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There are a number of defensive ASX shares that I’d be happy to buy for my portfolio.

However, plenty of them are trading quite expensively, so I’d only want to buy businesses that are trading at a good price.

Here are three quality ASX share options:

TPG Telecom Ltd (ASX: TPG)

It’s now one of Australia’s biggest telecommunications businesses. TPG and Vodafone Australia recently merged – the combined business now has a strong presence in both home internet and mobile connections.

The combined business should be able to extract pleasing cost synergies. One big bonus is that it only needs to build one 5G mobile network, rather than two. The business will also be able to cross-sell its mobile offering to broadband customers, and the broadband customers can be offered a mobile deal.

Telecommunications is a defensive industry, so TPG could be called a defensive ASX share with steady monthly revenue from customers.

I think TPG could become the most efficient big telco with the influence of the former TPG business. The combined business plans to pay out larger regular dividends for investors, which will boost total returns.

TPG’s share price has fallen 9% since 30 June 2020, so this could be a good time to buy. 

Magellan Global Trust (ASX: MGG)

Magellan is a listed investment trust (LIT) which is focused on global shares. The LIT is operated by the high-performing Magellan Financial Group Ltd (ASX: MFG).

It aims to invest in the highest-quality shares in the world. It doesn’t go for ASX shares. Some of its biggest investment include technology companies like Alibaba, Alphabet, Microsoft, Tencent, Facebook, Visa and Mastercard. These businesses are in the right industries to weather the terrible global impacts of COVID-19.

However, Magellan Global Trust also owns a number of defensive positions to protect the portfolio against negative market movements. Magellan Global Trust owns businesses like Atmos Energy, Eversource Energy, Xcel Energy and Reckitt Benckiser.

At the end of July 2020 it had a relatively large cash position to defend against downside market movements. It had a cash weighting of 18% at 31 July 2020. 

Its net returns over the longer-term have been quite strong. Since inception its portfolio has produced net returns of 11.8% per annum, outperforming the MSCI World Net Total Return Index by 1.7% per annum.

I like the global diversification offered by this ASX share and it generally performs better than the index.

As a bonus, the LIT targets a 4% distribution yield which is decent for income investors.

The Magellan Global Trust share price is trading at a 3.4% discount to its current indicative net asset value (NAV).

Rural Funds Group (ASX: RFF)

Real estate investment trust (REITs) generate defensive regular rental income from tenants.

However, this COVID-19 period has been difficult for most REIT sectors including shopping centres and office buildings.

But farmland is more defensive, everyone needs to eat food after all. However, as the landlord, Rural Funds doesn’t have the operational risks like the tenant does. Even so, Rural Funds owns sizeable water entitlements which can be used by tenants.

The ASX share generates attractive cash rental profit whilst steadily investing in its farms to improve them to create higher rental earnings. The defensive ASX share also benefits from contracted rental increases which are either a fixed 2.5% per annum, or it’s linked to CPI inflation, plus market reviews.

Rural Funds aims to increase its distribution by 4% per annum, which is more than inflation.

At the current Rural Funds Group share price it offers a distribution yield of 5.1%.

Foolish takeaway

Each of these defensive ASX shares have attractive defensive attributes. I think Rural Funds is the most defensive, but it’s trading at a decent premium to its NAV whereas Magellan Global Trust is trading at a discount, so it would be the one I’d go for first.

More reading

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Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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 Damstra Holdings Ltd (ASX: DTC) share price is today falling as the company released its results for the financial year ended 30 June 2020 (FY20). Damstra’s share price is currently trading 5.64% lower at $1.84 per share.

Damstra is an Australian-based provider of integrated workplace management solutions to multiple industry segments across the globe. The company develops, sells and implements integrated hardware and software-as-a-service (SaaS) solutions in industries where compliance and safety are important.

How did Damstra perform in FY20

In Damstra’s FY20 results, the workplace management provider delivered a record full-year performance with revenue and other income of $23.5 million – a 47% increase on FY19.

