Hello Fools,

A final article to let you know that after six years I will no longer work as an editor and writer for The Motley Fool Australia. I am off to join The Australian Financial Review as a reporter.

Many thanks goes to The Motley Fool and its full-time team for giving me the opportunity to write, edit, and work with a large team of talented freelancers over the years.

In particular I'd like to acknowledge former colleague and writer, Mike King, who passed away from melanoma on January 8 2018. Mike was a kind man, great writer, investor, and mentor to me. 

Over the years I hopefully met the Foolish mission to 'educate, enrich, and amuse'. While providing readers some good investment ideas. 

Record highs

It's also rather serendipitous that I leave with local and global share markets hitting record highs today.

As we know one consistent message The Motley Fool preaches is for individual investors to buy high-quality companies for the long term.

Time really is your biggest advantage in the share market, so the earlier you start the better. 

The internet and technology also means new and older investors now have a level playing field versus professional investors.

A new investor can now buy an index-tracking fund on a low-fee basis, while experienced investors can access all the data they need to make their own investment decisions on a low-cost basis. 

Lessons learned

The local share market remains lightly regulated though and there are plenty of unscrupulous listed operators using it as a vehicle to fleece investors.

So I'd advise against speculating on 'penny stocks' or the hundreds of companies with no sales or commercial products. As this kind of speculating will almost always end in capital losses.

Share markets exist for two principle reasons.

First, so investors can buy and sell shares.

And second so companies can raise capital from investors. Remember companies are always going to sell the sexiest stories possible to raise and spend capital. 

'Stock promotes' or 'stock pumps' are the oldest trick in the share market book that have fleeced speculators for hundreds of years. They play on greed, laziness, and those wet behind the ears.

They also have regulatory cover as there's nothing to stop 'a company' promising the world, but delivering nothing. 

Moreover, there's no recourse in the share market for getting sucked into 'stock promotes' as the principle of caveat emptor has existed for thousands of years. 

Good times

But why get sucked into penny stocks when you could buy terrific businesses changing the world?

After all it might be a happy coincidence that share markets are at record highs on my last day. But it's no real world coincidence.

Over time share markets always print record highs on the back of global growth.

Thankfully, it's now easier than ever to grow your wealth on the back of this happy habit. So please, do take advantage. 

The post On a serendipitous day, Tom Richardson is leaving the building appeared first on The Motley Fool Australia.

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There's still a lot of appetite for tech-based IPOs if the vertiginous rise of Aerometrex Ltd (ASX: AMX) shares is a guide.

The aerial mapping business issued 25 million new shares at $1 each for its IPO on December 9 with the stock doubling in value to $2 just one week later. 

Based on 94.4 million shares on issue Aerometrex is now valued by the market at $189 million, with it posting a net profit after tax of $2.57 million on sales of $16.1 million for the financial year ending June 30 2019. It also made an operating cash profit of $5.09 million to suggest it's quite rare as an already profitable new tech listing. 

Notably, most of its sales are currently achieved on a project basis where it maps the ground for enterprise clients using airborne lasers. Close to half its total revenue also originates from public sector clients that commonly demand the on demand aerial surveying projects. 

Notably, it's looking to build out its subscription or data-as-a-service offering to clients that would generate more recurring revenue potentially at very high gross profit margins. In this sense it's a potential competitor for Nearmap Ltd (ASX: NEA), but still a long way behind it. While Nearmap for example could also look to push into Aerometrex's mapping-on-demand space so competition is a two-way street. 

Overall though, it's not hard to see why Aerometrex's valuation surged last week given it's already profitable.

Moreover, it now has the cash on hand it needs to to invest in sales, marketing, product development and other sources of new client acquisition. 

It looks a small cap to watch. 

The post Why Aerometrex shares have doubled their IPO price appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap 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.

The National Veterinary Care Ltd (ASX: NVL) share price is up 52 per cent to $3.61 today after it revealed it has received a $3.70 per share cash takeover bid from VetPartners.

