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ASX tech shares were smashed on Wednesday but one leading fundie thinks that now could be the time to buy.

What happened to ASX tech shares?

Big-name tech companies like Afterpay Ltd (ASX: APT) were smashed on Wednesday as a broader tech stock sell-off in the United States continued.

Tesla Inc. (NASDAQ: TLSA) shares fell 10.3 per cent on Wednesday after disappointing battery day updates. Tesla announced work to produce a car costing US$25,000 as it looks to reduce production costs while also announcing a new Model S ‘Plaid’ with a luxury price tag.

Investors were not impressed by the updates and it sparked another broad tech sell-off overseas. ASX tech shares were not immune with the Afterpay share price now down 8.2% since 10.30am on Wednesday morning.

Why a leading fundie thinks its time to buy

According to an article in the Australian Financial Review (AFR), Frazis Capital Partners portfolio manager Michael Frazis thinks it could be time to buy.

Frazis thinks now could be a good entry point for investors looking to invest in the future. The fundie doesn’t think that the volatility has subsided with a real chance of further short-term downside.

However, increased volatility could introduce buying opportunities for investors willing to roll the dice.

Is now really a good time to buy?

No one has a crystal ball for this sort of stuff. It’s hard to know whether there are further losses on the way or ASX tech shares are set to surge.

I think there are some like Afterpay that could see further correction given just how far they’ve surged in 2020. However, I’m sure there are pockets of tech that still have further to go if investors are willing to hunt for bargains.

Despite strong gains for Xero Limited (ASX: XRO), I’m still quietly bullish. I think the ASX tech share can continue to climb and surge past the $100 per share mark in 2020.

More reading

• 2 must buy ASX 200 shares to snap up right now
• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%
• How Elon Musk’s Tesla delivered a body blow to these ASX stocks
• Elon Musk’s ‘Battery Day’ could see these ASX mining shares soar, and volatility hits the markets
• ASX 200 down 1.2%: Westpac hit with $1.3bn penalty, Brickworks disappoints, tech shares lower

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T 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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The S&P/ASX 200 Index (ASX: XJO) is home to 200 of the largest listed companies in Australia.

While I don’t think all shares on the benchmark index are buys, there certainly are a good number of quality options for investors to choose from.

Two top ASX 200 shares that I would buy are listed below:

Ramsay Health Care Limited (ASX: RHC)

The first ASX 200 share to buy is Ramsay Health Care. Although trading conditions are likely to remain tough because of the pandemic and its impact on elective surgeries, I expect it to return to form once the crisis finally passes. After which, I believe Ramsay is well-positioned for growth over the long term due to increasing demand for healthcare services because of ageing populations and increased chronic disease burden.

In addition to this, Ramsay’s management team has a track record of making value accretive acquisitions. I suspect there will be further acquisitions in the coming years that expand its footprint into new markets and drive further growth.

Xero Limited (ASX: XRO) 

A second ASX 200 share to buy is this cloud-based business and accounting software platform provider. Over the last few years Xero has evolved from being an accounting solution to a full service small business solution allowing users to run their businesses more smoothly and efficiently. This has supported strong subscriber growth over the last few years, leading to Xero finishing FY 2020 with 2.285 million subscribers. This was up 26% year on year.

Pleasingly, despite the pandemic’s impact on small businesses, Xero’s subscriber numbers have continued to grow in FY 2021 and stood at 2.38 million in August. The good news is that this is still only scratching at the surface of its overall market opportunity. In light of this and the quality of its software, I believe it still has a very long runway for growth over the next decade.

More reading

• Why this fundie still sees an ASX tech share surge
• Is the Transurban (ASX:TCL) share price a secret cash cow?
• Why the Telstra (ASX:TLS) share price could be under pressure in 2021
• 5 things to watch on the ASX 200 on Friday
• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%

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 Xero. 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 Transurban Group (ASX: TCL) share price has been surprisingly resilient in 2020. The Aussie infrastructure share slumped 38.6% in the space of a month during the March bear market.