The company also announced pro forma earnings before interest, taxes, depreciation and amortisation (EBITDA) of $6.8 million, significantly higher than the prior corresponding period’s $1.8 million.

Damstra points to existing client project rollout, multiple new clients, new product sales and international revenue growth as drivers for the strong numbers. This has seen the company’s revenues grow 42% per year over the last 3 years.

The number of clients the company services increased to 279, representing a 116% increase. This increase was likely in part due to Damstra’s acquisition of Vault.

Damstra reported there was no reduction in demand for its services even during the height of the pandemic. 

Also of note was Damstra’s continued strong spending on research and development (R&D). The company spent $2.2 million on research to position itself well for future growth. Using R&D and acquisitions, Damstra has already increased its number of products from 14 (2018) to 28 this year. Some of the products developed include topical temperature detection software and fever detection integrated with facial recognition.

However, despite impressive reporting growth, investors were clearly expecting more as the Damstra share price is currently trading 5.64% lower.

Balance sheet strength

Damstra’s balance sheet increased to $9.4 million, following its capital raise and strong underlying operating cash flow in FY20. The increase in receivables and income received in advance reflected the revenue growth generated in the period. Damstra continues to operate on a long-term, debt-free basis, as its strong availability of cash underpins its ongoing growth.

On that note, the company announced there would be no dividend, with cash to be reinvested in growth.

Outlook

Looking forward, the company anticipates an increase in demand for its services and an expanded product offering. In FY21, this is expected to be underpinned in Australia by federal and state funding for major infrastructure projects, whilst increased pressures to manage COVID-19 will support a North American expansion.

The company has provided guidance of $33 million–$35 million for FY21 revenue.

At the time of writing, the Damstra share price is almost 6% lower for the day, although it is up 49% on this time last year. 

More reading

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• Life360 share price surges 9% on strong growth results

Daniel Ewing owns shares of Damstra Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra 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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The Clinuvel Pharmaceuticals Limited (ASX: CUV) share price has come under pressure following the release of an underwhelming full year result.

At the time of writing the biopharmaceutical company’s shares are down 4% to $22.30.

What happened in FY 2020?

Clinuvel’s strong growth came to a halt in FY 2020 after the coronavirus pandemic led to a slowdown in sales of its novel drug Scenesse.

Scenesse is used to increase pain-free light exposure in adult erythropoietic protoporphyria (EPP) patients with a history of phototoxicity. The company appears to believe that demand remained strong in FY 2020 despite lockdowns keeping people inside. Instead, it has blamed the softer sales on EPP sufferers being turned away from hospitals while they focused on COVID-19 sufferers.

Whatever the reason, after delivering an 11% increase in sales in the first half, its sales growth slowed markedly in the second. This led to Clinuvel reporting total revenue of $32.565 million, an increase of 4.8% or $1.5 million year on year. This is particularly disappointing given its launch in the massive United States market during the financial year.

Growing at a much quicker rate was Clinuvel’s expenses. They increased by $6.4 million or ~44% to $20.8 million in FY 2020. Management explained that this was a deliberate and controlled increase. These costs relate to research and development, commercialisation, clinical studies, regulatory fees, and personnel.

Management commented: “The increase in overall expenditures reflects the Group’s focus to further invest in its commercial rollout to treat patients in the EU and, for the first-time, the USA.”

This ultimately led to Clinuvel reporting a net profit after tax of $16.65 million, down over 8% from FY 2019.

Management commentary.

Clinuvel’s CFO, Darren Keamy, commented: “The Company has continued to meet its objectives to provide treatment despite the monumental societal changes which occurred in early 2020. While many healthcare facilities came to a standstill and focussed on critically ill COVID-19 patients, we managed to continue the supply of SCENESSE to EPP centres both in Europe and the USA.”

“Today’s results demonstrate not only an ability to maintain discipline in expenditure and cash management, but also a strength in managing our expenditure levels as a means to invest in future growth. In maintaining sufficient working capital to withstand adverse market conditions, and without further diluting shareholders or assuming debt, we have delivered a return on equity of 23 percent,” he added.

