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The Nextdc Limited (ASX: NXT) has been a top performing ASX tech share in 2020. However, I think the outlook could be even better than is currently priced in by the market.

What does Nextdc do?

Nextdc is an Australian data centre operator with centres across Australia catering to retail and wholesale customers.

Heightened diplomatic tensions have put the spotlight on data security and sovereignty which has boosted demand for Nextdc’s services.

There is definitely some challenges ahead for the Aussie economy thanks to the onset of the coronavirus pandemic.

However, I think things are looking good for Nextdc’s data centre industry with a focus on remote working and increased cybersecurity.

Why the Nextdc share price can rocket higher

A Research and Markets report from May 2020 estimates the Australian data centre market will reach $6 billion by 2025. That represents a compounded annual growth rate of 3.4% over the next 5 years.

That’s good news for the Nextdc given the Aussie company is already a market leader. I see a few paths to further growth for Nextdc in the next few years.

The most obvious is that Nextdc continues to expand its capabilities across Australia with organic development. This could help the Aussie company capture more market share and increase its value through growth.

Another option is that Nextdc just maintains its market share while the addressable market continues to grow. I think the demand environment is strong particularly as more companies beef up cybersecurity and explore operational flexibility with work from home arrangements.

The final option that I see is inorganic growth through acquisitions. While this might increase Nextdc’s size, I think it would be negative for the Nextdc share price.

Acquisitive companies often pay a premium for taking over the target business. That acquisition is based on perceived “synergies” or operational efficiencies from integrating the new business.

However, historically mergers and acquisitions haven’t been great for the acquirer’s shareholders. That means any new deals to buy smaller competitors could see the Nextdc share price fall lower.

Foolish takeaway

The Nextdc share price has already rocketed 82.1% higher to $11.89 per share. However, if the company can realise further organic growth, I think it could be climbing into the ASX 20 by 2025.

More reading

• How to invest in ASX shares in uncertain times?
• Why I’d buy Afterpay and other ASX tech shares at record highs
• ASX 200 down 0.9%: Costa impresses, Harvey Norman profits grow, Appen downgraded
• 5 things to watch on the ASX 200 on Friday
• NEXTDC share price on watch after hitting the high-end of its guidance in FY 2020

Motley Fool contributor Ken Hall 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 Sezzle Inc (ASX: SZL) share price will be on watch this morning following the release of its half year results.

How did Sezzle perform in the first half of FY 2020?

For the six months ended 30 June 2020, the buy now pay later provider reported underlying merchant sales (UMS) growth of 338% to US$307.4 million.

This led to the Afterpay Ltd (ASX: APT) rival’s total income growing 384% over the prior corresponding period to US$20.8 million.

A key driver of this growth was a significant increase in customer numbers. At the end of the period, the company had 1,475,235 active customers, which was up 243% on the prior corresponding period.

This was supported by the growing adoption of its platform by merchants. Active merchants grew 219% on the prior corresponding period to 16,112 merchants.

Also improving was its loss rates. The company’s net transaction loss came in at 0.7% of UMS (down from 1.5% a year earlier), leading to a net transaction margin of 1.7% (up from negative 0.3% a year ago).

At the end of the half, Sezzle had US$55.7 million of cash and cash equivalents, with total debt of US$38.47 million.

How has Sezzle performed since the end of the half?

Pleasingly, Sezzle’s strong growth has continued since the end of June. In fact, July was a record month for the company.

Active consumers reached 1.6 million (up 7.1% month on month), active merchants rose to 17,600 (9.3% MoM), and UMS climbed to US$71.8 million. The latter represents a record month and 14.6% above the average monthly pace for the second quarter.

Another positive was its repeat usage, with active customer repeat usage improving to 88.1%. This was the 19th straight month of sequential improvement.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, commented: “We are fortunate to be able to provide merchants and consumers the payment flexibility they need in this unprecedented global pandemic of our lifetime. The utility of Sezzle is evident in our record 1H20 performance and strong start to 3Q20 in July.”

Outlook.

Following the strong first half and its positive start to the second, the company has reiterated its guidance for FY 2020.

It expects to achieve an annualised UMS run rate in excess of US$1 billion by the end of 2020.

Looking ahead, the company is testing its offering in India and exploring opportunities in Europe.

