Many investors will argue there is no such thing as blue chips anymore.
But while I don’t agree with that, and I consider the likes of Commonwealth Bank of Australia (ASX: CBA) very much the ultimate ASX blue chip, more stocks are being referred to as “speculative” as technological advancements change the state of play in certain sectors virtually overnight.
These two shares have been named as buys by brokers, but both of them are in the “speculative” basket.
Here’s the lowdown.
Fastbrick Robotics Ltd (ASX: FBR)
A mobile robotic technology company with a focus on the global brick construction industry, Fastbrick Robotics has attracted the attention of many interested punters of late, but the $191 million market cap company is still in small cap territory.
State One brokers have placed a buy recommendation on the stock off the back of its announcement on June 7 that the mechanical assembly of its Hadrian X construction robot is complete.
The vehicle is a commercial prototype of the company’s patented 3D robotic bricklaying system and the project is now in the process of commissioning with factory acceptance testing to be completed in the September quarter.
While State One has a 50c per share price target on the stock, Fastbrick shares are a far cry from that at the time of writing – down 2.7% to 17c per share.
But while such a futuristic project might seem a bit left of field, a recently-completed global market analysis for the Hadrian X indicated demand could be up around 150,000 machines with Fastbrick expecting to target 2% of this market over the next 5 years.
State One admits a Fastbrick buy in would be a high-risk speculative buy – but don’t most well-rounded investors need a couple of these on their watch list?
One to watch as its strategy for market application gains traction.
Money3 Corporation Limited (ASX: MNY)
Shares in national credit provider Money3 Corporation Limited are up 2.3% at the time of writing to $1.95, as Hartleys has placed a buy rating on the stock with a share price target of $2.14.
The broker’s upgrade to buy came after Money3 released a market update guiding to an FY18 NPAT of $31 million – at the upper end of guidance – with management reporting a strong momentum building for a record number of settlements in May 2018. As such Money3 is not all that speculative as a profitable business.
Money3 simplified its funding structure in late 2017 with $90 million of additional lending capacity providing the opportunity to drive lending growth.
Money3 services the needs of customers who cannot access funds via traditional lenders, with secured automotive loans and personal loans and even unsecured personal loans online.
While Hartley’s maintains Money3 has a large market opportunity its clear strategy to focus on auto lending of late seems to be the major impetus driving growth and its track record of exceeding earnings growth throughout FY16, FY17 and likely FY18 is also something catching the attention of many investors and brokers alike.
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Motley Fool contributor Carin Pickworth owns shares of Commonwealth Bank of Australia. 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.