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Efficiency can be measured in many ways, but one very high-level indicator is how much revenue a company brings in per employee it hires.

Investment firm Clare Capital was kind enough to compile the ASX company numbers for The Motley Fool this week.

Because the 2020 financial year has not finished for many companies, the 2019 stats are our best guide.

Surprisingly, A2 Milk Company Ltd (ASX: A2M) has come out on top. It made a whopping $5.7 million per staff member.

It’s a shock result because sectors that produce highly scalable products and services, like technology, are usually expected to have high revenue-per-employee numbers.

Certainly over in the United States this holds true, with Netflix ruling the roost with $3.28 million of revenue per employee.

For an agricultural product company to come first in Australia is a testament to how well A2 Milk is going at the moment. 

Its shares have climbed from just above $14 at the start of the year to $17.29 at 12.25 pm AEST Monday.

The highest tech company is not one you’d think

Two finance companies then followed: Magellan Financial Group Ltd (ASX: MFG) and Challenger Ltd (ASX: CGF). They raked in $5.1 million and $5 million per employee, respectively.

AMP Limited (ASX: AMP), which has been rocked by both customer service and sexual harassment scandals in recent years, made $3.8 million per worker.

Company	2019 revenue	2019 headcount	Revenue per employee
A2 Milk Company Ltd (ASX: A2M)	$1.3 billion	228	$5.7 million
Magellan Financial Group Ltd (ASX: MFG)	$643 million	125	$5.14 million
Challenger Ltd (ASX: CGF)	$3.4 billion	687	$4.99 million
Beach Energy Ltd (ASX: BPT)	$2.2 billion	483	$3.86 million
AGL Energy Limited (ASX: AGL)	$13.8 billion	3586	$3.8 million
AMP Limited (ASX: AMP)	$24 billion	6500	$3.78 million
Dicker Data Ltd (ASX: DDR)	$1.8 billion	485	$3.49 million
Meridian Energy Ltd (ASX: MEZ)	$3.5 billion	1001	$3.36 million
Sydney Airport Holdings Pty Ltd (ASX: SYD)	$1.7 billion	508	$3.3 million
Australian Finance Group Ltd (ASX: AFG)	$671 million	203	$3.06 million
Source: Clare Capital, table produced by author

The highest-ranked technology company is not one of the famous WAAAX shares.

It’s little-known distributor Dicker Data, which came in 7th. The Sydney company made $3.49 million per staff member.

The Dicker Data share price has enjoyed a handsome ascent over the past 18 months. It was around $3 in February last year, but now sits at $7.55 – all while paying a dividend yield of 4.39%.

And for the 2019 financial year, it remains as the only tech company among the highest-ranked revenue-per-employee players.

TPG Telecom Ltd (ASX: TPG) is the next best tech company, sitting at 32nd place with $1.8 million per employee.

More reading

• AMP sexual harassment report never uses the words ‘sexual harassment’
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• 5 things to watch on the ASX 200 on Monday
• Will the RBA keep the cash rate on hold for 3 more years?
• 5 things to watch on the ASX 200 next week

Motley Fool contributor Tony Yoo owns shares of A2 Milk, Dicker Data Limited, and Sydney Airport Holdings Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Dicker Data Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post This ASX-listed company makes $5.7 million per employee appeared first on Motley Fool Australia.

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I have built a portfolio of ASX shares to allow me to focus on three activities. The first activity builds wealth through investing in growth companies or undervalued companies. This is ongoing and active with a time horizon of 3 years or more.

The second part of my investing is to look for short-term market opportunities. Things like takeovers, occasional government bonds, or high yield dividend payments. This has a very near-term horizon, generally within months. Third, I use the proceeds from these two areas to buy undervalued companies that pay a solid, stable dividend. This is very long-term and I work to achieve a specific amount per year.

This week, I intend to invest in an undervalued ASX share that I believe will see good growth over the next 2–3 years at least. And if it goes well, I will let it run further. 

