In order to receive a dividend, you must own the ASX share before its ex-dividend date.

If you've had your eye on an ASX share for a while, and you're ready to buy, the ex-dividend date can provide a deadline to act.

Might as well buy and pick up the next dividend payment if the stock is trading at an acceptable price, right?

Alternatively, you could play a longer game, and wait for the ex-dividend date to arrive before buying the stock.

This can be a good strategy because share prices tend to fall on the ex-dividend date.

This happens because the stock is fundamentally worth less without the next dividend payment attached.

Many companies offer dividend reinvestment plans (DRPs).

DRPs allow investors to instruct the company to use their dividends to buy more shares on their behalf, instead of paying cash.

After lodging your DRP form, this process becomes automatic.

It's an easy, passive way for investors increase their shareholdings in a company over time.

And every now and then, a company will offer a discount to shareholders participating in the DRP.

Bonus!

ASX shares with ex-dividend dates next week

The post 14 ASX shares about to go ex-dividend appeared first on The Motley Fool Australia.

At the time of writing, the Cash Converters share price is down 8% to $0.32, as investors weigh the dilution from the new share issue and the discount applied to the offer price.

Capital raise update

Cash Converters announced on Wednesday that it had successfully completed the institutional component of its capital raising, securing $15.7 million through a fully underwritten $5 million placement and an accelerated institutional entitlement offer that raised $10.7 million at $0.305 per share (which is a 12.9% discount to last Friday's closing price).

The remaining retail entitlement offer is expected to raise approximately $9.3 million. It opens on 3 November and closes on 17 November.

The company said demand for the institutional component was strong, with both new and existing shareholders participating. Major shareholder EZCORP Inc, which owns around 44% of Cash Converters, subscribed for its full entitlement worth $8.7 million and will sub-underwrite up to $2.18 million of the retail offer.

Funding a strategic acquisition

Proceeds from the equity raise will be used to fund the $37 million acquisition of 29 franchised stores across New South Wales, Queensland, the ACT, and Tasmania. The stores, collectively known as the Cash Converters Investment Group, are being acquired for a 4.5x FY25 EBITDA multiple and are expected to be earnings-accretive in the first full year of ownership.

The deal will expand Cash Converters' corporate-owned network from 92 to 121 stores, giving the company greater operational control and allowing it to capture more of the earnings upside from its retail and lending operations.

CEO Sam Budiselik said the company was pleased with the "strong demand in the bookbuild" and welcomed new institutional investors to the register.

Market reaction

Despite management's optimism, the market response was cautious. The sharp fall in share price reflects investor concerns over short-term dilution and integration execution risk.

While the acquisition aligns with Cash Converters' long-term strategy of consolidating franchise stores, investors will be looking for evidence that the company can deliver the expected synergies and earnings lift once the acquisition is completed.

For now, the 8% drop suggests the market is taking a wait-and-see approach.

What's next

The institutional component of the entitlement offer has been completed, with the retail offer opening on 3 November and closing on 17 November. Trading is expected to stabilise as the market absorbs the new supply of shares and investors digest the longer-term benefits of the transaction.

Management at Cash Converters has made the case that the acquisition is a compelling strategic fit that will enhance margins and earnings quality once integrated. For now, however, the stock's 8% slide suggests investors want to see execution, to match the ambition.

The post Cash Converters shares drop 8% as trading resumes after capital raising appeared first on The Motley Fool Australia.

The consumer finance and second-hand goods retailer announced plans to acquire 29 franchised Cash Converters stores across Australia for $37 million, expanding its corporate-owned network from 92 to 121 locations.

Management expects the deal, which covers stores in Queensland, New South Wales, the ACT, and Tasmania, to be earnings-accretive within the first full year of ownership.

Capital raise

The capital raising will comprise:

• A $5 million institutional placement, and
• A $20 million 1-for-9.57 accelerated non-renounceable entitlement offer at $0.305 per share, which is a 12.9% discount to Friday's close of $0.35.

Major shareholder EZCORP Inc, which holds roughly 44% of the company, has committed to taking up its full entitlement (~$8.7 million) and will also sub-underwrite up to $2.2 million of the retail offer. Bell Potter Securities is acting as lead manager and underwriter.