No guidance has been given for the year ahead.

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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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The Life360 Inc (ASX: 360) share price has surged almost 9% higher today following the release of its half year financial results.

Based in San Francisco, Life360 operates a market-leading mobile app that connects families by helping them stay safe, keep in touch and protect each other. 

What were the half year results?

Life360 delivered normalised revenue growth of 57% year-on-year (YoY) to US$38.7 million. This included a non-recurring adjustment of US$0.9 million relating to the deferral of subscription revenue.

The statutory earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped US$7.1 million, a 57% YoY improvement.

The company increased its global monthly user-base (MAU) by 25.2 million, up 9% YoY. 

Furthermore, cash from operating activities improved -US$5.5 million from -US$16.7 million in the prior corresponding period. This was due to strong growth in customer receipts and reduced investment in user acquisition. However, it was somewhat offset by higher research and development expenses. Life360 finished the half year with net cash of US$58.4 million and no debt.

Outlook for the Life360 share price

Life360 expects a revenue of US$79–US$82 million in calendar year 2020 and an underlying EBITDA loss of US$10 million–US$14 million, excluding share-based compensation. Operating cash flow is expected to range from US$10 million to US$14 million. 

Looking forward, the company is cautious. The coronavirus pandemic has created significant uncertainty in the US and globally. However, its business model has been resilient despite an initial decline in maonthly active users in April. 

A new membership offering is delivering strong new subscriber growth. Furthermore, Life360 has resumed new marketing activities that will accelerate as conditions return to normal. 

Life360 CEO Chris Hulls said the average revenue per paying circle (ARPPC) for the company’s new cohort of membership subscribers had lifted 33% in the first month since full launch in mid-July. Legacy subscribers were grandfathered on their previous plans, so it will take some time for this increase to be reflected in overall ARPPC.

At time of writing, Life360 share price is trading at $4.03 per share, a jump of 8.92% today. 

More reading

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Motley Fool contributor Matthew Donald 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 Prospa Group Ltd (ASX: PGL) share price and profit results show that the battle between fintech and ASX banks isn’t one sided.

Lots have been written about how new nimble technology players will eat the lunch of traditional banks like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd. (ASX: NAB).

But the small cap business lender’s results showed it is on the wrong side of the technology divide. While several tech stocks like the Afterpay Ltd (ASX: APT) share price have surged in this COVID-19 socially distanced world, Prospa is feeling the heat.

COVID-19 dents demand for credit

Loan originations in FY20 have fallen by around $50 million to $450.9 million compared to last year while earnings before interest, tax, depreciation and amortisation (EBITDA) crashed to a loss of $19.5 million. This compares to an EBITDA loss of $800,000 in FY19.

It’s a tough time for any company that depends on small and medium companies. The sharp and sudden recession has hit SMBs hardest.

What’s more, this sector is unlikely to bounce back anytime soon, in my view. That means weak demand for business credit from the smaller end of town.

Silver lining to Prospa’s profit results

There are a few bright spots for Prospa though. If you excluded the financial impact from the coronavirus outbreak and other one-off items, underlying EBITDA would have been a positive $4 million.

Further, total revenue jumped 4.2% to $142.1 million. Just don’t count on more growth in FY21 as the gains all came before COVID-19 struck.

On the other hand, the group is only setting aside $18 million in additional provisioning for potential bad debts. The economic impact from the pandemic on its customers isn’t as bad as management initially expected and customer repayments are holding up relatively well.

Growing debt pile

Management also pointed out that total unique customers in Australia and New Zealand continue to increase and is up 43.5% compared to FY19. Prospa claims to have lend more than $1.6 billion to over 28,750 customers since it started.

Not only has the total number of customers gone up, but average gross loans have jumped 35.7% over the previous year to $433.3 million. Let’s just hope its borrowers can continue to service their obligations, especially after COVID support expires.

