Tag: Motley Fool

I believe that some ASX shares would make great buys right now with $2,000 for October and the long-term.

The US election could throw up a lot of volatility over the next month (or four). Sometimes we have to ignore potential short-term problems and go with investments that seem like quality long-term ideas.

If I were buying two growth shares for the long-term, I’d go with these picks:

Pushpay Holdings Ltd (ASX: PPH)

I think the market is underestimating how much growth Pushpay can generate over the next year or two.

Don’t get me wrong, the electronic donation business has been doing very well. The Pushpay share price has actually risen by 141% over the past six months.

I think there’s more to come from the ASX share. It was able to beat its previous guidance for FY20 and I believe that it could beat its guidance in FY21. Pushpay is aiming to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to at least US$50 million in FY21. The unfortunate COVID-19 circumstances are boosting adoption of Pushpay’s services. It also offers livestreaming capabilities for congregations. 

Part of the reason why I think Pushpay could do so well is because of its scalability. In FY20 alone it grew its EBITDAF margin from 17% to 22%. That came from just adding another US$30 million-ish revenue to its top line. In FY20 it made US$130 million revenue, it seems the business can become much more profitable as it steadily grows to its US$1 billion revenue target from large and medium US churches.

Over the longer-term, the ASX share could expand its technology to other religions in the US, other geographical markets or other not-for-profit sectors.

At the current Pushpay share price it’s priced at around 38x FY21’s estimated earnings.

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price has been crunched almost 30% lower over the past two months.

Over the short-term, businesses will suffer some difficulties. A2 Milk seems to be going through some COVID-19-related pain right now.

For the second year in a row, A2 Milk’s share price has suffered through August and September.  

I think the market is overestimating how much A2 Milk’s earnings are going to be hurt over the long-term.

I believe this is a long-term opportunity to buy shares of one of the best ASX shares. The company is impressively growing its market share domestically and overseas, particularly in the US and China.

Daigou channel sales aren’t the only way to sell to Chinese consumers. A2 Milk is seeing fast growth of its China business.

For the full 2021 financial year it’s expecting revenue to be between NZ$1.8 billion to NZ$1.9 billion. That would represent growth of between 4% to 10%, up from NZ$1.73 billion in FY20, with a fairly similar earnings before interest, tax, depreciation and amortisation (EBITDA) margin.

The company continues to add thousands more stores to its distribution network across China as well as the US.

I’m particularly excited by the expansion into Canada with its agreement with Agrifoods. The more countries that A2 Milk can sell its products into the better. It increases A2 Milk’s total addressable market and gives it a longer growth runway.

In the short-term, Melbourne’s lockdowns seem on track to be lifted soon which should help boost sales.

In my opinion, the ASX share has many years of good growth ahead. I view this selloff as a very attractive buying opportunity. I don’t know what A2 Milk shares will do over the next few weeks, but I think it can do well over the coming years.

At the current A2 Milk share price it’s trading at 21x FY23’s estimated earnings.

More reading

• 3 ASX shares for growth, income, and value investors to buy in October
• 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

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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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.

The post 2 top ASX shares I’d buy with $2,000 for October and beyond appeared first on Motley Fool Australia.

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Are you looking for options for your portfolio in October? Well, whether you’re a growth, income, or value investor, one of the shares listed below could be worth considering.

Here’s why I think they are top options for investors:

BWP Trust (ASX: BWP)

If you’re an income investor then you might want to consider BWP. It is a commercial real estate company which leases the majority of its properties to hardware giant Bunnings Warehouse. Given the strength of the Bunnings business, particularly during the pandemic, I believe BWP is well-placed to continue growing its distribution over the coming years. In FY 2021, the company expects to pay a distribution in the region of 18.29 cents per unit. Based on the current BWP share price, this equates to a 4.5% distribution yield. 

Pushpay Holdings Group Ltd (ASX: PPH)

Growth investors might want to look at this leading donor management and community engagement platform provider for the faith sector. Due to the digitisation of the church and the shift to a cashless society, Pushpay’s platform is quickly becoming indispensable in the sector. I believe this puts it in an excellent position for growth over the next decade. In FY 2021, the company expects to deliver EBITDAF of between US$48 million and US$52 million. This will be a 91.2% to 107% increase, respectively, year on year.

