Tag: Motley Fool

With the Australian share market coming under pressure recently, a number of shares on the S&P/ASX 200 index are trading lower year to date.

But not all of them are. Some shares on the benchmark index have carved out strong gains this year despite the market volatility.

Here’s why these ASX 200 shares are flying high in 2020:

Afterpay Ltd (ASX: APT)

The Afterpay share price has rocketed 158% higher since the start of the year. Impressively, this is despite the payments company’s shares trading 21% lower than their 52-week high. Investors have been fighting to get hold of Afterpay’s shares this year following a very impressive performance in FY 2020 and particularly during the pandemic.

Furthermore, the company announced its expansion into the European market and advised that it is testing the waters in Asia. Given the seismic shift to online shopping, this appears to have positioned Afterpay to deliver further strong growth over the coming years.

Domino’s Pizza Enterprises Ltd (ASX: DMP) 

The Domino’s share price has risen a sizeable 57% higher year to date. The catalyst for this gain has been a very positive performance by the pizza chain operator during the pandemic. At a time when many companies were struggling, Domino’s delivered strong growth in FY 2020 despite the temporary closure of some of its stores. It reported a 12.8% increase in sales to $5,624.9 million and a 7.3% lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to $303 million. In addition to this, management revealed that it plans to grow its store network to 5,500 stores by 2033. This will be more than double the 2,668 stores it had at the end of June.

Is it too late to invest? Despite its strong share price gain in 2020, I don’t believe it is too late to invest and feel Domino’s would be a fantastic buy and hold option. This is due to its bold expansion plans and its increasingly popular pizzas.

More reading

• This ASX tech share is still cheap to buy
• The biggest threat to tech shares
• Tech shares lead ASX rebound but Afterpay (ASX:APT) faces mounting competition
• ASX 200 up 0.7%: Nearmap (ASX:NEA) launches capital raising, Afterpay (ASX:APT) rebounds
• Why Afterpay, Clinuvel, IDP Education, & Saracen shares are charging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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.

The post Why Afterpay (ASX:APT) and Domino’s (ASX:DMP) are smashing the market in 2020 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3hgkKz7

Wilson Asset Management equity analyst Sam Koch has revealed one tech stock that’s a good buy at the moment.

Technology companies have gone gangbusters this year, so most are inflated in value. But Koch reckons Tyro Payments Ltd (ASX: TYR) still has legs.

Wilson sold out of Tyro in February, and the share price was subsequently hammered during the COVID-19 downturn.

“What the market is missing, however, is the structural shift towards card payments away from cash, which will drive Tyro’s earnings growth,” Koch told an investor call.

“Currently trading at a 40% discount to international peers, we believe this evaluation gap will close as we emerge from lockdown and more people use card over cash.”

Wilson currently has a price target of $4.30 to $4.50 for Tyro, which closed at $3.30 on Thursday.

Tech shares to stay away from

Wilson Asset Management lead portfolio manager Oscar Oberg said its flagship fund WAM Capital Limited (ASX: WAM) had sold out of the tech industry this year, going from 10% of its portfolio down to about 6%.

WAM Capital had done pretty well out of stocks like Appen Ltd (ASX: APX), but it sold the company this year because “expectations were just sky-high”.

According to Oberg, it and Afterpay Ltd (ASX: APT) are typical of the current hype around technology.

“You can’t just look at companies like Afterpay, which went from $8 to $90, and think that’s the new normal,” said Oberg.

The Appen share price was up 3.21% to close the day at $32.51 on Thursday.

When asked about Kiwi software maker Xero Limited (ASX: XRO), Oberg said he would stay away.

“Xero is an exceptional global growth story,” he said.

“At this stage we believe Xero is probably fair to overpriced… Unfortunately at the [current] valuation, not attractive.”

Xero’s share price is up about 17% from the start of the year, even after a correction the last 8 days.

More reading

• Why Afterpay (ASX:APT) and Domino’s (ASX:DMP) are smashing the market in 2020
• 2 exciting ASX growth shares to buy in September
• The biggest threat to tech shares
• Tech shares lead ASX rebound but Afterpay (ASX:APT) faces mounting competition
• Why you shouldn’t be concerned by the high PE multiples of ASX tech shares

Tony Yoo owns shares of AFTERPAY T FPO, Appen Ltd, WAM Capital Limited, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post This ASX tech share is still cheap to buy appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2FlSXAe

The S&P/ASX 200 Index (ASX: XJO) was back on form on Thursday. The benchmark index rebounded from Wednesday’s sell off and recorded a gain of 0.5% to 5,908.5 points.

