Tag: Motley Fool

One area of the market which has been on fire in 2020 has been the gold sector.

Since the start of the year the S&P/ASX All Ordinaries Gold index (ASX: XGD) has climbed an impressive 27%.

This strong gain has of course been driven by the appreciating gold price due to a number of factors. These include increased demand for safe haven assets, market volatility, ultra-low interest rates, and a weakening U.S. dollar.

The price of the precious metal has been in such strong form that earlier this month it broke through the US$2,000 an ounce mark to reach a record high.

But it’s not only the gold miners that have been profiting from the rise in the gold price. Australian retail investors have been flocking into the sector and look to have made a killing.

What are retail investors buying?

Gold miners Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR) appear to have been particularly popular with retail investors.

According to Northern Star’s annual report, there are 9,552 Northern Star shareholders that have a holding of 1 to 1,000 shares. This represents 52.45% of its shareholders and compares to 6,056 shareholders a year earlier.

Based on the current Northern Star share price, this means over half of the gold miner’s shareholders have holdings of less than $14,000.

It is a similar story for Saracen Mineral. Its FY 2020 annual report shows that 5,955 or 37.2% of its shareholders own 1 to 1,000 shares. With the current Saracen share price at $5.37, this means over one-third of its shareholders have holdings of $5,370 or lower. This is also up strongly year on year.

And if you extend this out to shareholders with 1,001 to 5,000 shares, this increases by a further 5,786 shareholders. Combined, that’s 11,741 shareholders or 73.4% of its total register with shareholdings worth under $26,850. Clearly, interest in Saracen has been strong with retail shareholders based on these figures.

But how have they fared?

It’s fair to say that these investors have done very well by investing in the gold sector.

The Northern Star share price is up 25% year to date and the Saracen share price has zoomed a massive 61% higher in 2020.

And we’re only in August.

More reading

• 3 ASX results you might have missed on Wednesday
• Northern Star share price drops lower despite record profit and special dividend
• The latest ASX stocks upgraded by brokers to “buy” today
• Why Cochlear, Kogan, Megaport, & Northern Star shares are charging higher
• Warren Buffett is dumping banks and buying gold, should you?

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.

The post Retail investors are flocking to buy ASX gold stocks Saracen Mineral and Northern Star Resources, and they look to have made a killing appeared first on Motley Fool Australia.

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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Catapult Group International Ltd (ASX: CAT)

According to a note out of Morgans, its analysts have retained their add rating and lifted the price target on this sports analytics and wearables company’s shares to $2.44. Morgans was pleased with Catapult’s performance in FY 2020 and particularly its positive free cashflow. It was also happy with its low levels of churn during the pandemic and sees a long runway for growth ahead of the company. I think Morgans makes some good points and Catapult would be worth a closer look.

IDP Education Ltd (ASX: IEL)

A note out of UBS reveals that its analysts have retained their buy rating and lifted the price target on this student placement and language testing company’s shares to $21.00. The broker notes that IDP delivered a stronger than expected result in FY 2020 thanks largely to its excellent cost control. It also notes that demand for its services remains strong and expects the company to come out of the crisis in an even stronger market position. I agree with UBS and would be a buyer of IDP Education’s shares.

Pro Medicus Limited (ASX: PME)

Another note out of UBS reveals that its analysts have upgraded this health imaging software company’s shares to a buy rating with a $29.65 price target. UBS was pleased with its better than expected performance in FY 2020 and expects another strong year ahead. Especially given how its sales pipeline continued to grow even during the pandemic. I would have to agree with the broker on this one as well. I think Pro Medicus could be a great buy and hold option.

More reading

• Why IDP Education, IRESS, Mosaic Brands, & Mayne Pharma are dropping lower
• ASX 200 down 0.8%, IDP Education soars
• ASX 200 down 1%: Qantas results, Afterpay hits record high, Webjet crashes lower
• Why Afterpay, Codan, IDP Education, & Sonic shares are charging higher
• Pro Medicus share price drops 5% despite 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 Idp Education Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Catapult Group International Ltd and Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Catapult Group International Ltd and Pro Medicus 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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Finding ASX shares with dividend yields over 7% is a lot harder than it used to be. Gone are the days when at least 2 of the big four ASX banks had a 7% yield on offer. Ditto with other ASX blue chips like Woolworths Group Ltd (ASX: WOW) or Wesfarmers Ltd (ASX: WES).