Telstra Corporation Ltd (ASX: TLS)

I think Telstra would be a great option for value investors. Due to a heavy decline this year, the telco giant’s shares are changing hands at under 19x estimated FY 2021 earnings. This strikes me as great value, especially given its improving outlook and defensive qualities. Another positive is this decline means that its shares now offer a very generous dividend yield. I still believe the company can maintain its 16 cents per share dividend in FY 2021 through its free cash flow. Based on the current Telstra share price, this equates to a 4.8% dividend yield.

More reading

• 2 top ASX shares I’d buy with $2,000 for October and beyond
• New $190 million tech share listing on ASX
• Telstra (ASX:TLS) launches new 5G NBN alternative
• Is the TPG (ASX:TPG) share price a buy 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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 area of the market which I think is a great place to look for investment ideas is the tech sector.

At this side of the market there are a good number of shares which have the potential to generate strong returns for investors over the next 10 years.

Two ASX tech shares that I think investors should take a look at are listed below:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a provider of enterprise mobility software which helps sales and service organisations to increase their sales win rates and improve customer satisfaction. This is achieved through improved mobile worker productivity. It was a very strong performer in FY 2020, delivering a 53% increase in annualised recurring revenue (ARR) growth to $35.8 million.

More of the same is expected in FY 2021, with management guiding to ARR growth of 36.9% to 48% year on year. This is still only a fraction of its overall market opportunity. Management expects the sales engagement platform market to be worth $6 billion a year by 2021.

Xero Limited (ASX: XRO)

Another high quality ASX tech share to buy is Xero. Over the last few years Xero has evolved from being a cloud-based accounting solution to a full service small to medium sized business solution. Unsurprisingly, this has gone down well with small businesses across the globe, leading to stellar subscriber growth over the last few years.

At the last count the company had almost 2.5 million subscribers using its platform. While this is certainly a large number, it is still only scratching at the surface of its overall market opportunity. In fact, management notes that less than 20% of its global English-speaking target market is using cloud-based accounting software currently. I believe more and more will start embracing the new technology in the coming years. And given the quality of Xero’s platform, I suspect it will be very well-positioned to benefit from this shift.

More reading

• Why these ASX tech shares just hit record highs
• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX tech shares I’d buy with $10,000 
• 10 fantastic ASX shares to buy in October
• 3 of the best ASX growth shares you can buy right now

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended BIGTINCAN FPO. 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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Each week, we Fools like to look at the most traded shares Aussies are buying and selling. Commonwealth Bank of Australia‘s (ASX: CBA) CommSec platform provides week-to-week data on both the most traded ASX shares and the most traded international shares (which are almost always United States shares). So here are the most traded US shares that Aussies were trading last week (21-25 September).

Most traded international shares on the ASX

The five most traded international shares last week were these:

1. Tesla Inc (NASDAQ: TSLA) — representing 15.8% of total trades with an 84%/16% buy-to-sell ratio.
2. Apple Inc. (NASDAQ: AAPL) — representing 5.4% of total trades with an 82%/18% buy-to-sell ratio.
3. Amazon.com Inc (NASDAQ: AMZN) — representing 1.9% of total trades with a 79%/21% buy-to-sell ratio.
4. Microsoft Corporation (NASDAQ: MSFT) — representing 1.9% of total trades with a 75%/25% buy-to-sell ratio.
5. Nikola Corporation (NASDAQ: NKLA) — representing 1.3% of total trades with a 53%/47% buy-to-sell ratio.

The next five most traded shares were the following:

      6. Workhorse Group Inc (NASDAQ: WKHS)

      7. Alphabet Inc Class C (NASDAQ: GOOG)

      8. Nio Inc (NYSE: NIO)

      9. Zoom Video Communications Inc (NASDAQ: ZM)

    10. NVIDIA Corporation (NASDAQ: NVDA)

What can we learn from these trades?