How Prospa’s balance sheet is holding up

Management also believes it holds a strong balance sheet with $55.3 million in unrestricted cash versus $29 million in FY19.

Its funding partners are still backing the group and Prospa claimed it held $114.1 million of available facilities with total third-party facilities amounting to $442.9million.

More uncertainty on the horizon

“Management have taken steps to ensure Prospa has the right foundations to manage the impact of COVID-19,” said Prospa’s chair Gail Pemberton.

“While momentum in FY20 slowed due to the impact of COVID-19 in the final quarter, we believe it will be restored as the economy and the small business sector recovers.”

The company declined to provide a guidance due to the volatile conditions but committed to providing quarterly updates through FY21.

The Prospa share price slumped 11.1% to $80 cents in after lunch trade.

More reading

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Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia and National Australia Bank Limited. Connect with me on Twitter @brenlau.

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

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The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is out of form on Thursday and acting as a drag on the S&P/ASX 200 Index (ASX: XJO).

At the time of writing the banking giant’s shares are down 1% to $18.38.

Why is the ANZ share price dropping lower?

As well as general weakness in the banking sector today, this morning ANZ announced the impending retirement of its chairman.

According to the release, David Gonski has decided to retire as ANZ’s chairman after being in the role for the last six and half years.

The bank has acted swiftly and has already found a successor. It revealed that Paul O’Sullivan will succeed David Gonski as its chairman following the finalisation of its full year results on 28 October 2020.

Who is ANZ’s new chairman?

Mr O’Sullivan is a very experienced executive. He is currently the chairman of Western Sydney Airport Corporation, Chairman of Optus, and a director of Coca-Cola Amatil Ltd (ASX: CCL).

In addition to this, he has previously held senior executive roles with Singapore Telecommunications (Singtel) and was the CEO of Optus between 2004 and 2012. He is also a director of the St George & Sutherland Medical Research Foundation, the National Disability Insurance Agency, and St Vincent’s Health Australia.

Mr O’Sullivan appears up for the challenge of improving ANZ’s operations and simplifying the business.

He commented: “My focus as Chairman will be to continue the work we have been doing over many years to improve our operations and simplify the bank to benefit not only the owners of our company but also our customers and our staff.”

“The banking industry is at an important inflection point as we do all we can to help the economy recover from the impacts of COVID-19 and ANZ will remain committed to that cause,” Mr O’Sullivan added.

“The right time to hand over the reins”.

Outgoing chairman, David Gonksi, explained the reasoning behind his exit.

Mr Gonski said: “I feel it’s the right time to hand over the reins. We have in place an experienced, diverse and talented management team as well as having made significant progress on our ambitions to simplify and improve our operations. Importantly, we have also taken steps to improve the governance around matters impacting our reputation, including the now well established EESG1 Board committee.”

“I’m delighted Paul has agreed to succeed me as Chairman. Paul is an outstanding director who has already made a strong contribution to ANZ and I’m confident he will do an excellent job leading the Board as we continue to work for the benefit of our shareholders,” Mr Gonski concluded.

More reading

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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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Over the coming 12 months, the stock of Apple (NASDAQ: AAPL) is headed more than 20% higher from Tuesday’s closing price. So says Wedbush Securities analyst Dan Ives, who raised the stock’s price target to a street-high $600 on Wednesday, and that could be just the beginning. Ives’ bull case has Apple stock climbing more than 40% to $700, pushing its market cap to nearly $3 trillion. 

He cited Apple’s “once in a decade” opportunity in the coming 12 to 18 months, saying that more than one-third of iPhone users could upgrade. The ongoing rollout of 5G, the next generation of cellular technology, will be the catalyst for this upgrade cycle. This would amount to as many as 350 million users of an estimated 950 million buying the upcoming iPhone, in what many analysts have dubbed the “super cycle.”