Even before the coronavirus pandemic hit, record low interest rates saw ASX dividend shares bid to the sky as investors hunted for yield. It’s a big reason why (in my opinion), ‘safe’ dividend shares like Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) both rose by roughly 50% in value between late 2018 and early 2020.

But the game has changed in 2020. The pandemic has crippled the power of many ASX companies to generate profits at the same rates they used to. And dividends are paid out of profits.

So here are 2 ASX shares that still offer investors a grossed-up yield of more than 7% in 2020.

2 ASX dividend shares with high yields

1) Telstra Corporation Ltd (ASX: TLS)

Telstra shares have been on the slide ever since the company released its full-year earnings last week. Investors apparently weren’t too impressed with the 9.7% drop in underlying earnings the company reported for FY2020.

However, one aspect of the announcement was well-received: the continuation of Telstra’s 16 cents per share annual dividend. And because Telstra shares have fallen around 10% over the past week, that dividend is looking a whole lot juicer today.

On current prices, it’s offering investors a trailing yield of 5.26%, or 7.51% grossed-up with full franking. That’s not a bad looking deal for dividend income in my view. I’m also excited bout Tesltra’s upcoming 5G rollout, which could give the company a new source of earnings (and fund higher dividends) in the years ahead.

WAM Research Ltd (ASX: WAX)

WAM Research is a listed investment company (LIC) run by the venerable Wilson Asset Management. It primarily invests in mid-cap ASX companies with growth characteristics or that it finds undervalued. Some of its current holdings include Adairs Ltd (ASX: ADH) and Breville Group Ltd (ASX: BRG). It then uses the gains from this strategy to fill a ‘profit reserve’, from which it pays dividends.

WAM Research’s last dividend came in at 4.9 cents per share, which if annualised gives this company a dividend yield of 7.1%, or 10.14% grossed-up with full franking. Seeing as WAM research still has 27.7 cents per share left in its profit reserve, I would say this dividend is well-covered for at least a couple of years. As such, I think it’s a top choice today for any income investor looking for reliable ASX dividend shares.

More reading

• Where to hunt for ASX dividend share income in 2020
• Why I would buy Telstra and this ASX dividend share today
• Afterpay and Mesoblast were among the most traded shares on the ASX last week
• Have $3,000 to invest? Try these 2 dirt-cheap ASX shares
• Telstra share price hit by broker downgrade today

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited and WAM Research Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Transurban Group, Wesfarmers Limited, 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.

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Overnight (our time), Apple Inc. (NASDAQ: AAPL) achieved an incredible milestone. It became the first publically-listed company in the world to achieve a market capitalisation of more than US$2 trillion (A$2.78 trillion).

On the latest day of trading over in the United States, Apple pushed over US$473 a share, which was enough to seal the deal on the US$2 trillion ceiling.

If you’re struggling to try and get your head around the stupendously massive number that is US$2 trillion, picture this. In 2019, the entire gross domestic product (GDP) of Australia was around US$1.4 trillion. That’s the value of every good and service sold in Australia last year. Yep, one company is worth more than that.

But it’s just another milestone for Apple. It was only just over 2 years ago that Apple was crowned the first US$1 trillion company. And today, the company gets the US$2 trillion crown as well.

It was a close race. There are a few companies that were close contenders for the US$2 trillion title. At the time of writing, Amazon.com Inc. has a market capitalisation of US$1.65 trillion. Microsoft Corporation is on US$1.62 trillion and Alphabet (owner of Google) is on US$1.07 trillion.

But none of these companies ended up getting in the way of Apple’s birthright.

So what is it about this company that is so darn special?

The Apple of investors’ eye

We all know Apple. Even if you don’t have an iPhone, Mac, iPad or set of Airpods, chances are you know someone who does. This statement can probably be applied to almost anyone living in most countries of the world.

This company has built such a phenomenal brand that it has the luxury of charging pretty much whatever it likes for its products. According to Apple’s latest quarterly filing, it has a gross margin (how much of a sale it keeps as profit) of 38%. That’s an incredible metric. It implies that the company makes a luxury-item premium on mass-market products – something most other companies could only dream of.

In my view, Apple’s brand is what has enabled the company to reach US$2 trillion. There are a lot of great brands in the world. Coca Cola, Louis Vuitton, Toyota, Google, Nike… the list goes on. But Apple is a cut above the rest. The kind of loyalty the Apple brand inspires is unrivalled. People literally queue for hours to buy the company’s high-margin products. And there are some people who will buy whatever product Apple releases, just because it’s Apple.  It’s trusted, it’s unique and it’s special.