Once again, we see the big US tech companies and electric auto companies dominating the list, with Elon Musk’s electric car and battery manufacturer Tesla again claiming top spot by quite a large margin there, almost triple that of Apple in the number two spot. Over the period in question, Tesla shares were down nearly 10%, so clearly there were some ASX investors looking to scoop up a perceived bargain here (the Tesla share price is up 8% since 25 September, so it’s paid off so far). Work-from-home market darling, Zoom, also made a rare appearance.

Nikola, Workhorse and Nio are all electric vehicle manufacturers as well, although these companies are clearly in the ‘speculative’ side of the market (in my view anyway). It’s clear that many ASX investors think these companies are worth taking a shot on, even if most (excepting Chinese company, Nio) have yet to produce a market-ready vehicle. These shares are highly volatile. As an example, Workhorse stock was down 18% between 21-25 September, and up more than 22% between 25 September and today. How’s that for a rollercoaster!

That’s nothing compared to the embattled Nikola though. The Nikola share price lost 30% over the same period (and a further 8% since). That probably explains why Nikola is the only share with anything close to an even buy/sell split on this list.

Foolish takeaway

It was an interesting set of numbers last week for the ASX’s most traded international shares, with some familiar and surprising names coming up. It will be fascinating to see what this week’s numbers drag up.

More reading

• Banks rejoice: Mortgages back to pre-COVID levels
• Where to invest your CBA dividends
• The ASX big bank stock that’s most at risk of a dividend cut
• Which ASX REITs are still worth buying in a post-COVID-19 world?
• BrainChip (ASX:BRN) and Novonix (NVX) were among the most traded shares on the ASX last week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, NVIDIA, Tesla, and Zoom Video Communications and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, NVIDIA, and Zoom Video Communications. 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 Bank of Queensland Limited (ASX: BOQ) share price has come under pressure on Wednesday and is dropping lower again.

The regional bank’s shares are down over 2% to $5.75 in afternoon trade.

Is this a buying opportunity for investors?

While I see more value in some of the big four banks and would sooner buy their shares, one broker that thinks this is a buying opportunity is Goldman Sachs.

This morning the broker retained its buy rating but trimmed the price target on the bank’s shares to $6.85. This follows Bank of Queensland’s provisions update this week.

The broker’s price target implies potential upside of 19% for its shares over the next 12 months, excluding dividends.

Including dividends this increases to approximately 24% based on its dividend estimates.

Why is Goldman Sachs positive on Bank of Queensland?

Goldman commented: “BOQ has announced that it expects its FY20 loan impairment expense (LIE) will be A$175 mn, including a COVID-19 related collective provision of A$133 mn. While we had sat above BOQ’s previous guidance on its COVID-19 provision, today’s LIE update is still c. A$25 mn higher than our previous forecast. Furthermore, BOQ has announced that an A$11 mn expense will be taken at the FY20 result (due on 14 October) resulting from a proactive review of historical employee pay and entitlements.”

And while this has led to the broker reducing its earnings estimates, it still sees a lot of value in its shares at the current level.

It explained: “We think BOQ provides good exposure to the lower basis risk and falling deposit costs that we are currently seeing in the market and its capital position remains solid, with our Aug-20 CET1 ratio forecast to be 10.0%. Therefore, with our revised TP offering 15% [now 24%] total shareholder return, we stay Buy.”

More reading

• ASX 200 ends the day flat, BOQ (ASX:BOQ) shares drop on impairments
• ASX bank share price hammered after missing pay revealed
• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Why a2 Milk, Bank of Queensland, Mesoblast, & Northern Star are dropping lower today
• Bank of Queensland (ASX:BOQ) share price on watch after COVID and employee underpayment update

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.

The post Top broker names Bank of Queensland (ASX:BOQ) shares as a buy appeared first on Motley Fool Australia.

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I think that some exchange-traded funds (ETFs) can be good investments for any portfolio.

There are some ETFs focused on ASX shares like Vanguard Australian Shares Index ETF (ASX: VAS) which are decent options for income but many of them aren’t demonstrating the ability to generate capital growth.

An ETF’s returns is dictated by the underlying investments. Many of the ASX’s biggest companies like National Australia Bank Ltd (ASX: NAB) haven’t done much over the past decade.

I think it’s important that investors focus on total returns, of which capital growth (and earnings growth) is a very important part.