Apple’s services business will also be a key driver over the next couple of years, the analyst said, generating more than $60 billion in revenue in 2021. This is a testament to the company’s ongoing ability to monetize its existing customer base, and it remains a linchpin of the company’s future growth. 

Ives also cites the impressive contributions from the wearables segment, which he calls “eye popping.” After selling 65 million AirPods in 2019, that number could soar to 90 million this year, an increase of 38%.

Apple’s $2 trillion market cap and its pending stock split have driven increased interest from investors, pushing the stock price to $500, topping Ives’ previous target.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Danny Vena owns shares of Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia has recommended Apple. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Starpharma Holdings Limited (ASX: SPL) share price has been on fire on Thursday following its full year results release.

The dendrimer products developer’s shares jumped to a 52-week high of $1.51 at one stage.

How did Starpharma perform in FY 2020?

As you might have guessed from the strong share price gain, Starpharma was on form in FY 2020 and delivered a solid full year result.

For the 12 months ended 30 June 2020, the company reported a 162% increase in revenue and other income to $7.1 million. This was driven by VivaGel product sales and royalties and a $4.34 million milestone payment by AstraZeneca for the first dose of AZD0466 administered in the phase 1 trial of its first DEP product.

Despite this increase in revenue, Starpharma’s loss increased by $0.4 million to $14.7 million in FY 2020. Management advised that this reflects the expensing of all research and development expenditure and patenting costs associated with VivaGel and DEP programs. The company now has three phase 2 assets in its clinical product portfolio.

Nevertheless, Starpharma finished the year in a strong financial position with a cash balance of $30.1 million.

“An extraordinary period”.

Starpharma’s CEO, Dr Jackie Fairley, commented: “The past year has been an extraordinary period for all of us.”

“While COVID-19 has impacted companies around the world, Starpharma was able to achieve a number of important milestones during the year, including: significant progress with our internal clinical-stage DEP assets with three products now in phase 2; advancing multiple new development programs, including in antivirals and radiotherapy; in addition to several product launches of VivaGel BV in the UK, Europe and Asia,” she added.

COVID-19 nasal spray.

The company also provided some commentary on its SPL7013 product candidate which was tested and found to have significant activity against SARS-CoV-2. This is the coronavirus that causes COVID-19.

Dr Fairley commented: “As the pandemic emerged we also identified an opportunity for a preventative SPL7013 COVID-19 nasal spray. We already knew SPL7013 has broad spectrum antiviral activity, and undertook further testing which established it has significant activity against SARS-CoV-2.”

“In a short period of time we have been able to develop nasal formulations, select a manufacturer and appropriate device components, and have undertaken pilot manufacture. We have also held discussions with regulators and confirmed a rapid development pathway. Feedback from key opinion leaders confirms that a SPL7013 antiviral nasal spray could be an important addition in preventing the transmission of COVID19 and complementing vaccine-based strategies,” she explained.

Outlook.

No guidance was given for the year ahead, but another busy one is expected.

Dr Fairley concluded: “In the year ahead, we will continue to advance our clinical DEP assets and expand our portfolio by moving up our preclinical programs and explore value-adding combinations to increase the market opportunities. Starpharma is well positioned for further growth as we achieve further approvals and launches in our VivaGel portfolio, as well as accelerating the development of our COVID-19 nasal spray.”

More reading

• Starpharma share price bolts 14% on COVID-19 nasal spray
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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 Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings 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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After a few weeks of fury and frenzy over gold prices, ASX investors seem to have moved on to bigger and better things. I get it. When gold falls from record highs of more than US$2,089 an ounce to today’s price of US$1,943, shares like Zip Co Ltd (ASX: Z1P) – which shot up more than 27% just yesterday – are just more interesting. It’s funny how it’s only when an asset is reaching record high prices that everyone wants a piece of the action.

But now that the market for the precious metal has cooled somewhat, is this pullback in the gold price a buying opportunity for gold, gold exchange-traded funds (ETFs) or gold mining shares?

Does gold still glitter?