An undervalued ASX share

Jumbo Interactive Ltd (ASX: JIN) was one of the best performing ASX shares of the past decade, and I believe it is likely to be one of the great shares of this decade. In fact, the coronavirus lockdown proved the resilience of the company’s business model. Jumbo sells lottery tickets online under license from Tabcorp Holdings Limited (ASX: TAH). Despite fewer large jackpots, the company was able to increase top line revenue by 9% and earnings before interest, taxes, depreciation and amortisation (EDITDA) by 8%. This is because of higher online sales for a number of reasons. 

However, despite all of these big improvements, net profit after tax remained steady at $26.5 million. The reason for this was a ~$2 million increase in depreciation and amortisation. This is an accounting transaction and the money has not left the company.

Strong growth strategy

The company’s strategy continues to deliver results. During the lockdown, it renegotiated an extension to its deal with Tabcorp, from 2022 to 2030. This had held me back in the past, 2 years is not enough of a ramp for the company to create additional revenue streams. Additionally, this ASX share is in negotiations with Lotterywest in Western Australia, and has been able to grow its charity lottery business.

The charity business and its recent acquisition in the UK are very interesting to me. Charities in Australia and the UK are authorised to run lotteries for funding purposes. In Fy20, the company signed up four charities to its platform. Thus enabling them to sell tickets on the platform.  Furthermore, Jumbo purchased a company called Gatherwell in the UK. This is the largest external reseller of lottery tickets for schools and local councils. 

Foolish Takeaway

Within Australia, 28% of lottery sales are online, globally it is closer to 10%. Moreover, just the charity lottery sales alone are worth $26 billion. The combination of the size of the addressable market, company platform and the movement of consumers online, makes this a very interesting ASX share for me. 

I think it is undervalued based on its current share price. Moreover, it clearly has a lot of growth ahead of it and is diversifying revenue streams to target the full addressable market. Therefore, this share is a ‘buy’ for me right now. 

More reading

• 3 under the radar ASX growth shares to buy today
• 3 ASX shares to turn $10,000 into $100,000
• Why APA, Bravura, Jumbo, & Whitehaven shares are sinking lower
• Jumbo share price drops lower on flat FY 2020 profits
• Jumbo Interactive share price on watch after signing Tabcorp deal

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

The post Why I’m buying this undervalued ASX share right now appeared first on Motley Fool Australia.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a solid gain. At the time of writing the benchmark index is up 0.3% to 6,091.4 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Fortescue Metals Group Limited (ASX: FMG) share price has dropped 8% to $17.33. This decline is largely attributable to the iron ore producer’s shares trading ex-dividend this morning. This means that its shares are now trading without the rights to its upcoming dividend. Eligible shareholders can look forward to being paid a final fully franked $1.00 per share dividend in October. Based on its last close price, this equates to a very generous 5.3% dividend yield.

The Openpay Group Ltd (ASX: OPY) share price is down 5.5% to $4.44 following the release of its full year results. This morning the buy now pay later provider reported record growth across leading indicators in FY 2020. Openpay’s active plans grew 229%, active customers jumped 141%, and active merchants rose 52%. This led to total transaction value (TTV) growing 98% to a record of $192.8 million.

The Pointsbet Holdings Ltd (ASX: PBH) share price has fallen 8% to $12.88. This appears to have been driven by profit taking after an incredible gain last week. The sports betting company’s shares rocketed 140% over the period thanks to the release of an impressive full year results and the announcement of a major deal with NBC Universal.

The Sezzle Inc (ASX: SZL) share price has dropped 7% to $10.52. This follows the release of the buy now pay later provider’s half year results this morning. Despite Sezzle delivering strong underlying merchant sales growth and a sharp reduction in transaction losses, some investors appear to have been expecting even more today.

