The gain comes off the back of an announcement to the market this morning that the engineering contractor had been awarded a long-term contract with NBN Co Limited.

Let's take a look at the details of the deal, and why I think Downer is a company to keep an eye on.

What did Downer announce?

According to the release, Downer has been awarded a unified field operations contract with the NBN at a value of $320 million, to take place over the coming 8 years.

The contract is expected to begin in September 2020 for an initial 4-year term, with 2 further extension options of 2 years apiece.

Downer will provide services to the NBN including network restoration, copper rehabilitation, alternate power system activities, network performance and capacity enhancement, urgent field service work and site maintenance across Western Australia, South Australia, and the Northern Territory.

Notably, this latest deal with the NBN further bolsters Downer's reputation as a leading provider of fixed and wireless network services both in Australia and New Zealand, and a key contributor to the construction of the NBN more broadly.

In commenting on this morning's news, Downer CEO Grant Fenn added:

A lot of NBN construction work is coming to completion and Downer is now transitioning to delivering NBN maintenance services. We look forward to continuing our partnership with NBN and optimising the national broadband network.

Is the Downer share price a buy?

Despite posting a net loss after tax of $150 million for FY20, I've been a fan of Downer for a while now. My thesis for the company is largely owing to their recent shift towards government and other large-scale contract work.

Examples of this include a $324 million contract in the power generation, oil and gas sectors and a $420 million contract with the South Australian government for road maintenance, both announced in July.

These new contractual agreements add to the current portfolio of Downer's projects, which includes the delivery of the Auckland City Rail Link, railway vehicles including the Sydney Waratah and Melbourne Metro train fleets, and light-rail projects in Parramatta and the Gold Coast.

Participation in these larger projects will likely provide a robust source of recurring revenue over the long-term, which is a positive for Downer's shareholders. Boasting a trailing dividend yield of over 6.1% on current prices, this company also has a track record of providing decent payouts.

In terms of potential headwinds facing the Downer share price, the company's ownership of Spotless Group continues to cause it liquidity headaches, and its recent need to raise $400 million in equity to strengthen its balance sheet and buy out the remainder of Spotless suggests COVID-19 has left a sizeable hole in Downer's coffers.

Foolish takeaway

It's great to see Downer has plenty of new work on its plate, and I like that the revenue earnings from these projects are being spread out over a long-term horizon. The NBN deal is another notch in its cap. Let's see whether the Downer share price has further room to grow moving forward.

The post Downer EDI share price lifts on NBN deal appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas has shares in Downer EDI Limited. 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 Flexigroup Limited (ASX: FXL) share price is on the sidelines today after the company announced a trading halt for equity raising. The news comes alongside Flexigroup's release of its FY20 results, as the company looks to pivot its strategy in the coming 12 months.

The Flexigroup share price was $1.30 at close of trade yesterday, after clawing back from a 52-week low of 38 cents when it bottomed out in March.

So what were the FY20 highlights for the buy now, pay later (BNPL) group? And what are the details of its strategy update?

Flexigroup FY20 result

There were some positive takeaways from the Flexigroup result overall. Its FY20 net profits remained in the black at $21.4 million, active customers were up 30% to 2.3 million compared to FY19, and transaction volumes lifted 17% on last year's levels to $2.5 billion.

Its BNPL operations delivered as much as 18% volume growth, reflecting strong performances from Australia, New Zealand and Ireland. Notably, Flexigroup's Australian online volume increased by 172% overall in FY20 and 262% in the second half of this financial year. This is reflected in booming online retail sales via BNPL more broadly.

On the other hand, revenues for the company slumped 5% to $450 million and the net profit result was 6.5% lower. This weaker overall financial performance has prompted Flexigroup to scrap its dividend payout for the time being.

As a result, Flexigroup has initiated a 1 for 3.20 entitlement offer, expecting to raise $140 million in additional equity. $115 million of this figure will be underwritten. The company said these added funds would provide "balance sheet flexibility and support the sustainable and profitable growth outlook".

Strategic update

The company's new strategy will focus around the humm platform. To maximise the platform's profitability potential, Flexigroup and its flagship products will be rebranded under the one name. This would simplify the business around "a unifying value proposition of interest-free instalment payments for consumers and SMEs".

Flexigroup CEO Rebecca James said:

FY20 has seen Flexigroup make significant progress against its strategy, with the company now primed for sustainable and profitable growth. With the simplification of the business nearly complete, and a common credit decision platform in place across our core consumer product suite, we are ready to put our firepower into larger ticket buy now pay later, and expand our offering with humm90 and bundll.

Flexigroup's rebranding to humm remains subject to a shareholder vote at the company's FY20 AGM. A reservation of the ASX ticker "HUM" has already taken place.

James said the rebrand would "simplify our story to our customers and retailers, and clarify our significant market position as a leading BNPL player and provider of long-term interest-free solutions".

Foolish takeaway

I think a parallel can be drawn between the boom of the buy now, pay later sector and the Australian gold rush that began in 1851.

Companies like Flexigroup are flocking to capitalise on this 'golden' opportunity, but to be honest I believe the bigger BNPL players like Zip Co Ltd (ASX: Z1P), Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL) are a better buy at this point. 

The post Flexigroup share price in trade halt ahead of capital raise appeared first on The Motley Fool Australia.

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Toby Thomas owns shares of Sezzle Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited and Sezzle Inc. 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 Super Retail Group Ltd (ASX: SUL) share price initially bounced as high as $10.97 in early trade, following release of the company's FY20 results. At the time of writing, however, the Super Retail share price has fallen back to $10.67, representing a modest 1.04% gain for the day so far. 

The retail powerhouse has clawed its way back from as low as $3.54 when it bottomed out in March this year, providing those who got it at the bottom with a whopping 201% gain in just 5 months.

Let's take a look at the specifics of the company's FY20 performance.

What's moving the Super Retail share price? 

In case you were unaware, Super Retail is one of Australia's largest retail operators, boasting household brand names such as Rebel Sport, Supercheap Auto, and Boating Camping and Fishing.

According to this morning's release to the market, total revenue for the group increased by over 4% to $2.83 billion. This was largely assisted by a boost to online sales of $290 million, which represented an increase of 44%. Likewise, earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 4.3% to $328 million.

In addition, underlying net profit after tax for FY20 increased by 1% to $154 million, and Super Retail will pay out a final dividend (fully-franked) of 19.5 cents per share. The group decided not to give its shareholders a pay day earlier in March due to the uncertainty proliferated by COVID-19

Notably, the FY20 fourth quarter saw an impressive rebound in consumer demand for Super Retail's products, leading to a 27% rise in group like-for-like sales in May and June.

This trend appears to be emblematic of the retail industry more broadly, with the Australian Financial Review reporting last week that Australians had spent 30% more on household goods in July this year compared to 2019. The timing is hardly a coincidence, with tailwinds including the extension of JobKeeper and other government programs, the processing of FY20 income tax returns, and the extra money saved from possible mid-year overseas holidays all benefitting the retail sector.