Betashares Asia Technology Tigers ETF (ASX: ASIA)

As I mentioned, growth is important. This ETF is very growth focused – it’s invested in 50 of the best Asian technology companies outside of Japan.

Which businesses? Well, its largest holdings are: Taiwan Semiconductor Manufacturing, Meituan Dianping, Alibaba, Tencent, Samsung, JD.com, Infosys, Netease, Pinduoduo and Sea.

There is a high level of technology adoption in Asia and that’s partly why many of this ETF’s holdings are doing so well. COVID-19 impacts have also caused a shift to digital services, which businesses like Alibaba and Tencent provide.

The performance of this ETF has been very impressive. At the end of August 2020 it showed a net return, after the management fees of 0.67% per annum, of 58.65% over the prior 12 months and 28% per annum since inception in September 2018.

One of the main risks of this ETF is that 57.4% is invested in Chinese businesses. Aussies may feel nervous about getting exposure there. Yes, there are risks with China, but remember that the rest of the ETF isn’t invested in China businesses.

I think this Betashares Asia Technology Tigers ETF is worth an allocation, you don’t need to make it a large position.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

Some Aussie investors may want to invest ethically, or at least not own businesses that don’t align with their viewpoints.

This ETF from BetaShares excludes many categories of businesses that people not agree with.

It’s invested in 200 large global shares from developed market countries, excluding Australia, that have been identified as climate leaders and excludes fossil fuel industries.

The ETF also avoids investing in businesses materially involved with: gambling, tobacco, armaments, uranium and nuclear energy, alcohol, junk foods, pornography, mandatory detention of asylum seekers, destruction of valuable environments, human rights and supply chain concerns and lack of board diversity.  

You might be wondering which businesses pass this stringent test. Its top holdings include: Apple, Nvidia, Mastercard, Visa, Home Depot, Adobe, PayPal, Tesla, Toyota and Netflix. I think this is a high quality list.

It has actually performed really well. The ETF’s inception date was 5 January 2017. Over the past three years the ETF has delivered an average annual net return of 23.5% per annum. Remember, that’s after the yearly fees of 0.59% per annum.

In terms of sector diversification, there is a large allocation to IT. It made up 38.9% of the ETF’s holdings at the end of last month. I think it’s good to best invested strongly in this sector because this is where the growth is coming from.

Other double-digit allocations include a 15% exposure to consumer discretionary shares, a 14.7% exposure to healthcare and a 14.1% exposure to financials.

I like the global diversification offered by the ETF. It’s not a US-only ETF, though 72.2% of the ETF’s holdings are listed in the US. Remember that many large US shares have global earnings, they aren’t solely American earners. Other countries are represented including Japan, Switzerland, the Netherlands, Hong Kong, France, the UK and so on.

Foolish takeaway

Both of these investment options give quality diversification that you just don’t get with ASX shares. They have generated good returns and they could keep doing well over the long-term. I’d be happy to buy a starting position in both of them today.

More reading

• Here are 2 of the best ETFs you can buy today
• The BIG problem with ASX ethical investing
• Where to invest $10,000 into ASX shares right now
• 3 ASX growth ETFs to add to your portfolio
• 2 ETFs for easy investing and strong returns

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. 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 NRW Holdings Limited (ASX: NWH) share price was down 4.98% at the time of writing to $2.00 following a trading halt put in place yesterday. The share price fall came after the company announced the outcome of legal proceedings related to Gascoyne Resources.

What was in the announcement?

Attempts by Habrock to place Gascoyne Resources into liquidation failed in the Federal Court. Gascoyne is currently under voluntary administration and NRW Holdings is involved in the recapitalisation of the company. NRW was a creditor to Gascoyne before it entered administration and had previously made impairments for trading debts owed for work performed. However, through an agreement with Gascoyne and its administrators, NRW has claimed that it can potentially recover 100% of its losses. 

Gascoyne Resources owes NRW $32.7 million.