Why it matters

This move marks another step in Cash Converters' strategy to convert franchise stores into corporate-owned locations, which its management says will boost margins through scale, consistency, and efficiency.

By bringing these high-performing East Coast locations under full ownership, the company strengthens its presence in the country's most densely populated and economically active corridor. The move not only deepens Cash Converters' reach in high-demand urban markets but also allows it to unify store operations, improve consistency across compliance, systems, and customer experience, and accelerate decision-making that was previously constrained by the franchise model.

The acquisition also enhances efficiency and profitability. Corporate ownership allows Cash Converters to capture the full slice of the pie in retail and lending activities rather than relying on franchise royalties.

It also improves the company's ability to cross-sell consumer finance products through its retail network, where in-store lending typically outperforms digital channels. With standardised processes and greater scale, the company expects to achieve meaningful cost synergies and margin expansion.

The purchase price represents a 4.5× multiple of FY25 EBITDA, noting that the acquisition will be EPS-accretive in year one.

The company will use a mix of the new equity and existing cash reserves to complete the deal.

What comes next

Cash Converters shares are expected to resume trading on Wednesday, 29 October 2025, once the institutional offer closes. The retail component opens on 3 November and runs until 17 November.

Investors will be watching whether the market views this as a smart growth play or a dilutive capital raise. The key will be executing the integration of 29 stores smoothly and delivering the promised earnings uplift.

For now, Cash Converters remains on halt, but when it returns to trade, investors will get their first read on how the market prices this expansion move.

The post Cash Converters enters trading halt for $25 million raise and store acquisition appeared first on The Motley Fool Australia.

With the August reporting season done and dusted, scores of companies have ex-dividend dates next week.

If you're keen to buy any of these ASX shares while they are still trading cum dividend, time is running out!

To receive a stock's next dividend, you must buy or already own it before the ex-dividend day.

We provide a sample of the ASX shares going ex-dividend next week below.

35 ASX shares about to go ex-dividend

The post 35 ASX shares with ex-dividend dates next week appeared first on The Motley Fool Australia.

As we move towards the end of September, a vast majority of ASX shares are trading ex-dividend these days.

An ex-dividend date is when investors must have purchased a company's shares to be eligible for the upcoming dividend. If an investor buys the shares on or after this date, the dividend will go to the seller.

Below, we take a look at the list of shares that are trading ex-dividend today.

Cash Converters International Ltd (ASX: CCV)

Cash Converters provided its full-year results to the market at the end of August, highlighting a mostly positive performance.

Revenue fell 23% on the prior corresponding period to $201.3 million in what management described "a challenging economic environment". Nonetheless, this didn't deter the company to turn around its bottom line. Net profit after tax improved to $16.2 million compared to a $10.5 million loss in FY20.

The board declared an unfranked final dividend of 1 cent per share, payable on 14 October 2021.

The Cash Converters share price has accelerated by almost 60% over the past 12 months with year-to-date gains above 10%.

Eagers Automotive Ltd (ASX: APE)

Eagers Automotive released its half-year result also in late August, delivering increases across the board.

Underlying Earnings before Interest, Tax, Depreciation, Amortisation and Impairment (EBITDAI) surged 65.4% to $378 million. An even better percentage came from the company's statutory profit after tax, up 1,614% to $202.3 million.

The board declared a full-franked interim dividend of 28.4 cents per share. Eligible shareholders can expect to receive the dividend distributions on 15 October 2021.

The Eagers Automotive share price has travelled 60% higher since this time last year and is up 15% in 2021.

Cochlear Limited (ASX: COH)

Cochlear revealed its full-year results on 20 August, recording a strong finish for the 2021 financial year.

Sales revenue lifted 19% to $1.49 billion which led the company's bottom line to jump 54% to $236.7 million.

Cochlear announced an unfranked dividend of $1.40 per share, landing in shareholder accounts on 18 October 2021.

The Cochlear share price has gained 16% in the past 12 months and is treading 24% higher this year alone.

NRW Holdings Limited (ASX: NWH)

NRW issued its full-year results on 19 August, registering a mixed performance for the financial year's end.

Revenue lifted by 11.5% on the prior comparable period to $2.3 billion. The bumper earnings weren't enough to pick up profit before income tax, declining 24.3% to $75.9 million.

