United States in the final quarter of 2020.

Investors appear concerned that its entry in the market will increase competition greatly and squeeze out some of the smaller players.

And although Zip’s QuadPay business has a large and growing customer base in the country, it has nowhere near the same level of traction as market leaders Afterpay and Klarna. This could mean that PayPal’s entry stifles QuadPay’s growth and leads to Zip falling short of the market’s lofty expectations.

Is this a buying opportunity?

While there is a lot of uncertainty given PayPal’s entry, I still believe Zip would be worth considering as a long term option.

Especially considering the size of the US market. Management has previously noted that it is worth an estimated $5 trillion a year. This means there’s plenty of room for multiple players to operate successfully in this market.

Though, I can’t help but feel that it might be worth the company adjusting its US business model to be more in line with its Australian business to help it stand out in the crowded market. 

More reading

• These were the worst performing ASX 200 shares in September
• BrainChip (ASX:BRN) and Novonix (NVX) were among the most traded shares on the ASX last week
• Why Flight Centre, MoneyMe, Paradigm, & Zip shares are pushing higher today
• Could these small cap ASX shares be the next Afterpay (ASX:APT) or Zip (ASX:Z1P)?
• The Zip (ASX:Z1P) share price is down 38% in a month: Is this a buying opportunity?

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 Nearmap Ltd. and ZIPCOLTD FPO. 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 Nearmap Ltd. and 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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