The offer is at a whopping 57 per cent premium to NVL's last closing price of $2.36. The proposed merger still requires potential approval from NVL shareholders, the Foreign Investor Review Board, or other regulators.

According to today's announcement VetPartners is a privately-owned business that already owns 140 veterinary clinics across ANZ and Singapore. 

Historically, NVL has pursued an aggressive acquisition or roll-up strategy itself to deliver sales and profit growth for its investors. As at June 30 2019 it had acquired and integrated 99 veterinary practices across Australia. 

The veterinary surgery industry is highly fragmented with many privately-owned operations with listed and mainly private equity players competing to roll them up on a profitable basis.

Formerly listed pet care roll-up Greencross for example was recently acquired for around $675 million by U.S. private equity player TPG Capital. 

Given the apparent amount of money looking to invest into the sector it wouldn't be a big surprise to see a number of new roll-up style pet care players pop up on the ASX. 

The post Why the National Veterinary Care share price is going nuts today appeared first on The Motley Fool Australia.

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of NATVETCARE FPO. 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.

Virgin Money UK (ASX: VUK) shares are up 8 per cent to $4.06 today as investors bid the stock higher on the back of the UK general election result that saw the Conservative party win a parliamentary majority. In effect this means it can force Brexit legislation though the parliament and any other legislation that is business friendly in any number of ways. 

Virgin Money recently merged with National Australia Bank (ASX: NAB) spin off Clydesdale & Yorkshire Bank (ASX: CYB) with the combined group heavily leveraged to consumer and business demand for credit to invest. 

The merger also allows regional lender Clydesdale & Yorkshire Bank to shed a rather tarnished brand for the undoubtedly more popular Virgin Money brand.

In a similar way to some leading Australian financial services groups, Clydesdale & Yorkshire Bank's brand has been shattered by a series of regulatory scandals where the bank was found guilty of mis-selling financial products to consumers and basically ripping them off. 

A definitive Brexit and rebranding then may help the newly-combined group compete more effectively as a modern banking and consumer credit player in what is a competitive UK market. 

The post Virgin Money UK shares soar on Brexit hopes appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. 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.

Pro Medicus Limited (ASX: PME) shares are up. 2.8 per cent to $22.34 in morning trade after the medical software provider updated the market on its performance for the half year ending December 31 2019. 

The company is eager to emphasise the second half of the financial year is traditionally stronger than the first half. This is because the timing of new client wins may also be partially reflected in the first half, but the entire second half. It also flagged the RSNA Conference in Chicago as a significant expense it meets every first half, which does not occur in the second half. 

As such shareholders will hope management is not buttering them up for a softer-than-expected result for the six months to December 31 2019.

New product developments 

It also revealed that its AI (Artificial Intelligence) Visage Accelerator program had made excellent progress. Its developers have created an in-house breast density screening AI algorithm to assist in the detection of breast cancer. The tech can be integrated to its core Visage 7 platform and it has made a submission for commercial approval with the U.S. healthcare regulator the FDA. 

Another ASX-listed business benefiting from the U.S. regulator's tightening demands on breast cancer screening standards is Volpara Healthcare Technologies Ltd (ASX: VHT).

Volpara's software also helps medical professionals screen breast density as a key indicator of a patient's assessed risk of developing breast cancer. 

It's possible that Pro Medicus views Volpara as an acquisition target given the two businesses are operating in similar spaces in the U.S. healthcare market. 

However, the near 40% fall in value of Pro Medicus's scrip from $36 to $21.80 over the last four months means any scrip funded or cash and scrip bid will cost its shareholders a lot more now. 

Merger and acquisition activity could be on the minds of Pro Medicus's management team given how eager they seem to support it's valuation. 

Still, Pro Medicus's founders can hardly complain about the share price falls after they managed to sell 1 million shares each at $36.10 per share just last September.

The buyers of the shares offloaded by block trades are unknown, but they're now deep underwater on their investments.

It's possible the buyers were index-tracking funds that pay zero regard to valuation, or even institutional investors who don't pay much more regard to valuation themselves. 