In commenting on the company's outlook for FY21, Super Retail's CEO said, "We are well positioned to benefit from consumer trends emerging from the pandemic, including the channel shift to online, uptake in DIY auto repairs and household projects, increased focus on personal health and wellbeing, and greater demand for domestic travel and outdoor leisure activities."

Foolish takeaway

A key question for Super Retail relates to whether Australia's latest retail shopping spree is sustainable. Having said that, today's results reflect a strong performance considering the circumstances of the past 12 months. The ease with which Super Retail has pivoted to online sales has also helped to bolster the company's FY20 results. 

The post Super Retail share price edges higher on FY20 result appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group 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.

The share price of shipbuilder and defence contractor Austal Limited (ASX: ASB) has jumped following a report the company is expanding its land, buildings and dry dock in Alabama in the United States. At the time of writing, the Austal share price was 2.57% higher at $3.59 after closing yesterday's session at $3.50. 

Let's take a look at the specifics of this morning's announcement and whether the company has the legs to return to its February highs of $4.40.

What did Austal announce?

As part of its media release to the market, Austal specified it had entered into a conditional agreement to purchase 15 acres of additional waterside land and facilities in Mobile, Alabama, USA.

It stipulated that "The acquisition would support Austal USA's new construction and service strategy by securing launch and deep water berthing capability in support of future new construction efforts including steel ships, while also giving Austal USA increased service and repair capacity in Mobile."

This is of critical importance to Austal, particularly in light of news released in June that the company would be spending US$100 million on creating a steel shipbuilding capability alongside the US Government. This capability is expected to compliment the company's existing aluminium operations.

To finance the acquisition, a sum less than US$10 million, Austal will utilise its cash holdings. The agreement between Austal and the Modern American Recycling and Repair Services of Alabama (MARS) remains conditional on undisclosed factors at this point, however the company assured the market these conditions were not unusual for this type of transaction.

Is the Austal share price in the buy zone?

Prospective investors looking at the shipbuilder will likely be optimistic the Austal share price can rise based upon the large volume of work coming through its doors.

One such example of this was the six new patrol boats ordered by the Australian Government in May, cited as a deal worth $350 million. This order will likely create homegrown jobs to assist in the economic recovery from the COVID-19 pandemic, whilst also providing a boost for the company's bright future in Australia.

Additionally, Austal's partnership with the US Government is a significant tailwind, particularly if these ties can deepen over the next few years. According to the US Department of Defense (DoD), US$705 billion will be spent on defence in FY21, a budget of colossal magnitude.

With seemingly plenty of money to go around, Austal has a unique opportunity to benefit from its relationship with the US Government. This is particularly the case if tensions between the US and China continue to linger in maritime hotspots such as the South China Sea. As well as promoting the overall priority of defence spending, these tensions at sea will likely mean continued renovation or expansion of naval craft for the US and their allies in Asia.

The bottom line is that, in theory, US-China tensions in a military context are of benefit to defence contractors like Austal. Of course, one must question whether the election of a Democratic US President in November could see a shift in policies toward China and the reversal of defence spending to some extent. This uncertainty could prove to be a drag on the current Austal share price.

Foolish takeaway

This expansion of its facilities in Alabama appears to be of key strategic importance for Austal. Furthermore, the company has a history of delivering projects in a timely manner and has plenty of work locked in over the short term. Austal reports its full-year FY20 earnings on Monday next week.

The post Austal share price jumps on Alabama expansion appeared first on The Motley Fool Australia.

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Toby Thomas has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Austal Limited. 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 Southern Cross Media Group Limited Ltd (ASX: SXL) share price has fallen lower in today's trade following release of the company's FY20 results. The Southern Cross share price bounced higher at the opening bell to 18 cents but has since retreated to 16 cents at the time of writing. This is 5.88% lower than yesterday's closing price of 17 cents. 

Having declined more than 80% from its 52-week high of 93 cents in September last year, the Southern Cross share price has faced a rocky period in FY20 to say the least.

So how did the company perform in the past financial year, and how is it shaping up moving forward?

What does Southern Cross Media do?

Southern Cross provides content for Australians through its radio, television and digital assets. It is the parent company for Southern Cross Austero, which claims to be "Australia's biggest entertainment company with the ability to reach more than 95% of the Australian population" via its various channels.

Key brands include 2Day FM, Triple M and the Hit Network, and the company also engages with the Nine Network, Seven Network, and Network Ten in programming.

FY20 results

Despite the profoundly challenging economic environment, Southern Cross managed to report a profit of $25.1 million for FY20. In addition to remaining profitable, it recorded earnings before interest, taxes, depreciation and amortisation (EBITDA) of $108.2 million for the year, translating to a positive margin of 20%. Equally notable was that all four quarters of FY20 were EBITDA positive, unlike many other members of the S&P/ASX200 Index (ASX:XJO) which have reported this month.

Southern Cross' revenues dipped by 18% for both Audio and Television assets, and the company explicitly stated it does not expect to pay a dividend in FY21, with restoration of dividends likely postponed until FY22.

Removing dividends from the equation will certainly bolster the company balance sheet, which the announcement referred to as 'robust' due to the recent equity raising and historically low net debt of $131 million.

A particularly bright spot for Southern Cross was the performance of PodcastOne Australia, which turned cash flow positive and grew revenue by 96% to $4.6 million in FY20. The formidable growth of podcast consumption is absolutely a tailwind for the company, albeit just one facet of the holistic business operations. The media release also indicated the company expects advertising revenues from podcasting to continue to rise in FY21, having seen the revenue of PodcastOne grow by 112% over the past 12 months.

Is the Southern Cross share price too cheap to ignore?

Considering how high the Southern Cross share price once was, it would be tempting to buy into the company now and sit on it for the next couple of years. I expect podcasting, and its associated advertising revenue to continue growing at a strong pace. It's also likely that Southerm Cross' radio stations will continue to maintain loyal followings.

To capitalise on these followings, the company highlighted that in FY21 it "will continue to grow our digital auto ecosystem with premium content, platforms and products attractive to our listeners and advertisers."

On the flipside, it is the case that revenues from free-to-air television continues to decline, particularly as consumers have shifted to paid subscription services like those offered by Stan and Netflix Inc (NASDAQ: NFLX). Coupled with this, Southern Cross explicitly speculated it will likely not quality for the JobKeeper extension beyond 27 September, and this may lead to liquidity issues or cash flow shortages in the coming months.

Foolish takeaway

In balancing potential risk to reward, the current Southern Cross share price remains only a watchlist item for me at this point. I think the podcasting model has the potential to continue to grow in profitability, but these gains could be offset by free-to-air television continuing to shrink in the future.

The fact that Southern Cross maintained its profitability for FY20 is a big tick nonetheless, so for prospective investors with a greater risk appetite, I think there could be considerable upside to today's Southern Cross share price. 

The post Southern Cross share price drops 6% on FY20 earnings appeared first on The Motley Fool Australia.

