Tag: Motley Fool

The S&P/ASX 200 Index (Index:^AXJO) started the week on a negative footing. But some ASX stocks have suffered bigger losses after being downgraded by top brokers.

The top 200 stock benchmark fell 0.5% in after lunch trade as negative overseas leads weighed on sentiment.

But the fall is nothing compared to the 6.5% tumble by the Virgin Money UK CDI (ASX: VUK) share price. The UK bank lender is the second worst performer on the ASX 200 at the time of writing with the Unibail-Rodamco-Westfield CDI (ASX: URW) share price taking the wooden spoon.

Negative rates trigger downgrade

Virgin Money is underperforming after Bell Potter downgraded the stock to “hold” from “buy” as the broker warned that storm clouds are gathering.

The Bank of England is likely to use negative interest rate to support the country’s sagging economy. The outlook for the UK darkened significantly as it struggles to contain a new COVID-19 outbreak.

Negative rates could render mortgages unprofitable and that poses a big risk to Virgin Money as these account for 82% of its loan book.

Virgin Money more exposed than peers

What’s more, the lenders more at risks are smaller institutions and those that have greater dependency on retail deposits for funding. Virgin Money fits into both categories!

“While VUK continues to expect a FY20 [net interest margin] of 155-160bp, we feel the overall outlook will be more challenging in FY21 given reduced flexibility to reprice liabilities among other things,” said Bell Potter.

The broker’s 12-month price target on the stock was cut to $1.80 from $2 a share.

Dust yet to settle

Another underperformer today is the DEXUS Property Group (ASX: DXS) share price. Shares in the office property group retreated 3.2% to $8.73 at the time of writing.

The fall coincides with Morgan Stanley’s decision to downgrade the stock by two full notches to “underweight” (or “sell”) from “overweight”.

The broker believes the outlook for the Australian office property market is tougher than it originally thought.

“Office is going through a societal shift, where longer-term decisions are being postponed, as exemplified by tenants requesting shorter-term deals on recent expiries,” said the broker.

“DXS may look good value today, but as we think tenants have yet to work out where they stand on Work-from-Home, a bounce back is unlikely in the next 12 months.”

Cheap but not yet cheap enough

Dexus may be trading at around a 15% discount to net tangible assets, but the stock traded at a 60% discount during the GFC.

Sure, the GFC isn’t quite the same as the COVID carnage, but that experience shows equity valuations can overshoot the physical market in a down- and upcycle, noted Morgan Stanley.

The broker also cut its 12-month price target on Dexus to $8.15 from $10.20 a share.

More reading

• Two ASX infrastructure shares to buy before the October budget
• What you need to know about Tyro’s share price roller coaster today
• Why Byron Energy, Clover, DEXUS, & Webjet shares are sinking lower today
• ASX 200 down 0.5%: Harvey Norman (ASX:HVN) update, Magellan (ASX:MFG) makes Barrenjoey investment
• Why I like Saracen (ASX:SAR) and these ASX mining shares today

Motley Fool contributor Brendon Lau 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 S&P/ASX 200 Index (ASX: XJO) is sitting low today, with the index having fallen 0.77% at the time of writing. However, a few ASX shares moving higher today are swimming against the tide. Here are three of them:

3 ASX shares rising today

Sonic Healthcare Limited (ASX: SHL) 

The Sonic Healthcare share price is up 2.43% today after jumping from a closing price on Friday last week of $32.50 to currently trade at $33.29. Sonic Healthcare is a global healthcare company. It specialises in a number of niches including medicine/pathology, radiology/diagnostic imaging and primary care services. Sonic is based in Sydney.

Recently, Sonic announced a final dividend of 51 cents per share, bringing the total dividend to 85 cents per share for the year. In recent reporting, Sonic provided some solid numbers, with earnings before interest, tax, depreciation and amortisation (EBITDA) coming in higher than anticipated. The Sonic Healthcare share price recently slumped, however now looks set to chase its 52-week high of $38 if it maintains this new bullish course.

