Four ASX shares that are not letting that hold them back are listed below. Here's why they are rising:

Amaero Ltd (ASX: 3DA)

The Amaero share price is up 5% to 32 cents. This has been driven by news that the high-value refractory and titanium alloy powders provider has entered a master purchasing agreement that includes a purchase order for titanium alloy powders with a value of $7.8 million. Amaero's chair and CEO, Hank J. Holland, commented: "Commercial activity across both segments of Amaero's business is strong. We are excited to secure a contract for titanium powder shipments in FY2027 that approximates total titanium powder sales in FY2026. We have been advancing numerous titanium powder opportunities over the past 6-12 months with several opportunities potentially exceeding 100 tonnes of annual demand."

Mesoblast Ltd (ASX: MSB)

The Mesoblast share price is up 4.5% to $2.12. This appears to have been driven by bargain hunters swooping in following a pullback in the biotechnology company's shares this week. One broker that is likely to approve of this buying is Bell Potter. It currently has a speculative buy rating and $4.45 price target on its shares. This is more than double its current share price.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix Pharmaceuticals share price is up 5.5% to $14.39. Investors have been buying the radiopharmaceuticals company's shares following the release of a major update this morning. Telix revealed that the US FDA has accepted its New Drug Application for TLX101-Px (Pixclara). It is a PET agent for imaging brain cancer (glioma). The US FDA has set a Prescription Drug User Fee Act (PDUFA) goal date of 11 September 2026. This essentially means that Telix will find out if it will be approved within the next five months.

Tivan Ltd (ASX: TVN)

The Tivan share price is up 6% to 34.2 cents. This morning, this mineral exploration company announced that it has located high-grade copper-gold mineralisation across multiple sites at the Baucau and Ossu Projects in the Democratic Republic of Timor-Leste. Tivan's executive chair, Grant Wilson, commented: "We are very pleased to share these results today, that will resonate deeply in Timor-Leste, particularly the discovery of high-grade gold. Tivan will be working closely with community and stakeholders in the Ossu and Baucau regions in the months ahead to consolidate our social license to operate and to plan forward works."

The post Why Amaero, Mesoblast, Telix, and Tivan shares are charging higher today appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher on Thursday and named below. Here's why they are falling:

4DMedical Ltd (ASX: 4DX)

The 4DMedical share price is down 2% to $4.20. This morning, this respiratory imaging technology company revealed that it has received total firm commitments from wholesale, professional, and sophisticated investors for a $150 million single-tranche institutional placement. These funds are being raised at $3.80 per new share, which represents an 11.4% discount to its last close price. The company's founder and CEO, Andreas Fouras, said: "We are pleased to welcome several high-quality global institutional investors to our share register and sincerely appreciate the strong ongoing support from existing shareholders. This placement provides 4DMedical with the balance sheet strength to accelerate U.S. commercialisation of CT:VQ at a time when unprecedented interest from clinicians is driving rapid adoption across leading academic medical centres."

Amaero Ltd (ASX: 3DA)

The Amaero share price is down 21% to 25.5 cents. Investors have been selling this high-value refractory and titanium alloy powders producer's shares after it downgraded its guidance for FY 2026. Amaero now expects revenue of $18 million to $20 million in FY 2026. This is down from its prior guidance of $30 million to $35 million. Management advised that this "primarily reflects timing delays in contract awards and revenue recognition associated with extended U.S government funding uncertainty and a temporary federal government shutdown during the December quarter."

Clarity Pharmaceuticals Ltd (ASX: CU6)

The Clarity Pharmaceuticals share price is down 4% to $3.46. This is despite the pharmaceuticals company revealing that its Phase II SECuRE clinical trial will continue as planned. This follows a formal safety review by independent doctors. The SECuRE trial is testing a targeted treatment for advanced prostate cancer using a copper-based approach.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price is down 5% to $5.08. This may have been driven by a broker note out of Citi this morning. According to the note, the broker has downgraded the wine giant's shares to a sell rating (from neutral) with a $4.80 price target. The broker has concerns over its outlook in the United States amid reports that distributor RNDC could sell operations in seven states. In addition, given recent share price strength, the broker thinks its shares are now overvalued.