Investors were worried that the coronavirus pandemic would see traffic numbers plummet across Transurban’s portfolio. Less traffic means less toll road revenue and ultimately less free cash flow for investors.

Ultimately, that did turn out to be the case. Transurban’s traffic figures slumped 90% lower in the midst of sweeping restrictions.

However, the Transurban share price is down just 1.2% in 2020. That says to me investors aren’t nearly as bearish as they were on the Aussie infrastructure group. But I also feel like it’s an undervalued cash cow in the current market.

Why the Transurban share price could be a cash cow

Transurban may, in fact, see an uptick in traffic from the pandemic. I see a couple of drivers that could lead to this result in 2021 or beyond.

The first is a shift towards work from home and more remote working arrangements. This is allowing employees to live further away with longer commutes but less frequency. 

Ultimately, many of these people will need car transportation options. That paves the way for Transurban to increase traffic numbers just from a shift in commuting habits. In a perfect world, investors would see that hit the bottom line and boost the Transurban share price higher.

The other factor is restricted public transport numbers and perceived safety. Less people are interested in sitting on public transport while COVID-19 is a threat.

That could mean the toll roads operated by Transurban could be a good option. I think this two-prong approach could actually see the Transurban share price outperform the S&P/ASX 200 Index (ASX: XJO) in 2021. 

Even if the capital gains don’t shine through, Transurban shares are yielding 3.2% p.a. right now. If cash generation was high, we could even see a special dividend or even increased ordinary dividend in FY21.

Foolish takeaway

I think the macro environment is very solid for the Transurban share price. North America traffic has been slower to return but I think that will recover given time.

Combine strong cash generation ability with high-quality infrastructure assets and I think the Aussie infrastructure group could be in the buy zone.

More reading

• 2 must buy ASX 200 shares to snap up right now
• Why the Telstra (ASX:TLS) share price could be under pressure in 2021
• 5 things to watch on the ASX 200 on Friday
• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%
• Why I just bought shares of this ASX ETF

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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 Is the Transurban (ASX:TCL) share price a secret cash cow? appeared first on Motley Fool Australia.

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The Telstra Corporation Ltd (ASX: TLS) share price has had a rough ride in 2020, falling 20.7% lower to $2.84 per share. In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 12.2% in the same time to 5,875.90 points.

Why is the Telstra share price falling?

The coronavirus pandemic has hurt earnings despite the telco maintaining its 16 cents per share final dividend. There is also the ever-present threat of the NBN which continues to hit the company’s top and bottom lines.

That NBN threat could be about to get even more serious, according to an article in the Australian Financial Review (AFR). The government-backed network company is making some serious waves that could put the Telstra share price under pressure.

What’s changing at NBN Co?

Communications Minister Paul Fletcher and NBN Co CEO Stephen Rue have announced some big changes which could weigh on the Telstra share price.

Mr Fletcher says that by 2023, 75 per cent of fixed-line premises will be able to order significantly faster broadband at 1 gigabyte per second.

This is all part of NBN Co’s 2021 corporate plan which forecasts earnings before interest, tax, depreciation and amortisation (EBITDA) of $4.5 billion by June 2024 and revenues of $6.2 billion.

For reference, Telstra recently posted total income down 5.9% to $26.2 billion with underlying EBITDA down 9.7% to $7.4 billion.

Some quick and dirty numbers by the AFR suggest that based on relative valuations and NBN’s forecast cash flows, the company’s enterprise value (equity + debt – cash) could be worth nearly $100 billion.

The NBN does look like it could cause some headaches under the new and improved plan. What does this all mean for the Telstra share price?

What it means for the Telstra share price

The introduction of faster NBN speeds is a big deal for Telstra. The telco’s 5G network can reportedly offer mobile modem plans of around 700 megabytes per second. 

These plans would come at a cheaper cost than the estimated faster NBN plans. That could mean Telstra could continue carving out its own niche alongside a growing NBN.

However, there’s no doubt this is a threat for the Telstra share price and its dividends. I think ultimately there is still plenty of uncertainty around the 5-year plan and a lot of execution risk involved.