Management noted that the progressive dividend will be maintained, announcing a fully-franked final dividend of 5 cents.

The funds are scheduled to be paid to eligible shareholders on 13 October 2021.

The NRW share price has lost 24% in the past year, with further falls of 44% coming in 2021.

The post 4 ASX shares going ex-dividend today appeared first on The Motley Fool Australia.

Below we take a look at what's driving investor interest.

What update did Cash Converts provide?

Cash Converters' share price is gaining today after the company reported strong growth rates in its personal lending outgoings, with its loan books growing.

The company's total gross loan books increased by 14% over the half year to 31 May to $176.6 million. That's up from $151.1 million as of 31 December.

Cash Converters also said it had re-launched its vehicle finance product, with the recent months seeing outgoings growing.

In an update on its corporate and franchise store network acquisitions, Cash Converters reported it acquired (or entered into arrangements to acquire) 6 franchise stores during the 2021 financial year. The company plans to maintain its focus on "disciplined growth" as it continues to expand its physical footprint to reach new customers.

The Cash Converters' share price may also have received a boost from the company's reiteration that it's committed to resuming sustainable dividend payments. It reported a May 2021 cash balance of $73.3 million, along with an undrawn funding facility line of $79.8 million.

Commenting on the performance update, Cash Converters' managing director, Sam Budiselik, said:

The performance of our underlying business throughout FY 2021 has been extremely impressive considering the substantial impact of COVID-19 on our loan books, with government stimulus payments impacting borrower demand and accelerating loan book repayments in the first half of FY 2021.

Whilst borrower demand and business activity throughout the second half of FY 2021 has largely recovered, the expectation of a softer second half earnings result is due to these COVID-19 related factors.

Budiselik added that "borrowing demand continues to recover and loan book growth is forecast to continue" in the 2022 financial year.

Cash Converters' full 2021 financial year results will be released to the market by 30 August.

Cash Converters share price snapshot

Over the past 12 months, Cash Converters' shares have gained 41%, handily outpacing the 31% gains posted by the All Ordinaries Index (ASX: XAO).

Year-to-date the Cash Converters share price is up a more modest 5%.

The post What's lifting the Cash Converters (ASX:CCV) share price today? appeared first on The Motley Fool Australia.

At the time of writing, the Cash Converters share price is 4.44% higher at 24 cents a share. Meanwhile, the Wisr share price is 6.7% higher to 24 cents a share. 

Cash Converters third-quarter update

Continued momentum in the rebounding economy has been music to the lender's ears. Improved consumer confidence typically correlates with an increase in taking on various forms of debt. Whether that's home loans, vehicles, or personal loans. This is evident in Cashies' latest update, with Cash Converters managing director, Sam Budiselik commenting:

As observed in our H1 FY 2021 results our core business segments have continued to recover in-line with Australia's ongoing economic recovery. Our secured vehicle finance and pawnbroking products, alongside our unsecured personal loan products, continue to meet the credit demand among the millions of Australians excluded from the mainstream financial system. Meanwhile, our unique secondhand retail offering continues to appeal to value and environmentally conscious consumers.

The company reported momentum across all loan products, except for its vehicle financing business. This was due to an intentional decision to reposition the vehicle financing business. The impact on loan originations is expected to be short-lived. Following a refresh, the vehicle financing unit began recovering towards the end of the quarter. 

On a positive note, the combined loan book experienced an 8% lift from the previous quarter. Medium amount credit contracts (MACCs) contributed substantially to the company's loan book growth, with a 26% increase to $38 million in value. Additionally, small amount credit contracts (SACCs) grew a further 10% to $63.1 million.

Cash Converters noted a deliberate shift away from SACCs being its biggest segment of loans, at 39% of the entire loan book. This is due to the ongoing review of legislation surrounding SACC. As a result, the company plans to continue decreasing its reliance on the SACC book. 

Wisr steals the share price excitement

The lack of movement in Cash Converters could be attributed to Wisr releasing more impressive growth figures. The non-bank lender expanded its loan book significantly in the last quarter, increasing 17% to a total of $488.3 million. This compares to Cashies' increase of 8% to a total loan book value of $163.1 million. 