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Toby Thomas 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 Netflix. The Motley Fool Australia has recommended Netflix. 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 Invocare Limited (ASX: IVC) share price edged as much as 2% higher in early trade after the funeral home operator released its half-year results for FY2020. The Invocare share price has since dropped to $9.86 per share at the time of writing, down 1.40% for the day.

How did Invocare perform?

Notwithstanding the difficulties posed by COVID-19 restrictions on funeral attendances specifically, Invocare's performance was largely resilient in the circumstances. In particular, the government-imposed restrictions of funeral attendance numbers was cited as "the key driver in declining revenue".  

Invocare's revenue declined by 6.2% overall between the January and June period, operating earnings before interest, taxes, depreciation and amortisation (EBITDA) were down in the order of 22.7% and net profits after tax were down by as much as 143% compared to 2019 half-year levels.

Despite these underwhelming results, the company is seeing customer preferences return to pre-COVID trends since restrictions have eased, with higher attendances expected to drive earnings uplift for the second half of 2020.

The company will pay out to shareholders its previously deferred dividend of 23.5 cents, as well as a 5.5 cent interim dividend on 5 October.

In commenting on the results and Invocare's ability to respond to a challenging environment, CEO Martin Earp added: "Innovative new services, capital raising, debt refinancing, new operational procedures to safeguard the safety of our staff and our client families are all clear examples of a business that has responded in an agile manner to adjust to the challenges experienced due to COVID."

Is the Invocare share price in the buy zone?

As alluded to by this morning's media release, there are a couple of tailwinds benefitting Invocare's business.

Firstly, the strong performance of recently renovated funeral homes, which have outpaced un-renovated sites, is a positive indication that Invocare's 'Protect and Grow' strategy has been worthwhile. As part of the strategy, Invocare has given a facelift to dozens of its funeral homes as a means to adapt to changing societal attitudes and client needs.

On the strong trends of its renovated facilities, Invocare's CEO commented: "One of the key issues to arise from this pandemic has been the recognition by families of the important role of funeral services and this gives us confidence to continue upgrading our service offerings to ensure that we meet the changing needs of our client families into the future."

The other significant tailwind that I believe will benefit the company in the long-term is Australia's ageing population. Government figures from the Australian Institute of Health and Welfare  show that as of 2017, close to 4 million Aussies were 65 and over. With the largest market share of any national funeral operator, InvoCare's operations will be a beneficiary of this macro trend.

Foolish takeaway

Invocare's half-year results aren't anything to write home about, but I'm still a believer in the company to perform strongly in the medium to long-term. The company has a track record of paying out a nice yield of 4%, and Australia's ageing population and its continued investment in its funeral sites bodes well for Invocare moving forward.

At the time of writing, the Invocare share price remains 37% lower compared to its 52-week high of $15.79.

The post Invocare share price wobbly following half-year results appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas owns shares of InvoCare Limited. The Motley Fool Australia has recommended InvoCare 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.

The Dexus Property Group (ASX: DXS) share price is edging slightly higher to $8.53 this morning after the company released its FY20 earnings results.

Dexus is one of Australia's largest Real Estate Investment Trusts (REITs) and the largest owner/manager of office buildings. As such, its results will likely be used as a performance barometer for the commercial and industrial property sector.

Commercial property has been savaged by the COVID-19 pandemic this year, particularly as the shift to working from home has left many office buildings vacant.

So how is the Dexus share price faring in this period of economic uncertainty?

FY20 performance

Dexus reported a net profit of $983 million for FY20, a 23.3% drop compared to the previous financial year. This was largely due to lower revaluations of property assets undertaken by the company compared to FY19.

The property group maintained rent collections at 98% for FY20, although this dipped to 92% in the fourth quarter. As of 30 June 2020, office occupancy was 96.5%, which is lower than the 98% seen a year prior.

Despite the lower results, Dexus will pay a final dividend of 23.3 cents per share, taking its full-year dividend to 50.3 cents per security. This represents an attractive yield of more than 5% paid out to shareholders.

Dexus CFO Alison Harrop said the group enhanced its financial position by sourcing $1.85 billion of debt, including the issue of $700 million of 10 and 12-year medium-term notes. That increased debt duration to 6.9 years and further diversified funding sources.

"In this uncertain environment, we remain focused on maintaining the strength of our balance sheet," she said.

Dexus also maintains a sturdy $1.6 billion of cash and undrawn debt facilities. The property group provided no guidance for FY21 due to the current economic uncertainty.

Should you invest?

With the Dexus share price reaching an all-time high of $13.51 in February of this year, COVID-19 has put a large hole in its current price performance. The group's prominent exposure to office property is largely to blame for this.

I do like that the company maintained its dividend yield despite the pandemic. But with so much future uncertainty, I have my doubts about how well the Dexus asset portfolio can hold up in FY21.

In contrast, property competitors like Goodman Group (ASX: GMG) have thrived in recent weeks due to their exposure to warehousing and industrial property. This is a by-product of the unprecedented growth in e-commerce, leading to Goodman reaching an all-time high of $18.51 this week.

If I was trying to diversify my portfolio and gain some exposure to property, I'd look at a REIT like Goodman due to its quality industrial portfolio, rather than Dexus' plentiful dead weight of office buildings. On this basis, the Dexus share price is just a watchlist item for me right now.

Foolish takeaway

The Dexus share price performance may hinge on how soon large numbers of people return to the office. With such an attractive dividend yield, a buy and hold strategy may be an option. A COVID-19 vaccine could make all the difference for a return of bustling Australian cities once more.

The post The Dexus share price edges higher following FY20 results appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas 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 Treasury Wine Estates Ltd (ASX: TWE) share price plunged by as much as 17% in this morning's trade, but has marginally recovered to currently sit at $10.71 at the time of writing.

This negative price movement has taken place in response to news reported by the Australian Financial Review that China is preparing to levy hefty import duties on Australian wine exports. Australia's annual exports in wine are estimated to be over $1 billion in value, the large majority of which is conducted by Treasury Wine.

These added restrictions could be a significant headwind for the wine-maker, and this is seeing a largescale market sell-off of Treasury Wine shares.

What are the details?

China's Ministry of Commerce landed the latest punch in the escalating tensions between Australia and China this morning, revealing it would investigate the alleged dumping of wine by Australian businesses.

It is believed that an anti-dumping complaint from the local Chinese wine industry sparked this investigation, which could profoundly limit Australian exports of wine to China in the coming months.

The AFR further reported that the dumping investigation would include all Australian imports of wine in containers of 2 litres or fewer.

As of May 2020, Global Trade Atlas estimated that Australia represented a whopping 37% of China's imported wine by value, with France (27%) and Chile (13%) also featuring on the podium.

In response to the revelations, Treasury Wine cited in a market announcement they would cooperate with Chinese and Australian authorities on the matter, and that the company "has had a long and respectful relationship with China over many years through its team, partners, customers and consumers."