Frontier Digital Ventures Ltd (ASX: FDV)

The Frontier Digital Ventures share price continues to enjoy the bullish action it has seen over the last 3 trading sessions. On Thursday last week, Frontier shares moved up more than 8%. On Friday, the price rose 4.2% and today it has moved as much as 11.4% in intraday trade. A heavy pullback around lunchtime has seen much of today’s gains reversed, however we normally see some volatility after a few days of bullish action.

Frontier is a private equity firm specialising in developing and investing in online classified advertising businesses. Investing in the automobile and property advertising niches are some of Frontier’s top choices. Frontier has offices in both Australia and Malaysia.

Recently in early September, Frontier announced that it had partnered with Brazilian digital real estate brokerage platform AoCubo, through its investee business InfoCasas. This is a significant opportunity for Frontier to expand interests into the Brazil market.

This industry has proven to be very lucrative for bigger players such as REA Group Limited (ASX: REA), Domain Holdings Australia Ltd (ASX: DHG) and Carsales.Com Ltd (ASX: CAR).

Whitehaven Coal Ltd (ASX: WHC) 

The Whitehaven Coal share price has surged as much as 8.5% in intraday trade today. Coming off the back of a few stagnant and down days in the back half of last week, this is a welcome change for investors.

Whitehaven operates coal mines in New South Wales and Queensland. It is headquartered in Sydney and sells its product (coal) to many international markets. These include buyers located in Japan, Taiwan, Korea, India, China, Malaysia and many others.

The company has had a bad run recently. The Whitehaven share price has been on a downward slope with falling coal prices and and increased regulation from foreign governments. I don’t think Whitehaven has quite hit a turning point yet, but it’s great to see a green day on the market for the company.

Foolish takeaway

It’s always a good idea to pay attention to the shares moving higher today, as it can give you an indication of what the rest of the week might bring. These companies are running out of the gate, so hopefully we will see continued momentum.

More reading

• ASX 200 down 0.5%: Harvey Norman (ASX:HVN) update, Magellan (ASX:MFG) makes Barrenjoey investment
• ASX 200 down 0.1%: Tech shares push higher, AMP (ASX:AMP) sinks lower
• ASX 200 drops 1.2%, Mineral Resources (ASX:MIN) fell 9%
• Why Northern Star, SeaLink, THC Global, & Whitehaven Coal shares are dropping lower
• ASX 200 up 0.7%: Afterpay (ASX:APT) higher, QBE Insurance (ASX:QBE) lower on UK update

glennleese 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 Frontier Digital Ventures Ltd. The Motley Fool Australia has recommended carsales.com Limited, Frontier Digital Ventures Ltd, REA Group Limited, and Sonic Healthcare 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 think that there are a few different ASX share options that would be good ideas for a $500 investment.

It can be hard to know where to start investing when there are so many different options. I think there are a few good places to start like exchange-traded funds (ETFs) and listed investment companies (LICs).

Both ETFs and LICs give investors the ability to invest in a large group of shares through a single investment. Most ETFs are index-based and LICs are run by an investor or an investment team.

I think an ETF or a LIC is a good start for a $500 ASX share investment because it creates instant diversification and you can’t go too wrong with most of them (as long as you pick a decent one – there are some very left-field ETFs out there).

Here are two ASX share ideas, one being an ETF and one LIC:  

Betashares Global Quality Leaders ETF (ASX: QLTY)

This ETF is invested in quality global businesses which rank well on return on equity (ROE), have low debt levels and display earnings stability.

Betashares Global Quality Leaders ETF is invested in 150 of these global names right across the world. Whilst around two thirds of the ETF is allocated to US businesses, the other third is spread across Japan, Switzerland, France, Denmark, Hong Kong, the UK and so on.

The ETF doesn’t invest in ASX shares – it specifically excludes Australia from the potential investment list.

