Share price winners
The Kogan.com Ltd (ASX: KGN) share price has risen by ~265% since the market low on 23 March. The pandemic and lockdown hastened a trend towards online shopping that was already underway. In a 5 June report, the company announced a 100% increase in sales for the Q4 FY20 to date and a 130% growth in profit.
The same could be said for City Chic Collective Ltd (ASX: CCX). This share price is up by ~263% from 23 March. City Chic declared that two-thirds of its sales came from online channels. Moreover, it announced a 57% increase in online sales during the company’s store closures versus the same period last year.
The grey zone
There is a range of companies that I am not certain about, even now. For example, Aristocrat Leisure Limited (ASX: ALL) sells machines, platforms, software and online gaming. In its Q3F20 report, it showed a decrease of 14.2% in net profit after tax (NPAT). However, the company is rapidly expanding its digital business. The company enjoyed double-digit growth in revenue and profits over the period compared to the previous corresponding period.
Personally, I do not think the Crown Resorts Ltd (ASX: CWN) share price can return to prior levels without full international tourism. Nonetheless, I am not sure that the same goes for Aristocrat. Partly because of the diversified revenue streams, partly due to the international footprint.
Even more so, I think that embattled cinema and theme park companies such as Village Roadshow Ltd (ASX: VRL), or Event Hospitality and Entertainment Ltd (ASX: EVT) are too close to call. Even without full international tourism, these companies can make profits. Unfortunately, most of the movies due for release by the end of this year have been moved into 2021. I do not see a good medium-term future for the share price of these companies.
Jumbo Interactive Ltd (ASX: JIN) is surrounded by speculation in relation to a mysterious trading halt. Media sources seem to think there is a conflict occurring due to negotiation with LotteryWest, sparking a high-level discussion with 11% stakeholder and licensor, Tabcorp Holdings Limited (ASX: TAH). Nevertheless, the company forecast an FY20 NPAT just under that of FY19. It seems even the company is unsure whether the lockdowns will drive sales up or down.
The hardest hit
There is a strong chance that Qantas Airways Limited (ASX: QAN) share price will take another hit during today’s trading. It announced a combination of cost-cutting, layoffs and restructuring that highlights how different the world will be. The Qantas share price is already depressed.
I find this company to be well managed. It has a 10-year average return on equity (ROE) of 17.5% which is impressive. However, personally I find it hard to envisage a world where governments allow us to travel internationally as freely as we used to. At least not yet.
Aside from Qantas, there are a number of other companies that will likely not be the same again for 3–5 years. Most of these are in the international travel space. Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) need to open international borders. Sydney Airport Holdings Pty Ltd (ASX: SYD) also needs full international tourism to see the level of footfall it had in January.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and Webjet Ltd. The Motley Fool Australia has recommended Crown Resorts Limited, Flight Centre Travel Group Limited, and Kogan.com 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.