There are some ASX shares that could be worth looking at if you have some money to invest.
Some businesses have been falling recently and this may open up some interesting opportunities.
These two ASX shares may be able to generate good returns over the coming years:
Adairs Ltd (ASX: ADH)
Adairs is a large omnichannel retailer of home furnishings in Australia and New Zealand. It has a national footprint with a number of different store formats.
It sells a variety of things including bedlinen, bedding, towels, homewares, soft furnishings, children’s furnishings as well as occasional and bedroom furniture. Adairs said with vertically integrated product design, development, sourcing, distribution, and retail operations, over 90% of Adairs’ range is sold under its own private brands. The ASX share says this is essential to Adairs’ differentiated product offer and customer value proposition.
The company has been focused on managing its gross profit margin, with the Adairs gross margin increasing by 690 basis points to 67.8% in the first half of FY21. This was achieved through a mix of a sourcing and retail pricing initiatives combined with a strong focus on reduced depth and length of promotional activity. The number of storewide promotional events was reduced by 29 days during the half.
Margin improvements helped Adairs generate as much earnings before interest and tax (EBIT) in the FY21 first half as the entire FY20. Adairs underlying EBIT jumped 166% to $60.2 million and net profit grew 233.4% to $43.9 million.
The company continues to construct its national distribution centre in Melbourne, it’s on track for the first quarter of FY22, which should deliver annual savings of $3.5 million per annum once operational.
Adairs also has a very generous dividend. The board declared an interim dividend of 13 cents. Morgans thinks Adairs will pay a dividend of $0.31 per share in FY21, which would be a grossed-up dividend yield of 10.2%.
Pushpay Holdings Ltd (ASX: PPH)
Since 8 April 2021, the Pushpay share price has fallen by 16.3%. That gives investors the opportunity to buy shares at a cheaper price.
What is Pushpay? It’s an ASX share that provides a donor management system, including donor tools, finance tools and a custom community app, and a church management system to the faith sector. Its main clients are large and medium US churches.
The company is due to hand in its FY21 result next week. Pushpay is expecting to report quite a lot of growth.
In the FY21 half-year result it revealed that its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) increased by 177% to US$26.7 million. Operating cashflow grew 203% to US$27 million.
The tech business has increased its EBITDAF guidance a number of times during FY21. Pushpay is now expecting its EBITDAF to come in somewhere between US$56 million to US$60 million. This guidance increase occurred after stronger-than-expected donation processing volume as well as continuing operating leverage growth.
According to Ord Minnett, the Pushpay share price is priced at 25x FY22’s estimated earnings.