In addition, Wisr really pushed the point that its grown loan originations for 19 quarters consecutively. Comparatively, Cash Converters has been on a bumpier ride. The company's loan book actually fell in value for the prior three quarters. That's right, Cash Converters broke a losing streak today — while Wisr extended a lengthy winning streak. 

A bit of extra salt in the wound for Cash Converters… While its vehicle financing business is in decline, Wisr's vehicle product delivered growth ahead of expectations. In fact, Wisr added $21.9 million in secured vehicle loans, while Cashies lost $2.9 million. 

Comparing performance

Both of these non-bank lenders have delivered outperformance compared to the S&P/ASX 200 Index (ASX: XJO) over the past year. However, Wisr takes the trophy — adding 81.5% to the Wisr share price in that timeframe. Lagging behind, Cash Converters delivered a 53.3% share price increase in the past 12 months. 

The post Wisr outshines Cash Converters (ASX:CCV) share price on loan book updates appeared first on The Motley Fool Australia.

These ASX shares will be going ex-dividend this week. This means that investors who own or purchase the company's shares before the ex-dividend date will receive its next dividend payment. The ex-dividend date will typically see the company's share price open weaker to reflect the dividend paid. The larger the dividend paid, the greater the share generally falls on the ex-dividend date. 

Briscoe Group Ltd (ASX: BGP) 

Briscoe is a New Zealand based sporting and homeware retailer. The company announced solid earnings growth for the full year ended 31 January 2021 with revenue up 7.5% to NZ$701 million while net profit after tax increased 17% to $73 million. Briscoe will be going ex-dividend on Tuesday 23 March, for 13.5 cents per share. At its last closing price on Friday of $4.05, this represents a yield of 3.33%. 

Cash Converters International Ltd (ASX: CCV)

Cash Converters will be going ex-dividend on Wednesday 24 March, paying a distribution of 1 cent per share. This represents a yield of approximately 4%.

The embattled second-hand retailer and financial services provider has struggled against more tech-enabled competitors. The company's 1H21 report saw a 31% decline in revenues to $98.4 million while operating net profit after tax declined 28% to $7.7 million. 

Lindsay Australia Ltd (ASX: LAU) 

Lindsay is an integrated transport, logistics and rural supply company with an extensive east coast network. The Lindsay share price has been in a steady decline since 2015, losing more than 25% in value. From an earnings perspective, the company has had relatively stable cash flows and dividends. Its most recent 1H21 report highlighted a 12.1% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $26.1 million, reflecting continued cost controls and improving operational efficiency. 

The company will be going ex-dividend on Thursday 25 March for an interim fully franked dividend of 1.2 cents. This represents a yield of approximately ~3.2%. 

Vita Group Limited (ASX: VTG) 

Vita Group shares took a 30% dive on 11 February when Telstra Ltd (ASX: TLS) announced that it would transition its Telstra branded retail store network to a full corporate ownership model. This means that the current dealer agreement with Telstra will end by 30 June 2025. 

A significant proportion of Vita's earnings are derived from its retail Telstra stores. In its 1H21 results, $307.8 million of its $323.7 million revenue came from information and communication technology (ICT) channels. Vita Group CEO Maxine Horne said the company "has been investing in the very attractive category of skin health and wellness for some time, thus creating a new growth opportunity for the group". 

Vita Group will be going ex-dividend on Thursday 25 March, for an interim dividend of 5.6 cents. Its recent share price decline to 95 cents has propped up the yield to approximately 6%. 

Service Stream Ltd (ASX: SSM) 

Service Stream provides end-to-end life-cycle services such as design, construction and maintenance to utility and telecommunication asset owners, operators and regulators in Australia.

A reduction in telecommunication works in 1H21 resulted in a 17.7% decline in revenues to $409.9 million. Service Stream expects subdued trading conditions and COVID-19 related impacts to continue into the second half, with results approximately in-line with the first half.

The market has not been impressed by historically weaker earnings from Service Stream. The Service Stream share price is down more than 30% year-to-date, sitting at around 3-year lows. The company will be going ex-dividend on Thursday 25 March for an interim dividend of 2.5 cents.

