Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

A2B Australia Ltd (ASX: A2B)

The A2B share price is down 33% to $1.41. This has been driven by the taxi payments company's shares going ex-dividend today for a special dividend. A2B, formerly known as Cabcharge, is paying shareholders 60 cents per share on 30 January. These funds were raised from the sale of 9-13 O'Riordan Street, Alexandria for $78 million.

Alumina Limited (ASX: AWC)

The Alumina share price is down 2.5% to $1.10. This is likely to have been driven by profit-taking from investors after the alumina producer's shares raced higher earlier this week. Investors were fighting to get hold of the company's shares after its partner, Alcoa (NYSE: AA), decided to curtail production at the loss-making Kwinana operation.

Healius Ltd (ASX: HLS)

The Healius share price is down 5% to $1.50. This morning, analysts at Morgan Stanley downgraded this healthcare company's shares to an underweight rating with a $1.30 price target. The broker believes that there's significant earnings uncertainty and has doubts over its earnings guidance.

Nuix Ltd (ASX: NXL)

The Nuix share price is down 13% to $1.82. Investors have been hitting the sell button today after the investigative analytics and intelligence software provider released a half-year update. Nuix expects to report annualised contract value (ACV) of $196 million to $199 million for the half. This will be up 15% to 17% over the prior corresponding period. While this means that it is on track to achieve its target in FY 2024, it appears to have fallen short of the market's lofty expectations. Its shares are up more than 150% over the last 12 months.

The post Why A2B, Alumina, Healius, and Nuix shares are dropping today appeared first on The Motley Fool Australia.

They may be in an earlier stage of their business life cycle, meaning market share could be rising very quickly. Or the industry that they are in could be fairly new.

Or the companies could be offering more innovative products and services compared to the incumbents.

This potential is especially relevant now after 18 months of underperformance from small-cap stocks. Investors have fled to safety of large caps while inflation, interest rates and wars make them anxious.

Here is a pair of small-cap ASX shares that the team at IML are loving at the moment:

8 of 9 analysts reckon this stock is a buy

Automotive parts provider GUD Holdings Limited (ASX: GUD) has already enjoyed a handsome 25.4% increase in its share price so far in 2023.

The IML analysts put this down largely to the first half performance.

"The result was underpinned by a strong performance from its core wear and tear business, while the recently acquired APG delivered a slight improvement in underlying earnings with a positive outlook on the back of an improving supply of new vehicles," read their memo to clients.

Despite the spectacular rise, a buying opportunity still exists.

"The stock still trades at a very attractive price of 12 times FY '24 earnings, with a yield of 5%, reflecting the very low expectations implied by the market prior to the result."

The wider professional community largely agrees with the IML team.

According to CMC Markets, eight out of nine analysts currently rate GUD shares as a buy.

Taxis are still going gangbusters

With the rise of ridesharing apps, taxi companies such as A2B Australia Ltd (ASX: A2B) may not be in vogue.

But that hasn't stopped the A2B share price from rocketing an amazing 43.3% year to date.

A couple of recent catalysts really pleased the market, according to the IML analysts.

"It reported a strong result in February with revenue up 22% and driver volumes recovering from the disruptions caused by COVID," read the memo. 

"Then in March A2B reported it had sold its Alexandria, Sydney property for a price of $78m which was a strong outcome in a softening property market."

The IML analysts reckon that a nice gift could be coming for A2B investors after that real estate sell-off.

"The sale should result in a sizable, fully-franked special dividend being paid to shareholders by the end of this calendar year."

That's in addition to the usual 3.17% dividend yield that A2B is already paying out.

The post 'Very attractive price': 2 small-cap ASX shares to buy before they rocket further appeared first on The Motley Fool Australia.

Why is cash flow important?

Spheria Asset Management's Portfolio Manager, Marcus Burns, explained the importance of cash flow when looking at small caps.

He commented: "When it comes to investing in small caps, too many investors ignore cash flow, but when it comes to small caps, cash is king."

"Key to our investment process is buying businesses that generate predictable free cash flows at an appropriate multiple for the forecast growth profile. By default, this lends itself to screening out companies that don't generate cash, lack sustainability or are being priced nonsensically by the market."

"The cash-flow conversion rate is a key metric in this process, and we believe it's one of the most important characteristics for enduring small-cap returns."

Given that the Spheria Australian Smaller Companies Fund has returned 33.9% (net of fees) in the six months to January 31, it certainly pays to listen to what Spheria says.

Why ASX shares does Spheria like?

The three small cap cash flow kings that Spheria likes are listed below. Here's what it has to say about them:

A2B Australia Ltd (ASX: A2B)

The first cash flow king is A2B Australia, formerly known as Cabcharge. Mr Burns explained:

"The COVID-19 outbreak has hurt sentiment towards the business given reduced taxi usage from ongoing restrictions. While the company's short-term performance in its core mobility business is likely to remain patchy the balance sheet is more than strong enough to see A2B through ($24m net cash).