Betashares Global Quality Leaders ETF is heavily invested in IT and healthcare. These two sectors offer secular growth with many high quality names. The IT sector had a 32.4% allocation at 31 August 2020 whilst healthcare had a 25.7% allocation. The other sectors that make up more than 5% of this ETF’s holdings are communication services, consumer discretionary and financials.

So what businesses actually display these quality credentials? At the end of last month its biggest positions were: Nvidia, Apple, Adobe, Facebook, Intuit, Accenture, Intuitive Surgical, Nike, Alphabet and Texas Instruments.

BetaShares only launched the ETF in November 2018. Over the past year it delivered a net return of 17.6% and since inception it has delivered net returns per annum of 19.6%.

WAM Microcap Limited (ASX: WMI)

WAM Microcap invests in ASX shares with market capitalisations under $300 million.

It’s run by the investment team at Wilson Asset Management. The idea of picking small caps is that they can deliver strong outperformance if you can find an idea whilst it’s still relatively undiscovered or undervalued before its growth story is picked up by the wider market.

WAM Microcap has performed very strongly since inception in June 2017. The WAM Microcap gross portfolio return (before fees, expenses and taxes) over the past year has been 25.4%. Since inception the gross portfolio return has been 21.7% per annum, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 13.3% per annum.

The LIC has been very effective at finding small cap growth opportunities like Citadel Group Ltd (ASX: CGL), Redbubble Ltd (ASX: RBL), City Chic Collective Ltd (ASX: CCX) and FINEOS Corporation Holdings PLC (ASX: FCL).

It would be unwise to expect that WAM Microcap’s long-term performance will continue to be more than 20% per annum. But it shows the level of returns that the WAM team can generate over good periods for the overall ASX share market. It’s quite hard for small caps to outperform when the market crashes.

At the current WAM Microcap share price it’s probably trading at close to its net tangible assets (NTA) per share. It also offers an grossed-up ordinary dividend yield of 5.6%.

Foolish takeaway

Both of these ASX shares seem like good investments to me. WAM Microcap was one of my main buying targets earlier this year. I’d definitely be happy to buy more if there was another market dip.

More reading

• Where I’d invest $20,000 into ASX shares right now
• How to generate $1,000 a month in dividends
• Why Mineral Resources, Redbubble, Saracen, & Temple & Webster shares are pushing higher
• Is the Redbubble (ASX:RBL) share price on a path to $10.75?
• Why I’m more excited about WAM Microcap shares

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends FINEOS Holdings plc. The Motley Fool Australia has recommended Citadel Group Ltd and FINEOS Holdings plc. 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 Brainchip Holdings Ltd (ASX: BRN) share price has jumped 9.3% to 47 cents at the time of writing. The sharp Brainchip share price movement comes following an announcement of the company establishing a software development centre.

This compares with the All Ordinaries Index (ASX: XAO) which is down 0.73% to 6,025 points.

Brainchip presence in India

In mid-afternoon trade, the Brainchip share price is surging after the company advised the market it has established a software development centre in Hyderabad, India. A leading provider of ultra-low power, high performance artificial intelligence (AI) technology, Brainchip will seek to support development of its Akida Neuromorphic System-on-Chip (NSoC).

The new asset addition is expected to concentrate on the software and firmware development of the Akida NSoC. This includes critical components such as software for device drivers, the CPU complex and firmware for commercial implementation.

The development centre will be staffed by five software engineers and local management. Brainchip said that it does not expect the new entity to add any incremental expenses to its historical cash flows. This is due to staff having previously served the company as contracted service providers over several quarters.

Brainchip also stated that it has provided funds for the new facility and cost of equipment.

The company’s India division will complement the team in France, which hones in on the software environment and networks on the Akida neuron fabric. The implementation is intended to provide ease of use and execution in leveraging ultra-low power, event-based capability.

What did management say?