The post Is Pro Medicus eyeing a takeover of Volpara Healthcare? appeared first on The Motley Fool Australia.

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Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of VOLPARA FPO NZ. The Motley Fool Australia has recommended Pro Medicus Ltd. and VOLPARA FPO NZ. 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.

Digital tithe merchant Pushpay Holdings Group Ltd (ASX: PPH) today announced it'll spend US$87.5 million to acquire rival Church Community Builder using a mix of cash on hand and debt. According to the announcement Church Community provides digital church management systems to over 4,000 U.S. churches. 

Pushpay's financial year ends March 31 2020 and it reports the acquisition is expected to be accretive on a pre tax operating cash flow per share basis over the year to March 31 2021. Over the year to March 31 2022 the deal is expected to add "material" accretion to Pushpay's total revenue and EBITDAF. 

The company also reiterated the following guidance: "Operating revenue of between US$121.0 million and US$124.0 million, gross margin of over 63%, EBITDAF of between US$23.0 million and US$25.0 million, and total processing volume of between US$4.8 billion and US$5.0 billion."

Pushpay has a shareholder basis as evangelical as the churchgoers it skims fees from, but whether this business model lasts the distance is yet to be seen. 

The post Pushpay in US$87.5 million U.S. acquisition appeared first on The Motley Fool Australia.

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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.

Early exit polls suggest a thumping UK general election win for Conservative party leader Boris Johnson that should provide the parliamentary majority required to force through Britain's exit from the European Union. 

This is a positive for British business as it removes the uncertainty over whether Britain will remain part of the common market going forward or not.

It also means Britain will soon be free to unilaterally negotiate new free trade deals with major trading partners outside the European Union, rather than being stuck in an indefinite paralysis as MPs seek to obstruct a democratic vote. 

On the local share market the group formerly incorporated as regional lender Clydesdale & Yorkshire Bank (ASX: CYB), but now known as the post-merger Virgin Money UK (ASX: VUK) is up 8 per cent to $3.78. Like others it benefits both from Brexit and a more business friendly Conservative government with a majority to force through legislation. 

Link Administration Holdings Ltd (ASX: LNK) is up 3 per cent to $5.76 as the trustee and share market administration business is partly dependent on the health of UK capital markets to drive profits. The UK economy itself is heavily services focused with financial services being a key Brexit-facing earner for the country. 

Elsewhere UK facing fund managers like Pendal Group Ltd (ASX: PDL) and Janus Henderson Group (ASX: JHG) are up 6% and 5% respectively. Janus Henderson's equities business is largely based out of London and heavily reliant on the health of European capital markets. Its fixed income business, Janus, is based out of Denver, Colorado, USA. 

While Magellan Financial Group Ltd (ASX: MFG) is up 2 per cent to $55. It has an important partnership with UK retail distribution and financial advice giant St James's Place. 

Macquarie Group Ltd (ASX: MQG) is also entrenched in the UK's financial services, asset management, and lending markets. Although it won't be happy about Brexit, the positive for the groups are a potential end to the uncertainty, Conservative government, and step up in investment.

Elsewhere consumer-facing travel businesses Flight Centre Travel Group Ltd (ASX: FLT) will welcome an end to the uncertainty and potential for a stronger pound as many UK holidaymakers delayed overseas travel plans due to the British pound's weakness.

The interminable Brexit delays lead holidaymakers to continuously delay travel and spending plans, with the UK's largest travel agency, Thomas Cook, even going bankrupt in 2019. 

Thomas Cook had a significant fee-based referral partnership with Webjet Limited (ASX: WEB). The latter has taken a huge receivables and sales hit on the back of Thomas Cook's collapse.

Travel and retail have been the two sectors hit hardest by Brexit, with UK retailers falling like flies. In December 2019 UK retail entrepreneur and billionaire Mike Ashley labelled retail conditions "unbelievably bad' and "unprecedented".