The gold price is now down around 7% from the all-time highs reached earlier this month on 7 August. Even so, it remains above the previous all-time high of US$1,921 an ounce that held between 2011 and August 2020.

Gold miners (themselves a leveraged bet on the gold price) have also fallen over the past month. The ASX’s largest gold digger Newcrest Mining Ltd (ASX: NCM) is trading for $32.23 today (at the time of writing), down more than 12% since 6 August. Other gold miners have faired similarly. Saracen Mineral Holdings Limited (ASX: SAR) is down 19% over the past month, whilst Northern Star Resources Ltd (ASX: NST) is down more than 15%.

On one level, this isn’t an extraordinary move. Global share markets have had a very good August so far. The S&P/ASX 200 Index (ASX: XJO) is up 3.7% so far this month, whilst the flagship American index the S&P 500 is up 6.5%. Gold is traditionally a ‘risk-off’ asset, which means it tends to fall in value when ‘risk-on’ assets like shares are rising.

But I still think there’s room for the gold price to climb higher. And if I’m right, this small pullback we have seen in August might represent a good buying opportunity if you missed the boat on the last gold rally.

I still think gold has room to climb because the factors that drove gold’s rally from around US$1,519 an ounce at the start of the year to today’s levels haven’t gone away.

The coronavirus pandemic is still (unfortunately) wreaking havoc around the world, despite the recent performance of global share markets.

Central banks are still printing unprecedented levels of monetary stimulus.

And interest rates are still at record lows, both in Australia and around the world.

Foolish takeaway

If this current rally that we’re seeing in shares abates, I would expect interest in the gold price to pick up once more. And if that happens, it might be too late to get in at the prices that gold-related assets are seeing today. Long story short, if you want to have some exposure to gold in your portfolio but you missed your chance last time, today might be a good day to take the plunge.

More reading

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Sebastian Bowen owns shares of Newcrest Mining Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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 is on the rise again today, up 1.5% in early afternoon trading. That puts Sezzle’s share price gain just shy of 52% so far in August. And shares have gained 523%, year-to-date.

In comparison, the All Ordinaries Index (ASX: XAO) is up 4.5% in August and down 7.0% in 2020.

With its blistering year-to-date share price gain, you might think Sezzle was somehow immune to the COVID-19 panic selling that rattled most shares on the ASX. Yet Sezzle suffered even more than most, putting the faith of its loyal shareholders to the ultimate test when its share price crashed 80% from 27 February through to 23 March.

Shareholders with the nerve to hold on — or those fortunate enough to buy on 23 March — were amply rewarded though. Sezzle’s share price is now up 2,697% from that low. Yes, you read that right.

What does Sezzle do?

Sezzle is a leading company in the booming buy now, pay later (BNPL) field, listed on the ASX and based in the United States. The company’s technology provides a payments platform for simple and secure payments between retailers and their customers.

Sezzle’s BNPL model allows customers to purchase products interest free, repaying the money via a short-term instalment plan over 4 equal payments spread across 6 weeks. The first payment is made at checkout with the rest paid on a fortnightly basis. The retailers receive the purchase price from Sezzle, for which Sezzle charges a processing fee.

The company has expanded rapidly in the BNPL space, with roughly 1.5 million active users and more than 16,000 participating retailers globally.

Sezzle shares first traded on the ASX in August 2019.

Why has the Sezzle share price soared 52% in August?

There’s no single reason pointing to Sezzle’s remarkable share price performance this month, and indeed since 23 March.

Sezzle operates in the fast growing BNPL space. And investors are pricing considerable future growth into the trend of paying for your purchases in interest free instalments.

The company has been performing well, reporting a 57.5% increase in its underlying sales for the June quarter. Its $86 million capital raising included a $7.2 million share purchase plan for eligible shareholders. On 7 August the company announced the plan was oversubscribed, indicating the strong ongoing interest in the BNPL provider.

The Sezzle share price will be one to watch next week. The company reports its half year results for the year ending 30 June on Monday 31 August.

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Bernd Struben 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 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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