"The company has also begun to articulate a measured strategy to grow its payments business into the non-taxi space in Australia and its mobility platform solutions business globally. We believe the market continues to discount an overly bearish outcome on the core mobility business let alone any success on the latter two growth opportunities.

"A2B's fundamentals are incredibly strong – its long-term rate of cash flow conversions sits at 84%, it has net cash of around $24m, yet trades on an EV/EBIT multiple of around 4x."

Monadelphous Group Limited (ASX: MND)

Another cash flow king according to Spheria is this global engineering company. The portfolio manager commented:

"What's important about this construction engineering company is that it has two divisions, one is an engineering division where it builds something once-off, the second is a maintenance division.

"We believe the maintenance division is the company's most lucrative division and it has been growing to now account for around 63% of the business.

"Monadelphous has a long-term cash flow conversion rate of 112%. It trades on around 11x EBIT, has around $200m of cash on the balance sheet and we think it presents incredibly good value especially now that the business mix has improved over time. Monadelphous stands to benefit from the improved sentiment and exploration activity in the resources sector."

Mortgage Choice Limited (ASX: MOC)

Finally, Mr Burns feels that mortgage and home loan broker, Mortgage Choice, is another cash flow king for ASX investors to look at. He explained:

"During December, MOC was one of our microcap fund's largest contributors, clocking a 20% return. We were genuinely perplexed why the stock remained so cheap after posting a robust FY20 result. Since the day of that announcement, it has returned an additional 71% showing how microcaps share price performance can sometimes badly lag the fundamentals.

"The company still only trades on a PE of 10x with net cash of $6m and a highly attractive dividend yield of +8% (fully franked) that is underpinned by a $54bn loan book."

The post Spheria Asset Management names 3 ASX small cap cash flow kings appeared first on The Motley Fool Australia.

Spheria Emerging Companies Ltd (ASX: SEC) is one of the listed funds on the ASX, it recently shared some thoughts about some of the positions in its portfolio.

Spheria's portfolio has outperformed its benchmark by more than 10% over the last six months.

These are two of the ASX shares that it talked about:

Fletcher Building Limited (ASX: FBU)

Fletcher Building was the largest position in the Spheria portfolio at the end of November 2020. It made up 4.3% of the portfolio.

This company is a diversified construction business. It makes building products including insulation and cement. Fletcher Building also operates retail businesses that sells those products and others to tradespeople across the Tasman. The company also builds homes, buildings and infrastructure.

Spheria said that Fletcher Building was the lead contributor to the portfolio, gaining 39% during the month on the back of a strong trading update for the first four months of the year followed by a strong profit guidance increase towards the end of the month.

In the first four months it saw revenue up slightly by 1%, with earnings before interest and tax (EBIT) growing by $80 million to $227 million. The EBIT margin rose by 2.9 percentage points to 8.4% because of the improved operating efficiency. In the first half of FY21, Fletcher Building is expecting EBIT to be in the range of $305 million to $320 million, up from $219 million in the prior corresponding period.

The fundie explained that Fletcher Building is seeing the benefit of a recovering housing market in both Australia and New Zealand plus the benefits of streamlining its operations over the recent housing downturns. Since the sale of the Formica division around two years ago, the Fletcher Building balance sheet has been lowly geared, putting the business in a good position for a re-bound according to Spheria.

Fletcher Building also said recently that the board expects the company will resume dividend payments in FY21.

A2B Australia Ltd (ASX: A2B)

A2B was another performer for the Spheria portfolio in November, rising by 37%.

It's the business behind Cabcharge, Silver Service, 13cabs and other brands. Cabcharge allows passengers and drivers access to fast and secure cashless payment methods. Silver Service is a premium taxi service. 13cabs provides the booking service platform, it trains drivers and helps them obtain a taxi licence, buying a vehicle and it also helps with insurance.

Spheria said that the ASX share is perceived as being a beneficiary of social movement. Having Melbourne emerge from lockdown has clearly helped the short-term outlook for A2B. The fund manager believes the company is misperceived on many levels.

The first misconception, according to the fundie, is that it's suffering major disruption from ridesharing companies. It thinks this is an incorrect view because ridesharing has grown the overall personal transport market, it hasn't dramatically reduced the number of cab trips being taken.

The fund manager believes the second major misperception is that the company doesn't have any growth potential. Spheria pointed that A2B has been heavily re-investing into payments and cab-hailing technology.

The ASX share's present valuation is still incredibly supportive and the outlook for the business both here and internationally has hardly been stronger. Despite the re-rating over the month, the fundie believes A2B is still only trading on an enterprise value / EBIT ratio of 7 times.