Even market darling and children's stationery retailer Smiggle hit the skids in terms of UK sales and store openings over 2019. It is the store rollout golden child of retail investment conglomerate Premier Investments Limited (ASX: PMV).

Other companies to have blamed the Brexit pantomime for recent problems include Gentrack Group Ltd (ASX: GTK), Bravura Solutions Ltd (ASX: BVS), Computershare Limited (ASX: CPU) and QBE Insurance Group Ltd (ASX: QBE).

On the other hand one business flying in the UK is online accounting provider Xero Limited (ASX: XRO). Its success shows how even the wildest political dramas will have little impact on good businesses over the medium term.  

The post 15 Brexit-facing companies breathing a sigh of relief today appeared first on The Motley Fool Australia.

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Tom Richardson owns shares of Macquarie Group Limited, Magellan Financial Group, Webjet Ltd., and Xero.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd and Link Administration Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited, Macquarie Group Limited, and Premier Investments Limited. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Bravura Solutions Ltd, Computershare, Link Administration Holdings Ltd, and Webjet 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.

Collection House Limited (ASX: CLH) shares are now down 34% over 2019 as the debt collector hits the skids on the back of a couple of disappointing updates.

On November 24 the group surprised the market by announcing the resignation of its CEO Anthony Rivas. 

I spoke to Mr Rivas a couple of times and he was an ebullient character, but the abrupt departure suggests he did not see eye to eye with a board that immediately promoted CFO Doug McApline to the role.

Mr McAlpine has only been with Collection House since July 2019, while Mr Rivas was in the role just over three years.

Generally, a high turnover of 'C-suite' staff or staff generally at any company is a sign that there may be problems at the underlying business. High staff turnover also makes it harder for a business to perform well, as, inter alia, it reduces productivity and adds to costs.

Over FY 2109 Collection House paid dividends of 8.2 cents per share on adjusted earnings of 15.2 cents per share. It's guiding for adjusted earnings between 17 to 18 cents per share over FY 2020. 

That means it sells for just 6x forecast earnings at $1.06 this afternoon. It's also likely to offer a pretty big yield based on forecast earnings.

It's worth nothing though that debt collection businesses traditionally trade on low multiples due to the limited visibility of earnings that are vulnerable to volatile debt pricing environments. 

The post Collection House shares just hit a 52-week low appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.

The Tyro Payments Ltd (ASX: TYR) share price is up 7 per cent to $3.65 today after a $2.75 per share IPO that hit the ASX boards last Friday.

The fintech is chaired by ex-Telstra Corporation Ltd (ASX: TLS) CEO, David Thodey, who has trousered around 900,000 shares himself and helped the group raise around $250 million at IPO to boast a total market valuation of $1.364 billion. 

What does Tyro do?

Tyro provides merchants mainly in the hospitality, health or retail spaces the EFTPOS or 'point of sale' machines to process customers' debit or credit card payments.

It has now signed up 29,000 merchants and reported a 'pro forma' EBITDA loss of of $6.1 million on income of $189.8 million over fiscal 2019. Total transaction value processed climbed 31% to $17.5 billion.

At the IPO around $175 million of the $300 million raised will be banked as a major payday for the company's founders, with around $125 million left over to be reinvested back into the business for growth. 

Areas flagged for investment include; sales and marketing, product development, acquisitions, and "new industry verticals".

It reported that over fiscal 2019 nearly half of all new merchants acquired came about as a result of digital marketing. In other words it's likely to ramp up its investment in online (display) advertising, SEO optimisation, or data-driven e-commerce. 

Tyro brings advantages to merchants as it's a little like a modern-day 'cash register' supporting small businesses as Australian consumers increasingly dump cash as a payment method.

The 'war on cash' is a structural shift Tyro should keep benefiting from. 

However, it's in a competitive space with rivals like U.S. innovator Square Inc. taking significant market share in Australia. 

This has not stopped investors bidding the shares 33 per cent higher over its first week on the market to now give it a market value around $1.875 billion. 