The post Small and mid cap ASX shares going ex-dividend this week appeared first on The Motley Fool Australia.

We take a look at Cash Converters' financial results for the half-year ending 31 December (H1 FY21) below. In particular, what these figures mean for the Cash Converter share price. 

What results did Cash Converters report for H1 FY21?

Today, Cash Converters reported a 31% decline in revenue, to $98.4 million from $142.7 million in H1 FY20.

Statutory net profit after taxes (NPAT) came in at $7.7 million. Which was up from a $19.4 million statutory NPAT loss in the prior corresponding period (pcp).

Operating NPAT declined 28% year-on-year. Cash Converters said its operating results "are presented net of the significant expense items directly associated with the settlement of class action litigation claims in the previous corresponding period".

For the same reason, statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) was $24.6 million. This was up compared to a negative $12.6 million in H1 FY20. Additionally, operating EBITDA declined 19% year-on-year from $30.4 million.

Moreover, the company's online presence looks to have benefited from a wider shift in consumer online spending growth. Cash Converters reported a 39% boost in online retail sales, up 39%.

Gross bad debt expenses were cut by 56% and operating cash flow was up at $8.6 million from negative $15.5 million in the corresponding half year.

Cash Converters reported $91.3 million in cash and equivalents as at 31 December, up from $59.4 million.

Management Commentary

Commenting on the results, Cash Converters' managing director, Sam Budiselik said:

The performance of our underlying business has been extremely impressive considering the substantial impact of COVID-19 throughout the first half of FY 2021. The ongoing Government stimulus had resulted in our inventory levels depleting throughout our store network, our Loan Books contracting and franchise fee revenue reducing as various state-wide (and international) lockdowns occurred throughout the period.

Despite these headwinds the resilience of our business model continued to demonstrate the appeal of our store service experience and the reach of our online and digital assets.

Cash Converters noted it was not eligible for and made no direct claims under the government's  JobKeeper allowances.

Cash Converters share price snapshot

Despite tumbling 50% during the viral market rout last February and March, Cash Converters' shares are up 38% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) is up just under 5%.

Year-to-date the Cash Converters share price is up 19.5%.

The post Why the Cash Converters (ASX:CCV) share price slid lower today appeared first on The Motley Fool Australia.

Cash Converters has been severely impacted this year by COVID-19 with the pandemic decimating the company's ability to open its 705 stores around the globe. Customers have also been impacted by the financial fallout from COVID-19 which has negatively affected the company's lending demand and revenue. Surprisingly, however, lockdown restrictions have lead to an uptick in loan settlement rates and retail revenue, which has seen the Cash Converters share price recover strongly from its March lows.

Cash Converters full year results

Despite the obvious headwinds caused by the pandemic, Cash Converters posted revenue of $279 million, down only 0.9% on the prior year.

The most significant impact to revenue and earnings occurred in the final quarter of the financial year, with personal and vehicle finance demand reducing as customers benefitted from government stimulus measures. Early settlements occurred at a higher rate than prior quarters and a decline in demand and eligibility impacted origination volumes. This resulted in gross loan books falling 24.2% year on year to $160.0 million.

Conversely, store operations demonstrated counter cyclical retail behaviour complimented by particularly strong online sales of home entertainment and technology items. Although store sales trended lower in the final months of FY 2020 as inventory levels decreased, turnover remained above the monthly average of the prior year's, as did the gross profit margin.

This resulted in the merchant actually increasing its operating net profit before tax (NPAT) to $19.6 million which was an increase of 63.2% on the year before. Earnings before interest, taxes, depreciation and amortisation (EBITDA) also increased as it finished the year 51.5% higher at $62.1 million. Despite this, Cash Converters still posted a statutory net loss after tax of $10.5 million.

Outlook

With a strong balance sheet and a diversified store network, Cash Converters aims to consolidate its position as a lender and retailer of first choice for customers moving forward.

However, with Victoria recently entering stage 4 restrictions to combat COVID-19 infections, the company's Melbourne metropolitan stores have been temporarily closed. Nonetheless, Cash Converts believes it is well set up as a result of the significant investment made into the Company's online retail and lending operations.