The post Why 4DMedical, Amaero, Clarity Pharmaceuticals, and Treasury Wine shares are falling today appeared first on The Motley Fool Australia.

Four ASX shares that are not letting that hold them back are listed below. Here's why they are rising:

Amaero Ltd (ASX: 3DA)

The Amaero share price is up 5.5% to 47 cents. Investors have been buying the high-value refractory and titanium alloy powders producer's shares following the release of its quarterly update. Amaero reported revenue of $1.489 million. This comprises approximately $1 million from powder sales and $483,000 from Powder Metallurgy Hot Isostatic Pressing (PM-HIP) manufacturing. CEO, Hank J. Holland, commented: "We are pleased to report a milestone quarter that positions Amaero for transformational growth as we move into FY2026. The commissioning of our second advanced atomizer in Tennessee, on schedule, underscores our commitment to building a secure, sovereign, scalable, and traceable supply chain for high-value refractory and titanium alloy powders."

AMP Ltd (ASX: AMP)

The AMP share price is up 9% to $1.67. This has been driven by the release of the financial services company's second quarter update. AMP reported a 63.2% increase in Platforms net cashflows to $1,565 million. It also revealed that its Superannuation & Investments reached positive net cashflows for the quarter of $33 million. This was the first time since 2017 that this has been achieved.

Block Inc (ASX: XYZ)

The Block Inc share price is up 11% to $121.75. This follows a strong gain by the payments giant's NYSE listed shares on Wall Street on Friday. The catalyst for this was news that the Afterpay and Cash App owner's shares will be added to the benchmark S&P 500 index after Hess Corp (NYSE: HES) was acquired by energy giant Exxon Mobil (NYSE: XOM).

South32 Ltd (ASX: S32)

The South32 share price is up 5% to $3.03. Investors have been buying this mining giant's shares following the release of its fourth quarter and full year update. Summarising its performance, South32's CEO, Graham Kerr, said: "We delivered another strong quarter of operating performance, exceeding the Group's FY25 production guidance, driven by annual production growth of 20% in copper and 6% in aluminium." Another positive was that management revealed that operating unit costs are expected to be in line with its current guidance.

The post Why Amaero, AMP, Block, and South32 shares are racing higher today appeared first on The Motley Fool Australia.

Four ASX shares that are not letting that hold them back are listed below. Here's why they are rising:

Amaero Ltd (ASX: 3DA)

The Amaero share price is up 3.5% to 42.5 cents. This morning, this high-value refractory and titanium alloy powders producer announced that it has entered a technical development collaboration with US-based Auburn University's National Center for Additive Manufacturing Excellence. Additionally, recent printing and testing of Amaero's C103 and Ti64 powder has demonstrated that the powders conform with industry accepted standards and based on Auburn's testing and certification, Amaero has satisfied Velo3D's qualification condition. CEO Hank J Holland, said: "Amaero has commissioned the most advanced atomisation technology and has assembled a technical team with pioneering experience and proprietary know-how for gas atomisation of refractory and titanium alloys."

Black Cat Syndicate Ltd (ASX: BC8)

The Black Cat Syndicate share price is up 6% to 83.5 cents. Investors have been buying this gold miner's shares after it released a drilling update for the Kal East Gold Operation. Commenting on the drilling results, Black Cat's managing director, Gareth Solly, said: "Activity is ramping up at Kal East. Grade control drilling at Fingals is delivering high-grade results from the northeastern part of the open pit and we are looking forward to commencing development in the coming months. These activities are all aligned with our More Gold, Sooner strategy."

Domino's Pizza Enterprises Ltd (ASX: DMP)

The Domino's Pizza share price is up 3% to $18.56. This appears to have been driven by the release of a broker note out of UBS this morning. According to the release, the broker has upgraded the pizza chain operator's shares to a buy rating with a $22.00 price target. It made the move largely on valuation grounds following recent share price weakness. In addition, it notes that the company is aiming to cut costs quicker than expected, which could result in improved store profitability.