Mr Youakim concluded: “Sezzle’s strong recent performance, improving consumer profile and confidence in reaching annualized UMS of US$1 billion by the end of 2020 allows us to be uniquely positioned to further expand through a number of near-term growth initiatives.”

More reading

• 3 under the radar ASX growth shares to buy today
• The Sezzle share price is up a sizzling 52% in August and still going strong
• Where to invest in a ‘rip-roaring’ share market rebound
• 3 ASX shares to turn $10,000 into $100,000
• Flexigroup share price in trade halt ahead of capital raise

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended 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.

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The Pointsbet Holdings Ltd (ASX: PBH) share price is on fire right now. In fact, shares in the Aussie wagering group rocketed an astonishing 86.7% higher on Friday.

Why did the Pointsbet share price rocket higher?

The major trigger was Pointsbet’s full-year results announcement on Friday morning.

Total revenue for the wagering group rocketed 194% higher to $75.2 million in a breakout year.

Pointsbet reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.9 million for its Australian trading arm on the back of strong growth.

The group reported an $82.1 million net win result, up 191% compared to FY19 figures.

It wasn’t just the strong financials that saw the Pointsbet share price surge higher. The Aussie wagering group also announced a new 5-year sports media deal with NBCUniversal in the United States.

That’s another big step into the lucrative US sports betting market which points to more future growth in FY21.

Is it too late to buy?

It’s hard to argue an ASX share is good value after surging 86.7% higher in one day.

The Pointsbet share price has now climbed a whopping 185.7% higher in 2020 and more than 1,000% since the March bear market.

There are certainly some challenges ahead for the Aussie betting company. The coronavirus pandemic has shown that further disruption to sports could lie ahead which isn’t good for online betting volumes.

However, key markets have thus far persevered. Given Pointsbet is still a loss-making company, we can’t even use a price-to-earnings (P/E) ratio to help in valuation.

I would put Pointsbet in the same speculative basket as the Aussie tech shares. Shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) continue to soar in 2020.

I think at this point the fundamental or ‘intrinsic’ valuations have been left behind. However, a record low interest environment and favourable monetary policy bode well for further growth.

I think if sports remain underway in key markets like the US and Australia, then the Pointsbet share price has further to run.

However, if we see further disruptions to 2021 seasons, then the priced-in earnings growth could see a correction for the ASX wagering share.

More reading

• How to invest in ASX shares in uncertain times?
• ASX 200 drops 0.9%, Costa reveals healthy result
• ASX Stock of the Day: Pointsbet share price surges 77% on NBC deal
• Why Costa, Flight Centre, Polynovo, & Pointsbet shares are storming higher
• Pointsbet share price on watch as FY20 revenue triples

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Pointsbet Holdings 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.

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After a big week for the S&P/ASX 200 Index (ASX: XJO), there are a few ASX 200 shares that I’ve got in my sights.

The benchmark Aussie index edged 0.6% lower to 6,073.80 points as investors reacted to the latest run of earnings results.

Find out why I’ve got my eye on Polynovo Ltd (ASX: PNV) and 2 more ASX 200 shares in the week ahead.

Polynovo and 2 more ASX 200 shares to watch

It was a volatile week for the Polynovo share price after the Aussie biotech announced its FY20 results.

Polynovo saw sales growth of 104% to $19.1 million but reported a net loss after tax of $4.2 million. That wasn’t enough to impress investors as the ASX 200 biotech share price fell 14.5% lower in the space of 2 days.

However, a strong resurgence saw the Polynovo share price rocket 12.9% on Friday, thanks to robust insider buying.

Speaking of resurgences, I think the Afterpay Ltd (ASX: APT) share price could be on the move on Monday.

The buy now, pay later (BNPL) group released its FY20 results on Thursday. That was headlined by a 112% increase in underlying sales to $11.1 billion driven by strong growth across Australia, New Zealand, the United Kingdom and the United States.

However, the ASX 200 fintech still managed to report a statutory loss despite strong sales. That didn’t impress investors with the Afterpay share price falling 5.6% lower to $88.75 per share.

Finally, I’ve got my eye on the Woolworths Group Ltd (ASX: WOW) share price this week. 

Shares in the ASX 200 conglomerate jumped higher on Thursday after the company’s full-year results.