That's around 10x trailing revenue as investors bet the group will scale sufficiently well to move towards profitability. 

There's a lot of hype around the fintech payments space on the ASX right now largely thanks to the runaway success of Afterpay Group Ltd (ASX: APT). So while Tyro looks attractive, you wouldn't want to get carried away as an investor.

The post Why the Tyro Payments share price is climbing today appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.

This morning Vmoto Ltd (ASX: VMT) reported that it expects to post a net profit between $1 million to $1.3 million over calendar year 2019.

Vmoto shares are up more than 5x over 2019 on the back of investors backing the China-based electric scooter business as a turnaround story. 

While a 5x or 400% rise sounds impressive, it's worth noting that Vmoto is just a penny stock that has gone from 5 cents to 26 cents over the period. Shareholders should remember that these kinds of volatile penny stocks can fall as fast as they rise. 

Still if Vmoto delivers a net profit more than $1 million over 2019 it would be a long way ahead of almost every other penny stock on the local market in delivering respectable profits. 

Over the quarter ending September 30 2019 Vmoto reported that it sold 6,027 electric scooters, which is nearly double what it sold on the prior quarter. 

It's the manufacturer's surging sales over the second half of 2019 that have really put a rocket up shares. 

Vmoto does have a mixed track record though and investors must do plenty of research on this business. 

The post Why Vmoto shares are up 5x in 2019 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.

The Fortescue Metals Group Limited (ASX: FMG) share price hit a record high of $10.37 this afternoon as news wires report the steel ingredient is commanding around US$93 per tonne today.

That compares to around US$70 per tonne at the start of 2019 with the near 25% rise over the year sending Australia's leading iron ore miners higher. 

Fortescue is now up more than 150% in 2019 as its valuation tends to exhibit the most beta towards iron ore prices due to the leverage on its balance sheet. In other words, if iron prices rise, stronger-than-expected investors will pile into Fortescue on the basis it's cheap versus the profits it has potential to print. Whereas if iron ore prices tumble, investors tend to jump ship out of concern its balance sheet is over-extended and a serious downturn in prices could place it under real pressure.

Other leading miners like Rio Tinto Limited (ASX: RIO) or BHP Group Ltd (ASX: BHP) are more diversified with less leveraged balance sheets. This means they tend to follow the iron ore price higher or lower, but not to the same extreme as Fortescue. 

In fairness, the strong iron ore prices and huge profits have helped Fortescue greatly deleverage over the past few financial years. 

As at the end of fiscal 2019, Fortescue's net debt to what it describes as 'underlying EBITDA' stood at just 0.3x, while gross debt to 'underlying EBITDA' stood at 0.7x. Back in fiscal 2015 gross debt to 'underlying EBITDA' stood at 3.8x.

Today gross gearing (debt/equity) stood at 27%. 

If iron ore pries hold up or climb higher over the medium term, Fortescue shares are probably still cheap. However, if they revert back to long-term averages the shares could come under selling pressure. 

The post Iron ore prices send Fortescue shares to a record high appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.

Paradigm Biopharmaceuticals Ltd (ASX: PAR) shares are up from 99 cents on New Year's day 2019 to $3.49 today and even hit as high as $4.12 last November.

What does Paradigm do?

With its shares up 250% in less than a year you'd think Paradigm is sporting big profit and sales growth. But it's actually on the contrary in that it has zero sales or approved commercial products, let alone profits. 

Despite the lack of dollars coming though the door, Paradigm is getting bid higher on investor excitement over the potential of its patented Zilosul drug as a treatment for osteoarthritis and other common joint inflammations in patients. 

The biotech currently has various applications in with the the US healthcare regulator the FDA and local regulator the Australian Therapeutic Goods Administration (TGA) to have the drug assessed and approved for commercial use. 

More specifically the FDA has granted Zilosul an 'expanded access program status' and the drug's first U.S. patients are being treated on a trial basis in December 2019. 

Are the shares worth a punt?