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

ASX 200 poised to slide lower.

The ASX 200 looks set to end the week on a disappointing note. According to the latest SPI futures, the benchmark index is expected to slide 78 points or 1.3% lower at the open. This follows a poor night of trade on Wall Street which saw the Dow Jones fall 1.45%, the S&P 500 drop 1.75%, and the Nasdaq tumble 2% lower.

Oil prices drop lower.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could end the week in the red after oil prices dropped lower. According to Bloomberg, the WTI crude oil price is down 2.6% to US$37.07 a barrel and the Brent crude oil price has fallen 2.4% to US$39.83 a barrel. Traders were selling oil after inventories started to build again.

Nearmap downgraded.

The Nearmap Ltd (ASX: NEA) share price is fully valued according to analysts at Goldman Sachs. This morning the broker downgraded the company’s shares to a neutral rating with a $2.95 price target. Goldman made the move following the announcement of its capital raising and a sharp rise in the Nearmap share price over the last few months.

Gold price softens.

Gold miners Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch today after the gold price edged lower. According to CNBC, the spot gold price is down slightly to US$1,953.90 an ounce. The precious metal started the day strongly but gave back its gains late in the last session.

Cleanaway goes ex-dividend.

The Cleanaway Waste Management Ltd (ASX: CWY) share price is going ex-dividend this morning and could trade that extra bit lower. The waste management company’s shareholders can now look forward to being paid this dividend on 6 October. Elsewhere, shareholders of Bapcor Ltd (ASX: BAP) and JB Hi-Fi Limited (ASX: JBH) will be getting paid their dividends later today.

More reading

• ASX 200 rises 0.5%, gold miners glitter
• Why the Rio Tinto share price is outperforming its peers
• Why I would buy Telstra (ASX:TLS) and 1 other ultra-cheap ASX share today
• Is the Wesfarmers (ASX:WES) share price a quality buy for ASX dividends?
• ASX 200 up 0.7%: Nearmap (ASX:NEA) launches capital raising, Afterpay (ASX:APT) rebounds

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 5 things to watch on the ASX 200 on Friday appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2ZHLbbh

I believe that one of the best ways for investors to grow their wealth is to make long term investments in quality shares with strong business models and positive outlooks.

Two ASX growth shares that tick a lot of boxes for me right now are listed below.

Here’s why I think they could provide outsized returns for their shareholders over the 2020s:

Appen Ltd (ASX: APX)

The first ASX growth share that I would buy right now is Appen. It is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence. Appen has a very strong position in the industry thanks to its team of over 1 million crowd-sourced workers spread out across the globe.

This sizeable team allows the company to collect and label high volumes of image, text, speech, audio, and video data that is used to build and improve artificial intelligence models. Given the growing importance of artificial intelligence and machine learning for businesses and governments, I expect demand for its services to grow rapidly over the coming years. This should put the company in a position to continue growing its earnings at a strong rate long into the future.

PolyNovo Ltd (ASX: PNV)

Another ASX growth share to consider buying is PolyNovo. It is an exciting medical device company behind the increasingly popular NovoSorb technology. NovoSorb is a biodegradable material that was developed and CSIRO and is used to aid the repair of bone fractures and damaged cartilage, and also in skin grafts.

I believe the NovoSorb Biodegradable Temporising Matrix (BTM) product will be the key driver of growth in the future. It is a wound dressing intended to treat full-thickness wounds and burns and has a massive $1.5 billion market opportunity. Management also has plans to expand its use into other markets and has its eyes on the hernia and breast treatment markets. These would add a further $6 billion to its addressable market if successful.

More reading

• Why you shouldn’t be concerned by the high PE multiples of ASX tech shares
• ASX 200 up 0.7%: Nearmap (ASX:NEA) launches capital raising, Afterpay (ASX:APT) rebounds
• ASX 200 drops over 2%, tech and oil fall
• ASX 200 down 2.4%: Afterpay (ASX:APT) and Oil Search (ASX:OSH) sinking lower
• 3 ASX tech shares to buy for the long term after the Nasdaq selloff

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 exciting ASX growth shares to buy in September appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3ipl5kE

If you’re struggling to generate a sufficient income by using term deposits, then I would suggest you consider switching to ASX dividend shares.