The Woolworths share price is up 9.6% this year but it has been a volatile ride for investors. I think Woolworths is worth watching in the week ahead as investors try and re-value the ASX 200 share.

Foolish takeaway

It’s been a wild ride in August with many Aussie companies reporting their half-year or full-year earnings.

These are just a few of the ASX 200 shares that I’ve got my eye on in the week ahead with some exciting results including IOOF Holdings Limited (ASX: IFL).

More reading

• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• 5 things to watch on the ASX 200 on Monday
• Unlikely ASX stock winners from the change in the Fed’s inflation policy
• 3 of the best ASX tech shares to buy in September
• ASX reporting season heroes to buy for FY21

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths 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 Polynovo and 2 more ASX 200 shares to watch this week appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has just given investors the second week of falls in a row as earnings season draws to an end. The Index’s 0.6% drop over the week comes after the week prior’s 0.2% fall and pulls the ASX 200 back to 6,073 points. The ASX 200 has now trended around the 6,000-point level since early June (a support level I have highlighted before). Over the past month, the index had been threatening to break away from this rut, reaching as high as 6,167 points in mid-August. But since then, we have seen investors get cold feet and pull away from solidifying these gains. Even though there were both winners and losers from this week’s earnings reports, it was the bears that ended up seizing control of the week’s market moves.

ASX 200 Earningspalooza

So we heard from some big names last week. It started out strong on Monday with Fortescue Metals Group Limited (ASX: FMG) reporting a 49% lift in profits and a monster $1 per share final, fully franked dividend. Fortescue shares were up 4.89% for the week.

Cleanaway Waste Management Ltd (ASX: CWY) also had a well-received report, telling investors profits were up 2.1% and earnings per share (EPS) up 8.7%. Cleanaway shares were up 15% last week.

We also heard from Woolworths Group Ltd (ASX: WOW) on Thursday, which had a less-rosy set of numbers. Profits were down 1.2%, and the company announced a dividend trim when it declared a 48 cents per share final payout, fully franked. Even so, Woolies shares were up 0.6% for the week.

Other big names reporting last week include Boral Limited (ASX: BLD), Bingo Industries Ltd (ASX: BIN), Ramsay Health Care Limited (ASX: RHC), Afterpay Ltd (ASX: APT) and Harvey Norman Holdings Limited (ASX: HVN).

We already had a fair idea of what Afterpay would produce due to a previous guidance update, but the company’s stellar results (including a 112% increase in underlying sales and a 73% lift in earnings) helped push Afterpay shares to yet another all-time high of $93.99 on Thursday morning.

Speaking of buy now, pay later (BNPL) shares, we can’t finish without mentioning Zip Co Ltd (ASX: Z1P). The Zip share price rocketed almost 30% on Wednesday after the company announced a partnership with e-commerce giant eBay, before dropping 8% the next day at one point on its earnings result. Zip shares remain up 34% for the week.

How did the markets end the week?

As we previously flagged, the ASX 200 had a down week. It started out on Monday at 6,111.2 points and finished up on Friday at 6,073.8 points, translating to a total loss of 0.61% for the week. Monday started with a modest rise of 0.3%, while Tuesday backed it up with another 0.5% gain. Then Wednesday came and brought a 0.7% fall with it. This was countered on Thursday with a 0.3% rise, but Friday doubled down on the losses with a 0.86% fall.

Meanwhile, the All Ordinaries Index (ASX: XAO) also slipped 0.16% last week after starting out at 6,270.2 points and finishing up at 6,260.8 points.

Which ASX 200 shares were the biggest winners and losers?

It’s gossip time, so get some tea ready and we’ll check out which ASX shares were causing a stir last week. As always, we’ll start with the losers:

Worst ASX 200 losers	% loss for the week
Whitehaven Coal Ltd (ASX: WHC)	(29.7%)
Bravura Solutions Ltd (ASX: BVS)	(15.6%)
Blackmores Limited (ASX: BKL)	(14.5%)
Appen Ltd (ASX: APX)	(13.6%)

Coal miner Whitehaven takes out last week’s wooden spoon with a near-30% drop in value. This was (of course) sparked by the company’s full-year earnings report that was released on Wednesday. Evidently investors weren’t too pleased with the company’s 94.7% drop in profits that was announced.

Fintech company, Bravura, wasn’t popular either, despite the company reporting bumps in both revenue and profits last Wednesday (the latter by 22%).