Ramelius Resources Ltd (ASX: RMS)

The Ramelius Resources share price is up 4% to $2.46. This morning, the team at Macquarie responded positively to the gold miner's quarterly update. It has reaffirmed its outperform rating and $3.10 price target on Ramelius' shares. The broker said: "The 4QFY25 production result beat RMS' own expectations (which we were anchored to) and continued to demonstrate strong cash generation. In the near term our valuation relies on completion of the SPR deal and key study results."

The post Why Amaero, Black Cat, Domino's, and Ramelius shares are racing higher today appeared first on The Motley Fool Australia.

Today's share price movement came after the company announced plans to build a world-class titanium powder plant in Australia.

Amaero is a specialist in metal additive manufacturing, otherwise known as 3D printing, to produce components out of various metal alloys. The company aims to supply sectors including defence, aerospace and tooling.

Let's take a closer look at today's announcement.

What did Amaero announce?

The Amaero share price bounced higher this morning after the company announced plans to construct a customised and proprietary titanium alloy powder manufacturing plant in Victoria.

In its release, Amaero said the $8 million facility was expected to be the world's most advanced titanium alloy powder manufacturing facility in the world.

It will produce aerospace-grade titanium "to the highest standards at approximately half the cost of the nearest competition", according to the company.

Amaero says this will provide the company with a "distinct advantage" when it comes to securing long-term offtake agreements with clients.

Once fully operational, the plant is expected to generate revenues of approximately $30 million per annum.

What did management say?

Amaero CEO Barrie Finnin hailed the plans, saying:

Producing titanium alloy powder in Australia will provide a stable, secure and cost-effective supply, allowing defence and other sectors to continue to advance their 3D manufacturing capabilities. This project directly supports Amaero in delivering ongoing, significant, high margin revenues via a stable commodities market.

Finnin also commented on the traction and support behind the new plant, revealing:

Amaero has signed a Memorandum of Understanding with a metal powder supply company that has established market channels for metal powder sales and we are now in the process of negotiating a collaborative distribution agreement.

In addition, we have already received letters of support for this project from two of the five largest defence companies globally indicating strong potential demand for Ti64 powder from a competitive Australian source for specific commercial and military applications.

Amaero share price snapshot

Amaero shares listed on the ASX on 6 December 2019 at an initial public offering (IPO) offer price of 20 cents per share.

The company secured manufacturing agreements for high profile companies including Boeing back in December 2020 and collaborated with Rio Tinto Limited (ASX: RIO) to commercialise its high-operating-temperature aluminium alloy.

Despite the company's positive achievements, the Amaero share price is tracking just 0.85% higher year-to-date.

The post What's happening with the Amaero (ASX:3DA) share price today? appeared first on The Motley Fool Australia.

Both the investment company's subsidiary, Li-S Energy Limited, and its affiliate, Strategic Alloys Pty Ltd, had good news to share this morning.  

Let's take a closer look at what has been announced.

Li-S moving to new, multimillion-dollar manufacturing hub

Li-S has confirmed it will be moving to a new home at Deakin University when a $20 million expansion of the university's Geelong campus is complete.

The PPK subsidiary is in the process of developing its lithium battery insulation technology.

Li-S has announced it plans to work with Deakin to leverage the new technology at its proposed ManuFutures 2 advanced manufacturing hub.

Deakin Professor Iain Martin said the campus is becoming Victoria's epicentre of research and innovation in advanced manufacturing, materials, energy, sustainability and technology.

Yesterday the university announced it will put a $10 million Higher Education State Investment Fund from the Victorian Government towards the expansion, which will double the size of the facility.

Li-S is one of the first confirmed tenants of the new addition.

A new commercialisation strategy for Strategic Alloys

Strategic Alloys is set to have a new line of customers, as its parent company partners with Rio Tinto Limited (ASX: RIO) to develop a supply chain.

Strategic Alloys is owned by three entities – 45% of the company is owned by PPK and 45% is owned by Amaero International Ltd (ASX: 3DA). Deakin University owns the remaining 10%.

Amaero provides Strategic Alloys with the essential ingredients for its High Operating Temperature Aluminium Alloy (HOT AI), while PPK delivers the company with Boron Nitride Nano Tubes (BNNT).