The post This fund manager names 2 surging ASX shares to watch appeared first on The Motley Fool Australia.

Four small cap ASX shares that were picked out by fund managers are listed below. Here's why they are positive on them:

A2B Australia Ltd (ASX: A2B)

The Portfolio Manager of Spheria Asset Management, Marcus Burns, is a fan of A2B Australia. He doesn't believe the company, formerly known as Cabcharge, is being disrupted by UBER and DiDi as much as people think.

Burns commented: "Many people think that they've been disrupted by ridesharing apps like DiDi and Uber but the data shows this hasn't actually affected the amount of cab rides, while A2B is also becoming a leading technology player in the payments space."

In addition to this, the fund manager believes A2B Australia's shares are very cheap, particularly given its evolution into a technology company. He added: "The long term rate of cash conversion at A2B has been 84% which is a good conversion rate. If you look at the balance sheet it has net cash of around $24m and trades on an EV of three to four times. It's a very cheap business, with good cashflows that is essentially becoming a technology stock."

Aroa Biosurgery Ltd (ASX: ARX)

Firetrail Portfolio Manager, Matthew Fist, believes this New Zealand-based soft tissue regeneration company could be a top option for investors. Mr Fist has a high conviction view on its technology and medium term earnings potential.

He commented: "Incredibly Aroa's product itself is manufactured from the fourth stomach of a sheep. The digestion system of any animal that has four stomachs is unique and consequently products that are derived from them are too. Our conversations with surgeons and a review of the scientific evidence confirm the superior technology of the Aroa products. Aroa offers its products at comparatively low prices to its peers and generates gross margins in excess of 75%"

Gold Road Resources Ltd (ASX: GOR)

Mr Fist is also positive on this gold miner due to its high quality ore body. He believes that it is a materially undervalued option in a sector filled with stretched valuations.

He commented: "Gold is one of the hottest sectors in the market right now, valuations across the board are stretched, however there are opportunities. Based on some bottom-up work we've undertaken on the Gold Road plant… we expect processing capacity to increase to ten million tonnes over the next two years, some 30 per cent. Gold Road is a long-life, low-cost and materially undervalued company and it is materially misunderstood by the market."

Monadelphous Group Limited (ASX: MND)

Finally, Spheria's Marcus Burns also believes that this engineering and maintenance company would be a top pick for investors. It appears to be the maintenance side of the business which gets the fund manager most excited. This business has been growing strongly in recent years and now accounts for almost two-thirds of its earnings.

Burns said: "What's important about this company is that it has two divisions, one is an engineering division where it builds something once-off, the second is a maintenance division."

He added: "This stock trades on around 11x EBIT, it has around $200m of cash on the balance sheet and we think it presents incredibly good value especially now that the business mix has improved over time."

The post Leading fund managers name 4 small cap ASX shares to buy appeared first on The Motley Fool Australia.

What's moving the A2B share price?

The A2B share price is on the move after the company announced a new partnership with Transport for NSW to provide a smartcard solution for the NSW Taxi Transport Subsidy Scheme (TTSS). The TTSS supports the mobility of 41,500 NSW residents who have a qualifying severe and permanent disability. The scheme is integral in supporting the independence of its members and their participation in the life of their communities.

A2B has been appointed to deliver a smartcard solution to replace the paper docket payment system currently in use. Consequently, A2B's payment and data services will bring the TTSS into the digital age. 

The solution will provide new and useful insights through data, enabling Transport for NSW to better serve TTSS participants, an aspect of the partnership that A2B highlights as being particularly exciting.

Management commentary

Commenting on the new partnership, A2B CEO Andrew Skelton said:

Our team is happiest when the technologies we build are leveraged to provide accessible, dependable and equitable transport. The efficiencies and data insights that A2B's technologies provide will enable Transport for NSW to continuously improve the TTSS for the benefit of communities throughout NSW… This partnership with A2B brings world class technology and data to the Taxi Industry component of the transport mix, and it's an added bonus that the technology is being provided by an Australian payments company headquartered in Sydney.

The A2B share price

The A2B share price is currently trading up 1.89% on the back of this announcement, yet remains down by approximately 47% in year to date trading. This values the company at $97.55 million with a trailing 12-month dividend yield of 9.88%. After payment of its H1 FY20 dividend, A2B has a total liquidity position of ~$74 million. This includes $24.2 million of free cash.

The post Here's why the A2B share price is on the move today appeared first on The Motley Fool Australia.

What did A2B announce?

A2B updated the market on its performance during the COVID-19 pandemic. In particular, the company advised that, after an 80% decline in payment turnover during the early weeks of the pandemic, it had enjoyed 10 consecutive weeks of growth. 