What this could mean for Treasury Wine's earnings

This strips the wind from the wine-maker's sails just after it presented better-than-expected full-year earnings for FY20 just last week. Its share price jumped about 10% off the results, which included net profits down 25%, but a dividend of 8 cents per share and positive signs of COVID-19 recovery in the Chinese market.

The optimism shown by the market has thus been short-lived, with all of the gains from last week stripped away following this dumping investigation. It's too early to tell how this may affect Treasury Wine's earnings for the coming 12 months, but higher tariffs and less bottles of wine being consumed in China suggest one thing – lower profit margins.

Treasury Wine may just have been caught in the political crossfire between Canberra and Beijing, similar to the barley and beef industries, but nonetheless today's announcement has muddied the waters for the wine-maker's future earnings outlook.

The post Here's why the Treasury Wine share price is getting hammered today appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas owns shares of Treasury Wine Estates Limited. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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.

The Catapult Group International Ltd (ASX: CAT) share price has surged more than 5.7% higher today. The company has clawed its way back from a 50 cent low in March with the Catapult share price today an impressive rally of 290% since bottoming out.

This morning, the sports data provider revealed it had been awarded a major contract in Hungary – Catapult's largest capital sale to date.

What does Catapult do

Catapult provides technology and data analysis software services to high-performance sporting organisations.

Services include wearable player technology, video analysis and an athlete management platform. Overall, the software as a service (SaaS) allows athletes and coaches to maximise performance in a variety of sporting contexts.

Why did the Catapult share price surge today?

Catapult has been awarded a major contract with BMSK Sport Közhasznú Nonprofit Kft in Hungary. The deal involves 16 sports academies and teams across 3 national sports over the next 4 years.

Catapult's video analysis, player-worn technology, and its ClearSky GPS system will support the Hungarian academy's football, handball and basketball teams.

The deal boosts its presence in the European market, where it has already established relationships with the French, Welsh, Romanian and Swedish football federations.

Catapult chief commercial officer Matt Bairos said:

The combination of video and wearable insights was a key contributor to the success of our tender response, and we remain uniquely positioned to offer new performance insights through combined solutions.

Should you invest?

Catapult has a few tailwinds going for it right now. Earlier this month, the company won a video exchange contract for 130 US college football teams. That, together with today's deal, indicates plenty of business coming through the door.

In addition, the company reported in July it was cash flow positive a year ahead of schedule. This was driven by an improvement in the professional sports landscape globally after the impact of COVID-19. Sports organisations appear to be returning to business as usual, and that's good news for Catapult's unique product offering.

The movie Moneyball, about how data analysis spurred the Oakland A's to a record 20-game winning streak, shows just how imperative data is in sports.

On top of that, large sports teams maintain fat budgets, and usually have the extra cash to outsource to companies like Catapult for data analysis. Whether COVID-19 will reverse this trend is a valid question, however. Fewer or no fans in the stadiums arguably restricts profits.

Overall, I think Catapult a highly attractive investment prospect.

If the company can keep signing big deals and reap the benefits of recurring client revenue, look out for the Catapult share price to grow in the years ahead.

The post Catapult share price surges on award of record contract appeared first on The Motley Fool Australia.

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Toby Thomas owns shares in Catapult Group International Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International 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 long-awaited initial public offering (IPO) of shares for a neobank in Australian equity markets is expected to occur as early as next week.

According to a report in the Australian Financial Review (AFR), fintech company Douugh launched a pre-listing capital raise of $750,000 via the online platform Equitise late last week.

The AFR reported that the pre-IPO funding was secured within an hour of being shared, making it the quickest crowdfunding effort seen by the Equitise platform to date. This sensational backing by investors suggests a heap of excitement around the neobank and its unique features.

What is a neobank?

For those unfamiliar, neobanks perform almost identical functions to traditional bricks and mortar banks like the big four in Australia, but do so exclusively online without physical branches.

For some people, the inability to go into your local branch and do your banking is a deal-breaker. Neobank proponents believe the inevitable cost-reduction of being purely online represents a slimmer and more profitable business model.

Many would have heard of 'Up Bank', which is owned by Bendigo and Adelaide Bank Ltd (ASX: BEN). Up Bank was the first neobank to hit Australia, and provided snazzy features like a bright red debit card and a decent savings interest rate of 1.5%.

These innovative features draw in millennials and younger customers who find the benefits of a local bank branch negligible and would rather choose minimal fees and maximum savings.

How is Douugh different?

According to its webpage on Equitise, Douugh is taking "a proprietary artificial intelligence (AI) first approach to disrupting the business model of banking". This to be achieved by helping customers spend wisely, pay off debt, save more and build wealth through a smart bank account and debit card.

It is believed that Douugh and a washed-up telecommunications company already listed, Ziptel Ltd (ASX: ZIP), will in effect merge in a complex deal known as a reverse takeover. In layman's terms, the neobank will start as Ziptel but relist almost immediately as Douugh Ltd under the ticker ASX: DOU .

Douugh is predominantly a US-focused company. It has launched its mobile app to the US app store and partnered with American institution Choice Bank. Notably, Douugh has formed a global strategic partnership with payments powerhouse Mastercard, an alliance which is potentially adding to the hype of its pre-IPO popularity among investors.

Should you invest

It is widely known that the 'GOAT' investor Warren Buffet has never been much of a fan of IPOs. But at the end of the day, whether you should invest boils down to if you think neobanks are the future.

On one hand, neobanks attract minimal fees for customers, provide innovative budgeting tools and lower overheads, and often facilitate higher interest rates to encourage savings.

Overall, part of me thinks neobanks are the future – that they will incrementally chip away at the market share of the big 4 banks due to their popularity among millennials. For now though, the Douugh IPO is a bit too spicy for my risk appetite so I'm staying on the sidelines a little longer.

Keep an eye on Douugh when it launches in the coming days. If it performs well, I wouldn't be shocked to see a few more neobanks listing on the ASX in the future.

The post Should you invest in Douugh when the neobank pioneer lists on the ASX? appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas 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.

Ampol today announced a $1.4 billion property trust deal with partners Charter Hall Group (ASX: CHC) and Singapore's GIC.

The fuel and convenience giant has been mitigating risks since the initial public offering (IPO) was unveiled last November. The risks include market volatility as a result of COVID-19, extreme shocks to the oil price and a failed takeover bid by Canadian firm Alimentation Couche-Tard. Let's look at what this means for Ampol shares.

What's in today's announcement?

Ampol revealed the unlisted property trust would hold 203 of its core freehold convenience retail sites (petrol stations), with Ampol maintaining a 51% controlling stake, and the Charter Hall & GIC 'consortium' acquiring the other 49 per cent.

The consortium will pay $682 million for this stake, which values the entire 203 property trust at $1.4 billion, and Ampol will pay $77 million in rental payments to the trust in its first year.

The plan is that all sites within the property trust will be leased back to Ampol under long-term arrangements, the average being 19.2 years. This lengthy duration gives the fuel company added security, as it will benefit from long-term lease repayments and the liquidity that provides.