The company’s push into a new tech agreement with Microsoft Inc. (NYSE: MSFT) could also be an indication of things to come. The telco is looking to leverage that connection to grow its capabilities in 5G, cloud computing and artificial intelligence.

A transformation away from being a pure telco into more of a technology company could ultimately be a good thing for the Telstra share price.

Foolish takeaway

I wouldn’t panic just yet. If Telstra can continue generating cash and positioning itself as a market leader, those dividends can be maintained for some years to come.

More reading

• 2 must buy ASX 200 shares to snap up right now
• Is the Transurban (ASX:TCL) share price a secret cash cow?
• 5 things to watch on the ASX 200 on Friday
• Where to invest your Telstra (ASX:TLS) dividends
• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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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As regular readers would know, one of my highest-conviction long-term ASX share ideas is Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). It reported this week, is the Soul Patts share price a buy?

FY20 report

The Soul Patts report was covered here. WHSP was listed in 1903 and it has been going strong ever since. 

There were a number of interesting pieces in the report.

Regular profit after tax was down 44.7% because of lower coal prices and demand for New Hope Corporation Limited (ASX: NHC) as well as COVID-19 impacts on construction with Brickworks Limited (ASX: BKW).

Statutory profit after tax increased by 284.3% to $953 million largely due to the accounting profit from merger involving TPG Telecom Ltd (ASX: TPG).

The net cash flows from investments increased by 48.8% to $252.3 million thanks to the special dividend declared by TPG.

Soul Patts’ net asset value (pre-tax) decreased by 5.3% to $5.2 billion. The net asset value decline of 5.3% was 6.9% better than the S&P/ASX All Ordinaries Index (ASX: XAO) decline of 12.2% over the year to 31 July 2020.

The Soul Patts directors decided to declare a final dividend of 35 cents per share, which was an increase of 2.9% compared to last year’s final dividend. That brought the total dividend for FY20 up to 60 cents per share – an increase of 3.4%.

Its equities portfolios did very well during the year.

The small cap portfolio delivered a 4.4% return, beating the ASX Small Ords Accumulation Index by 12.9%. This portfolio aims to identify fast growing companies that are outside the companies monitored by the large cap portfolio monitors. These ideas could become larger positions in the overall Soul Patts portfolio.

The large cap portfolio – managed by Contact Asset Management – delivered a total return of -7.8%, beating the 9.7% return of the S&P/ASX 300 Accumulation Index over the year. This portfolio aims to preserve long-term capital and deliver an attractive income stream of a grossed-up yield of 6%.

Total returns

The most important reason for any investor to like any ASX share is the total return. The total return is the share price growth plus the dividends. The Soul Patts share price has done very well over the long-term. 

Over the past five years its average total shareholder returns (TSR) per annum has been 10.6%, outperforming the All Ordinaries Accumulation Index by 5.1% per annum. Over the past two decades its average TSR per annum has been 12.7%, outperforming the All Ordinaries by 5.2% per annum.

It has done this whilst improving its diversification. During FY20 one of its main new investments was a $127.7 million investment into agriculture, managed by Argyle Capital Partners. It also increased its stake in Ironbark Asset Management and it participated in the Palla Pharma Ltd (ASX: PAL) capital raising.

The outperformance and increasing diversification is an attractive proposition.

Reliability for dividend investors

I think that Soul Patts could be one of the best ASX dividend shares on the ASX, if not the best. It has actually increased its dividend every year for the past 20 years in a row.

At the current Soul Patts share price it has a grossed-up dividend yield of 3.6%. The yield has lowered recently as the Soul Patts share price has risen strongly in September.

As I mentioned, the total dividend for FY20 was increased by 3.4% to 60 cents per share.

If you’re looking to buy Soul Patts shares then I imagine the dividend is part of the focus. Soul Patts is a great dividend idea with its diversified and growing assets in my opinion.

Is the Soul Patts share price a buy?

Since the end of August 2020 the Soul Patts share price has gone up by 13%. It has now risen beyond the pre-COVID-19 crash price. So it’s not as cheap as a buy as it was before over the past few months.

For the long-term I think Soul Patts could be a very good buy for steady returns and growing dividends.