Vitamin hawker, Blackmores, was also out of favour, with the company reporting a 3% drop in revenue and a 66% collapse in profits. Management also warned that the company would likely only return to profit growth in the second half of FY21.

Lastly, the human dataset provider and WAAAX share, Appen, also disappointed last week. Investors sent the company’s shares down after Appen reported that, despite impressive revenue, earnings and profit growth, its guidance for FY21 will remain unchanged.

Let’s take a look at last weeks winners, now the bad news is out of the way:

Best ASX 200 gainers	% gain for the week
Reliance Worldwide Corporation Ltd (ASX: RWC)	32.8%
Cleanaway Waste Management Ltd (ASX: CWY)	15%
Nearmap Ltd (ASX: NEA)	14.5%
Bingo Industries Ltd (ASX: BIN)	13.3%

Mr Worldwide, otherwise known as Reliance, topped last week’s gainers with a 32.8% surge. Investors were clearly pleasantly surprised by this company’s earnings report, which delivered a 5% bump in sales and a 33% drop in profits. Even after this hefty bump, Reliance shares are still down around 7.5% year to date.

It was a great week for garbage collectors it seems. We’ve already discussed the Cleanaway share price, but rival Bingo Industries was also in demand following its earnings result, which included a 21% surge in revenues and a 196% increase in statutory profits.

Meanwhile, aerial mapper, Nearmap, was also hot property and saw a new 52-week high last week. Nearmap reported its earnings in the week prior, but clearly investors haven’t quite got over their euphoria.

What does this week look like for the ASX 200?

It looks set to be a quieter week on the ASX boards this week, purely because earnings season is coming to a close. We will see some stragglers on Monday, such as IOOF Holdings Limited (ASX: IFL), but after the last few weeks, I’m sure many investors are looking forward to some eerie calm.

Whether that eventuates is still uncertain though. We have the monthly Reserve Bank of Australia (RBA) board meeting on Tuesday, in which the future cash rate will be determined for the month of September. It’s currently sitting at a record low of 0.25%, but the RBA could well decide to empty its last bullet in the chamber and pull rates down to zero. Expect some market euphoria and perhaps volatility if that does happen.

With that in mind, here is a look at how the major ASX blue chip shares are looking as we start another week. Note the changing price-to-earnings (P/E) ratios as earnings metrics are updated for FY20’s results.

And finally, here is the lay of the land for some leading market indicators:

•     S&P/ASX 200 (XJO) at 6,073.8 points
•     All Ordinaries (XAO) at 6,260.8 points
•     Dow Jones Industrial Average at 28,653.87 points after rising 0.57% on Friday night (our time)
•     Gold (Spot) swapping hands for US$1,964.95 per troy ounce
•     Iron ore asking US$120.18 per tonne
•     Crude oil (Brent) trading at US$45.08 per barrel
•     Crude oil (WTI) going for US$42.93 per barrel
•     Australian dollar buying 73.66 US cents
•    10-year Australian Government bonds yielding 1.01% per annum

Foolish takeaway

With another earnings season (mostly) out of the way, ASX investors can now benefit from having the full range of data for the 2020 financial year available for analysis. I would suggest taking a good look at the reports of all companies you currently hold, as well as any you are looking to add to your portfolio and see how they’ve been tracking during these difficult times.

It might be time to add to any winners and cut your losses on any underperformers. Remember, we are going through an extraordinary time that will likely battle-harden only the best companies on the ASX. If you have a holding that you suspect might not have what it takes to thrive in a post-COVID world, some hard-headed thinking might be necessary. On that note Fool, stay safe out there, stay rational and stay Foolish! Until next week!

More reading

• Polynovo and 2 more ASX 200 shares to watch this week
• These are the 10 most shorted ASX shares
• How to invest in ASX shares in uncertain times?
• 5 things to watch on the ASX 200 on Monday
• Why I would buy these strong ASX dividend shares next week

Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, Ramsay Health Care Limited, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Nearmap Ltd., Reliance Worldwide Limited, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited, Bravura Solutions Ltd, Macquarie Group Limited, and Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Nearmap Ltd., Ramsay Health Care Limited, and Reliance Worldwide 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 ASX 200 Weekly Wrap: Earnings drag ASX back to reality appeared first on Motley Fool Australia.