Ampol will use the proceeds of the deal to reduce its debts, which have ballooned because of the pandemic and lower demand for both jet and everyday vehicle fuel.

Ampol CEO Matt Haliday said: "Following the completion of our retail network review in 2019, we identified the opportunity to unlock the value of our high-quality retail property assets through a transaction that would demonstrate value, whilst importantly allowing Ampol to retain strategic and operational control over our core convenience retail network."

Should you invest in Ampol shares?

The property trust deal gives Ampol more flexibility to buy future sites and sell additional properties into the trust over time. I like the company plan, which is to unlock financial capital without being forced to change its operating structure.

The big test from here will be whether the additional funds freed up by this property trust will find their way back to shareholders in the form of dividends.

I'm also waiting to see how Ampol performs when it provides its full-year earnings for FY20 on 25 August. Of particular interest will be the impact of the pandemic on its earnings and operations, and whether there will be some clarity for shareholders with an FY21 forecast.

The market's adverse reaction to this morning's news may also be attributed to the upfront $77 million that Ampol will need to fork out to get the ball rolling. In addition, the original announcement last year said that 250 sites would be incorporated in the transaction. The negative price movement in Ampol shares may thus communicate an underwhelming shareholder response.

Foolish takeaway

In principle, it's good to see Ampol attempting to unlock additional value for its shareholders. I'm enthused by the long-term duration of this agreement and the stability that provides.

Having said that, keep an eye out for Ampol's FY20 earnings next week to assess both the tailwinds and risks facing the fuel retailer moving forward.

The post Why the Ampol share price is lower today appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas owns shares of Ampol Limited. 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.

Having successfully fended off new cases of COVID-19 for 100 days prior to this week, media reports this morning now say that 36 new cases of the virus have infiltrated New Zealand's borders. To restrict further infections, NZ Prime Minister, Jacinda Ardern, has selectively imposed renewed short-term restrictions across the country. If case numbers continue rising, however, it is likely these restrictions will become more widespread and longer lasting. This could potentially impact the share prices of NZ-based ASX shares. So, should prospective investors be looking to buy these ASX-listed Kiwi companies if they take a dive?

2 ASX shares that could become buys

Air New Zealand Limited (ASX: AIZ)

Having reached a 52-week high of $2.94 in January of this year, the Air New Zealand share price now trades at $1.20 at the time of writing.

As one of the many businesses devastated by the pandemic, Air New Zealand reported to the market in June that it was expecting to deliver a full-year loss of $120 million for FY20. Despite this result, however, the company was optimistic in June that NZ's scaling back of restrictions would allow it to slowly restart domestic flying operations.

This week's news of a spike in cases will likely foil any such plans for the airline. The news was reflected by the Air New Zealand share price taking a dive on Tuesday by over 4.5%. But investors who nabbed the airline at lows of 80 cents per share in April have still done pretty well at this point, up approximately 50% at the time of writing.

Thus, if new restrictions are imposed, and Air New Zealand shares dive below the $1 mark again, could the company be too cheap to ignore?

On the one hand, the airline seems a pretty safe bet. As the national airline, if Air New Zealand did get in to any liquidity trouble, the NZ government may very well bail it out. And eventually, the company's operations will rebound – albeit to an unknown extent.

Yet, on the flip side, three of the top brokers, Macquarie, Credit Suisse, and UBS, have all placed a 'sell' or 'underperform' rating on the airline. Some of the key risks referred to by the brokers include the high likelihood of a significant liquidity injection via debt or an imminent capital raising, the latter of which could dilute shares.

Notwithstanding this, if you've got the risk appetite and the shares dip below that $1 mark in the coming days, I still think Air New Zealand could be a good buy.

Skycity Entertainment Group Limited (ASX: SKC)

The Skycity share price has likewise been bludgeoned by the coronavirus pandemic, retreating from nearly $4 in January to its current price of $2.18.

The gaming and entertainment powerhouse was quick to inform the market on Wednesday about what an Alert Level 2 for the entire country and an Alert Level 3 for Auckland would mean for its business operations.

The announcement revealed that the company would be shutting its Auckland casino and entertainment facilities. The company's Auckland hotels and other NZ casinos, however, would remain open for the time being.

It has been a wild ride for shareholders in 2020, with the Skycity share price bottoming out at $1.10 in March, which was followed by a partial recovery to its current trading levels.

Due to liquidity issues, the company also completed a $230 million equity raise, and is expected to report its full-year results for FY20 on 3 September. Only then will it be known just how large a hole the pandemic has punched in the operations of its casinos, hotels, restaurants and bars.

If the Skycity share price takes a tumble again in the coming days, I definitely think this is a company worth looking into further. With casinos in Hamilton, Auckland and tourism-rich Queenstown, as well as Australia's Adelaide, the company has diverse market exposure and a history of paying sizeable dividends.

At the current share price, its dividend of 18 cents equates to a trailing yield of 8.3%. Whilst it may take some time to get back to these payout levels, those with a long-term investment horizon could possibly reap the benefits of another dip in the Skycity share price.

Foolish takeaway

First and foremost, let's hope our neighbours can get the pandemic under control as soon as possible, negating the need for more stringent lockdowns. If ongoing restrictions are required, however, it will be interesting to see whether these New Zealand ASX shares experience further sell offs. Both remain watchlist shares for me at this point due to the uncertainty of the NZ situation, but a further sell-off could possibly make both companies too cheap for me to ignore.

The post ASX shares that could take a hit from New Zealand lockdowns appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sky City Entertainment Group 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.

With reporting season in full swing, Australia's leading broker houses are exceptionally busy. Many have updated their analysis coverage on blue-chip ASX companies ahead of full-year FY20 results.

Three brokers are bullish on these 3 ASX shares in particular. Here's why.

Appen Ltd (ASX: APX)

UBS has placed a price target of $41 and a 'buy' rating on the tech darling, suggesting a 10% upside on the current price of $36.22 at the time of writing. Its previous target was as low as $32 for the company.

The broker is optimistic about the outlook of the AI industry generally. It sees Appen's recent hiring activity as a positive indication of progress in its North American business development.

It was also buoyed by the news from Appen's previous earnings guidance that it was stepping up investment in its supply chains. UBS sees the company's continuation of this aggressive investment strategy throughout COVID-19 as a strong sign of high confidence.

The UBS broker forecasts earnings per share of 66.5 cents for FY20, and a further upscale of 92.5 cents in FY21 alongside an increased dividend.

Appen will report full-year performance on 27 August, but having reached a record high share price of $38.47 last month, I expect this ASX share to continue to outperform.

Downer EDI Limited (ASX: DOW) 

Having reported a statutory net loss after tax of $150 million in FY20 as part of yesterday's full-year results, Credit Suisse still believes the jack of all trades contractor will outperform moving forward.

According to the broker, Downer's FY20 results didn't contain any surprises in terms of operating income and net profit. And Credit Suisse is impressed by the company's urban services operations and exposure to government contract work for FY21.