Soul Patts’ returns will largely be decided by the performance of its underlying assets. I think some of its businesses like TPG, Brickworks and Clover Corporation Limited (ASX: CLV) are on track to deliver good returns over the next few years. The future investments will help grow its asset value, with the potential for something like regional data centres as an investment idea in FY21.

I’m not jumping to buy Soul Patts shares today, as it’s already one of my biggest positions. However, I like the business a lot so I’d be happy to buy a parcel today and buy more on price weakness.

More reading

• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%
• 3 star ASX income shares for 2021
• Here’s why Soul Patts (ASX:SOL) is the king of ASX dividend shares
• Top brokers name 3 ASX shares to sell today
• ASX 200 down 1.2%: Westpac hit with $1.3bn penalty, Brickworks disappoints, tech shares lower

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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 the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped notably lower following heavy declines by tech and gold miner shares. The benchmark index fell 0.8% to 5,875.9 points.

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

ASX 200 futures pointing higher.

It looks set to be a better day of trade for the ASX 200 index on Friday. According to the latest SPI futures, the benchmark index is poised to rise 6 points or 0.1% at the open. This follows a positive night of trade on Wall Street, which saw the Dow Jones rise 0.2%, the S&P 500 climb 0.3%, and the Nasdaq index push 0.4% higher.

Oil prices mixed.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) will be on watch today after a mixed night of trade for oil prices. According to Bloomberg, the WTI crude oil price is up 0.6% to US$40.18 a barrel and the Brent crude oil price is down slightly to US$41.76 a barrel. Traders appear undecided on oil prices amid falling inventories but concerns over demand.

Gold price recovers.

Gold miners Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could be on the rise today after the gold price recovered after a series of declines. According to CNBC, the spot gold price is up 0.3% to US$1,873.40 an ounce. The precious metal tumbled to a two-month low during Thursday’s trade.

Premier Investments full year results.

The Premier Investments Limited (ASX: PMV) share price will be one to watch this morning when it hands in its full year results. According to a note out of Goldman Sachs, its analysts expect the company to report net profit after tax of $152.2 million on a pre-AAB16 basis or $138.8 million adjusted for AASB-16. The latter is up 11.1% year on year. Goldman is also forecasting a fully franked 20 cents per share final dividend, down from 37 cents per share a year earlier.

Westpac rated as a buy.

Analysts at Goldman Sachs have retained their buy rating on Westpac Banking Corp (ASX: WBC) shares after it announced a $1.3 billion settlement with AUSTRAC. The broker has a $19.80 price target on the banking giant’s shares. It commented: “With this significant overhang for the stock now behind it, at a digestible incremental financial cost, we expect the stock to begin to re-rate (currently trades at a 17% PER discount to peers, versus in line historically), and reiterate our Buy.”

More reading

• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%
• Westpac (ASX:WBC) share price hits 4-month low. Is it time to buy the ASX bank?
• Why I just bought shares of this ASX ETF
• Gold retreats! Is this a buying opportunity?
• How Elon Musk’s Tesla delivered a body blow to these ASX stocks

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Premier Investments 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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I continue to believe that dividend shares are the best way for investors to generate an income in the current environment.

Luckily, there are a good number for investors to choose from on the Australian share market right now.

Two that I think would be great options for income investors are listed below. Here’s why I would buy them:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to consider buying is Accent. This footwear-focused retailer was a positive performer in FY 2020 despite the pandemic. It delivered a full year net profit after tax of $58 million, up 7.5% year on year. Thanks to its very strong start to FY 2021, I’m optimistic it will record similar growth this year.

Looking further ahead, I expect its expansion plans, strong online business, and on trend offering to underpin solid earnings and dividend growth over the next decade. In the meantime, I’m forecasting a 9 cents per share fully franked dividend in FY 2021. Based on the current Accent share price, this equates to a 5.7% dividend yield.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend share to consider buying Wesfarmers. I believe the conglomerate is well-placed for growth over the coming years thanks to the quality of its portfolio and particularly its Bunnings business. The hardware giant is now the company’s biggest contributor to earnings. Which, given its strong performance during the pandemic, has proven to be a very good thing.