Paradigm already has a massive $666 million valuation based largely on hype, FOMO, and shareholders' views that Zilosul has a good chance of commercial approval.

Anecdotally, much of the bullishness is based on the view that past trials and usages of the drug have been effective according to some clinicians and former patients. 

The company boasts that the revenue potential for Zilosul in Australia on a 20 per cent market share basis is $1.5 billion.

Needless to say it would be many multiples of that in a market like the U.S.

However, as a word of warning if Paradigm's drugs fail to meet expectations it would join a long list of biotechs promising the world but delivering almost nothing.

It's also fair to say that its current valuation it's already priced for success, which means plenty of downside if it disappoints. 

It also has the opportunity to partner with big pharma to meet some of the significant trial and marketing expenses it will incur on the way to getting any treatments commercialised. If it does this the investment profile will de-risk nicely, although the upside will not be quite so great. 

Other riskier biotechs exciting some investors include Opthea Ltd (ASX: OPT), Mesoblast Limited (ASX: MSB) and Next Science Ltd (ASX: NXS).  

The post Why the Paradigm share price is up 250% in 2019 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.

Often it's worth taking investment advice straight from the horse's mouth to borrow a metaphor.

This is because investors should rely on primary information to draw investment conclusions or to calculate valuations.

Primary information generally includes companies' accounts, annual reports, earnings reports or other miscellaneous presentations.

The numbers in these documents should all be audited and correct to mean the information is incorruptible if applied properly. 

However, often investors will use third-party information sources such as stock market news websites, online share forums, or others financial wires to derive incorrect information over a company's market cap or dividend yield for example. 

The one problem with only relying on a company's presentations or accounts is that they tend to highlight positives and obscure the negatives. After all the higher a company's share price the cheaper it can raise capital.

So you can hardly blame the companies for wanting to present themselves in the best possible light, it's just that professional investors know to always dig deeper in conducting their research. 

This morning almond producer Select Harvests gave investors six reasons it thinks its shares are a good buy for investors. 

Source: Select Harvests, presentation Dec 10, 2019.

You can't argue with those reasons as the almond farmer is exposed to rising demand from the Asian middle class and the trend towards healthy eating. 

For the 12 months ended September 30 2019 it paid dividends of 20 cents per share on earnings of 55.5 cents per share.

On a trailing basis shares offer a 2.4% yield on 15.3x earnings. Annualised return on capital employed stands at a decent 16.5%. Net debt to equity is just 6.6% with no bank debt and a $27.4 million 'finance lease'. 

The group is in reasonable financial shape and shares are potentially cheap if it can consistently grow earnings. 

However, risks include the fact it's reliant on almond prices that can rise and fall, agricultural conditions, and underlying demand. 

The post Select Harvests gives investors 6 reasons to buy shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

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.

The Viva Energy Group Ltd (ASX: VEA) share price is down 6.1% to $2 today after it told investors to expect underlying profit on a 'replacement cost' basis between $135 million to $165 million over 2019. That compares to $229 million delivered in 2018 when adjusted to make the new AASB accounting standards comparable. 

The company reported: "Earnings have been impacted by lower refining margins during 1H2019, lower retail market margins as a result of oil price volatility and heightened competition, as well as increased ocean freight and effects of lower exchange rates compressing commercial margins."

Viva splits its business between retail fuel sales and supply, commercial fuel sales and supply, and the refining of crude oil for fuel supply. 

Supply, corporate and other costs also increased more than 10% over the calendar year in a result the company attributed to higher shipping, property and associated network costs, among other factors. 

The company declined to provide any guidance for FY20. 

Elsewhere, fuel distributor Caltex Australia Limited (ASX: CTX) is the subject of a $34.50 per share takeover offer. 

The post Viva Energy shares fall 6% on 2019 profit guidance appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.

The Jumbo Interactive Ltd (ASX: JIN) share price has now lost around one third of its value since October 2019 as investors reassess the valuation of the online lottery ticket reseller. 