More reading

• ASX 200 edges higher: Fortescue sinks, NAB sells MLC Wealth, Costa jumps
• Openpay share price drops after posting strong FY20 results
• Why the Fortescue share price is sinking over 7% lower today
• 3 under the radar ASX growth shares to buy today
• Sezzle share price on watch after explosive first half growth

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

The post Why Fortescue, Openpay, Pointsbet, & Sezzle shares are dropping lower appeared first on Motley Fool Australia.

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Looking for quality ASX dividend shares to add to your share portfolio? Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS) are both in my buy zone right now. Here’s why.

Wesfarmers

I like Wesfarmers as an ASX dividend share because it is a highly diversified company. The group operations in retail segments including general merchandise and office supplies. In addition, Wesfarmers also has investments in industrial segments such as energy and industrial.

The group recently released its full year FY 2020 results, reporting a very solid 10.5% revenue growth from continuing operations to $30.85 billion. Wesfarmers recorded relatively high sales growth in both its Bunnings and Officeworks divisions. This was due to increased demand for products during the coronavirus pandemic. Items that are linked to working and learning at home such as laptops and PCs, as well as goods used for home projects, were in particularly high demand since March. Despite highly volatile COVID-19 trading conditions, with the temporary closure of some of its stores, the Kmart retail chain still managed to deliver a strong result.

Overall online sales growth for Wesfarmers during FY 2020 was impressive at 60%. Not only has the online channel proven to be highly popular during the pandemic, the growing trend of online shopping has accelerated significantly during the lockdown period.

Overall revenue growth may slow down a bit during FY 2021 for Wesfarmers. However I believe that the long-term growth prospects of Wesfarmers remain reasonably promising.

Wesfarmers currently pays an attractive 3.19% fully franked forward annual dividend yield.

Telstra

Another quality ASX dividend share that I recommend right now is Telstra. Telstra’s total income for FY 2020 decreased by 5.9 per cent to $26.2 billion. Meanwhile, NPAT for the telco provider decreased 14.4 per cent to $1.8 billion.

On the surface, this top-line result may look disappointing. However, when considered in context of Telstra’s transition into a leaner and slightly smaller telco provider under its T22 strategy, I believe this is a very solid result. Telstra’s T22 strategy is helping the company evolve into a more efficient telco outfit that can more effectively compete in the National Broadband Network (NBN) environment over the next decade.

Telstra continues to be the market leader in the race to rollout nationwide 5G services. At the end of June, the telco provider’s 5G network reached one third of the Australia’s population.

Telstra currently pay a handy 3.45% fully franked forward annual dividend yield. Grossed up that amounts to a return of 4.9%.

Foolish Takeaway

Both Wesfarmers and Telstra are in my view, top notch ASX dividend shares that are well-placed to continue to pay strong dividends over the next few years.

More reading

• Telstra and 1 more hot ASX dividend share to buy
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• Why I would buy these strong ASX dividend shares next week
• 5 top ASX dividend shares you should never sell
• ASX giants say cutting staff hours will save jobs

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

The post Why I’d buy Wesfarmers and 1 other quality ASX dividend right now appeared first on Motley Fool Australia.

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Are you looking to add some ASX growth shares to your portfolio next month? Well, you’re in luck! The Australian share market has a large number of quality growth shares to consider buying.

Four that I think would be great long term options are listed below. Here’s why I would buy them:

Altium Limited (ASX: ALU)

Altium is an electronic design software provider which has been growing at an exceptionally strong rate over the last few years. I expect this positive form to continue long into the future thanks to its exposure to the growing Internet of Things and Artificial Intelligence markets. These markets are underpinning the proliferation of electronic devices and driving increasingly strong demand for its Altium Designer software.

Aristocrat Leisure Limited (ASX: ALL)

Another ASX growth share to look at is this gaming technology company. Thanks to its industry-leading pokie machines and the huge potential of its digital and social gaming business, I think Aristocrat Leisure is a great share to buy. And while it is facing notable headwinds right now due to the closure of casinos because of the pandemic, I expect its growth to accelerate once trading conditions return to normal.