The cab operator also announced that changing customer behaviour during the pandemic, as well as an increased desire for contactless payment technologies, is fueling a period of rapid geographic expansion. During FY20, A2B subsidiary Mobile Technology International has installed its bookings and despatch technology for clients across Canada, the United States, Finland and Denmark. 

Within Australia, another subsidiary company, 13Cabs, has also grown significantly during FY20. 13Cabs has initiated service arrangements for a number of local taxi networks across regional locations such as Taree, Dubbo and Townsville. In response to demand from local operators, 13Cabs has also launched proprietary networks in Perth, Albury/Wodonga, Toowoomba, Darwin and Wollongong.

Even with this expansion, the company's active fleet numbers are still 23% lower than pre-pandemic levels but are recovering.

Financial position

I believe A2B's robust balance sheet at the outset of the pandemic, as well as its early and decisive action, have positioned the company well for continued recovery. After payment of the H1 FY20 dividend, A2B has a total liquidity position of ~$74 million. This includes $24.2 million of free cash

Social distancing and COVID-19 control measures continue to impact economic activity. However, the company's brand strength and technologies have enabled it to increase its footprint during the pandemic.

A2B share price

The A2B share price closed at $0.82 on Monday, valuing the company at $98.75 million. This gives it a price to earnings ratio of 10.04 and a trailing 12 month dividend yield of 9.76%.

The post A2B share price jumps 5% on strong growth appeared first on The Motley Fool Australia.

The Future Generation shareholder presentations happened in Sydney earlier today.

There are two Future Generation listed investment companies (LICs), being Future Generation Investment Company Ltd (ASX: FGX) and Future Generation Global Investment Co Ltd (ASX: FGG), that invest in Australian fund managers and pay 1% of the NTA to youth charities each year instead of management fees.

Two of the participating fund managers named a few ASX stock picks at the meeting, those fund managers being Ben Griffiths from Eley Griffiths Group and Geoff Wilson from Wilson Asset Management.

Ben Griffiths

Cabcharge Australia Limited (ASX: CAB)

What may be a surprise to some readers was the choice for the taxi business. It provides dispatch, logistical and payment services for taxis. It also provides vehicle leasing, loans, insurance, smash repairs and driving training.

Over the past five years its share price has almost halved but Mr Griffiths thinks there could be better times ahead with the company heavily investing in developing its technology and its taxi app to challenge Uber.

Nearmap Ltd (ASX: NEA)

Nearmap is a leading aerial imaging business that provides frequently-updated, high-resolution photos to various entities. An example of its use is for management to check how a construction project is progressing.

Nearmap has a 25% market share in Australia but it only has a 1% market share in the US – Mr Griffiths thinks there is a lot of growth potential in this market. Nearmap is also looking at expanding into Canada.

Geoff Wilson

Austal Limited (ASX: ASB)

Aside from going for a non-ASX pick, Mr Wilson chose Austal as an Australian share option.

This is a global ship building business and defence contractor that designs, constructs and provides support for defence and commercial vessels.

Geoff Wilson said he was attracted to this business because it's trading at only 13x earnings yet is growing at 20% per annum. It also comes with a handy unfranked dividend yield of 2.6%.

Foolish takeaway

None of the above picks are what I'd typically look at for my own portfolio, but each one has compelling reasons for why it could be a market beater over the next year or two.

The post Leading investment managers name 3 top ASX stock tips appeared first on The Motley Fool Australia.

With so many results being announced, I wouldn't be surprised if these three slipped under the radar:

The Australian Vintage Limited (ASX: AVG) share price dropped 1% to 54 cents today despite the wine company posting a net profit after tax of $7.7 million on revenue of $264.6 million. This was an increase of 79% and 16.9%, respectively, on FY 2017's result. A key driver of this growth was a 14% increase in the sales of its McGuigan, Tempus Two, and Nepenthe brands. North American sales grew 31% in FY 2018 thanks to a significant increase in sales to Canada. Management expects earnings growth of 10% in FY 2019 based on a GBP exchange rate remaining at around 56 pence. If the British pound isn't hit by the Brexit, I feel Australian Vintage could be a great investment.

The Cabcharge Australia Limited (ASX: CAB) share price sank 7% lower to $2.10 after the payments company reported a 22% increase in revenue to $185.5 million, but a 36.2% decline in underlying profit after tax to $13.6 million. The decline in profits led to the Cabcharge board slashing its full year dividend down to 8 cents from 20 cents in FY 2017. While the company appears positive on the year ahead, it seems some investors aren't sticking around to find out how it fares.

The Marley Spoon AG (ASX: MMM) share price finished the day flat at 95 cents after releasing its half year results. The subscription-based weekly meal kit company posted half year revenue of €39.5 million on a constant currency basis, up 99% on the prior corresponding period. Marley Spoon's top line was boosted by strong growth across all regions, particularly in Australia. The strong first half means that the company is on track to meet its prospectus forecast for FY 2018.