This is because there are a good number of companies on the Australian share market paying dividends that offer yields which are vastly superior to those on offer with term deposits.

But which ones should you buy? Here are two ASX dividend shares I would buy:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to consider buying is this supermarket operator. I think it is a great share to own during the pandemic due to its defensive qualities and strong market position. It was thanks partly to these that Coles was able to deliver an impressive full year result last month. At a time when most other companies were reporting sharp profit declines, Coles reported strong sales and profit growth. It posted a 6.9% increase in sales to $37.4 billion and a 7.1% lift in net profit after tax to $951 million in FY 2020.

The good news is that Coles has started FY 2021 in a positive fashion and appears to be in a position to deliver another solid result next year. I expect this to allow the company to reward its shareholders with another generous dividend in FY 2021. Based on the current Coles share price, I estimate that it offers a forward fully franked 3.2% dividend yield.

National Storage REIT (ASX: NSR)

A second dividend share to consider buying is this self-storage operator. I like National Storage due to its strong market position and positive long term outlook thanks to its growth through acquisition strategy. It was this strategy that helped the company overcome the negative impact of the pandemic and deliver underlying earnings of $67.7 million in FY 2020. This was a 9% increase over the prior corresponding period.

And while the company’s earnings are likely to be flat at best in FY 2021, I’m confident that it will return to growth once the pandemic passes. For now, the company is forecasting earnings of 7.7 cents to 8.3 cents per share this year and a dividend pay out ratio of 90% to 100%. Based on the current National Storage share price, the middle of this range implies a 4.1% distribution yield.

More reading

• Is the Wesfarmers (ASX:WES) share price a quality buy for ASX dividends?
• Should you buy Bega Cheese (ASX:BGA) shares at near an all-time high?
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• 2 top ASX dividend shares in the buy zone for income investors
• Why I would buy these quality ASX shares for a retirement portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 Why I would buy Coles (ASX:COL) and this ASX dividend share appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/32k1Bbw

Luckily for investors the ASX is home to a good number of shares which I believe have the potential to grow strongly over the long term.

But which of these ASX shares should you buy and hold? Three top ASX shares that I think would be great long term options are listed below:

Altium Limited (ASX: ALU)

I believe Altium is a perfect share to buy and hold. This is due to the electronic design software company’s exposure to two markets which are growing at an explosive rate – the Internet of Things and artificial intelligence markets. These markets are expected to underpin strong demand for its Altium Designer platform and cloud-based Altium 365 product over the 2020s. Management expects this to support very strong revenue growth over the next five to six years and for the company to achieve market domination.

Cochlear Limited (ASX: COH)

Another share to consider buying and holding is Cochlear. I believe the hearing solutions company is perfectly positioned for strong long term growth thanks to the ageing populations tailwind. By 2050 there are forecast to be 1.5 billion people over the aged of 65. This will be almost triple the number of over 65s in 2010. I expect this to underpin a sustained increase in demand for its cochlear implantable devices over the next few decades. Especially given its world class products and high level of investment in research and development.

REA Group Limited (ASX: REA)

A final buy and hold option is REA Group. It is a leading property listings company with real estate websites in Australia, Europe, Asia, and the United States. While trading conditions are not easy at present because of the pandemic, REA Group has still been a positive performer. I believe this demonstrates the strength of its business model. It also bodes well for the future and I expect its earnings growth to accelerate when the headwinds ease.

More reading

• Why you shouldn’t be concerned by the high PE multiples of ASX tech shares
• 2 ASX shares I’d buy if this crash gets worse
• Where to invest $10,000 into ASX shares
• 3 ASX shares that are trading at bargain prices
• 3 ASX tech shares to buy for the long term after the Nasdaq selloff

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 Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 outstanding ASX shares to buy and hold for decades appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3bIGMJC

Bonds are an asset class that you don’t hear too much about these days. For the uninitiated, a bond is an investment the same way a share is. Many investors build what’s known as a balanced portfolio using a combination of shares and bonds. Why? Well, bonds are perceived to have a different risk profile to shares. They tend to respond to market events in different ways. In this manner, bonds can provide a portfolio ‘protection’ against share market crashes and other volatility that shares have a habit of bringing into one’s portfolio.