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company. It provides businesses with a unified platform to streamline processes such as employee administration, recruitment, and payroll. ELMO has been a strong performer in recent years, even during the pandemic, and looks well-placed to continue this trend over the next decade. It also has the option of putting its hefty cash balance to work with earnings accretive acquisitions. I think this makes it an ASX growth share to buy.

ResMed Inc. (ASX: RMD)

ResMed is a medical device company which has a focus on sleep treatment solutions. It is one of my favourite growth shares due to the quality of its products and its large market opportunity. Management estimates that there are 936 million people with sleep apnoea globally and 380 million people who suffer from chronic obstructive pulmonary disease (COPD). The vast majority of these people are undiagnosed. I believe this gives it a long runway for growth over the next decade and beyond.

More reading

• 3 stellar ASX growth shares to buy right now
• How to become rich by investing $1,000 into ASX shares
• Buy and hold these fantastic ASX healthcare shares until at least 2030
• Where to invest $5,000 into ASX shares immediately
• Is the Altium share price in the buy zone?

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

The post 4 fantastic ASX growth shares to buy in September appeared first on Motley Fool Australia.

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The COVID-19 panic, combined with the excess money and liquidity entering the global economy, has acted as jet fuel for the gold spot price. However, in recent weeks the gold price has cooled down and consolidated around the US$1,950 mark.

With the US Federal Reserve taking interest rates to zero for the foreseeable future and continuing monetary stimulus, could this be an opportunity to top up on gold mining stocks?

Here we explore 3 ASX gold shares and why they might be worth a closer look today.

1. Evolution Mining Ltd (ASX: EVN) 

Evolution is one of the lowest cost ASX gold mining stocks. This positions the company to greatly benefit from the recent surge in gold price. The company delivered a record FY20 financial result with its underlying net profit after tax (NPAT) soaring 86% to a record $405.4 million and 746,463 ounces of gold produced (FY19: 753,001 ounces) at an all-in sustaining cost (AISC) of A$1,043 per ounce. Looking ahead, the group provided the following outlook for the next 3 years: 

• FY21: 670,000–730,000 ounces at an AISC of A$1,240–A$1,300 per ounce
• FY22: 700,000–770,000 ounces at an AISC of A$1,220–A$1,280 per ounce
• FY23: 790,000–850,000 ounces at an AISC of A$1,125–A$1,185 per ounce

This represents a modest increase in production, which will be largely driven by the commencement of its Cowal underground mine in late FY22. Evolution is more cost-focused compared to other ASX gold mining stocks that have turned to acquisitions for growth. Its low costs mean great margins, even if the gold price were to weaken from today’s levels. At a price-to-earnings (P/E) ratio of just 20, I believe Evolution shares represent both good value and a defensive hedge. 

2. Northern Star Resources Ltd (ASX: NST) 

Strategic acquisitions to propel growth has been the name of the game for Northern Star. First, it acquired Canadian mine ‘Pogo’ in 2018 and then Australian mine ‘KCGM’ in late 2019. The company’s FY20 result saw strong cash flows with the finalisation of Pogo in FY20, and the miner expects KCGM’s cash flow to increase with full 12-month contribution in FY21.

The company delivered a 69% increase in underlying profit after tax and announced a final and special dividend of 19.5 cents per share. Northern Star does not boast a significantly higher valuation than the likes of Evolution, trading at a P/E of approximately 26. I believe the company will continue to realise production efficiencies, increases in gold reserves and cash flows from Pogo and KCGM in FY21. 

3. Saracen Mineral Holdings Ltd (ASX: SAR) 

Likewise, Saracen also recorded an explosive year of growth following its joint acquisition of KCGM with Northern Star. In FY20, the company delivered a 93% increase in revenue, 105% increase in NPAT driven by a 47% increase in gold production to 520.4 koz at an AISC of A$1,104/oz. Its FY21 guidance points to 600–640 koz at an AISC of $1,300-1,400/oz.