The post 3 results you might have missed on Wednesday appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they are tumbling lower today:

The Cabcharge Australia Limited (ASX: CAB) share price has fallen 7.5% to $2.09 after the release of its full year results. Although the payments company reported a solid 22% increase in revenue to $185.5 million, its underlying profit after tax sank by a sizeable 36.2% to $13.6 million. This forced the Cabcharge board to slash its full year dividend down to 8 cents from 20 cents in FY 2017.

The ELMO Software Ltd (ASX: ELO) share price has tumbled 4.5% to $7.16 following the release of its full year results. The technology company's shares were down as much as 15% at one stage before bouncing back strongly after lunch. The catalyst for the sell-off may have been its EBITDA guidance for the year ahead which overshadowed an impressive full year result.

The Experience Co Ltd (ASX: EXP) share price has fallen a little over 3% to 44.5 cents after the adventure company posted full year revenue of $135.3 million and normalised EBITDAI of $30.2 million. This was a 51.1% and 34.8% increase, respectively, on FY 2017's result. Earnings per share came in at 1.34 cents, meaning its shares are changing hands at 33x earnings now. Which I think is reasonably good value considering its guidance for EBITDAI growth of between 22% and 36% in FY 2019.

The Speedcast International Ltd (ASX: SDA) share price has continued its decline and is down a further 5.5% to $3.97. The remote communications and IT services provider's shares plunged lower on Tuesday after it downgraded its full year guidance. This led to Morgans downgrading its shares from an add rating to hold with a reduced price target of $4.09. I would have to agree with Morgans on this rating.

The post Why these 4 ASX shares are tumbling lower today appeared first on The Motley Fool Australia.

The taxi payment solutions provider fell 2.2% to $2.23 in afternoon trade when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index slipped 0.5%, although Cabcharge is still 30% ahead in the last three months compared to a 6% gain by the broader market.

This puts the stock on par with other small cap stars like oil explorer FAR Ltd (ASX: FAR), sterilisation equipment maker Nanosonics Ltd. (ASX: NAN) and apparel retailer Noni B Limited (ASX: NBL).

No large cap stock has managed to rally by more than 30% over the same period with gaming machine maker Aristocrat Leisure Limited (ASX: ALL) coming the closest with a 29% gain and takeover target APA Group (ASX: APA) right behind with a 24% uplift.

Investors have been buying back into Cabcharge on signs that ride-sharing company Uber is losing popularity among users and drivers.

Recent media reports suggested that Uber drivers were getting less than minimum wage after expenses, while customers are increasingly being put off by Uber's surge pricing.

UBS has scrutinised the taxi and ride share market in Australia and believes that Uber's momentum has slowed even though its app still accounted for almost half of the mobile downloads in the month of June (compared to 71% in the 2017 December quarter).

However, Cabcharge only enjoyed a minimal increase in market share and most of its gains came from other taxi-only apps.

It seems that Uber's market share loss is going to other ride-share competitors like Ola and Taxify, while Uber's Chinese rival Didi Chuxing recently launched in Melbourne.

"Momentum appears to have slowed for Uber in both app downloads and share of UBS taxi spend," said UBS, which marked down Cabcharge to "sell" from "neutral".

"However, CAB has only recorded a minimal uplift as a result – with the majority of the benefit going to competitors."

This isn't to say that Cabcharge's earnings momentum won't improve in the near-term, which is why the broker upped its price target to $2.15 from $1.65 a share, although UBS warns that the stock could be cum-downgrade.

UBS believes consensus forecasts are too bullish and will need to be adjusted lower. Based on the broker's estimates, the stock is trading on a FY19 price-earnings (P/E) multiple of around 17 times, and that's too rich for my liking.

If you are looking for another small cap star performer with a brighter earnings outlook, the experts at the Motley Fool have just the thing for you.

They've uncovered an emerging stock that is well placed to keep running ahead in FY19, if not beyond, and you can find out what this stock is for free by clicking on the link below.

The post UBS warns Cabcharge Australia Limited's (ASX:CAB) Uber advantage is over appeared first on The Motley Fool Australia.

Unfortunately, not all shares on the market have been so fortunate. Three shares that have been given the unwanted sell rating are listed below.

Here's why these leading brokers think you should sell them:

Cabcharge Australia Limited (ASX: CAB)

According to a note out of UBS, its analysts have downgraded this personal transport solutions provider's shares to a sell rating from neutral with an improved price target of $2.15. Although the broker notes that its analysis has shown a slowdown in Uber's app downloads and share of the taxi market, it isn't convinced that Cabcharge is benefitting as much as the market expects. As a result, it feels that its valuation has become stretched. I would agree with UBS on this one and think that Cabcharge is probably best avoided.