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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) remains the most shorted share on the ASX with short interest increasing to a sizeable 14.5%. Short sellers continue to increase their positions following its full year results. This may be due to concerns over its valuation in comparison to its medium term outlook.
• Speedcast International Ltd (ASX: SDA) continues to have short interest of 11.7%. Short sellers have done well with this one, but have been unable to closer their positions because the communications satellite technology provider’s shares have been suspended for most of 2020. Speedcast is busy trying to recapitalise after declaring itself bankrupt. It recently made progress, announcing a US$395 million equity commitment to complete its chapter 11 recapitalisation.
• Myer Holdings Ltd (ASX: MYR) has seen its short interest reduce week on week once again to 11.5%. Short sellers have been targeting the department store operator on the belief that the pandemic will ruin its turnaround plans.
• Orocobre Limited (ASX: ORE) has seen its short interest rise slightly week on week at 9%. Last week the lithium miner posted a US$67.1 million loss after tax in FY 2020. This was driven by a sharp decline in lithium prices. Orocobre also launched a $156 million equity raising.
• InvoCare Limited (ASX: IVC) has short interest of 8.9%, which is up materially week on week. Short interest has been building since the release of the funerals company’s half year results. Those results revealed a sharp decline in profits because of social distancing restrictions.
• Inghams Group Ltd (ASX: ING) has 8.6% of its shares held short, which is down sharply week on week. Short sellers may be closing positions on the belief that the poultry producer is now over the worst of its problems following its full year result. Inghams reported a 68.2% drop in profits for FY 2020.
• Nearmap Ltd (ASX: NEA) is back in the top ten with short interest of 7.5%. Short sellers may be regretting this one. The aerial imagery technology and location data company’s shares have been strong performers since the release of its full year results. So much so, last week they hit a 52-week high.
• Corporate Travel Management Ltd (ASX: CTD) has short interest of 7.7%, which is up slightly week on week. Once again, short sellers may regret this one. The travel company’s shares are up 79% in August.
• CLINUVEL Pharmaceuticals Limited (ASX: CUV) has seen its short interest reduce slightly to 7.7%. Last week the biopharmaceutical company’s shares sank lower following a disappointing full year result.
• Bank of Queensland Limited (ASX: BOQ) has seen its short interest rise slightly to 7.5%. Some short sellers appear to believe the worst is not over yet for the regional bank.

More reading

• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• These were the best performing ASX 200 shares last week
• The Corporate Travel share price has nearly doubled in August
• Is today’s Nearmap share price a buy?
• ASX shares are on track for new record highs. Here’s why…

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Nearmap Ltd., and Webjet Ltd. The Motley Fool Australia has recommended InvoCare 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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It may be really tricky to invest in ASX shares during these uncertain times.

A share price is meant to represent the prospects of a business for the foreseeable future. Many share prices are riding high, yet there’s still a lot of uncertainty. How are you meant to invest in this environment?

Reporting season is coming to an end and it has been quite illuminating.

There are plenty of businesses that you may not have thought that they’d do really well during a recession caused by a pandemic. But they are doing well. 

ASX shares like Harvey Norman Holdings Limited (ASX: HVN), JB Hi-Fi Limited (ASX: JBH), Adairs Ltd (ASX: ADH) and Nick Scali Limited (ASX: NCK) all reported impressive second half results. These retailers are not exactly providing what you’d say are ‘essential’ products. The Australian consumer has been spending a lot of money over the past few months.

We can see that retail strength coming through in the performance of the buy now, pay later companies such as Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). The valuations of Afterpay and Zip have gone sky high thanks international growth plans. Will they ever make a decent profit? Does it matter?

Returns are what matters

Ultimately, the most important thing that investors get judged on is returns.

It’s the portfolios of holdings like Afterpay, Zip, Kogan.com Ltd (ASX: KGN), Pointsbet Holdings Ltd (ASX: PBH), Megaport Ltd (ASX: MP1) and Nextdc Ltd (ASX: NXT) that have delivered the strongest results over the past year.

If you owned those ASX shares then you’ll have done really well with them. But those are past returns. Are they still good buys? Is it time to take profit off the table? Will cheaply priced shares finally outperform? These are impossible questions to answer because the future is unknowable. It’s particularly difficult to predict right now because of the different outcomes that could happen. 