I believe Saracen represents the best value of the 3 ASX gold shares, given its history of strong growth. Trading at a P/E of just 21 with an near-term goal of reaching 800 koz production, this could be the gold stock to own for both capital gains and hedging. 

More reading

• 5 things to watch on the ASX 200 on Monday
• Unlikely ASX stock winners from the change in the Fed’s inflation policy
• 5 things to watch on the ASX 200 on Friday
• Top ASX 200 gold shares have plummeted over the month with Resolute Mining leading the way down
• Is it finally time for ASX investors to buy gold?

Motley Fool contributor Lina Lim 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 Is now the time to top up on ASX gold shares?  appeared first on Motley Fool Australia.

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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has followed the lead of Wall Street and is edging higher following a shaky start to the day. The benchmark index is up slightly to 6,076.7 points.

Here’s what has been happening on the market today:

Fortescue sinks lower.

The Fortescue Metals Group Limited (ASX: FMG) share price is sinking over 7% lower on Monday. But rather than being driven by operational issues or broker notes, this decline is almost entirely attributable to its shares trading ex-dividend this morning. The iron ore producer is paying shareholders a final fully franked $1.00 per share dividend. Based on its last close price, this equates to a 5.3% dividend yield.

NAB sells MLC Wealth to IOOF.

The National Australia Bank Ltd (ASX: NAB) share price is pushing higher today after announcing a deal to sell its MLC Wealth business to IOOF Holdings Limited (ASX: IFL). NAB has entered into a sale and purchase agreement to sell MLC Wealth for a purchase price of $1,440 million. This comprises $1,240 million in cash proceeds and $200 million in the form of a 5-year structured subordinated note in IOOF. Management notes that this is in line with its strategy to simplify and focus on its core banking business.

Lendlease strategy update.

The Lendlease Group (ASX: LLC) share price has been a strong performer on Monday after releasing its strategy for the next decade. Lendlease is aiming to employ its placemaking expertise and integrated business model in global gateway cities to deliver urbanisation projects and investments that generate social, environmental, and economic value.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Monday has been the Costa Group Holdings Ltd (ASX: CGC) share price with a 7% gain. Investors have been buying the horticulture company’s shares after Morgans retained its add rating and lifted its price target to $3.70. The worst performer is the Orocobre Limited (ASX: ORE) share price with a 10% decline. This morning the lithium miner completed its institutional placement. It raised $126 million at a 13.1% discount of $2.52.

More reading

• Why Fortescue, Openpay, Pointsbet, & Sezzle shares are dropping lower
• Why Costa, Harvey Norman, NEXTDC, & Splitit shares are charging higher today
• Why the Fortescue share price is sinking over 7% lower today
• NAB share price pushes higher on $1.44 billion MLC Wealth sales to IOOF
• Polynovo and 2 more ASX 200 shares to watch this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP 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.

The post ASX 200 edges higher: Fortescue sinks, NAB sells MLC Wealth, Costa jumps appeared first on Motley Fool Australia.

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The Openpay Group Limited (ASX: OPY) share price is on the move today following the release of its full-year results to the market. At the time of writing, the Openpay share price is trading for $4.48, down 4.6%. This compares to the S&P/ASX 200 Index (ASX: XJO) which is up 0.1% at 6082 points.

At one point, the Openpay share price plummeted to as low as $4.00 in early morning trade.

What did Openpay report?

The company reported a very strong financial result for the 12 months to June 2020 (FY20). Revenue for the buy now, pay later (BNPL) business jumped a colossal 64% to $18 million from the prior year. This was reflected by a record growth in both active plans up 229%, and active customers up 141%.

FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) came in at a loss of $30.1 million compared to the FY19 loss of $11.5 million. This was in line with management’s expectations as the company has made significant investment in its geographical expansion plans.

Total transaction value (TTV) grew to $192.8 million, up 98% reflected upon a significant shift to online sales in Australia. Net transaction margin was 2.5% and net transaction loss was 2.3%. Openpay advised that credit risk has remained at low levels despite the COVID-19 impact.

The BNPL provider retained a healthy balance sheet of $70.1 million in cash with $80.8 million of undrawn debt facilities to use for future funding.

UK gaining momentum

Openpay’s UK business has achieved significant growth with active plans up 329% to 187,000 compared to the first-half of the year. The online retail channel added new merchants that included leading brands such as The Watch Hut, Masdings and JD Sports.

As the business prepares to move across other verticals in the UK space, this is expected to create substantial opportunities. The entire retail market is valued at UK$390 billion.

During the financial year, Openpay entered the business-to-business (B2B) space with the signing of supermarket giant, Woolworths. The agreement is an initial term of three years with the option to extend for another two. The BNPL company expects the partnership to deliver its first revenues in H1 FY21.

Looking ahead, Openpay did not provide any guidance going into FY21. However, the company plans to leverage its domestic expansion by driving platform utilisation and repeat customers growth.

The BNPL provider will also explore new verticals in the UK to complement its ongoing success, pending the approval of the Financial Conduct Authority (FCA) to diversify its product offering.

What did management say?

Independent chair Patrick Tuttle said the COVID-19 pandemic had accelerated the adoption of BNPL across a higher proportion of consumers as they embraced “the obvious benefits of transacting online from home in a highly efficient, safe and convenient way”.

Said Openpay CEO Michael Eidel:  “We’re confident that with our purpose-driven responsible payment services in B2B and B2C, and differentiated BNPS approach, we will continue to grow and scale, both in Australia and overseas.”

About the Openpay share price

Shares in the company fell to an all-time low of 32 cents in the March bear market, before shooting higher on the back of positive investor sentiment in the BNPL sector. Despite the volatility, the Openpay share price has managed to climb 357% since the beginning of the calendar year.

More reading

• Why Fortescue, Openpay, Pointsbet, & Sezzle shares are dropping lower
• The Afterpay share price is up a massive 700% since March. Is it still a buy?
• Afterpay share price hits new, all time high
• Are BNPL shares like Afterpay officially recession proof?
• Can these two ASX buy now, pay later companies become the next Afterpay?

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.

The post Openpay share price drops after posting strong FY20 results appeared first on Motley Fool Australia.

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If I could only invest in one ASX share this week I think would pick Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

A quick overview

Soul Patts is an investment conglomerate that has been around for over a century. It has actually been listed since 1903, so it’s one of the oldest businesses in Australia.

The ASX share has been served by a number of families as employees for the long-term. More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.

It’s now invested in a wide variety of industries such as telecommunications, property, building products, pharmacies, resources and so on.

Why I’d buy it now

There is currently a lot of uncertainty in the market with things like COVID-19, the US election and the unstable global economy. It’s hard to know where to invest. But I think it would be a mistake to just sit in cash for the long-term. It is impossible to know what share markets will do. Even if they drop, how are you supposed to know where the ‘bottom’ is? It may be best just to stay invested and keep investing regularly. 

Over the long-term shares have delivered good returns when you look at the long-term average returns. The long-term return numbers include the crashes and recessions.

However, acknowledging the long-term performance of shares doesn’t mean that every single ASX share is a buy at any price. It’s important not to overpay for businesses. That’s a big part of investing.

I believe that Soul Patts can provide a good balance between being positive about the long-term future and being cautious about the current conditions.

The investment conglomerate owns defensive businesses and it’s willing to invest with a contrarian style. So it can take advantage of negative market movements by buying (parts of) businesses. If the market goes up then Soul Patts can benefit from that too, and keep operating as normal.