Freedom Foods Group Ltd (ASX: FNP)

A note out of Morgans reveals that it has downgraded this health foods company's shares to a reduce rating from hold with a lower price target of $5.50. The broker appears to have been left disappointed with the company's recent update which resulted in its fourth downgrade in as many years. Furthermore, the broker is concerned that the market's expectations are too high, which could result in more disappointment in the years to come. While I agree that the recent update was disappointing, I think it is worth holding Freedom Foods for the long-term. Especially after its UHT production capacity upgrade.

Wesfarmers Ltd (ASX: WES)

Analysts at Morgan Stanley have retained their underweight rating but increased the price target on Wesfarmers' shares to $42.00. The broker is reasonably bearish on the retail conglomerate due to its exposure to the slowing housing cycle through its Bunnings brand. It is concerned that when Coles is spun-off it could find its shares de-rated due to the greater focus on Bunnings' earnings. While I may not necessarily rush to sell shares if I owned them, I wouldn't be a buyer unless they came down to a more attractive level.

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

Despite spending just $7 million on MTI, Cabcharge presented the acquisition as a significant strategic move towards the renovation of its dispatch and payment tools for taxi operators, aimed at enhancing service experience and enabling the company to compete with other personal transport companies.

This sounds like an obvious reference to rideshare companies like Uber, which recently disrupted the industry with their more technologically advanced offer.

However, the acquisition might also be a way for Cabcharge to establish a presence overseas, as MTI works with taxi companies in North America and in the UK, and owns and operates Mantax Taxis, the largest cabs network in Manchester.

The transaction should be completed by the end of the year, subject to the approval from the Australian Competition and Consumer Commission.

In fact, MTI provides its technology to most taxi networks in Australia, including Cabcharge's competitors. In order to ensure that MTI doesn't discriminate its other customers, Cabcharge intends to keep it as a separate entity, maintaining its existing management structure.

The post The Cabcharge Australia Limited (ASX: CAB) share price falls on new acquisition appeared first on The Motley Fool Australia.

I often talk about how I only invest for the long-term and prefer shares like Challenger Ltd (ASX: CGF) and InvoCare Limited (ASX: IVC). Hopefully they prove to be successful long-term investments.

It would be fairly easy to say that Nine Entertainment Co Holdings Ltd's (ASX: NEC) market power is nowhere near as strong as it was 20 years ago. Free-to-air television businesses are no match for Facebook and Alphabet (Google) right? Yet, the share price has gone up by 186% since the end of October 2016.

Every share punter was saying that Cabcharge Australia Limited (ASX: CAB) wouldn't have long to live. Uber was supposedly going to take its lunch in no time at all. Since its low in March 2018 it has gone up 45%. In three months this 'dinosaur' stock has dramatically outperformed the market.

Infigen Energy Ltd (ASX: IFN) is down over 40% since mid-2016, yet it's up 17% since the end of March 2018.

My point here is that every business has a value at some point and perhaps is undervalued if it keeps going down.

Foolish takeaway

However, that's not to say you should suddenly start investing in shares that have tanked. If you have a knack for valuation and a high-risk tolerance then those opportunities are there, but I'd much rather stick to my long-term buy-and-hold investment strategy.

The post You can make big returns with unloved shares appeared first on The Motley Fool Australia.

This is the strategy described eloquently by Forbes magazine whereby the investor searches for "beaten-down shares of unloved, troubled companies–firms whose earnings have been shrinking, whose industries are perceived to be in trouble, or whose plans for growth are being questioned. These companies' shares tumble to the point that they look quite cheap and attractive compared to earnings, sales, cash flow or book value, even if the businesses themselves are not particularly good."

Buffett himself said it was "like picking up a discarded cigar butt that had one puff remaining in it. Though the stub might be ugly and soggy, the puff would be free. Once that momentary pleasure was enjoyed, however, no more could be expected."

One beaten down share that value investors might be looking at is Cabcharge Australia Limited (ASX: CAB).

The company has faced a number of challenges which knocked back its share price to a low of $1.63 in March this year but since then, it's up 35%. The AFR even reported that some savvy fund managers were profiting from this upward trend.

So, are shares in Cabcharge worth buying? Here are a few considerations.

Context

The first thing to consider is context. Cabcharge might be up 35% over the last 3 months but it's still down over 80% from its $13 peak in 2007.

Valuation

As you can see above, based on some traditional valuation metrics, Cabcharge shares are cheaper than the overall market.

Growth rates

When you look at how the business has performed, you will notice that Cabcharge has experienced declining sales, earnings and cash flow for each of the last 1 year, 5 years and 10 years.