Another four years of a Trump presidency looks very different to a Biden presidency. The world (and share market) could be very different if a safe and effective vaccine for COVID-19 is created compared to if a vaccine proves impossible to develop.

Investing in ASX shares should consider a range of potential outcomes. A share price shouldn’t be priced as though only the best outcome is the only outcome that’s certain.

Interest rates

Interest rates going down goes some way to justifying today’s prices. Valuations are meant to be higher when interest rates are lower. Businesses that can create growth in a low growth world are going to be highly desirable.

The RBA interest rate is now just 0.25%, which is extremely low. Australia’s central bank has commented several times that the interest rate isn’t going to go negative like other central banks. The RBA has also said that the interest rate is going to stay low for a few years. That’s helpful for valuations. 

It may be a mistake to think that the interest rate will stay lower forever. But I can’t see the RBA deciding to suddenly send the interest rate up quickly either – that would probably be bad for the economy. The RBA has been carefully trying to manage the economy for a number of years, I don’t think it’s suddenly going to throw caution to the wind.

So, what to do about investing in ASX shares?

Don’t forget that some ASX shares are posting big numbers – investor excitement has been vindicated.

There’s an interesting question about what will happen when government support like jobkeeper ends.

There are lots of things to be uncertain about. But share prices keep rising and you’d have missed out on a lot of gains if you stayed in cash. If you can find businesses that you think are good value then I think you just have to go for it. Businesses can keep growing even if there are negative things going on.

Investing is about the long-term, not just what happens in the next few months. I’m sure there will be some volatility when it comes to the US election. But I think there are opportunities. ASX shares like Citadel Group Ltd (ASX: CGL) and Pushpay Holdings Ltd (ASX: PPH) are businesses that I think have very compelling futures, even with what’s going.

More reading

• Where I’d invest $10,000 right now in ASX shares
• 3 stellar ASX growth shares to buy right now
• Why I’d buy Afterpay and other ASX tech shares at record highs
• ASX 200 drops 0.9%, Costa reveals healthy result
• ASX Stock of the Day: Pointsbet share price surges 77% on NBC deal

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 and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Citadel Group Ltd, Kogan.com ltd, MEGAPORT FPO, and Pointsbet Holdings 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.

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On Friday the S&P/ASX 200 Index (ASX: XJO) was out of form and finished the week deep in the red. The benchmark index fell 0.85% to 6,073.8 points.

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

ASX 200 to drop lower.

The ASX 200 looks set to start the week in the red. According to the latest SPI futures, the benchmark index is expected to open the week a disappointing 40 points lower. This is despite Wall Street finishing the week strongly on Friday. The Dow Jones climbed 0.6%, the S&P 500 rose 0.8%, and the Nasdaq pushed 0.6% higher.

Fortescue shares trade ex-dividend.

The Fortescue Metals Group Limited (ASX: FMG) share price is likely to tumble lower today when it trades ex-dividend for its final dividend. The iron ore producer is paying shareholders a final fully franked $1.00 per share dividend. This equates to a 5.3% dividend yield, which could mean its shares fall by a similar margin.

IOOF results and potential AMP acquisition.

The IOOF Holdings Limited (ASX: IFL) share price will be in focus this morning when the financial services company announces its full year results. According to CommSec, the market is expecting a net profit after tax of $132.6 million. The company is also planning to announce a potential significant transaction. There is speculation the company could be interested in acquiring AMP Limited (ASX: AMP).

Oil prices mixed.

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) will be on watch after a mixed end to the week for oil prices. According to Bloomberg, on Friday night the WTI crude oil price fell 0.15% to US$42.97 a barrel and the Brent crude oil price rose 0.45% to US$45.81 a barrel. Oil prices have now recorded gains for six out of the last seven weeks.

Gold price jumps.

The shares of Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could be storming higher today after a strong finish to the week for the gold price. According to CNBC, the spot gold price jumped 2.2% to US$1,974.90 an ounce. U.S. dollar weakness supported the price of the precious metal.

More reading

• Unlikely ASX stock winners from the change in the Fed’s inflation policy
• Top brokers name 3 ASX shares to sell next week
• ASX reporting season heroes to buy for FY21
• 5 things to watch on the ASX 200 next week
• My top 5 ASX shares to buy in 2020

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

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Although the Australian share market came under pressure on Friday, it didn’t stop a number of shares from climbing to new highs.