According to an announcement by NRW on 25 June 2020, NRW will receive an up front payment equivalent to 8.75% of an equity raising conducted by Gascoyne, to a maximum of $7 million. The total amount of the equity raising will be $80-$90 million. However, NRW has also previously stated that it may participate in a debt for equity swap with Gascoyne which will see it receive shares in the company rather than cash. NRW may also take payment in the future as a proportion of Gascoyne’s production, which will be determined by ounces produced and the gold price. 

NRW has continued working with Gascoyne on its Dalgaranga project over the past 12 months.

About the NRW Holdings share price

NRW Holdings is a contractor that provides services to the mining and infrastructure sectors. It has been listed on the ASX since 2007.

In the year to 30 June 2020, NRW Holdings had record revenue of $2.062 million, an increase of 83% on the prior corresponding period. Earnings before interest, tax, depreciation and amortisation (EBITDA) in the year to 30 June 2020 were $250 million, an increase of 74% compared to the 2019 financial year. NRW had cash at 30 June 2020 of $170.2 million, an increase of $105.2 million.

The NRW Holdings share price has increased 101% since its 52-week low of $1.00. However, it is down 34.52% since the beginning of the year. The NRW Holdings share price is down 13.36% since this time last year. 

More reading

• 5 things to watch on the ASX 200 next week

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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Exchange traded funds (ETFs) certainly are becoming increasingly popular with Australian investors.

Last year the total funds invested into ETFs in Australia reached $50 billion. Incredibly, this number is expected to double to $100 billion by 2022.

I don’t find this overly surprising considering the advantages that they offer investors.

Investing globally or into certain themes has been a very challenging endeavour for investors in the past. But now, thanks to ETFs, it is as simple as opening up a brokerage account.

Given the growing popularity of ETFs, you won’t be surprised to learn that there is an increasing collection of funds for investors to choose from.

But with so much choice, it can be hard to decide which ones to buy. To help readers narrow things down, I have picked out two ETFs which I think are among the best on offer today.

They are as follows:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

I think the BetaShares Asia Technology Tigers ETF would be a great option for investors. This ETF tracks the performance of the 50 largest technology and ecommerce companies that have their main area of business in Asia, excluding Japan. This includes giants such as Alibaba, Samsung, and Tencent Holdings. As these and the other companies in the ETF are among the fastest growing in the region and revolutionising the lives of billions of people, I believe it could provide strong returns over the 2020s.

iShares Global Healthcare ETF (ASX: IXJ)

Another ETF to consider buying is the iShares Global Healthcare ETF. This exchange traded fund gives investors access to many of the biggest and brightest healthcare companies in the world. This includes CSL Ltd (ASX: CSL), Johnson & Johnson, Novartis, and Ramsay Health Care Limited (ASX: RHC). Due to the positive outlook for the healthcare sector over the next couple of decades due to ageing populations and increased chronic disease, I believe it could provide strong returns for investors.

More reading

• 2 top ETFs that would be good investments in any portfolio
• Where to invest $10,000 into ASX shares right now
• 3 ASX growth ETFs to add to your portfolio
• Buy BetaShares NASDAQ 100 ETF (ASX:NDQ) and these outstanding ETFs today
• 2 ETFs for easy investing and strong returns

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended Ramsay Health Care 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 market may be dropping lower on Wednesday, but that hasn’t stopped the Recce Pharmaceuticals Ltd (ASX: RCE) share price from jumping higher.

In afternoon trade the pharmaceutical company’s shares are up almost 10% to $1.21.

This latest gain means the Recce share price is now up a massive 255% since the start of the year.

Why is the Recce share price jumping higher today?

Investors have been buying Recce shares on Wednesday after it announced an agreement with the Murdoch Children’s Research Institute (MCRI) to conduct pre-clinical studies. The MCRI is the largest child health research institute in Australia and one of the top three worldwide for research quality and impact.

According to the release, these studies will assess the potential of RECCE 435 (R435) for the treatment of Helicobacter pylori (H. pylori) infections.

Management notes that there is a global unmet medical need for the treatment of H. pylori with no first-line therapy curative in all patients. In fact, the most commonly used treatment is triple therapy.

This includes the use of a Protein Pump Inhibitor in combination with multiple antibiotics. However, due to the increasing prevalence of antibiotic resistant strains worldwide, the eradication rate of standard triple therapy has fallen below 80%.