So when you’re looking for your next investment, you might be tempted to ask yourself ‘is this the next Apple’. In some ways, I think this attitude could be helpful. But at the end of the day, no other company is truly like Apple. That’s why Apple is the sole member of the US$2 trillion club today.

More reading

• These beaten down ASX energy shares could mirror the tech share price boom
• After the stellar COVID-19 rebound, can ASX share prices keep rising?
• Apple to hit US$3 trillion by 2023, analyst predicts
• Want to own the FAANG stocks? Here are 3 ways you can
• Here are the top 5 US shares ASX investors have been buying

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, and Nike and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Nike. 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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Technology company Connexion Telematics Ltd‘s (ASX: CXZ) share price leapt 42% in morning trade today following the release of the company’s full year results for the year ended 30 June. At the time of writing, the Connexion share price was trading at 2.7 cents, up from yesterday’s closing price of 1.9 cents.

Why is the Connexion Telematics share price on the move?

The Connexion share price surged after the company reported total revenue of $8.2 million. That was up 131% from the $3.6 million total revenue reported in FY19.

Net profit after tax (NPAT) also gained strongly, up 587% from the previous financial year to $3.2 million.

Net cash flow grew by 254% to $1.49 million while diluted earnings per share (EPS) leapt 537%. Working capital increased 256% year on year, to $3.35 million.

The company’s tech and support team also expanded by 33%.

Connexion announced that its growth initiatives will be pursed in the 2021 financial year.

What does Connexion do?

Connexion Telematics is an Internet of Things (IoT) technology company working to revolutionise smart car technology. It has commercial agreements with lead players in the automotive industry for its proprietary smart car technologies.

Connexion plans to roll out its products into millions of vehicles over the coming years. It has developed two flagship Software as a Service (SaaS) products, including CXZ Telematics, a cloud-based, integrated vehicle management system. This simultaneously tracks – in real time – all key performance indicators of a vehicle.

The company’s OnTRAC CTP/CTA subscription base averaged 69,000 vehicles for the 2020 financial year.

What did Connexion say?

The company reported it managed to build on positive momentum achieved in 2019 to deliver strong results, despite all the uncertainty throw up by the COVID-19 pandemic.

It continued to provide its SaaS offering, OnTRAC, to General Motors, Courtesy Transportation, and Cadillac’s Courtesy Transportation Alternative. The company noted it’s the only SaaS courtesy transportation solution software used by General Motors, and that barriers to entry are considerable.

Looking ahead, the company plans to continue building on its OnTRAC CTP/CTA SaaS solution with the General Motors dealership network. Optimisation and customisation work are ongoing, which Connexion says will continue to drive increased net revenue in the year ahead.

Outside the General Motors dealership network, the company is pursuing other growth opportunities through external applications with other OEM vehicle dealerships as well as independent software suppliers in Australia and the United States.

More reading

• Brokers name 3 ASX shares to buy right now
• 2 ASX dividend shares with yields over 7%
• Apple becomes first company worth US$2 trillion. Here’s what we can learn
• The Ingham’s share price zoomed up today despite a major drop in net profit
• These beaten down ASX energy shares could mirror the tech share price boom

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

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The Inghams Group Ltd (ASX: ING) share price has surged more than 6.5% in early trade, despite the company reporting a drop in net profit for FY20.

How has Inghams performed in FY20?

Inghams reported a 68.2% drop in net profit of $40.1 million for FY20. The poultry producer also reported a 23.6% fall in underlying profit of $78.8 million for the year. Despite the drop in profit, poultry volumes increased 3.3% to 429,000 tonnes in FY20.

Inghams cited the uncertain trading conditions as a result of the COVID-19 pandemic for the profit fall. The company said the pandemic presented significant challenges to the poultry market, supply chain and operations. However, it noted that full year results were in line with expectations laid out in its May business update.

According to the report, a decline in poultry demand in the fourth quarter interrupted positive momentum from previous quarters, resulting in an over-supply.  Inghams also noted that a 2% decline in New Zealand volume offset a 4.3% growth in Australian volumes for FY20.

Inghams management highlighted the company’s resilience to overcome the challenges of the pandemic. Despite the drop in net profit, Inghams still declared a final dividend of 6.7 cents per share.

What is the outlook for the Inghams share price?