While there is a lot of uncertainty because of the crisis, I’m optimistic that government stimulus will support the home improvement market and allow Bunnings to maintain its positive form in FY 2021. All in all, I expect this to lead to the company paying a fully franked dividend of ~$1.50 per share in FY 2021. Based on the current Wesfarmers share price, this equates to an attractive fully franked 3.3% dividend yield.

More reading

• The ASX stocks most leveraged to the Victorian economy re-start
• 3 mid cap ASX shares to buy for strong potential returns
• 2 high yield ASX dividend shares to buy this week
• Macquarie says ASX value shares will outperform growth stocks from here
• Is it time to buy Telstra and these high quality ASX 200 shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group. 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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Qantas Airways Limited (ASX: QAN) has lost a Federal Court case regarding the way it handled JobKeeper payments.

In a decision that could also affect other businesses that have utilised JobKeeper to improve their bottom lines, the court ruled the airline misused the COVID-19 assistance scheme.

The case brought on by unions concerned penalty wages paid in arrears and whether they could be counted towards the $1,500 JobKeeper payment for that second fortnight.

For example, a Qantas worker performs $2,500 worth of overtime in fortnight number 1. Penalties are paid in arrears so they receive nothing out of Qantas’ pocket but do receive $1,500 from JobKeeper.

Then in fortnight number 2, the worker doesn’t do any shifts but receives the $2,500 they’re owed from the previous period.

Qantas’ argument was that the $2,500 counts towards the JobKeeper allowance for fortnight 2. So the airline has been giving such workers just the $2,500 while the company keeps the $1,500 from the government assistance.

The Federal Court disagreed with Qantas on Thursday, and ruled that employees should be receiving both the $1,500 and $2,500 for fortnight number 2.

The court’s logic was that money owed for work from other periods can’t be counted towards JobKeeper for the fortnight of payment. That is, JobKeeper can only offset wages earned in the same fortnight.

Many Australian businesses could owe backpay

Qantas has a large workforce on shifts, fortnightly pay and ‘period on and period off’ cycles due to the nature of the aviation industry.

The court has yet to decide on remediation orders. But Thursday’s decision could mean the airline is up for a large backpay bill.

“The judgment will likely have adverse implications for all companies receiving JobKeeper, who are already reeling from the impacts of COVID,” stated Qantas.

Justice Geoffrey Flick acknowledged his decision could result in a “windfall” for employees.

“It remains a matter for the legislature to ‘tweak’ or adjust the scheme if it sees fit,” he said in the ruling.

According to Qantas, it had followed ATO guidance in handing out the ‘safety net’ assistance of $1,500 per fortnight.

“That ‘safety net’ assurance is a central part of the government’s JobKeeper policy,” the airline stated. “Today’s judgement appears to cut across that principle.”

The ruling especially impacts 8,000 Qantas workers terminated this year, as they would not have had subsequent fortnights to make up for the shortfall.

Qantas has 28 days to appeal to the full Federal Court, which it is “carefully considering”. 

The Australian Services Union has vowed it would “fight this all the way if we need to”.

“This is money stood-down Qantas workers desperately need. Qantas should do the right thing by its workers and promise to pay you what you are owed as soon as possible,” stated the union.

“This is money that Qantas workers will spend in their local businesses, helping our economy to bounce back as soon as possible.”

More reading

• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Why the Regional Express (ASX:REX) share price is taking off today
• Why Jumbo, New Hope, Northern Star, & Qantas shares are dropping lower
• The moment Virgin Australia CEO knew the airline was in trouble
• Is the Qantas (ASX:QAN) share price a cheap buy?

Motley Fool contributor Tony Yoo 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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If you’re an eligible Telstra Corporation Ltd (ASX: TLS) shareholder, earlier today you should have been paid the telco giant’s fully franked 8 cents per share final dividend.

While many shareholders will be using these funds as a source of income (particularly in this low interest rate environment), others may plan to reinvest these dividends back into the share market.