The company’s Non-Executive Chairman, Dr. John Prendergast, commented: “Antibiotic-resistant forms of H. pylori are on the rise. This is worrisome because more than four billion worldwide are infected with H. pylori, which is the leading cause of peptic ulcers and stomach cancer.”

“We are excited to collaborate with Professor Sutton and MCRI in investigating the potential of our oral anbitiotic RECCE 435 as what could be the first non-combination treatment for H. pylori infection, including those caused by drug resistant forms of the pathogen,” he concluded.

Management expects to complete the trial in approximately 12 months, after which it will pursue a human clinical trial. It notes that it is well funded to support the study program following its recent successful capital raise.

More reading

• Why Corp Travel Management, EOS, Evolution, & Recce shares are charging higher
• Why the Recce Pharmaceuticals (ASX:RCE) share price crashed 15% lower today
• Why Kathmandu, New Hope, Recce, & Ramelius shares are dropping lower today
• These 4 ASX shares have grown more than 100% this year
• Turn $6k into $60k, a guide to growth investing

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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One technology company that has benefitted from the COVID-19 trend of working from home and the rollout of the NBN is about to go public.

Aussie Broadband Limited (ASX: ABB) shares are scheduled to start trading on the ASX from 27 October.

The internet service provider (ISP) will float with a market capitalisation between $180.5 million and $190.5 million.

Aussie Broadband managing director Phillip Britt told The Motley Fool that the timing was right to raise funds publicly.

“We’ve got some fairly lofty ambitions. The capital markets was the obvious way to raise cash to do what we want to do.”

Britt co-founded Wideband Networks in 2003 then became the boss of Aussie after a 2008 merger with Westvic Broadband.

There are still 7 founding shareholders and some of them may seek to exit upon listing.

“They are all at different stages of their lives. I’m certainly here for the long run but different people want to get out at different times. [The float] provides optionality on that.” 

What’s Aussie Broadband’s moat?

Aussie Broadband has developed a loyal following during the rollout of the NBN the last few years. 

The ISP targets the premium residential and small business market, with monthly plans that are not the cheapest but promising plentiful bandwidth.

Aussie Broadband also loves pointing out in its marketing spiel that its call centre staff are based entirely in Australia.

“Our primary (moat) is customer service. It’s the thing we win all the awards for,” said Britt.

“The other part is that what’s on the box – what the product says, what speed it says it will do in the evenings – is exactly what it does.” 

The company saw $190.5 million of revenue for the 2020 financial year losing $5.1 million after tax. It forecasts $338.1 million revenue and a $529,000 profit for the current financial year.

What will Aussie Broadband do with the money raised?

The initial public offer (IPO) sees $30 million to $40 million raised through the issue of $1 shares.

The big push for raising the funds is the company’s vision to build a dark fibre network.

Aussie Broadband, like most ISPs, leases from Telstra Corporation Ltd (ASX: TLS) the pipes that go between all 121 NBN points-of-interconnect (POI) to its own network.

But its own dark fibre would allow it to bypass that arrangement in a majority of cases.

“We’re going to build our own fibre to 76 of those POIs, which are the metropolitan and outer-metro ones,” Britt said.

“It does two things. Obviously it reduces the amount of money we pay to Telstra in the long term, but it also means we can connect businesses directly to our own fibre. So we’re not paying the NBN or someone else for those services.”

While capital outlay for such a project is immense, Britt expects the dark fibre to “make a significant difference” to earnings by the 2023 financial year.

Customers went crazy for shares

The company decided to reward its loyal customer base by offering shares for purchase during the IPO.

The response was overwhelming. The IPO share offer was opened 9am last Tuesday, but by 8am the pre-queue saw 9,000 customers already lined up.

“Overall a bit over 14,000 in the queue. Only 5,000 can get it because that part was $10 million (with $2,000 of shares allocated per customer),” Britt told The Motley Fool.

“Our institutional offer was also heavily oversubscribed.”

Britt said advisors tried to talk him out of the customer offer due to the complexity in implementing such a scheme. But he feels justified after the allocation sold out in just over an hour.

“It was a testament to our customers and the product they want to invest in.”

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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