Back on October 16 2019 it hit a record high of $27.88 but today shares change hands for just $18.18 despite the lotto operator not releasing any material news to the market. 

On September 23 2019 Jumbo joined the benchmark S&P/ ASX200 Index (ASX: XJO) of leading Australian companies. This index is heavily tracked by wildly popular passive investment funds that commonly trade on stock exchanges. Index funds are mandated to buy index constituents regardless of valuation and Jumbo's vertiginous rise to October 16 may be related to index fund buying. 

Market professionals have also suggested that day traders, professional traders, and algorithmic programs may also be front running the index funds in buying securities they know via public information (released by S&P for example) will be added to an index. This is in order to potentially sell holdings onto index funds or market participants at a profit after they're added to the index. 

Often the relatively low daily trading volumes (i.e. liquidity) of new index members can add to the wild price swings first higher and then lower. 

Over FY 2019 Jumbo posted a net profit of $26.4 million on sales of $65 million. It's also tipping investors to expect more profit growth in FY 2020. 

The post The Jumbo share price is now down 33% since October appeared first on The Motley Fool Australia.

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. 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.

Pro Medicus Limited (ASX: PME) shares are now down around 40% over the last three months after tumbling from a high of $38.38 printed in September 2019. 

Just days after it hit a record high the company's two co-founders in Anthony Hall and Sam Hupert sold 1 million shares each at prices around $36 per share.

Any institutional investors on the other side of the block trades that totalled 2 million shares for around $72 million will now be nearly 40 per cent underwater and a little red faced. 

It's possible some of the shares were taken up by index tracking funds that are mandated to buy securities that make up the constituents of an index regardless of value.

On June 24 2019 for example Pro Medicus joined the S&P/ ASX200 Index (ASX: XJO) and it's one of the most widely tracked in Australia by low-fee passive investment funds. 

When share market valuations get disjointed from reality the outcome is predictable as professional investors sell and valuations crash. 

Even at $22.45 Pro Medicus is valued at $2.34 billion by the market despite posting a profit of just $19.1 million on sales of $50.1 million over FY 2019.

That means shares change hands for 47x trailing sales or 123x trailing diluted earnings of 18.32 cents per share.

This is sky-high using conventional metrics, or even using unconventional valuation metrics that are often used to justify the valuations of software-as-a-service businesses. 

The post The Pro Medicus share price has dropped 40% since September appeared first on The Motley Fool Australia.

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia has recommended Pro Medicus 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.

Suspended payments business iSignthis Ltd (ASX: ISX) slashed its FY 2020 EBIT guidance this morning from $10.5 million to $6.5 million and blamed the downgrade on the ASX for suspending its shares.

All its forecast EBIT numbers exclude what it labels as expenses associated with the regulator's suspension. 

The shares have been suspended by the ASX's listings compliance team since October 2 in a highly irregular scenario for a local stock market that is lightly regulated.

The securities regulator's compliance team is investigating iSignthis's historical disclosures, corporate governance, client base, and booking of revenues through the period up to June 2018.

In response to the ASX's refusal to let it return to the boards, iSignthis commenced legal proceedings to have a federal court force the ASX to let it resume trade.  

The claim is on the basis the regulator has contravened s.792 of the Corporations Act in exercising its powers to operate a securities market. 

If successful the ASX's compliance team will be humiliated, but if the court throws out iSignthis's application it's almost out of options other than to rely on the the securities regulator voluntarily lifting its suspension of the shares. 

SWIFT changes

Due to the suspension it also reported that that gross processing turnover volume (GPTV) is forecast to be flat for November and December 2019.

The GPTV slowdown is partly because it will no longer use SWIFT as a payment method as an Australian bank client when originating payments.

SWIFT is the globally dominant international interbank and counterparty payment platform and if iSignthis cannot use the network with Australian banks it suggests the business has run into serious operational problems.

The company provided no specific explanation for the SWIFT knock-back, other than to reference the "AML failures" of some Australian banks recently. 