Three ASX shares that hit new multi-year highs or better are listed below. Here’s why they are flying high:

Catapult Group International Ltd (ASX: CAT)

The Catapult share price climbed to a multi-year high of $2.32 on Friday. Investors have been buying this sports analytics and wearables company’s shares following the recent release of a strong FY 2020 result. Catapult reported a 6% increase in revenue to $100.7 million, thanks to an impressive 21% lift in its subscription revenue to $77.6 million. Things were even better for its operating earnings. Catapult delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of $13.3 million in FY 2020. This was an improvement of $9.2 million and driven by the continued strong subscription revenue growth and a decline in operating expenses. Looking ahead, management continues to expect the company to be cash flow positive in FY 2021.

Marley Spoon AG (ASX: MMM)

The Marley Spoon share price continued its meteoric rise and reached a record of $3.80 at the end of last week. The catalyst for this was the global subscription-based meal kit provider’s half year results. Thanks to the rapid adoption of its offering during the pandemic, Marley Spoon delivered an 89% increase in half year revenue to 116.2 million euros. This led to management upgrading its guidance for the full year to 80% to 100% revenue growth. Another positive was that this strong form means Marley Spoon is now cash flow positive.

Splitit Ltd (ASX: SPT)

The Splitit share price hit a record high of $1.92 on Friday. Investors have been buying the buy now pay later provider’s shares amid increased investor interest in the industry. This means Splitit is now valued over $700 million, despite generating only US$2.4 million of revenue in the second quarter of FY 2020. This looks very excessive to me, especially given its unusual focus. Most buy now pay later companies are leveraging the dislike for credit cards that younger consumers have. Yet Splitit is a payment method solution that allows customers to pay for purchases with an existing credit card by splitting the cost into interest and fee free monthly payments. I feel this gives it a far more limited market opportunity, not least given the declining number of active credit cards.

More reading

• Marley Spoon share price on watch after upgrading revenue guidance
• On a day when the ASX 200 is going nowhere, these popular “coronavirus shares” are hitting record highs
• Brokers name 3 ASX shares to buy right now
• If you invested $8,500 in this ASX share 6 months ago, you’d have $100,000 now
• Catapult share price in focus after strong FY 2020 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 and recommends Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International 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.

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As I mentioned here earlier today, the Reserve Bank is expected to keep the cash rate on hold at a record low of 0.25% on Tuesday.

And unfortunately for income investors, this is expected to remain the case for the next three years.

In light of this, I believe income seekers ought to consider investing in some of the high quality dividend shares on the ASX in order to generate a sufficient income.

Two that I would buy next week are listed below:

BWP Trust (ASX: BWP)

The first ASX dividend share to buy is BWP. This real estate investment trust invests in and manages commercial properties throughout Australia. While times are hard for many property companies because of the pandemic, BWP has not only come out of it unscathed, but arguably stronger. This is because the majority of its properties are leased to hardware giant Bunnings, which has been a strong performer during the pandemic. So much so, BWP Trust recognised a $93.6 million increase in the gains in fair value of its investment properties in FY 2020. Overall, given the strength of the Bunnings business, I believe BWP is well-placed to grow its distribution at a solid rate in the future. Based on the current BWP share price, I estimate that it offers investors a forward 4.5% yield.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share I would buy is Telstra. Thanks to its ongoing operating cost reductions, improving industry conditions, the arrival of 5G, and the easing NBN headwind, I believe Telstra’s outlook over the coming years is looking very positive. And while the pandemic is weighing on its performance, particularly with roaming revenues, I’m confident it will make a long awaited return to growth in the next two to three years. Opinion is divided on the dividend it will pay in FY 2021. I’m optimistic it will adjust its policy and maintain a 16 cents per share dividend. However, the worst case scenario of a cut to 12 cents per share wouldn’t be a disaster. Based on the current Telstra share price, these equate to attractive fully franked yields of 5.5% and 4.15%, respectively.

More reading

• 5 top ASX dividend shares you should never sell
• ASX giants say cutting staff hours will save jobs
• Beat ultra low interest rates with these top ASX dividend shares
• What are dividend shares and how do you find them?
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower

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

The post Why I would buy these strong ASX dividend shares next week appeared first on Motley Fool Australia.

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