Inghams has an optimistic outlook for the company despite challenges posed by the pandemic. The company said poultry demand continued to show resilience in the market as a preferred protein source.

However, the poultry producer noted that government restrictions during the pandemic would continue to impact consumption.

In addition,  COVID-19 restrictions could reduce capacity due to closures in poultry processing plants. Inghams was forced to close its Thomastown facility for 10 days due to an outbreak last month.

However, the company said its diversified network could maintain supply.

In the short to medium-term, Inghams will focus on its cost base and predictability of supply chains.

Foolish Takeaway

Investors seemed impressed with the company’s full year report this morning, with Inghams share price soaring more than 6.5% in early trade. However, the share price jump has scaled back this afternoon, with shares trading 3.65% higher at $3.41 at the time of writing.

More reading

• These are the 10 most shorted shares on the ASX
• Inghams share price flat despite ACCC update
• These are the 10 most shorted shares on the ASX
• How will Victoria’s stage 4 lockdowns impact ASX shares?
• These are the 10 most shorted shares on the ASX

Motley Fool contributor Nikhil Gangaram 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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If you’ve been betting against technology shares, or just waiting it out on the sidelines as tech share prices boom, you may want to skip ahead a little.

Yesterday, overnight Aussie time, the NASDAQ-100 (INDEXNASDAQ: NDX) hit yet another new record high gaining 1.4%. The index of the largest 100 tech-oriented shares is now up 29% year-to-date, and up 64% from the 23 March low.

As Ed Moya, senior market analyst at Oanda, wrote:

The love for technology stocks grew as the favorite pandemic plays, such as Apple and Tesla saw strong demand. No one wants to short this market, so we are seeing investors just rotate back into technology stocks today.  

The Apple Inc. (NASDAQ: AAPL) share price gained 2.2%, sending its market cap above US$2 trillion (A$2.8 trillion).

Meanwhile the Tesla Inc (NASDAQ: TSLA) share price rocketed 6.6%. Year-to-date, Tesla’s share price is up an eye-popping 365%, and up 454% from its 18 March low. (Short sellers, I did warn you to skip ahead!)

Australia’s tech shares are also on the rise again today. At the time of writing, BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) shares are up 0.68%.

This technology exchange-traded fund (ETF) holds some of Australia’s largest and most innovative tech companies. ATEC’s share price is up 9.13% so far in August and up 100% since its 23 March low. For comparison, the All Ordinaries Index (ASX: XAO) has gained 38% since 23 March.

Clearly, technology shares have been the big winner in 2020. And with the uptrend firmly in place, there’s good reason to remain bullish on the best tech shares.

But if you’re a long-term investor — which I believe is the best way to grow your wealth over time — there are other shares you may want to look at adding to your portfolio.

It hasn’t been a great year for ASX energy share prices

When the price of the resource you produce dives, your share price tends to follow it down.

And that’s largely been the case with Australia’s energy shares.

Liquified natural gas (LNG) spot prices, for example fell below US$2 per million British thermal units (MMBTU) in the wake of COVID-19.

Tumbling energy prices took their toll on some of the ASX leading energy shares.

The Santos Ltd (ASX: STO) share price cratered more than 69% from its January peak through its 19 March low. Since the low, the Santos share price is up 110%, though year-to-date it remains down 30%.

The Origin Energy Ltd (ASX: ORG) share price also fell more than 56% from its January highs to its 23 March low. Despite a 45% rebound from that low, Origin’s share price is still down 35% since 2 January.

But if your investment horizon stretches out a few years, both these companies could deliver a lot of share price growth from here.

Today, LNG spot prices are back in the US$4/MMBTU range. That’s well below its peak price. And it may not return to peak prices.

But with the Australian government backing cheap energy to revive domestic manufacturing and put some money back into household pockets, well-placed energy shares don’t need a return to peak prices to be profitable.

As the Australian Financial Review (AFR) notes:

Queensland Premier Annastacia Palaszczuk called on the Morrison government to match her government’s $5 million commitment to a feasibility study into a new gas pipeline from the Bowen Basin.

She said Queensland had already unlocked 20,000 square kilometres of land for domestic gas supply.

“The gas pipeline will support further gas supply for manufacturing while lowering carbon emissions from existing mines,” she said. “And I would welcome a matching commitment from the federal government.”

Even Labor frontbencher Bill Shorten put his hat in the ring for LNG to help bring energy costs down, saying:

You can’t have a manufacturing sector, from Qenos in Botany and Altona through to foundries, through to the four smelters in aluminium, the steel industry, unless we have low price energy. I think gas does tick some of those boxes.