BNNT's are extremely flexible thermal conductors that are chemically stable. They are able to withstand extreme temperatures and are electrical insulators.

Strategic Alloys' latest news is regarding Amaero's partnership with Rio Tinto. Rio Tinto has agreed to provide alloy billets to Amaero to process into powder for 3D printing. The two companies will then work together to scale production of HOT AI domestically and internationally.

PPK Group share price snapshot

At the time of writing, the PPK share price is trading at $5.80, up 8.41% from yesterday's closing price.

Over the past 12 months, the PPK Group share price has risen by more than 96%. However, year to date, the company's shares have fallen by 3.2%.

Based on the current PPK share price, the company has a market capitalisation of around $476 million with approximately 89 million shares outstanding.

The post Why the PPK Group (ASX:PPK) share price is climbing 8% appeared first on The Motley Fool Australia.

It's worth noting that, when news broke out, Amaero shares reached an intraday high of 71 cents, up more than 23%, before some profit taking occurred.

What's driving the Amaero share price higher?

The Amaero share price is pushing ahead today after the company updated investors with the positive announcement.

According to its release, Amaero has entered into an agreement with Rio Tinto to work together on the commercialising of Amaero's high-performance, high-operating-temperature aluminium alloy (HOT AI).

Recently, Rio Tinto received a sub-licence to produce Amaero's patented aluminium scandium alloys. Under the arrangement, Rio Tinto will exclusively provide Amaero with alloy billets to process into powder for 3D printing.

HOT AI is a breakthrough type of aluminium alloy that offers superior strength and durability at high operating temperatures. The lightweight material can be used in an array of defence and aerospace applications. In addition, it can also be employed in sports equipment industries such as the manufacturing of tennis rackets, baseball bats, bicycle frames, and more.

While Amaero holds the exclusive global commercial licence rights for HOT AI, the company applied for a broad international patent coverage in July 2020. It noted that it is now in the final stage of approval.

Amaero and Rio Tino plan to scale out the patented alloy's production in Australia, the United States and other international markets.

The deal between both parties will run for a period of three years with options to extend for an additional three years. 

Management commentary

Amaero CEO Barrie Finnin welcomed the new partnership, saying:

We are very pleased to enter into this Agreement with Rio Tinto. This is an important step in the commercialisation of this high-performance aluminium scandium alloy that will be used in our breakthrough 3D metal printing technology. We look forward to working with Rio Tinto to progress the production of the alloy so we can commence the qualification process with key customers in the aerospace sector and other industries.

Rio Tinto sales and marketing vice president Tolga Egrilmezer went on to add:

As a global leader in aluminium and the first producer of high-quality scandium oxide in North America, Rio Tinto is uniquely positioned to provide a secure source of aluminium-scandium alloy to the market.

…This first sale demonstrates our ability to develop products that meet our customers' needs, drawing on our technical expertise and world class assets.

The Amaero share price has accelerated over the past 12 months, delivering gains of 425% for investors.

The post Here's why the Amaero (ASX:3DA) share price rocketed 20% on open appeared first on The Motley Fool Australia.

The company provided an update on the order this morning, after which Amaero shares were placed in a trading halt. The trading halt was requested in relation to a potential capital raising. 

About Amaero 

Amaero made its ASX debut on 6 December 2019 at an initial public offering (IPO) offer price of 20 cents per share. The company uses additive manufacturing processes, otherwise known as 3D printing, to produce components out of various metal alloys. Its clients are predominantly in the defence and aerospace industries.

Amaero is Australia's largest metal 3D printing company by volume of 3D printers. Currently, six out of the top ten defence companies in the world are Amaero clients. 

The company's growth strategy is to focus on immediately addressable commercial opportunities whilst still providing growth optionality. It aims to assist defence and aerospace clients in preparing for future military and aviation platforms utilising Amaero's proprietary metal 3D printing processes and alloys. The company says its products provide improved performance and decreased weight whilst delivering mechanical enhancements not achievable via traditional manufacturing methods.