Current investments

It owns a portfolio of listed ASX shares as well as unlisted businesses. I quite like its existing portfolio, though I’m also thinking (positively) about how the portfolio will evolve over the coming decades. 

Some of its biggest equity holding are: TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Clover Corporation Limited (ASX: CLV) and Milton Corporation Limited (ASX: MLT).

Its unlisted business investments include swimming schools, resources, agriculture and Ampcontrol.

There is also a plan for an investment into a new sector. Data centres are in heavy demand right now – just look at Nextdc Ltd (ASX: NXT) – and Soul Patts is planning to invest in regional data centres.

I think regional data centres make a lot of sense for the ASX share. There was a sizeable shift to cloud IT infrastructure before COVID-19. The COVID-19 conditions have seemed to accelerate this shift. People in regional cities also need high-quality access to cloud infrastructure, so Soul Patts could be ahead of the curve by investing in this area.

Dividends

In the current investing world, it’s hard to find a good source of dividends. Banks are cutting dividends and miners are trading at cyclical highs. I think it’s best to buy miners when the market is pessimistic not optimistic.

Soul Patts is a great option for dividends in my opinion. It has grown its dividend every year since 2000. That’s a really good record. The ASX share aims to increase its dividend in the upcoming result and I’m sure the company will want to continue that growth record after that.

Not only is the Soul Patts dividend growing, but it’s also retaining some of its annual cashflow to invest in new opportunities (like regional data centres). Its existing investments and new opportunities will help grow its cashflow and fund bigger dividends in the future.

Foolish takeaway

At the current Soul Patts share price it offers a grossed-up dividend yield of 4.1%. I think it’s a good, defensive business which can safely navigate whatever happens next. I’d be happy to buy a parcel of shares for the long-term today.

More reading

• Where I’d invest $10,000 right now in ASX shares
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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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The Elixinol Global Ltd (ASX: EXL) share price surged 6.25% higher to 17 cents today after the company released its half year financial results. This was followed by a slight pullback in the Elixinol share price which is currently trading at 16.5 cents at the time of writing.

Elixinol operates in the hemp-derived, also known as cannabidiol or CBD, industry. The company’s major businesses are located in Australia, Europe, the United Kingdom and the United States.

What’s moving the Elixinol share price?

Investors were driving the Elixinol share price higher this morning despite the company reporting that revenues from continuing operations came in at $7.9 million for the six months to June 2020. This was a sharp 51% decline on revenues in the first half of FY 2019. The impact of the coronavirus pandemic was particularly hard for the company in the US retail market.

There has been a transition during the six month period to Elixinol branded products that have a much higher operating margin. The latter now constitute 64% of overall revenues, compared to only 50% in the prior corresponding half.

Operating expenses for Elixinol declined by 12% to $19.6 million for the six month period. Meanwhile, adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at $14.8 million compared to an EBITDA loss of $11 million in the prior corresponding period.

Elixinol ended 30 June with a relatively solid balance sheet. It had $16.8 million of cash and almost no debt on its books. The company also has a significant amount of existing inventory to support its growth strategy for more than a year.

Market outlook

While not providing any specific revenue guidance, Elixinol Global has highlighted some positive market trends already evident during FY 2021.

Executive Director and Group CEO, Oliver Horn, commented:

Post period, in July, we’ve seen the business improving across all divisions. All business units achieved internal EBITDA forecasts, demonstrating that revenue and cost have been well managed. 

With the European and UK business having secured extended distribution, an encouraging order book and launch of our new Elixinol Skin range, we are seeing a positive continuation of this trend in August. We have not yet realised full benefit from our cost reduction program – this will positively impact the business from H2 FY2020. 

Following its slight pull back, the Elixinol share price is now trading 3.1% up so far today. The company has had a challenging year to date with the Elixinol share price falling 67% in 2020. 

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Motley Fool contributor Phil Harpur 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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