A target price of $4.70 was placed on the ASX share, with an FY21 dividend yield of approximately 4.5% and earnings per share of 30 cents expected over the next 12 months.

Downer's shares are trading at $4.30 at the time of writing, suggesting a 10% upside based upon the broker's forecast.

Coles Group (ASX: COL)

Citi has placed a target price for the supermarket giant of $21.40, representing a 13% increase from its current share price of just a nudge under $19.

The broker sees Coles as a 'buy', spurred by buoyant trading conditions for the grocery business that it believes will continue for at least the next 6 months.

In addition to the high likelihood of elevated sales growth, Citi asserts that the earnings and dividend stability of Coles is a major tailwind for the company.

Coles will announce results for the full FY20 year on 18 August, but the broker expects an FY21 dividend yield of 3.2% and a 5% growth of earnings per share over the 12 months to 72 cents.  

The post Brokers have upgraded 3 ASX shares to the buy zone. Here's why appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas owns shares of Appen Ltd and Downer EDI Ltd. The Motley Fool Australia owns shares of Appen Ltd and COLESGROUP DEF SET. 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.

While the big four banks are usually the ones stealing the limelight in the financial sector, I believe regional retail banks such as Bank of Queensland Limited (ASX: BOQ) and Bendigo and Adelaide Bank Ltd (ASX: BEN) remain desirable as investment prospects.

Both of these blue-chip institutions have some of the highest fully-franked trailing dividend yields going around, representing a historically strong income source for shareholders. Likewise, these banks are currently facing similar headwinds that include COVID-19, the weaker national economic environment and the financial recovery from Australia's unprecedented bushfire season in regional communities.

Despite facing profound challenges, are either of these banks a prudent investment right now?

Bendigo and Adelaide Bank

The slightly larger of these banks, Bendigo maintains a market capitalisation of approximately $3.77 billion and is the largest retail banking institution outside of the big four.

The Bendigo and Adelaide Bank share price at the time of writing is trading at $7.13, thus representing a price-to-earnings (P/E) ratio of 12.04. This P/E sits at a discount to major competitors such as National Australia Bank Ltd (ASX: NAB), which has a P/E of 16.4, and Westpac Banking Corp (ASX: WBC), with a P/E of 13.6, suggesting that Bendigo may be slightly better value at its current share price.

In addition, Bendigo's trailing dividend yield sits at 9.26%, having paid out a healthy last dividend of 31 cents per share in March. Of course, COVID-19 has chewed up most of the company's profits and many institutions are seeking to preserve cash. As such, market consensus is that the bank will likely severely cut its final FY20 dividend by as much as 75%. Only time will tell if this proves to be the case with Bendigo reporting its full-year FY20 results next week on 17 August.

In the meantime, brokers from Citi last week placed a price target on the bank of $7.25, rating the company as 'neutral'. The broker cited concerns over Victoria's stage 4 lockdowns as a major headwind, particularly in H2 of FY20, highlighting that this may lead to higher loan deferrals and tighter lending margins.

Although the bank's share price has struggled in recent times due to its exposure to lending in regional areas, worsened by this year's bushfires, I remain optimistic that heightened domestic travel and spending in regional areas due to COVID-19 may offset some of the losses taken on by Bendigo.

The bank has a long way to get back to its 52-week high of $11.69, but investors with a long-term view will likely see significant upside from a combination of capital gains and upper-end dividend distributions.

Bank of Queensland

This slightly smaller bank comes in at a market capitalisation of $2.8 billion. The Bank of Queensland share price currently trades at $6.17 at the time of writing. Notably, Bank of Queensland's P/E ratio sits at under 10, making it a slightly less expensive option compared to other financial institutions.

Similarly to Bendigo, the current Bank of Queensland share price is trading at a sizeable discount of 38% to its 52-week high of $9.98, which was achieved in September last year. Bank of Queensland also maintains a fully-franked trailing dividend yield of over 10%, despite choosing to defer its dividends as of April this year.

According to its results for the first-half of FY20, Bank of Queensland saw its net profit slashed by as much as 40%, and earnings per share withdraw by 16%. Operating expenses also grew by 9% due to a deteriorating economic environment.

Despite poor first-half results in what management dubbed a 'transitional' year, Bank of Queensland remained positive regarding its strong balance sheet, aided by a $340 million equity raising.

But according to reporting by the Australian Financial Review, last month Bank of Queensland reported a $112 million increase in loans over 90 days overdue, and provided loan deferrals to over 21,000 customers. This is largely inevitable due to the current difficulties facing the institution and it is great to see the bank helping out its customers in their time of need. It may, however, lead to severe write-downs on some of the company's loans and a slashed valuation of the bank.

Foolish takeaway

Some short-term pain will undoubtedly be felt for shareholders of both banks but, over the long term, I believe these regional institutions will eventually make a comeback. If I had to pick one, I'd go with Bendigo. It's a bigger player overall and its loan books appear to be holding up marginally better in the current economic climate. In addition, I get to hear from Bendigo and re-evaluate my thesis on it as of next week, rather than waiting until October for Bank of Queensland.

The post Is the Bank of Queensland share price a better buy than Bendigo and Adelaide Bank? appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas 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 Nextdc Ltd (ASX: NXT) share price hit an all-time high of $12.17 in early trade this morning. At the time of writing, Nextdc shares have fallen back to $12.

The data centre and cybersecurity provider's share price has outperformed since it fell to lows of $6.58 in March this year, surging close to 60% from its bottom.

What's driving the Nextdc share price to new heights today

Rather than this morning's movement coming off the back of a key announcement, the Nextdc share price appears to have broadly benefitted from the unprecedented growth of the digital economy.

In particular, rising demand for data storage and security services this year has benefitted the company. The impact of COVID-19 on corporate Australia has been vast, including mandated stay at home orders and the majority of the workforce transitioning to working from home. These tailwinds have seen Nextdc flourish.

Part of the unique offering provided by Nextdc is the storage of company data infrastructure and IT services, coupled with its holistic protection by security operations centres. This ensures peace of mind for its clients to mitigate the risk of data breaches or cybersecurity breaches. Its client list includes international powerhouses Amazon Web Services (AWS), Alibaba, Google Cloud, and Microsoft Azure.

Cybersecurity continues to be an increasing area of positive market sentiment, highlighted by the approximate 25% increase in the BetaShares Global Cybersecurity ETF (ASX: HACK) share price since its lows in March this year. This macro trend for companies to invest in data protection will benefit Nextdc over the long-term in my view, as the incidence of corporations choosing to outsource their data and cybersecurity operations is likely to increase.

Should you invest?

Although Nextdc hasn't provided a date for the release of its FY20 full-year results, many were impressed by the company's first-half performance in February.

Despite being prior to COVID-19, the company nonetheless grew revenue by 8%, underlying earnings before interest, tax, depreciation and amortisation rose 21%, and its liquidity of $497 million will have helped cushion the pandemic's blow.