Amaero share price performance 

The Amaero share price has rocketed more than 300% since its IPO to a closing price of 65 cents on Wednesday. The company has made a series of significant achievements since listing including: 

• Tooling agreement with Fletcher Insulation, Australia's leading insulation company, for the development of an additive manufacturing application, to provide a superior tooling solution to Fletcher and its global manufacturing network. 
• Development agreement with top 10 global automotive manufacturer for metal 3D printing of tooling. 
• Commencement of qualification statement of work for the world's largest aerospace manufacturer. 
• International patent application in final stage for its high performance titanium alloy. 

The company had $4 million in cash and cash equivalents as at 30 June and believes it can become cash flow positive by 2023.

Boeing purchase order for evaluation parts 

Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners. It also produces defence, space and security systems which support airlines and government customers in more than 150 countries. Its products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defence systems, launch systems, advanced information and communication systems, and performance-based logistics and training. 

The evaluation parts for Boeing will be developed and manufactured at Amaero's facilities in California and Melbourne. 

The post Amaero (ASX:3DA) shares in trading halt after Boeing order appeared first on The Motley Fool Australia.

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Cyan Investment Management director and portfolio manager, Dean Fergie, reveals two Aussie businesses that are winning big contracts, and some ASX-listed foreign companies to avoid.

The Motley Fool: What's your fund's philosophy?

DF: Our philosophy is to find smaller, less well-known stocks that are commercially proven but not well-recognised and likely to go through a sustained growth phase for the next 3 to 5 years or more. 

We tend to avoid really speculative businesses and businesses that are mature, and look for the next ones that are up-and-coming.

MF: So is it fair to say that your investments are focused on smaller cap?

DF: Yeah. Our philosophy is that the bigger you get, the harder it is to grow at double digit-plus rates. So by definition you have to look down at the spine of the market.

COVID-19 crash 

MF: How's the fund going this year with all the volatility?

DF: The short answer is volatile. We took a lot of pain when COVID first came out and then have retraced some of that and more since that time.

MF: Did you manage to buy anything during the March dip?

DF: We bought quite a few stocks. I think we played it reasonably well. But you can probably always do a little bit better in hindsight. 

What I saw is the stocks or the funds that were really defensively positioned in March did really, really well. Then in April and May they all did relatively poorly and vice versa. 

We made some smart investment positions, but did we put all our money into that cohort of tech stocks that have done exceptionally well? No, unfortunately not.

I think more than ever it's a really important time to be diversified. Because if you've got all your stocks in a really defensive basket, or a really aggressive basket, or technology-laden, or value-based, there'll be times when you'll do incredibly well and times where you'll do incredibly poorly. And it's very uncertain when those periods are going to be. 

Buying and selling 

MF: What do you look at closely when considering buying a share?

DF: The ability to scale… Obviously that leads to technology businesses, specifically software, but also businesses that can grow organically or that are embarking on potentially a new kind of business angle that's not largely been explored already. 

We look at a lot of tech businesses, financial services, and we're quite big in education. We've dabbled quite successfully in some food businesses — one of our early investments that was successful was Bellamy's Australia Limited (ASX: BAL). Professional services as well.

MF: What triggers you to sell a share?

DF: Disappointment in terms of management execution, or potentially if there's new competitors to come into the market, or just companies [that] disappoint on an earnings front. 

If you think you're losing money on something, or if something's changed, just sell out. Take the capital loss and move into something that's more successful. That's the way we look at things.

MF: Even if the company is doing reasonably well, would you sell out because it's reached a certain target that you might have set for yourself?

DF: Yeah, there's an element of that. I guess what happens is that if you have stocks that become very successful, they become quite a large part of your portfolio. We have a hard limit of not having any one position more than 10% of our portfolio. So when you have businesses that rise exponentially, you're forced to sell them down. I think that's sensible. 

One of the beauties of stocks is that you have these incremental changes to your holdings. It's not like buying a house where you're either all in or all out. You can fine-tune your exposure to stocks relatively easily and cost-effectively. 

That's one of the great advantages of the stock market that I think a lot of investors don't really take advantage of. They want to buy everything at the bottom and sell everything at the top, and that's unrealistic. 