It's possible that some Australian banks have concluded they don't want the associated risks of having iSignthis as a client given the well publicised problems over its historical client base. 

iSignthis claims it can put in place alternative arrangements to work around the SWIFT issue, although shareholders will probably be worried. 

For now there are two diverging narratives around a company painting an optimistic picture despite its shares being suspended by a regulator not satisfied it's in compliance with listings rules. While its relationship as a client of Australian banks for SWIFT payments has also been halted, perhaps permanently.

Management's decision to commence legal proceedings also suggests it has little confidence the ASX will voluntarily lift the suspension in the near future. The iSignthis drama is moving closer to an endgame and it may not be pretty. 

The post iSignthis blames ASX for profit downgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

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.

Estia Health Ltd (ASX: EHE) shares could fall this morning after the aged care home operator told investors occupancy rates fell to 93.5% as at November 30 2019. The result is lower than the rate 94.1% rate posted in August 2019 as the industry continues to struggle with poor publicity and public sentiment turning sour on the sector. The group warned it doesn't expect the situation to improve in the short term as the shadow of the Royal Commission into Aged Care Quality looms over the sector. 

It also warned that revenues were not rising as fast as expected, with average daily revenue rates over FY 2020 just 1.5% above those in FY 2019. It blamed this result on competitive pressures and a reduction in the regulator's Maximum Permissible Interest Rate (MPIR).

Estia now expects FY 2020 EBITDA on 'Mature Homes' to come in between $78 million to $82 million. As at the end of FY 2019 it had net bank debt of $110.3 million. 

The post Estia Health provides trading update appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.

For many SMSF or institutional investors you just cannot beat blue-chip bank shares for big fully franked dividend yields.

In fact Australia & New Zealand Bank (ASX: ANZ) offers a term-deposit-thumping 6.5% dividend yield plus full franking credits based on Goldman Sach's forecast for it to hold its FY 2020 dividend steady at $1.60 per share. 

According to a December 5 note of out of Goldman's research desk ANZ Bank should be able to meet tough new capital requirements imposed by the RBNZ with retained earnings from its New Zealand operations.

Importantly, Goldman's expect the bank can do this without changing how much capital is channels from NZ operations to group operations. 

In total the major Australian banks are expected to have to find another NZ$20 billion in new capital or around NZ$5 billion each to meet the RBNZ's new capital requirements over the next seven years.

Despite this regulatory blow Goldman's still values ANZ shares at $26.76 over the next 12 months. That means it has around 9 per cent upside plus dividends of $1.60 per share if Goldman's analysis is on the money.

Elsewhere, as at December 5, it's tipping Commonwealth Bank of Australia (ASX: CBA) stock as a 'sell' and has a buy rating on National Australia Bank Ltd (ASX: NAB) shares. 

The post Top analysts tips ANZ share price to go higher appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. 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.

Westpac Banking Corp (ASX: WBC) shares are loved by retail and institutional investors for their fully franked blue-chip dividends. Admittedly, its reputation got a hosing on the back of the AUSTRAC scandal, but even a record fine a mammoth fine is unlikely to hurt the dividend payouts over the short term. 

On December 5 the analysts at Goldman Sachs took a look at Westpac's valuation in the wake of the compliance failings scandal and as the RBNZ lifts the capital adequacy requirements on ADIs it regulates.

Fortunately Goldman's believes Westpac will be able to fund the additional capital it'll need in New Zealand by using retained earnings from the country.

The analysts also reckon that as Westpac has seven years to meet the new capital requirements the adjustments required won't be as impactful as first feared. 

It still thinks all the Australian banks' NZ subsidiaries are set to take a hit to return on equity in NZ, which is a key measure of profitability.

This is because the more capital banks have to keep idle in reserve, the less they can lend out at profitable returns. Therefore return on shareholder equity falls. 

Goldman's is fence sitting with regards to Westpac's shares in assigning a 'neutral' rating.

It has a 12-month price target of $25.58, versus the $24.24 price shares change hands for today. 

The post This top broker is 'neutral' on Westpac shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. 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.