The name’s Bond…

That’s because (unlike a share) a bond is essentially a loan. It doesn’t represent an ownership stake in a business. Instead, it’s an obligation to be repaid a certain amount of capital (or principal), along with interest. That’s why bonds are sometimes referred to as ‘fixed interest investments’.

Bonds can be issued by all manner of institutions, including corporations and municipalities. But the most common and popular form of bonds are public or government-issued bonds. These are popular because the government of an advanced economy is considered a ‘risk-free’ lender. Since a government can’t really go broke or bankrupt (a privilege that owning currency printing presses allows for), there is no real risk that if you lend your money to the government, it won’t be repaid.

It’s relatively easy to access these bonds as well for any ASX investor. There is a plethora of bond or fixed-interest exchange-traded funds (ETFs) on the ASX. Some popular examples include the Vanguard Australian Fixed Interest ETF (ASX: VAF) and the iShares Core Composite Bond ETF (ASX: IAF).

So this all sounds pretty good, right?

Well, I think there are a 2 very good reasons why you should avoid bonds and bond ETFs today.

Shaken, not stirred

Firstly, the interest you can expect from a fixed-interest ETF is paltry. Because interest rates are at record lows right around the world (0.25% in Australia right now), the interest governments have to pay on their loans are also very low. Consider this – an Australian Government 10-year bond is today offering an annual yield of 0.93%. That’s less than what you can conceivably get from a bank savings account these days. Thus, having a large chunk of your portfolio in bonds right now is essentially dead money.

Secondly, interest rates are at record lows. Whilst this seems similar to what we just discussed, there’s another way interest rates affect bonds. Bonds are priced according to interest rates. If a government issues a 10-year bond at 0.93% per annum, and the following year issued one at 2% per annum because interest rates rise, the latter bond becomes more valuable than the former. Thus, because interest rates are virtually zero, anyone holding fixed-interest investments today will see their value decline significantly if the government started raising interest rates at any time over the next few years. And because the Australian cash rate is at 0.25%, there’s a lot more ceiling than floor – and thus a lot of risk, in my view.

Foolish takeaway

Bonds used to be an effective asset class to diversify your portfolio, but the current financial environment makes them essentially impotent as an investment, in my view. Instead, it’s my opinion that investors should be looking to diversify their portfolios in other ways for the foreseeable future. Perhaps a mix of sturdy dividend-paying shares is a good place to start.

More reading

• Perenti (ASX:PRN) share price pushes higher as contract secured
• ASX 200 rises 0.5%, gold miners glitter
• 3 small cap ASX shares I’d buy with $3,000 right now
• Lynas (ASX:LYC) share price stands its ground as retail offer finalised
• The biggest threat to tech shares

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.

The post Considering ASX bond ETFs for income? Here’s why you should stay away appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/32cm41M

The Perenti Global Ltd (ASX:PRN) share price has closed higher today after the mining company announced a $200 million contract with Yaramoko. The Perenti share price ended the day 1.72% higher to $1.18 per share.

What does Perenti do?

Perenti is a global diversified mining services company with key operations in Australia and Africa. They have businesses in surface mining, underground mining and mining support services, to name a few.

The group has operations in 13 countries across 4 continents, has more than 8,000 employees and currently has a market capitalisation of $810 million.

Details of the contract

Today, Perenti announced that its subsidiary, Barminco, was awarded a contract extension at Roxgold’s Yaramoko mine. The mine is located 200 kilometres southwest of Burkina Faso’s capital city, Ouagadougou.

The contract extension is valued at approximately $200 million over 2 years, from December 2021 to December 2023. This extension follows on from the existing development and production scope currently being executed, taking the total contracted work at Yaramoko to approximately $350 million.

Barminco’s CEO, Paul Muller, stated:

The high-grade Yaramoko complex is an important project for Roxgold, Barminco and the people of the Yaramoko community. We are very pleased to extend our contract with Roxgold to December 2023 and look forward to continuing to create enduring value and certainty for our client, employees, shareholders and the people of Yaramoko and Burkina Faso alike.

Perenti managing director Mark Norwell also spoke highly of the contract, saying:

Barminco and AUMS combined are a global leader in hard rock underground mining. This contract extension reinforces their sector leading position and underlines the Group’s focus on profitable growth through extending existing contracts and winning new work aligned with our 2025 strategy. We very much value the Roxgold and AUMS relationship and we look forward to continuing to deliver for our client.