I'm looking forward to seeing how Nextdc fared over the last 6 months, but over the long-term I expect the company to perform strongly. The shift to the digital economy and use of services in the 'cloud' is only going to be furthered over time, and the niche services offered by Nextdc are of critical importance to its clients.

The company is a watchlist item for me in the short-term, simply due to the Nextdc share price being at an all-time high, but if the price were to take a brief dive I'd be much more inclined to invest.

The post Nextdc share price hits record high – does it have room to grow? appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. 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.

I like to keep a close eye on ASX shares that brokers are giving buy ratings to and the reasons behind their bullish attitudes for those views.

Here are 3 ASX shares the experts are tagging as outperformers in the coming months.

City Chic Collective Ltd (ASX: CCX)

Leading broker Macquarie has placed a price target of $4.21 on the fashion retailer, which would provide prospective investors with approximately a 25% return at the current price of $3.37.

Macquarie analysts are enthused by its recent capital raising of $90 million to support its balance sheet and the room to manoeuvre for further growth this capital will provide. The additional liquidity will be utilised to finance the acquisition of the eCommerce assets from Catherines  from the Ascena Retail Group.

Citch Chic sagged as low as 79 cents per share when it bottomed out in March due to COVID-19, but has surged as of late due to impressive (unaudited) FY20 revenue growth of 31%.

Despite these recent successes, Macquarie remains wary of extended lockdowns in Victoria and the inevitable store closures this will cause. On the flipside, JobKeeper's extension is believed to soften the financial blow for City Chic in the meantime.

Alliance Aviation Serviced Ltd (ASX: AQZ)

Credit Suisse rates this ASX share as one set to outperform, placing a target price of $4.05 on the flight charter company. This represents a current upside of 12.5% on Alliance's share price of $3.60 at the time of writing.

The broker sees the current market for fly-in-fly-out (FIFO) workers as strong due to the continuation of commodities operations, and Alliance's exposure to chartering flights for the resources industry acts as a major tailwind for its profitability prospects in FY21.

Yesterday Alliance revealed to the market that it had achieved an 18.9% increase in net profits and close to an 8% gain in total revenues for FY20, largely aided by the diversity of its business operations.  

Although it has cut its final dividend for FY20 due to the pandemic, Credit Suisse anticipates shareholders will receive a 2.5% yield in FY21 and remains optimistic the airline will continue to exceed market expectations in the coming 12 months.

Aristocrat Leisure Limited (ASX: ALL)

Fresh analysis from brokers at Citi has categorised the gaming and leisure company in the buy zone.

Citi has upheld its price target on Aristocrat of $30.10, representing a difference of approximately 10% from its current share price of $27.37 at the time of writing.

In May, it was announced that Aristocrat's operating revenue for the first half of FY20 had increased by 7% compared to FY19, despite net profit after tax decreasing by as much as 14%, year on year.

In its current forecast for FY21, Citi expects Aristocrat to pay a dividend of 35 cents, equating to a yield of 1.3%, as well as earnings per share of $1.05.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas 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.

This drop is likely being somewhat driven by the broader losses associated with the S&P/ASX 200 Index (ASX: XJO) today, but a top broker's rating of "Overweight" for the stock this morning is definitely adding to the Treasury Wine share price's woes.

What did the broker say?

A note out of Morgan Stanley revealed that wine exports to China were down by as much as 16% in the June quarter on a year-on-year basis. Notably, Morgan Stanley saw this as a better than expected result, and in fact an improvement relative to the previous March quarter.

Although the broker didn't specify the likely causes behind this, the 2 that come to mind are the diminished consumption of premium wines in Asian markets due to COVID-19 restrictions, as well as heightened Australia–China diplomatic tensions generally creating a headwind for exports.

The company has forecast a 14% decline in FY20 operating income for its Asian markets to reflect the greater difficulty in one of its key operating environments.

Despite lower consumption, Morgan Stanley retained a current price target on Treasury Wines at $13.50, suggesting the stock may be currently undervalued by as much as 25%.

In providing a forecast for the coming 12 months over FY21, the broker expected full-year dividends of 29.70 cents per share, and earnings per share of 46 cents. On this basis, Treasury Wines could foreseeably pay out a 2.7% fully-franked dividend yield to its shareholders over the next year.

Should you invest?

I'm a big fan of the brands sold by Treasury Wine, including most famously Penfolds, Wolf Blass and the less well-known 19 Crimes brand.

While the company has been hard-hit by this year's bushfires and Australia–China diplomacy, I see a lot of upside for the company to perform strongly over the medium to long-term. The Penfolds brand has been liquid gold for Treasury Wine for decades, and I expect this to continue to a large extent moving forward.

Notwithstanding this, I expect the wine-maker to take a short-term hit for FY20 and FY21 due to the current economic recession and the impact this has on consumers' willingness to spend on luxury goods such as expensive wines.

Thus, now may be the time for prospective investors to buy into Treasury Wine, with the hope the Treasure Wine share price may get back to its September 2019 highs of as much as $19.47.

The post Why the Treasury Wine share price is sinking today appeared first on The Motley Fool Australia.

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Motley Fool contributor Toby Thomas owns shares of Treasury Wine Estates Limited. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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.

The Integrated Research share price got off to a hot start today after the company informed the market it would be releasing full-year earnings for FY19 on 20 August. The share price has, however, also been assisted by the collective gains of the ASX technology sector more broadly.

Today's result means the company has more than doubled in value since bottoming out at $2.19 in March. But I think the Integrated Research share price still has some growth ahead of it, particularly over the medium to long term.

What's driving the Integrated Research share price to an all-time high during this period of extreme volatility?

Impressive FY19 earnings

The Integrated Research share price has improved since the company, which is a leading global provider of management solutions for critical unified communications, payments, contact centres and IT infrastructure, provided a sneak-peak for expected FY19 profit guidance on 17 July.

This announcement indicated that revenue was expected to grow by around 9%-10% up to as much as $111 million. Likewise, profit after tax was touted to see an improvement of around 8%-11%.

Despite last month's announcement being subject to the necessary financial auditing requirements, the Integrated Research share price has been bolstered by over 13% since these figures were revealed.

Why I think the Integrated Research share price is still a buy

Although we'll know for sure just how well the company has performed in a couple of weeks, I like Integrated Research for its unique product offering, 'Prognosis for Unified Communications (UC)'.

In last month's profit guidance update, the company cited that its 13%-15% increase in licence sales was predominantly driven by its UC products.

Prognosis for UC is a performance management solution for voice, video and collaboration ecosystems, allowing its clients to monitor, troubleshoot, and optimise complex UC environments on-premises, in the cloud, or both.

Integrated Research offers the Prognosis suite in over 60 countries worldwide, and the company has benefitted from contracts with Avaya, Microsoft, Cisco, AT&T and Australia and New Zealand Banking Group Limited (ASX: ANZ) among others.  

I believe the growth of the company's 'Prognosis' platform is a key factor currently driving the positive movements of its share price.

