The Motley Fool

Is the WiseTech share price in the buy zone?

If the digital age wasn’t already here before the COVID-19 pandemic, it certainly is now. More than ever, people around the world are finding new ways to get on with their lives. Working from home, socialising through video communications and shopping online, people are getting creative and using digital means to achieve their goals.

With this in mind, there is 1 company that is perfectly positioned to grow with the digital trend, in my opinion.

WiseTech Global Ltd (ASX: WTC)

WiseTech Global was founded in 1994 in Sydney. The founders began by writing code for Aussie freight forwarding companies. In 2014, WiseTech developed its widely successful global logistics platform known as ‘CargoWise’.

Key product

CargoWise is the exciting product behind WiseTech’s success. The cloud-based software services the logistics industry worldwide by helping logistics providers operate more efficiently to move and store products. The platform delivers a number of services, including freight forwarding, customs services, container freight, warehousing, geo and tracking services amongst many others.

Only 1 year after launching CargoWise (2014), WiseTech secured $35 million in equity funding to help drive growth. Just 12 months after that, Wisetech listed on the ASX with a $1 billion valuation.

Today, CargoWise is a massive product in the logistics market. According to WiseTech, 25 of the top 25 global freight forwarding companies are its customers. Additionally, 40 of the top 50 third-party logistics providers and over 15,000 logistics organisations across 150 countries utilise CargoWise in their operations. 

Some of the big-name customers in WiseTech’s portfolio include UPS, DHL and Toll.

About the WiseTech share price

The WiseTech share price is currently trading at $21.32, which is down by 9%, year to date. The recent market crash in March this year took its toll on WiseTech, with prices plunging from almost $30 right down to $10.50. The good news for investors is that it only took the WiseTech share price 3 months to rise back to its current pricing.

Past performance 

WiseTech floated on the ASX in 2016 a little over $3 a share and the WiseTech share price reached a height of $38.70 in September 2019.

Even before the COVID-19 crash in March, WiseTech was caught in a series of very public short seller attacks by Beijing-based, J Capital. These attacks caused a lot of damage to the WiseTech share price.

The company, however, continues to thrive. Even with the short seller attacks and the COVID-19 crash, the growth in the WiseTech share price from ASX float to current day stands at a massive 500+%. Over approximately 4 years, this equates to around 118% per year. I have no doubt that has been a very enjoyable run for investors!

Future potential

The current situation presents a buying opportunity in my opinion, with WiseTech shares trading at 40%+ below their previous highs. With an encouraging rapid recovery following the March market crash, I feel that WiseTech has great future potential.

Dividends

In addition to share price growth, WiseTech also pays a dividend to its investors. The company’s official policy is to pay up to 20% of its net profit after tax. WiseTech has paid 2 dividends per year since 2017. Whilst many other companies suspended or delayed their dividends earlier this year, WiseTech paid an interim dividend to investors in April. This dividend was paid at 1.7 cents per share and was fully franked. An announcement on WiseTech’s final dividend is set for August this year.

Foolish takeaway

WiseTech has global reach in a world that’s becoming more digital by the day. People still need physical products, meaning increased work for all kinds of logistics and freight providers. As online shopping increases, so does shipping. WiseTech is in prime position to help its clients expand their own operations. By ensuring the success of the logistics industry, WiseTech also ensures its own success. WiseTech shares are certainly worth of portfolio consideration, in my view.

At the time of writing, the WiseTech share price is sitting at $21.32 per share, with a market capitalisation of $6.9 billion.

These 3 stocks could be the next big movers in 2020

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

Motley Fool contributor Glenn Leese has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. 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.

Related Articles...

Glenn Leese
Latest posts by Glenn Leese (see all)