So we just buy more stocks at lower prices and sell more of them at higher prices, and not try and be too binomial about those decisions.

What's coming up?

MF: Where do you think the world is heading at the moment?

DF: I wouldn't be alone in saying that the broader economy has got a lot of challenges ahead. But what we're seeing in 2020 is that there's been a massive disconnect between economic outlook and the stock market. They just don't reflect each other anymore. 

A lot of that has actually been driven by incredibly low interest rates. Just emotionally, investors don't want to leave their money in any kind of defensive asset class if it's not giving them any return. 

So every opportunity where there's a market dip, they've looked at getting into the stock market. And even the biggest funds, the pension funds, and massive super funds tend to be allocating more towards equities. On top of that, you've got a massive amount of retail day traders in the market sending stocks sky high with massive volumes. 

So whilst I think the near-term economic outlook does look challenging, I don't think it's necessarily a bad thing for the stock market because even if you've got businesses that are earning 3% or 4% earnings yields and potentially 1% or 2% dividend yield fully franked, that's a better outcome, if you're prepared to take the capital risk, than leaving your money in the bank right now.

At the end of the day, that's what drives the stock market, demand versus supply.

MF: That situation you just described, do you think it's a fundamental structural change that's here to stay? Or do you think the situation will return back to "normal"?

DF: It will depend on the direction of interest rates. They clearly can't go very much lower unless they go negative and I don't think that's looking like a realistic outcome. 

I would suggest that a lot of that rotation into stocks has already happened. The All Ordinaries Index (ASX: XAO) is not back to pre-COVID highs, but it almost is. Certainly the smaller end, the Emerging Companies Index, is 10% above where it was pre-COVID. 

So you're seeing a lot of money flow back into the stock market really, really aggressively. And it almost creates its own demand. It's almost like this elastic band in that you rail against the bullishness of the stock market till it runs so far that you just give up and cave in — and go and buy stocks like everyone else. 

But there are patches of the market that look crazily overvalued.

When we saw a potential vaccine come out and all those tech stocks tumble within the space of a day, I think that was a little bit of a warning sign — a canary in the coal mine — that it just can't go on forever. 

Sooner or later, all investors are going to come back to buying things on fundamentals. 

Overrated and underrated shares

MF: What's your most underrated stock at the moment?

DF: One stock that we've held for a while and just hasn't performed like we expected is a business called Quickstep Holdings Limited (ASX: QHL), which is an advanced carbon fibre manufacturer. 

They do a lot of work for the defence force… It's capped at sort of $60 million [market capitalisation], it does about $80 million in revenue, and is moderately profitable. 

They just penned a deal to buy a maintenance division of Boeing Co (NYSE: BA), which will add to their revenue. We look at that on just basic earnings multiples and revenue multiples and think it looks really cheap. 

Then when you look at it versus a number of these other advanced manufacturers in terms of like Titomic Ltd (ASX: TTT), AML3D Ltd (ASX: AL3), and Amaero International Ltd (ASX: 3DA)… it just looks ridiculously good value. So that's one we like. 

It's been a long slog for them to get where they are now, but they've got a lot of cash on their balance sheet. Contracts with global defence force businesses like Boeing, Lockheed Martin Corporation (NYSE: LMT) and Northrop Grumman Corporation (NYSE: NOC) — I just think it looks like a no-brainer in terms of a business to buy into, but the market just hasn't recognised it yet.

Another one that's going great guns at the moment is a hospital software provider called Alcidion Group Ltd (ASX: ALC). Again, they just signed a $9 million deal with a hospital in the UK. And they've got more than 20 million bucks in recurring revenue. They're getting very close to profitability. Global rollout. Reference sites.

MF: I see that one's spiked up this month?

DF: Yeah. It hasn't really done too much in the last 6 to 12 months. Everyone got pretty excited, went from I think about 6 cents to about 30, and has sort of come back.

With a lot of stocks, they run on momentum and then they kind of lose a bit of momentum and people get bored and they want to be on the next big thing regardless of what it is. So often you need a new contract or something new to excite people about it. 