Santos chief executive Kevin Gallagher puts the emphasis on the long-term outlook here (as quoted by the AFR):

So I am thinking we are beginning to see some green shoots of recovery, but I think there’s a bit to go yet and I wouldn’t expect to see any material change until some time next year. … These are 20-year projects so it’s more about what the market conditions are, the ability for markets to operate, the ability for shipyards to deliver on … construction builds, etc – so you don’t have big capex blowouts.

Allan Gray, portfolio manager at Suhas Nayak said:

Origin is well placed to handle the low prices. Given the cost reductions that have occurred and given the reduction of debt that’s occurred over the last little while I think they’re well placed to navigate the challenges.

While you’re unlikely to see many energy shares dominating the financial headlines with huge new weekly share price gains in the short run, longer-term you may wish you’d bought them at today’s discounted prices.

More reading

• Why Tesla Stock Soared Past $2,000 on Thursday
• 5 things to watch on the ASX 200 on Friday
• Tesla Gigafactory 1 to boost battery production capacity 10% after new $100 million panasonic investment
• Why CSL, Iress, Santos, & Webjet shares are dropping lower
• After the stellar COVID-19 rebound, can ASX share prices keep rising?

Bernd Struben 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 Apple and Tesla. 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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The Vita Life Sciences Limited (ASX: VLS) share price has today rocketed higher following impressive half year results. The Vita Life share price is currently up 26.76% to 90 cents, representing a new 52 week high for the company.

What does Vita Life do?

Vita Life is an Australian and Asia Pacific based pharmaceutical and healthcare company that provides over-the-counter vitamins and supplements. It is involved in the formulation, packaging, distribution and sale of three major consumer retail brands and over 700 products. Its three major brands are:

• Herbs of Gold: sold in Australia, Malaysia and Singapore
• VitaHealth: sold in pharmacies, clinics and health food stores throughout Southeast Asia
• VitaScience: sold through Blooms The Chemist stores exclusively in Australia

The company has been listed on the ASX since 2007 and employs over 400 people in seven countries worldwide.

Why is the Vita Life share price on the move?

The Vita Life share price has soared this morning following the company’s release of its half year results. Vita Life reported sales of $22.0 million, up 11% on the prior corresponding period (pcp). The Vita Life share price was also spurred on by an impressive EBIT result. EBIT increased to over $4 million representing an increase of almost 200% on the pcp. However, it was noted that this growth reflects substantial, one-off investment in advertising and promotion undertaken in 2019.

The result is particularly pleasing for the group given it commenced a strategic plan in 2018 with the objective of growing revenues by increasing the channels of distribution in its core markets. It recognised at that time, this would involve investment in both advertising and promotions, which would negatively impact its profits. The first half results reflect the increase in revenues from this strategy and, with the heavy investment in advertising not recurring, net profits have increased.

Vita Life also benefitted from the increased demand for immunity support products across key markets such as Australia and Malaysia, which helped to underpin the first half performance. Nonetheless, the company acknowledges that the COVID-19 pandemic continues to be an evolving situation, which has the potential to disrupt traditional selling channels.

Vita Life’s balance sheet remains strong with equity of $23.4 million and a net cash balance of $11.5 million. However, this is after bank borrowings that will need to be repaid.

Dividend

Directors have declared the payment of a fully franked interim dividend of 1.5 cents per ordinary share. The company’s dividend reinvestment plan (DRP) has been suspended and shall not apply.

What’s next for the Vita Life share price?

The Vita Life share price has been buoyed by today’s announcement, with investors clearly impressed by the group’s results. Results from the company’s 3-year strategy of increasing channels of distribution are positive and further growth is anticipated. However, retail conditions are expected to be mixed in the foreseeable future due to uncertainties surrounding the pandemic.

As such, Vita Life’s directors remain cautious over the medium term and were unable to provide any guidance for the remainder of the year.

More reading

• The Ingham’s share price zoomed up today despite a major drop in net profit
• These beaten down ASX energy shares could mirror the tech share price boom
• iSignthis hits ASX with $264 million damages claim
• Austal share price jumps on Alabama expansion
• Why IDP Education, IRESS, Mosaic Brands, & Mayne Pharma are dropping lower

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

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The ASX Ltd (ASX: ASX) share price is trading lower on Friday after iSignthis Limited (ASX: ISX) announced that it has filed an amended statement of claim against it in the Federal Court of Australia.