If you’re in the latter group, here are two top ASX shares that I would invest these funds into:

Dicker Data Ltd (ASX: DDR)

If you’re on the lookout for even more dividends, then you might want to take a look at Dicker Data. It is the leading wholesale distributor of computer hardware and software across the ANZ region. I believe Dicker Data is well-placed to continue its growth over the next decade thanks to its strengthening market position, growing vendor agreements, and positive tailwinds. In addition to this, the company is currently constructing a new distribution centre. This will give Dicker Data significant room to expand its operations and boost its revenue once complete. 

In FY 2020 the company is aiming to lift its dividend by 31% to 35.5 cents per share. Based on the current Dicker Data share price, this represents a generous fully franked 4.6% dividend yield. 

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another option to consider reinvesting your Telstra dividends into is the BetaShares NASDAQ 100 ETF. As its name implies, this ETF gives investors exposure to 100 of the largest non-financial companies listed on the famous Nasdaq index.

Among its holdings you’ll find some of the biggest and brightest companies in the world and those at the forefront of the new economy. This includes giants such as Amazon, Apple, Facebook, Microsoft, and Netflix. Another positive is that the ETFs strong focus on technology gives investors diversified exposure to a high-growth potential sector that is under-represented on the Australian share market. Given the quality of the companies included in the ETF, I believe it can outperform the ASX 200 over the long term.

More reading

• 3 top ASX tech shares to buy in 2020
• Forget term deposits and buy Coles (ASX:COL) and this ASX dividend share
• Telstra (ASX:TLS) share price is one of the latest ASX buy ideas from brokers
• Buy these ASX dividend shares to beat low interest rates
• Buy BetaShares NASDAQ 100 ETF (ASX:NDQ) and these ETFs today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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 Tesserent Ltd (ASX: TNT) share price closed 4.65% higher today after the company announced the acquisition of iQ3, a major private cloud provider for secure data. During intraday trading, the Tesserent share price rose as high as 23 cents before closing the session at 22.5 cents. It feels like just yesterday I was writing about another Tesserent acquisition, this being their third so far this month.

What iQ3 does

iQ3 is a secure cloud services firm headquartered in Sydney. It provides services to internationally established brands in Australia and Singapore, with particularly strong ties to New South Wales state and local governments. The firm has been delivering secure cloud infrastructure and related services to a long list of government agencies since 2010.

Furthermore, iQ3 has an excellent operating record. The company had FY20 turnover in excess of $25 million, delivered $3 million earnings before interest, taxes, depreciation and amortisation (EBITDA) and is immediately earnings and cash flow accretive to Tesserent. Strong revenue and earnings are expected to continue into FY21.

Importantly, more than 70% of iQ3’s revenue comes from recurring, multi-year, annuity-based contracts. The now gives the Tesserent group in excess of $30 million annual recurring revenue from multiple, locked-in contracts.

What’s moving the Tesserent share price?

The Tesserent share price was on the rise today as the company announced this strategic acquisition. The cyber-security provider announced the acquisition of iQ3 with the signing of a share purchase agreement executed between both parties. Investors will no doubt be pleased as iQ3’s services and solution offering materially complement Tesserent’s ‘Cyber 360’ strategy.

Furthermore, by introducing iQ3 into the group, there are considerable Cyber 360 cross and up-sell opportunities at a customer, geographic and solution level. 

Additionally, there are also notable benefits associated with iQ3’s operations centre and Tesserent’s existing ISO-certified security operations centre in relation to the delivery of associated cloud, connectivity and new managed security services capabilities.

Foolish takeaway

Significantly, the acquisition sees Tesserent expeditiously achieve its goal of $100 million turnover on an annualised basis. This marks an increase in excess of 1000% since the refresh of the Tesserent board in January 2020. It also contributes to the existing impetus that has seen the Tesserent share price soar 462% so far this year.

More reading

• Tesserent share price soars 8% on acquisition

Motley Fool contributor Daniel Ewing owns shares of Tesserent Limited. 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 Tesserent (ASX:TNT) share price rises on acquisition news appeared first on Motley Fool Australia.

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