Brainchip CEO, Louis DiNardo, validated the company’s new establishment to shareholders. He said:

We have established BrainChip Systems India to support the requirement for robust system software and firmware. As Akida is implemented commercially, it is important that our software is mature and provides a positive user experience.

Furthermore, Mr DiNardo commented:

We have a very seasoned management and engineering team in Hyderabad. Having a BrainChip entity in India will allow us to recruit and retain experienced engineering professionals as we expand operations to meet market demands. The India group has been working exclusively on Akida software and firmware development for several quarters and we are fortunate to have them join us as we bring Akida to market.

Is the Brainchip share price too cheap to ignore?

The Brainchip share price has taken shareholders on a wild ride in recent times. Brainchip shares started the year at 4.7 cents, and climbed to an all-time high of 97 cents. However, the last two weeks of heavy selling in Brainchip shares have been attributed to profit takers. Nonetheless, the Brainchip share price is still up over 1000% in the last nine months.

In my opinion, Brainchip has a lot of promise that could one day see it become a multibillion-dollar market cap share. Its advanced Akida chip may offer huge advantages for company projects such as NASA’s future missions.

At a market capitalisation of $700 million, Brainchip is still a small-cap share that is growing. Should the company be able to deliver on its potential, I think that the Brainchip share price is extremely attractive at a price of 47 cents.

More reading

• These 4 ASX shares have grown more than 100% this year
• Could this be the large cap version of the Brainchip (ASX:BRN) share price? 
• BrainChip (ASX:BRN) share price crashes a further 20% lower: Where next for its shares?
• Why the BrainChip (ASX:BRN) share price is crashing 21% lower today
• BrainChip (ASX:BRN) and Zip (ASX:Z1P) were among the most traded shares on the ASX last week

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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It’s no secret that the coronavirus pandemic – and associated economic lockdowns – produced a bevy of both winners and losers. The social and commercial changes that we all went through during March and April were massive. And some companies just seemed to be in the wrong place at the wrong time. Think Qantas Airways Limited (ASX: QAN) as one such example. 

Of course, there have been others where the pandemic came at the best possible time, and are sitting in a healthy tailwind today. Netflix Inc (NASDAQ: NFLX) is one, Zoom Video Communications Inc (NASDAQ: ZM) another.

But those are the obvious winners, and the pandemic (unfortunately) is likely to be with us long enough for some real structural changes to become permanent in the economy. Luckily, accounting firm KPMG has produced a list of the 10 brands in Australia that were voted the best at delivering excellent customer service during events of 2020 so far. Some of the names you’ll know, others might come at a  surprise. So I think this report is worth analysing for any investor looking to navigate the uncharted waters we’re all sailing through right now.

So without further ado, here are the top 10 brands, as selected by Australian consumers, that have been serving their customers the best during the lockdowns:

1. First Choice Liquor
2. IKEA
3. Afterpay
4. Boost Juice
5. Rebel
6. PayPal
7. Red Energy
8. Dan Murphy’s
9. ING
10. Best & Less

Some very interesting names here to be sure.

So, Of these 10 names, just 4 are owned by ASX-listed companies. 1 is an Australian government-owned company, with 4 being owned by foreign companies (public and private), and one being a privately-owned Australian company. Let’s dig in:

Some Aussie winners from the lockdown

So going down the list, first up we have First Choice Liquor. First Choice is a bottleshop chain owned by Coles Group Ltd (ASX: COL), Australia’s second-largest grocery chain.

Next, we have Swedish furniture giant IKEA, which is a privately-owned company based in Sweden.

Afterpay is (of course) owned by Afterpay Ltd (ASX: APT), the buy now, pay later (BNPL) pioneer, and ultra-popular growth-share as of late.

Boost Juice is an Australian company, but not a public one. It is owned by both co-founder Janine Allis, as well as by Retail Zoo, which is, in turn, owned by both Allis and private capital company Bain. This is an Australian success story, but unfortunately not one you can buy shares of today.