At the time of writing the stock exchange operator’s shares are down 2% to $88.09.

This is just a touch short of the record high of $90.84 it reached earlier in the day. 

What did iSignthis announce?

This afternoon the troubled payments technology company announced that it has amended its statement of claim to also allege misleading and deceptive conduct under section 1041H of the Corporations Act by ASX Limited.

This follows the publishing of a ‘Statement of Reasons’ that explained the basis of the suspension of iSignthis’ securities since 2 October 2019.

According to the release, iSignthis is claiming damages now in excess of $264 million. Though, it warned the stock exchange operator that this claim is likely to “increase with the passage of time between now and a resolution of the claim, and in the absence of a corrective statement by ASX and an apology.”

The company’s CEO, John Karantzis, commented: “The ASX now needs to demonstrate to the Federal Court that its ‘Statement of Reasons’ is supported by evidence, and not the mere conjecture that we claim it is.”

“Uniquely, ASX as a market operator may have mislead [sic] and deceived the market that it is obligated to maintain on a fair, transparent and orderly basis, throwing doubt on its ability to manage a Tier 1 market. By any measure, the damages claimed and the impact of any adverse finding make this a high stakes and material case for the ASX,” he added.

At the time of writing ASX Limited had not responded to the claim.

More reading

• ASX share price on watch as profit surges 4%
• How to turn $20,000 into over $200,000 in 10 year with ASX shares
• 5 things to watch on the ASX 200 on Monday

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 share price of shipbuilder and defence contractor Austal Limited (ASX: ASB) has jumped following a report the company is expanding its land, buildings and dry dock in Alabama in the United States. At the time of writing, the Austal share price was 2.57% higher at $3.59 after closing yesterday’s session at $3.50. 

Let’s take a look at the specifics of this morning’s announcement and whether the company has the legs to return to its February highs of $4.40.

What did Austal announce?

As part of its media release to the market, Austal specified it had entered into a conditional agreement to purchase 15 acres of additional waterside land and facilities in Mobile, Alabama, USA.

It stipulated that “The acquisition would support Austal USA’s new construction and service strategy by securing launch and deep water berthing capability in support of future new construction efforts including steel ships, while also giving Austal USA increased service and repair capacity in Mobile.”

This is of critical importance to Austal, particularly in light of news released in June that the company would be spending US$100 million on creating a steel shipbuilding capability alongside the US Government. This capability is expected to compliment the company’s existing aluminium operations.

To finance the acquisition, a sum less than US$10 million, Austal will utilise its cash holdings. The agreement between Austal and the Modern American Recycling and Repair Services of Alabama (MARS) remains conditional on undisclosed factors at this point, however the company assured the market these conditions were not unusual for this type of transaction.

Is the Austal share price in the buy zone?

Prospective investors looking at the shipbuilder will likely be optimistic the Austal share price can rise based upon the large volume of work coming through its doors.

One such example of this was the six new patrol boats ordered by the Australian Government in May, cited as a deal worth $350 million. This order will likely create homegrown jobs to assist in the economic recovery from the COVID-19 pandemic, whilst also providing a boost for the company’s bright future in Australia.

Additionally, Austal’s partnership with the US Government is a significant tailwind, particularly if these ties can deepen over the next few years. According to the US Department of Defense (DoD), US$705 billion will be spent on defence in FY21, a budget of colossal magnitude.

With seemingly plenty of money to go around, Austal has a unique opportunity to benefit from its relationship with the US Government. This is particularly the case if tensions between the US and China continue to linger in maritime hotspots such as the South China Sea. As well as promoting the overall priority of defence spending, these tensions at sea will likely mean continued renovation or expansion of naval craft for the US and their allies in Asia.

The bottom line is that, in theory, US-China tensions in a military context are of benefit to defence contractors like Austal. Of course, one must question whether the election of a Democratic US President in November could see a shift in policies toward China and the reversal of defence spending to some extent. This uncertainty could prove to be a drag on the current Austal share price.

Foolish takeaway

This expansion of its facilities in Alabama appears to be of key strategic importance for Austal. Furthermore, the company has a history of delivering projects in a timely manner and has plenty of work locked in over the short term. Austal reports its full-year FY20 earnings on Monday next week.

More reading

• 3 surging ASX defence shares to buy next week
• Escalating US-China tensions are sending these ASX stocks jumping higher today

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

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