What now for Perenti

Perenti recently posted record revenue as the company looks to scale up its operations. This deal represents a step in the right direction although the share still has a long way to go to hit its pre-COVID-19 highs. The share price is currently trading at $1.18 with its 52-week high sitting at $2.40.

More reading

• ASX 200 rises 1%, CSL (ASX:CSL) leads the way
• Perenti share price on watch after posting record revenue result

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

The post Perenti (ASX:PRN) share price pushes higher as contract secured appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2FgXm7n

The S&P/ASX 200 Index (ASX: XJO) rose by 0.5% to 5,909 points today, undoing some of the decline from yesterday.

Here are some of the biggest headlines from today:

Gold miners (mostly) glitter

Some of the best performers in the ASX 200 today were gold miners.

The Gold Road Resources Ltd (ASX: GOR) share price rose by 6.2%, the Saracen Mineral Holdings Limited (ASX: SAR) share price went up 4.6%, the Northern Star Resources Ltd (ASX: NST) share price grew 3.4%, the Newcrest Mining Limited (ASX: NCM) share price rose 1.8% and the St Barbara Ltd (ASX: SBM) share price went up 2.1%.

However, there was one ASX 200 gold miner that had a tough day. The Resolute Mining Limited (ASX: RSG) share price was the worst performer today, falling 6.1%.

Last night after trading hours Resolute Mining gave a Syama update. It told the market that the Union Nationale des Travailleurs has decided to do a 10-day strike at the Syama mine in Mali unless certain demands are met. The main demand is for Syama workers to be reinstated who have been stood down on full day due to Resolute’s COVID-19 protocols.

Resolute Mining explained that it had implemented a plan to prioritise the health of employees, contractors and stakeholders. It limited the travel of non-essential workers from outside the surrounding region to the mine site to limit virus transmission between populations and maintain the mine’s solation from the virus.

The ASX 200 gold miner is considering how to respond, but it called the strike notice “irresponsible” and “opportunistic”.

Clinuvel Pharmaceuticals Limited (ASX: CUV)

The Clinuvel Pharmaceuticals share price went up 9.2% today, it was the best performer in the ASX 200.

The company announced the progression of its drug, Scenesse, to treat the disease xeroderma pigmentosum (XP). The aim of the development program is to confirm the drug’s ability to regenerate DNA of skin exposed to ultraviolet (UV) damage.

Clinuvel is expanding its clinical research, aiming to confirm how intervention with the drug enhances elimination of photoproducts and regeneration of DNA.

The company is first treating patients with XP who have the most extreme deficiencies in their DNA repair processes, leading to a 10,000-fold increase in their risk of skin cancer.

Clinuvel’s chief scientific officer, Dr Dennis Wright, said: “After two decades of clinical research, I’m delighted that our team can now focus on the XP patients who are severely affected by UV radiation leaving them a short life expectancy. We will facilitate treatment for the first patient in the next few weeks.”

The results from the DNA repair program are expected to be reported in 2021.

Nearmap Ltd (ASX: NEA)

Nearmap went into a trading halt today as it announced a capital raising.

The ASX 200 business plans to raise a minimum of $70 million from institutional investors and a further $20 million in a share purchase plan (SPP).

The cash will be used to accelerate its growth. It will scale its investment in sales and marketing, particularly in North America. Nearmap also plans to expand its product solutions to high-value use cases. It will accelerate the roll-out of its Hypercamera3 systems, to generate expanded coverage at higher fidelity and expand into new geographical markets.

Other uses for the cash are investing in its operational systems and data to support rapid scaling. It could also pursue other growth opportunities.

Nearmap said that its pro forma cash balance at 31 August 2020 after the placement will be a minimum of $105 million.

The capital raising is being done through an institutional bookbuild with an underwritten floor price of $2.69 per new share. The underwritten floor price represents a 6.9% discount to the closing price of $2.89. The bookbuild price cap is $2.77 per share.

More reading

• Why the Rio Tinto share price is outperforming its peers
• Why I would buy Telstra (ASX:TLS) and 1 other ultra-cheap ASX share today
• Is the Wesfarmers (ASX:WES) share price a quality buy for ASX dividends?
• Why Myer, Resolute, SKY, & Whispir shares are tumbling lower today
• ASX 200 up 0.7%: Nearmap (ASX:NEA) launches capital raising, Afterpay (ASX:APT) rebounds

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 Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX 200 rises 0.5%, gold miners glitter appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3m1XWa5

I think that small cap ASX shares are attractive ideas to invest into.