Rebel is a sports outlet owned by the ASX-listed Super Retail Group Ltd (ASX: SUL), which also owns the Super Cheap Auto chain, as well as the Macpac and BCF chains.

PayPal is owned by the eponymous Paypal Holdings Inc. (NASDAQ: PYPL), an American-listed company. Red Energy is an energy retailer fully owned by Snowy Hydro, the Australian government-owned power generator.

Dan Murphy’s is another bottle-chop chain that competes with First Choice Liquor. Unsurprisingly, it is owned by Coles arch-rival Woolworths Group Ltd (ASX: WOW).

Lastly, we have ING, a bank listed in the Netherlands, as well as discount retailer Best & Less, currently owned by a private South African company called Pepkor.

The report quotes Amanda Hicks, a national managing partner at KPMG, as stating the following regarding this list:

Looking at our findings through a COVID-19 lens, companies which were able to maintain a level of commercial cadence, the rhythm associated with how customers and organisations transact and interact, ranked highest

Foolish takeaway

I think all of the company’s and brands listed in KPMG’s report are quality companies. Of the ASX-listed companies mentioned, I’m most excited about Super Retail Group and Afterpay. Dan Murphy’s and First Choice are quality businesses as well. But in reality, both are small components of Coles and Woolworths’ overall businesses. It just goes to show that both the importance of healthy customer relations, as well as that winners can keep on winning, even under seemingly bleak circumstances.

More reading

• What you need to know about Tyro’s share price roller coaster today
• Openpay (ASX:OPY) share price pushes higher on business update
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• 5 things to watch on the ASX 200 on Monday
• Forget term deposits and buy Coles and this ASX dividend share

Sebastian Bowen 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 Netflix, PayPal Holdings, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Netflix, PayPal Holdings, 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Clover Corporation Limited (ASX: CLV)

According to a note out of Ord Minnett, its analysts have retained their buy rating but reduced the price target on this specialist ingredients company’s shares to $3.00. The broker notes that Clover delivered a full year result in line with expectations last week. And while its guidance for FY 2021 was a bit disappointing due to de-stocking, its analysts feel confident that this is just a short term issue. They expect trading conditions to improve in the coming months. Outside this, the broker believes Clover is well-placed to benefit from potential changes to infant formula regulations in China. I think Ord Minnett makes some great points and Clover could be worth considering as a long term option.

St Barbara Ltd (ASX: SBM)

Analysts at Morgan Stanley have retained their buy rating and $3.85 price target on this gold miner’s shares. This follows an issue at the Gwalia gold mine which has impacted its production in the first quarter. However, the broker notes that management expects to make up for this shortfall in the second quarter and has reiterated its full year production guidance. In addition to this, the broker has previously spoken positively about its Atlantic Gold acquisition. It likes it due to the diversification and production upside it brings to the table. While it isn’t my top pick in the sector, I think St Barbara could be a good option for investors wanting exposure to gold.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating and $6.16 price target on this airport operator’s shares. Although the broker acknowledges that the future of domestic and international travel has become more uncertain in recent months, its analysts remain positive on Sydney Airport. They believe the company is very well-placed to hibernate through to when the recovery commences and then similarly well-placed to leverage it when it does. I think Goldman Sachs is spot on and Sydney Airport could be a great option for patient investors.

More reading

• Why Byron Energy, Clover, DEXUS, & Webjet shares are sinking lower today
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• 3 ASX growth shares I’d buy today for growth and income
• ASX 200 drops 0.3%, gold miners keep rising
• Why the St Barbara (ASX:SBM) share price is climbing higher 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 Clover 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.

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The DWS Ltd (ASX: DWS) share price is off to the races today, soaring 31%. The surge in the DWS share price follows this morning’s announcement that the company will be acquired by global giant HCL Technologies Ltd.

Today’s huge leap sees DWS shareholders handily in the green for 2020, with the share price up 9% year to date. Savvy (or lucky) investors who bought DWS shares at the 24 March lows are enjoying gains of 115%.