Looking ahead

Stepping away from the numbers and just considering the prospects of the business going forward, I think there are still a considerable amount of challenges for Cabcharge to overcome. The elephant in the room remains the threat posed by ride-sharing tech companies such as Uber.

Foolish Takeaway

While based on some metrics Cabcharge shares look cheap, the overall prospects of the business don't look promising and further technological advancements could disrupt the business. I would focus my attention on more promising businesses such as these four stocks.

The post Should value investors buy Cabcharge Australia Limited (ASX: CAB)? appeared first on The Motley Fool Australia.

Three shares which have been experiencing meaningful insider buying this month are listed below. Here's what you need to know:

Cabcharge Australia Limited (ASX: CAB)

This month the taxi payment processor's non-executive director Clifford Rosenberg instructed his broker to snap up $200,000 worth of shares on-market following the release of Cabcharge's half-year results. This took Mr Rosenberg's holding up to 111,307 shares and was hot the heels of fellow non-executive director, Louise McCann, who snapped up $25,000 worth of shares through an on-market trade last week. These directors appear to believe that the Cabcharge turnaround is working.

Computershare Limited (ASX: CPU)

According to a change of director's interest notice, non-executive director Abigail Cleland has picked up 11,500 shares of the share registry company for $202,630 through an on-market trade. Despite Computershare's share price being close to a multi-year high, Ms. Cleland clearly has confidence that the company's strong performance can continue long into the future and drive the share price higher. In addition to Ms. Cleland, fellow non-executive director Lisa Gay dipped into the market last month to purchase almost $200,000 worth of the company's shares through an on-market trade.

G8 Education Ltd (ASX: GEM)

This week Professor Julie Cogin picked up 15,000 shares in the childcare operator for $41,400 through an on-market trade. The non-executive director wasn't the only one dipping a toe into the market. Fellow director Susan Forrester picked up 9,818 shares for approximately $27,000 through an on-market trade as well. This was the sixth time in the space of a month that insiders have bought G8 Education's shares, which could be a positive sign for shareholders.

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• Revenue was up 13.8% to $90 million
• Cabcharge had a net loss of $5.1 million which was substantially lower than the previous half year period which included a loss on disposal of a discontinued operation
• The fleet size is now at 1,352 cars following the Queensland yellow cabs acquisition
• An interim fully franked dividend of 4 cents per share was announced

Cabcharge also recorded a non-cash impairment charge of $12.2 million for its taxi licence plates following a similar impairment charge of $7.9 million during the June financial year.

That's not surprising following the experience in New York City, a city famous for its yellow cabs among other things. Taxi medallions in the Big Apple (the licence required to operate a yellow cab) used to sell for over US$ 1 million and in recent times, some have sold for as low as $105,000 according to the New York Times. The US not only has Uber, but also Lyft as the main disruptors in the taxi industry.

Cabcharge management are obviously aware of this threat and are heavily investing in technology initiatives such as the 13CABS app and the adoption of the Alipay payments system.

The Cabcharge share price has fallen 86% since its peak in 2007 and it remains unclear how much of the Uber effect has been priced in.

What is clear however is that Cabcharge is in an industry that has been undergoing major disruption. While it remains Australia's number one taxi network, I'm not too optimistic about the long term.

Instead of investing in the disrupted, I'd rather invest in the disruptors. Today's growth companies and tomorrow's blue chips can be found in companies that are redefining their industries.

In the report below, we identify three companies on the ASX that we view as disruptors. I encourage you to have a read and learn more about them!

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Investors clearly loved the idea, with the share price up by 117% in one day. It's going to be called the KODAKCoin and use the same Blockchain technology as the other cryptocurrencies.

Kodak is launching an image rights management platform called KODAKOne that will create an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they can then license within the platform.

The KODAKCoin will allow participating photographers to take part in a new economy for photography, receive payment for licensing their work immediately upon sale and sell their work confidently on a secure blockchain platform.

The KODAKOne platform will continually trawl the internet to monitor and protect the intellectual property of the images registered in the system. Where unlicensed usage of images is detected the platform can efficiently manage the post-licensing process to reward photographers.

This idea sounds completely out of the box for Kodak, which seemed destined to be left behind in this technological world. However, the concept sounds great and could be a huge boost to the company over time.

I expect the KODAKCoin price could rocket on its release.

Kodak also revealed plans to install rows of Bitcoin mining rigs at its headquarters using spare power capacity at its on-site power generator.

I think this shows how even old-school companies can utilise new technology to thrust themselves back into relevance and now it could become the world's leading photo IP company, as well as perhaps running the most legitimate cryptocurrency.

If some ASX companies like Myer Holdings Ltd (ASX: MYR) or Cabcharge Australia Limited (ASX: CAB) could think as left-field as Kodak has to regenerate itself, then they could actually be onto something.

