There are three ASX shares in this article that could be solid performers during 2021, if 2020 trends are continued.
Here are three ideas:
Pacific Current Group Ltd (ASX: PAC)
Pacific is a multi-boutique asset management business that wants to partner with “exceptional” investment managers. It provides strategic business development to help them grow, either with funding or expertise.
Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It’s on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It is paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”
In FY20 the ASX share grew its underlying earnings per share (EPS) by 18% to $0.51 cents, funds under management (FUM) grew by 62% to $93 billion and the dividend went up 40% to $0.35 per share. In the FY21 first quarter its funds under management (FUM) grew 14% to $106.4 billion.
The company is considering launching a fund to invest in fund managers because there are more opportunities than it can invest in itself. Pacific would receive management fee revenue from the fund, as well as co-investment rights.
At the current Pacific Current share price it’s valued at 10x FY22’s estimated earnings. It also has a trailing grossed-up dividend yield of 8.1%.
Kogan.com Ltd (ASX: KGN)
Kogan.com is one of the e-commerce ASX shares to have grown significantly during 2020 with a large rise of online shopping.
FY20 saw Kogan.com’s gross sales go up 39.3% to $768.9 million, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) went up 57.6% to $49.7 million and net profit after tax (NPAT) went up 55.9% to $26.8 million. EPS grew by 61.1% to $0.29 and total dividends per share increased 46.9% to $0.21.
One of the main things that Kogan.com is focused on, aside from simply growing the overall business, is increasing its membership (Kogan First) numbers. Mr Kogan, the founder of the company, has spoken about the benefit to the ASX share of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”
Kogan.com’s margins continue to increase. In FY17 its EBITDA margin was 4.3%, in FY20 it had grown to 9.3%. This appears to have continued into FY21. In the first four months to October 2020, whilst gross sales increased by 99.8%, gross profit went up 131.7% and adjusted EBITDA went up 268.8%.
At the current Kogan.com share price, it’s valued at 26x FY23’s estimated earnings.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an ASX share that specialises in facilitating electronic donations to large and medium US churches.
The company has grown a lot during the difficult COVID-19 period. In the FY21 half-year result for the six months to 30 September 2020, Pushpay said that its operating revenue rose by 53% to US$85.6 million which helped the gross margin increase from 65% to 68% and the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) jumped 177% to US$26.7 million.
In FY21 Pushpay is expecting to grow EBITDAF by over 100%, to a range of between US$54 million to US$58 million. It’s also expecting more operating leverage to accrue as it grows in size.
At the current Pushpay share price it’s valued at 25x FY23’s estimated earnings.