By contrast, the All Ordinaries Index (ASX: XAO) is down 12% so far this year.

We’ll look at the details of the acquisition offer in a tick, but first…

What do DWS and HCL do?

DWS was founded in 1991 by its current CEO, Danny Wallis. Shares first started trading on the ASX in June 2006. The company provides a range of IT services including consulting for custom application development, digital solutions and project management. FY20 revenue came in at $167.9 million.

Operating out of 49 countries, HCL Technologies works to deliver companies the technology they need for the decade ahead. The company offers its services and products through three business units: IT and Business Services (ITBS); Engineering and R&D Services (ERS); and Products & Platforms (P&P). For the financial year ending 30 June, HCL had consolidated revenue of US$9.93 billion (AU$13.6 billion) and as of this morning had a market capitalisation of US$29 billion.

What is HCL offering DWS shareholders?

HCL is offering to buy 100% of the DWS shares by way of a scheme of arrangement. Shareholders will receive a total cash consideration of $1.20 per share plus 3 cents per share dividend. If shareholders approve of the deal (and it passes the needed regulatory hurdles) DWS will become a wholly owned subsidiary of HCL.

DWS plans to make use of HCL’s global resources and expertise to offer expanded platforms to its Australian customer base.

The implied price of $1.23 per share still exceeds the current $1.18 cents per share even after this morning’s 31% surge.

Danny Wallis, CEO and Managing Director, DWS said:

We are delighted the DWS team is joining HCL. As a leading name in the global technology industry and with over 150,000 employees across 49 countries, they bring best in class technology capabilities, global scale and a wide network of clients and partners across industries. This acquisition represents an outstanding outcome for all DWS stakeholders: shareholders, employees, clients and other business partners.

Michael Horton, Executive Vice President & Country Manager, Australia & New Zealand, HCL Technologies added:

We are excited for this expansion of HCL Technologies in Australia and New Zealand and are confident that our combined strengths will further accelerate the digital transformation journeys of our clients and innovations for their end customers. HCL has invested in the region for over 20 years and is committed to enabling digitilisation and growing the local ecosystem. DWS has forged a sterling reputation, powered by highly talented consultants who enable organizations to be at the cutting edge of technology.

More reading

• Where I’d invest $500 into ASX shares
• Brainchip (ASX:BRN) share price shoots 9% higher on software development centre
• Afterpay (ASX:APT) one of top 10 lockdown winners
• Leading brokers name 3 ASX shares to buy today
• All-time high! Here’s why the Baby Bunting (ASX:BBN) share price is soaring today

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

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The Baby Bunting Group Ltd (ASX: BBN) share price is on fire today. Baby Bunting shares started out at $4.49 this morning, but have soared 4.45% at the time of writing to $4.69 a share. Earlier in the trading day, Baby Bunting shares hit their new all-time high of $4.77, which means (at that price) Baby Bunting has given investors a return of more than 300% since 23 March, and more than 42% for 2020 so far.

What is Baby Bunting?

Baby Bunting is a retailer focused on ‘everything baby’. It has more than 50 stores around the country (as well as a strong online presence) and sells products ranging from prams and toys to manchester and car seats. The company has been around since 1979, but only recently joined the ASX boards (almost exactly 5 years ago). Since listing on 16 October 2015, the Baby Bunting share price has gone from $1.86 to today’s $4.66, meaning inevstors have enjoyed share price growth of around 150% over the past 5 years.

Why is the Baby Bunting share price at an all-time high today?

Even though the Baby Bunting share price is at a new all-time high, there is no obvious reason why today, with no major announcements coming out of the company this month so far.

As such, I think we can put today’s moves down to the general positive sentiment that has been swirling around this company since it reported its full-year earnings last month. On 14 August, Baby Bunting told the market that its revenue for the 2020 financial year was up 11.8% (including a near 40% rise in online sales), with profits rising by 34.1%.

Since 13 August, Baby Bunting shares are up clsoe to 25%, so I think the moves we are seeing today are just a continuation of this trend.