I think [Alcidion]'s one of these businesses that just hasn't been big on announcing new contracts, but they've signed some that are really, really significant for a business that size. 

And you've seen that with the success of companies such as Pro Medicus Limited (ASX: PME) and the like. When those businesses get some success, certainly overseas, they can become very, very big businesses. 

MF: What do you think is the most overrated stock at the moment?

DF: I look at businesses like these Israeli technology ones like Weebit Nano Ltd (ASX: WBT), Dotz Nano Ltd (ASX: DTZ), Audio Pixels Holdings Ltd (ASX: AKP). 

They're all speculative businesses that are doing nothing in terms of revenue, keep sucking in investor cash, and don't make money. And they've got valuations in the hundreds of millions of dollars and I'm not necessarily sure that they've got anything particularly special. 

I'd say the same thing about businesses like Titomic — [they] don't really do much and they're still capped at a couple of hundred million bucks.

MF: Do you think there's a phenomenon these days of amateur investors egging each other on in internet forums?

DF: Oh, no doubt. A lot of investors will buy stocks because they're going up. It's pure speculation, but they just want to be in something because they think it'll be worth more next week than this week, not because they understand it, not because they think they're buying it at a cheap price, just simply because it's going up. 

You look at Kogan.com Ltd (ASX: KGN), Temple & Webster Group Ltd (ASX: TPW), Adore Beauty Group Ltd (ASX: ABY) as well. They've all got good business models, but the selling product online is not necessarily a business that's got huge barriers to entry. I mean, anyone can open up a Shopify store. 

Sure, you don't have the customer base, you don't have the reputation, you don't have the buying power, but they're not businesses that I think should be trading on 6 times sales and 100 times earnings. I can't see them scaling up any time soon. 

There's a lot out there that I would be very, very wary of on a purely valuation perspective.

Looking back

MF: Which stock are you most proud of from a past purchase?

DF: Afterpay Ltd (ASX: APT) is the obvious one. 

MF: Do you still hold it?

DF: No, we sold out a while ago. 

One that we bought quite a while ago is RAIZ Invest Ltd (ASX: RZI). That one did struggle for a while. It's an online investing platform — I think they offer a really, really good product. Their app's got great functionality. 

They're getting a lot of long-term customers — more people are interested in investing. I think that's a business that's got tailwinds from the structural change that people want to think more about investing in stock markets and not leave their money in the bank. 

Secondly, it's a technology play and it's getting good growth both here and they're looking to launch overseas as well. So that's one that I think will go really well. 

But probably our two biggest winners we've ever had are Afterpay and Bellamy's and, oddly enough, we made a lot of money out of Experience Co Ltd (ASX: EXP) for a while before it kind of went really badly.

Stocks never go up and down in a straight line. And that's one where we got in early and managed to get out enough of them that we ended up getting a good return for our portfolio over a period where it went up 2 or 3 times before they… struggled a little bit.

MF: Has COVID-19 changed or altered your investment methods at all?

DF: What's happened is that investors, if you think of yourself as a traditional strong "numbers and valuation" player… then you would have left a hell of a lot of money on the table. 

I think you're naive to think that the market is just driven by valuations. It's not. It's driven by sentiment, excitement, enthusiasm, momentum, those sorts of things. And they will drive stocks much higher than might be, in your view, intrinsic value. And they can all disappear overnight. 

So you've got to appreciate that there's a lot of other drivers in the market other than pure financial fundamentals and try and kind of second guess where other investors are going to either see risk or opportunity in the market — and try and take advantage of that.

Advice for your readers is try and blend a little bit of fundamental analysis with what you see as an opportunity and excitement towards positions. 

Probably the highest profile stock float this year has been Adore Beauty because it's a mainstream business. A lot of females know about it. It's run by a female founder. It's a great news story. 

But it was, we thought… incredibly expensive. 

People I saw were saying "Oh look, you know, there's a girl… and she wants to buy shares because she thinks it's a really good company." 

You've got to put a framework of what you're buying around it. What are you getting for your money? And if you don't know that, you shouldn't really be investing because it's not that straightforward.

The post This cheap ASX share is supplying US giants: fundie appeared first on The Motley Fool Australia.