It’s a lot easier for a smaller business to double in size compared to a large business. A company’s potential market is limited to a certain size. If it’s near the limit of its market share, then future growth will be lower. It’s a lot easier for a small business to deliver market-beating returns because it’s starting from a small base. However, higher potential rewards do come with higher risks.

But which ASX small cap shares should you buy? I think these three will be market-beating ideas over the next five to ten years:

Share 1: Bubs Australia Ltd (ASX: BUB)

Bubs is a rapidly-growing infant formula business which specialises in goat milk products.

The Bubs share price has drifted lower by 15.5% since 24 August 2020 to $0.82. Since then it released its FY20 result and also announced a capital raising.

I thought the FY20 result was quite impressive. Full year revenue was up 32% to $62 million, infant formula revenue grew 58% to $30 million. The ASX share showed that Chinese revenue grew 32% to $13 million and export revenue outside of China increased by five-fold. That ex-China export revenue represented 10% of group revenue.

The normalised gross profit margin increased from 21% to 24% and it is going for a locally-produced manufacturing option (with Bubs’ ingredients) in China with joint venture partner Beingmate. Part of the capital raising money will be used to buy a stake in the Chinese manufacturing facility.

Bubs has a lot going on, I can understand the market uncertainty. But there are plenty of positives. It’s launching new products, including a vitamin and mineral range. It now has a global brand ambassador. It’s growing in multiple markets.

I’d be happy to buy a parcel of Bubs shares at the current share price.

Share 2: Citadel Group Ltd (ASX: CGL)

Citadel is an ASX technology share. The company provides important data management software to clients in sectors like education, healthcare and defence.

The Citadel share price has drifted lower by 15% since 24 August 2020. That was despite a solid underlying result in FY20 as it navigated through COVID-19 and acquired the UK healthcare software operator Wellbeing.

That FY20 result showed underlying revenue increased by 29.4% to $128.4 million and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rising by 25.3%.

I’m excited by the medium-term potential that the Wellbeing acquisition brings for the ASX share. It means Citadel is shifting towards higher margin, recurring revenue. It also means that Citadel can sell its Australian software into the UK, it can sell the UK software into Australia and it can offer the combined package to new clients and markets.

At the current Citadel share price it’s trading at under 12x FY23’s estimated earnings.

Share 3: BWX Ltd (ASX: BWX)

BWX is a natural beauty business with a number of brands including Sukin (the core brand), online retailer Nourished Life and two US brands called Andalou Naturals and Mineral Fusion.

FY20 was a strong year despite COVID-19 impacts. BWX has really bounced back over the past couple of years. Revenue grew by 25.5% to $187.7 million, gross profit increased by 30.2% to $108.8 million, underlying EBITDA rose 45.3% to $30.9 million and underlying net profit jumped 38.9% to $15.3 million. Reported net profit actually rose faster, it increased by 59.1% to $15.2 million.

For me, two of the most important metrics from the ASX share were the increasing profit margins. The gross profit margin improved by 210 basis points to 58% and the underlying EBITDA margin increased by 230 basis points to 16.5%. I think that shows the pleasing scalability of the business.

Operating cashflow also improved significantly, up from $3.7 million in FY19 to $28 million in FY20.

It’s heading in the right direction and I think there is good potential for international growth in the US, Asia and Europe in the coming years.

At the current BWX share price it’s trading at 23x FY23’s estimated earnings.

Foolish takeaway

I believe that each of these ASX share small caps have great growth potential and they’re trading attractively cheap for their medium-term outlooks. At the current prices I think both Bubs and Citadel look particularly compelling.

More reading

• Bubs Australia (ASX:BUB) share price falls as share purchase plan opens
• 2 ASX shares I’d buy with $750 right now
• Top ASX growth shares to buy in September 2020
• Bubs share price trading at a 5-month low. Is this a buying opportunity?
• Here’s how to make a $1 million portfolio by investing $1,000 a month

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO and BWX Limited. The Motley Fool Australia has recommended Citadel Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 small cap ASX shares I’d buy with $3,000 right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2ZoyNga