Is Baby Bunting a buy today?

Baby Bunting is without a doubt a top quality company with promising growth prospects and an impressive track record. It has managed to grow into its own niche in a very effective manner. Its online platform is also impressive, and it was good to see such a strong takeup of online sales during the worst of the national coronavirus lockdowns last financial year.

That being said, I’m not too wild about the Baby Bunting share price today. The company does offer a decent trailing dividend yield right now of 2.24%. However, the company is also being priced with a 63.7 price-to-earnings (P/E) ratio, which is not at a comfortable level in my opinion.

This is a growing company to be sure, but 63.7 is a very high P/E ratio that I’m not sure the company can live up to for the long-term. As such, this is a share that’s staying on my watchlist for now.

More reading

• Praemium (ASX:PPS) share price edges lower on compulsory takeover news
• Two ASX infrastructure shares to buy before the October budget
• The Marley Spoon (ASX:MMM) share price is down 29% in a month
• What you need to know about Tyro’s share price roller coaster today
• Why Byron Energy, Clover, DEXUS, & Webjet shares are sinking lower today

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

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The Praemium Ltd (ASX: PPS) share price has edged 1.85% lower to 53 cents at the time of writing after opening today’s session higher at 55 cents. The movement in the Praemium share price came after the company announced a compulsory takeover of the shares in Powerwrap Ltd (ASX: PWL) that it did not already own. The Powerwrap share price was down 1.49% to 33 cents at the time of writing. 

How will the  takeover be carried out?

Praemium previously made a bid on 22 July 2020 for all outstanding Powerwrap shares that it did not already own. The offer was one Praemium share for every two Powerwrap shares held in addition to 7.5 cents in cash for every Powerwrap share held. The offer is scheduled to close today at 7pm Melbourne time.

Praemium now owns 92.31% of Powerwrap shares. Given that it owns more than 90% of Powerwrap, Praemium intends to make a compulsory acquisition for all remaining Powerwrap shares. The compulsory acquisition will take place on the same terms as the original offer. Praemium is being advised by Deloitte and Nicholson Ryan lawyers.

Powerwrap provides wealth management platform technology to advisors, wealth managers and brokers. 

Praemium’s pro forma net profit for the year to 30 June 2020 when taking into account the merged group is $414,000. Pro forma revenue for the merged group at 30 June 2020 is $70.29 million compared to $51.24 million for Praemium prior to the takeover.

At current prices, shareholders now considering purchasing Praemium shares can theoretically purchase them at a small discount by buying shares in Powerwrap, however, this may be affected by tax implications.

About the Praemium share price

Praemium provides investment platform technology to advisors, institutions, stockbrokers, dealer groups and investment managers. It has been listed on the ASX since 2006.

In the year to 30 June 2020, Praemium had a 26% increase in funds under administration, which rose to $20.3 billion. Revenue was up 14% to $51.2 million in the year to 30 June 2020 and net profit after tax increased 91% to $4.9 million. Praemium’s earnings before interest, tax, depreciation and amortisation (EBITDA) were up 25% to $14.2 million in the year to 30 June 2020.

The Praemium share price is up 178.95% since its 52-week low of 19 cents, it is up 3.92% since the beginning of the year. The Praemium share price is up 8.16% since this time last year.

More reading

• Praemium share price falls despite Powerwrap acceptance of offer
• Praemium share price edges higher after Powerwrap offer goes unconditional

Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia has recommended Praemium 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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Before you invest in any new ASX shares, it pays to keep an eye on the money.

Not just the past year’s revenue and cash burn of the shares in question. Though you should certainly be well-informed on those.

But as you’re investing for the future, you need to know if the size of the pie your potential share purchase is operating in is growing, shrinking, or stagnant.

If it operates in a shrinking or flat market then it better be a dominant, nimble player. One that’s likely to steal market share from its competitors and adjust its business model as required.