In-fact, the below link has information on the next exciting technology trend.

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Retailing was a hot topic among investors in 2017, with Amazon's arrival sparking negative sentiment towards many ASX-listed discretionary retail businesses.

While that negativity appears overblown for some, I am concerned about the future of large department stores like Myer Holdings Ltd (ASX: MYR). If you're after some exposure to retailing, I suggest doing your research on Bapcor Ltd (ASX: BAP) and Greencross Limited (ASX: GXL) instead.

I wrote an article on Australian Agricultural Company Ltd (ASX: AAC) in September 2017, citing a lack of cash flow as a reason I wouldn't invest. A quick look at the company's FY2018 interim results presentation from November has not changed my opinion.

I believe Costa Group Holdings Ltd (ASX: CGC) and Huon Aquaculture Group Ltd (ASX: HUO) are better alternatives in the agriculture sector.

AMP Limited (ASX: AMP) is one of Australia's oldest and largest wealth management firms. Despite the company's strong position within its industry, long-term AMP shareholders have not benefitted and the share price is still well below its pre-GFC highs.

AMP released an improved set of results for the first half of 2017 and the company's share price has risen almost 10% in the last three months, however I would need to see a longer history of earnings performance before I considered investing.

My preferred financial on the ASX is Challenger Ltd (ASX: CGF), a market leader in annuity investments.

Cabcharge Australia Limited (ASX: CAB) shares are down close to 50% over the past year as earnings fell 25% in FY2017 on lower service fee income. The taxi payment solutions and bookings provider is experiencing major disruption through regulatory change and intensifying competition from the likes of tech firm Uber. Further change looms as autonomous vehicle testing increases.

Taxi operators are upset by the perceived lack of support from governments, however their protests have included holding up CBD and airport traffic and thereby inconveniencing potential customers.

A lack of public support for the taxi industry was underlined by the Victorian Taxi Association's failed #YourTaxis Twitter campaign in late 2015.

Coca-Cola Amatil Ltd (ASX: CCL) is suffering from declining Australian demand for high-sugar content, carbonated beverages. Sales volume for the company's largest category, Australian sparkling beverages, fell 3.8% in the first half of 2017 compared to the previous corresponding period.

Amatil is performing well in its Indonesia and Papua New Guinea and Alcohol and Coffee business segments. However Australian Beverages earnings are declining. Australian Beverages represented almost 60% of the company's underlying EBIT in the first half of 2017, though this contribution declined 13.2%.

Amatil is working to improve its product mix, but I won't buy shares in the company before it can turn around its largest sales segment.

The post 5 stocks I'm bearish on in 2018 appeared first on The Motley Fool Australia.

When BHP Billiton Limited (ASX: BHP) fell to a multi-year low in 2016 of $15 it would have taken a brave investor to jump in at that point. However, that brave investor is now sitting on a total return of more than 100%.

That doesn't mean that a share which is at a low price won't keep going lower. It's hard to see Cabcharge Australia Limited (ASX: CAB) recovering significantly at any point in the future.

It's worth considering whether the following shares could be in for a turnaround like BHP's:

The Reject Shop Ltd (ASX: TRS)

The Reject Shop has seen its share price fallen by nearly two thirds since the end of 2013. The retailer has struggled to grow its sales sustainably during this time, which is why the share price has been a bit of a see-saw.

Management believe that it could be one of the most resilient businesses to online shopping because the cost of shipping would make it uneconomical.

The business is also focusing on a simpler strategy of low-cost basics, which should prove to be a winner with value shoppers.

Vita Group Limited (ASX: VTG)

Vita is heavily reliant on the earnings that it generates from running Telstra Corporation Ltd (ASX: TLS) retail stores and business stores. The constant negative news coming out from Telstra about the contract has seen the Vita share price hurt heavily.

Vita has recently entered the medical aesthetics and men's 'athleisure' sectors, both of which could be decent growth opportunities for the business in the future.

Accent Group Ltd (ASX: AX1)

This business was previously known as RCG, it changed to Accent to reflect the importance of that segment of the business.

Management have continued to grow underlying profit over the years and reported further growth in its trading update. Underlying group earnings before interest, tax, depreciation and amortisation (EBITDA) for the first quarter of FY18 was 6% higher, total retail sales were 12% higher and like-for-like sales were 1% higher. Management expect profit growth in FY18.

Foot retailing could be one of the best retail stores to be internet-proof because most people like to wear the shoes before buying them.

Foolish takeaway

All three shares are interesting opportunities at the current price. If I had to invest in one today I'd probably choose Vita because it's being smart by diversifying into other sectors, which should help future-proof the business. However, all three could be risky choices because of how distrusting the market has been over the last year about their long-term potential.

The post Could you make big returns on these wrecked stocks? appeared first on The Motley Fool Australia.