Foolish takeaway

With working from home protocols resulting in unprecedented demand for software as a service (SaaS) and enhanced capabilities in the cloud itself, I see companies such as Integrated Research continuing to perform well over the medium to long term.

This company remains a watchlist item for me at this point, but I'll be keeping a close eye on its Prognosis UC platform over the coming months.

The post Integrated Research share price hits record high – should you invest? appeared first on The Motley Fool Australia.

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Toby Thomas has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited. 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 share prices of 3 stalwarts of the S&P/ASX 200 Index (ASX: XJO) have collectively fallen this morning in early trade.

At the time of writing, the Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) share prices have retreated by close to 2% to $71.88 and $17.32, respectively. The AMP Limited (ASX: AMP) share price has been the hardest hit of the 3 financial institutions, falling by as much as 12% to lows of $1.475.

What's dragging these ASX blue-chips lower?

Class action woes

This morning, the ABC revealed that hundreds of thousands of Australians who were forced to pay 'excessive insurance premiums' may have a basis for pursuing compensation claims against the financial companies, as part of 3 separate class actions.

Although court claims against Commonwealth Bank and Westpac's superannuation arm, BT Group, are expected to be commenced early next week, AMP has already been informed of claims filed against it this week in the Federal Court.

The practice leader for Shine Lawyers, the firm leading the litigation against Commonwealth Bank, AMP and Westpac, said the companies' "business models were set up to promote their own products and their own interests ahead of those of their own clients and their members."

The court actions mainly relate to life insurance and income protection policies offered by the 3 institutions.

It is anticipated that the 3 court actions are expected to be some of the largest since the Banking Royal Commission, and that is going to hurt all 3 companies if they are found to be liable for the alleged breaches.

The expected payout if wrongdoing is proven could be in the tens of millions, and that's a significant headwind sending the share prices of all 3 lower.

AMP has also been hit hard due to its announcement to the market this morning pertaining to profit guidance for the first half of FY20. As reported by my Foolish colleague here, the struggling financial institution expects underlying profit to be in the range of $140–$150 million. Judging by the dramatic fall in the AMP share price this morning, the market believes this result is an underperformance.

Is this a buying opportunity?

Some would argue that this morning's news provides investors with the ability to buy discounted shares in CommBank, Westpac and AMP.

Commonwealth Bank will announce its full-year results and provide an update on its dividend on 12 August, so many investors may take today's opportunity to buy in and take advantage of its excellent dividend record moving forward. Westpac and CommBank (and until relatively recently, AMP) shares have historically paid out sizeable yields on a fully-franked basis to their shareholders, making these financial institutions a reliable income source for many Australian investors.

On the other hand, this litigation may lead to further negative price movements for these 3 ASX shares in the coming days and weeks, as others may sell out and take profits from the recent resurgence of financial stocks.

The three companies are such large institutions that their share prices will eventually make a comeback, so in my opinion the majority of shareholders will likely take today's news as a short-term headwind.

The post What's dragging the CBA, Westpac and AMP share prices lower today? appeared first on The Motley Fool Australia.

More reading

• If I invest $10,000 in ANZ shares, how much passive income will I receive in 2027?
• 5 things to watch on the ASX 200 on Tuesday
• The RBA meets on 11 August. What could this mean for ASX bank shares?
• Here are the top 10 ASX 200 shares today
• Why ASX 200 bank stocks including CBA and NAB shares smashed the benchmark in July

Motley Fool contributor Toby Thomas owns shares of Commonwealth Bank of Australia. 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.

Shares in Coles Group Ltd (ASX: COL) rose by 1.98% to reach an all-time high of $18.54 before falling back to $18.46 at the close. Meanwhile, Wesfarmers Ltd (ASX: WES) surged as high as $47.31, just shy of its high, before falling back to $47.12 at the close. It's also worth noting that Wesfarmers is still a shareholder in Coles Group, holding approximately 4.9% of total shares in the company.

Despite no announcement coming from either company to spark this morning's upward price movement, both have been strong performers throughout 2020.

So, can the Coles and Wesfarmers share prices continue to outperform moving forward, or is this likely the peak?

Why both are pushing higher

Coles has undoubtedly benefitted from the panic-buying of groceries facilitated by COVID-19 lockdowns. According to the company's latest trading update in April, the supermarket juggernaut improved its overall third-quarter sales by 12.9% to $9.2 billion.

This overall revenue figure included a 13% improvement in its supermarkets business, which had its 50th consecutive quarter of sales growth.

While the market is waiting in anticipation for Coles to report its full-year earnings next month on 18 August, today's record share price is an indication that the company will showcase further revenue improvements in Q4. General second-wave fears and further lockdowns for Victoria over the past month will likely translate to further over-consumption at the checkout, and these macro trends are pushing the Coles share price higher.

Wesfarmers has similarly seen sales rocket from its brands Bunnings Warehouse, Kmart, Target, and Officeworks, as consumers have opted to make home improvements and update their working from home setups.

In a June trading update, Wesfarmers revealed second-half FY20 sales growth of 19.2% for Bunnings, 27.8% for Officeworks, and 68.7% for Catch.com.au. This saw the group's retail businesses deliver total online sales growth of 89% in the first half of the 2020 calendar year.

Wesfarmers will report full-year earnings on 20 August, but its red-hot share price arguably suggests the market is confident of further improvements in revenues for Q4 FY20.

Should you invest?

The price-to-earnings (P/E) ratio is a much-loved metric for ascertaining the overall expensiveness of a particular share and one of the first things I look at when researching a company.

Coles is currently situated on a P/E ratio of 20.77. This is neck and neck with competitor, Woolworths Group Ltd (ASX: WOW), which currently trades on a P/E of 19.57. It is, however, much lower than Wesfarmers' P/E of 24.44. On this basis alone, Coles may be less expensive than Wesfarmers and therefore a better current buy for investors.

However, I really like the diversity of businesses that Wesfarmers holds, particularly Bunnings, Officeworks and Catch. I think Officeworks will perform particularly well in Q4 due to many of its items being tax-deductible, and plenty of companies recently informing their employees that they will be working from home for the remainder of 2020. Its Catch eCommerce platform has also been a key beneficiary of COVID-19, offering discounted goods in a similar vein to Kogan.com Ltd (ASX: KGN). And Bunnings is a timeless household Aussie name that almost always performs.

The Wesfarmers dividend yield of 3.25% also edges out Coles' yield of 2.28%, so if I had to pick one of these 2 blue-chip companies, I'm going with Wesfarmers. I like its diversity of businesses and, after all, it is still a shareholder in Coles, so I get the best of both worlds!

The post Coles and Wesfarmers share prices reach for new highs. Should you invest? appeared first on The Motley Fool Australia.

More reading

• How many Woolworths shares do I need to buy for $1,000 per month of passive income in FY27?
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Monday
• ASX 200 technology and healthcare shares continued their comeback last week

Toby Thomas 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 owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended 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.