Those types of well-managed companies do exist. But they operate against some hefty headwinds.

Which is why I prefer to focus on shares operating in growing markets.

No, we’re not talking about ASX tech shares today. Not because most tech share prices have been falling the past few weeks. While they have been, that can be seen as a broader buying opportunity.

But specifically, for today’s topic, we’re talking about companies operating in markets that are about to be showered with government stimulus money.

Australia’s ‘New Deal’

You’re likely familiar with the ‘New Deal’. It was actually a series of deals ushered in under the stewardship of former United States president Franklin D Roosevelt from 1933 to 1939 to lift the US out of the Great Depression.

The massive fiscal spending program got its name from Roosevelt’s acceptance speech for the 1932 Democratic presidential nomination. At the time he said, “I pledge myself to a new deal for the American people. This is more than a political campaign. It is a call to arms.”

And what a call to arms it was.

As part of the New Deal, the administration spent billions of dollars to help private companies build roads, bridges, and public buildings, among others.

The combined programs employed millions of Americans who’d been out of a job as the unemployment rate topped 20%. And it was a welcome boon to the private industry on the receiving end of the government’s cash splash.

Today Australia, and indeed most of the developed world, finds itself battling recession and depression for a different reason. The coronavirus pandemic, and the social distancing and lockdown measures put into place to help keep it in check.

But the way out of today’s deep recession would sound very familiar to Roosevelt.

Government spending. With a likely strong focus on infrastructure.

As the Australian Financial Review reports:

The states are set to receive billions extra in infrastructure funding on the proviso they use it or lose it in the October 6 budget, which will front end spending to drive the economic recovery from the coronavirus…

Further allocations of infrastructure funds will hinge on whether the initial amount has been spent or allocated. The idea is to encourage the states to spend as much as possible as quickly as possible on projects that will create jobs and boost productivity.

Indeed, Treasurer Josh Frydenberg said, “It’s fair to say that when we are providing support to the states, or to various industries, we want that money to be spent as quickly as possible.”

We’ve never had anyone approach us with funding, either in our personal or business life, and explain that if we wanted more, we’d best spend the initial cash splash fast. But we can confidently say we’d do our best to comply. And we believe the states will too.

Which brings us to the ASX shares that are well-positioned to benefit.

ASX infrastructure shares to tap into big spending budget

The precise level of government spending on infrastructure won’t be revealed until the October 6 budget. Rumour has it, the states are looking at more than $10 billion, so long as they’re prepared to spend it fast.

A lot of shares should benefit from this. But some will gain more than others.

Transurban Group (ASX: TCL) is one share that could enjoy strong growth over the year ahead. Transurban not only operates toll roads in Australia, Canada and the US, it is also a major developer of new roadways. And with the government’s renewed focus on infrastructure spending, you can bet road construction will see a lot of new funding and interest flooding in.

After plummeting 39% during the February and March viral market rout, Transurban’s share price remains down 7% year-to-date. But that could be a different story by Christmas time.

The second share that could do very well from Australia’s New Deal budget is Adbri Ltd (ASX: ABC).

Adelaide Brighton supplies a range of products to the construction and infrastructure industries throughout Australia. Its primary focus is producing and distributing cement and concrete products. And with multi-billion infrastructure projects set to launch across the country, Adelaide Brighton’s share price outlook is bright indeed.

Having slumped 54% in the first months of 2020, Adelaide Brighton’s share price is currently down 20% since 2 January.

Both Transurban and Adelaide Brighton make up part of the S&P/ASX 200 Index (ASX: XJO).

More reading

• What you need to know about Tyro’s share price roller coaster today
• ASX 200 down 0.5%: Harvey Norman (ASX:HVN) update, Magellan (ASX:MFG) makes Barrenjoey investment
• Why I like Saracen (ASX:SAR) and these ASX mining shares today
• Why these ASX laggards could start to rally in the next few months
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just

Motley Fool contributor Bernd Struben 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.

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