The company also believes that "the ultimate impact of COVID‐19 is yet to be fully realised by Australia's economy. And as Australia emerges from 'lock‐down', Cash Converters remains well positioned to benefit from a wider economic recovery."

With today's rise, the Cash Converters share price has recovered 120% from its March low but is still down by 8.3% in year-to-date trading.

The post Cash Converters share price edges higher on FY 2020 results appeared first on The Motley Fool Australia.

While a recession is not good for most businesses, there are some companies that may fare well and even improve their earnings during a time of economic downturn. This is because their business model allows them to benefit from some of the economic phenomenon occurring around them. For example, during a recession an increase in people not paying their bills can be a boon for debt collection companies.

If the recession is prolonged, investors may get some security from holding assets that can thrive in a market downturn while other companies suffer.

Here are 3 ASX companies that are counter-cyclical and could do very well through the pending recession.

Credit Corp Group Limited (ASX: CCP)

Credit Corp buys and collects non-performing debts owed by consumers in both Australia and the US. It is the largest debt purchase and collection company in Australia and has been listed on the ASX since 2000.

The company has announced a capital raising of $150 million in order to take advantage of increased supply of the debts which it purchases and collects, brought about by the coronavirus. It has also announced that its balance sheet will remain secure in a variety of scenarios.

Credit Corp has cut costs significantly since the onset of the COVID-19 crisis, and its CEO and directors fees have been reduced by 50%. This helps in positioning it well to take advantage of the current situation. The increases in provisions for bad debts recently announced by National Australia Bank Ltd. (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) will provide ample business for Credit Corp as it picks up the scraps of Australia's bad debts.

As part of its capital raising, Credit Corp also announced its interest in purchasing competitors' books. This could provide an opportunity for a significant boost to earnings as it acquires cheap assets brought on by the COVID-19 recession. Credit Corp could also consider expanding into new markets as it finds itself facing a recession with significant cash on hand.

Cash Converters International Ltd (ASX: CCV)

Cash Converters is an international personal finance and pawnbroking business, mainly operating in Australia with franchises around the world. The business has a loan book of $224.2 million and achieved $42.4 million in retail sales in the first half of the 2020 financial year.

The types of personal loans that Cash Converters specialises in, known as payday loans, are likely to be in high demand during a recession as people find themselves short on cash. Payday loans are short term loans of as little as a few weeks, usually with a high interest rate. This type of lending has proven highly profitable for Cash Converters over many years. Additionally, during times of hardship people are likely to hunt for bargains rather than pay full price for retail goods. While this may be bad news for retailers like Harvey Norman Holdings Limited (ASX: HVN), it could provide a boost to Cash Converters.

Cash Converters has remained quiet about the effects of the coronavirus lockdowns on its business. However, as last reported, 53.9% of its loans originated online. This means that it is likely that the company has seen continued demand for loans during lockdowns.

While the recession could mean an increase in defaults on existing loans, people are likely to need additional cash while economic times are tough. In the US for example, a report by the Chicago Federal Reserve observed a sharp increase in payday loans during the GFC. If there is a sharp increase in demand for new payday loans in Australia through the pending recession, Cash Converters is likely to have a highly profitable few years ahead.

Betashares U.S Strong Bear Hedge Fund ETF (ASX: BBUS)

This exchange-traded fund (ETF) is an interesting one. It aims to provide returns that are negatively correlated to the US S&P 500. This means that as the US enters a bear market, returns will be positive. When the US starts to recover and the S&P 500 rises, returns will be negative. In this way, this ETF is like betting against the S&P 500 index of the 500 biggest US companies.

During a recession this could be an effective strategy, particularly if share prices drop further. In the long term, however, this is probably not a great strategy and holders will need to consider when a recovery in the S&P 500 is coming to close out their position. Historically, the S&P 500 index has eventually recovered through difficult times.

During March this year when world financial markets were crashing, this ETF rose from a low of $2.61 to $6.80. That's a return of 160.53%. It currently sits back at $3.19 due to the recovery in share prices. However, this is one to hold if you believe that this will be a prolonged bear market with further dips in financial markets.

The post 3 counter-cyclical ASX shares to hold during a recession appeared first on The Motley Fool Australia.

We see stories all the time of famous people who have gone bankrupt because of their mansions, private jets and spending habits.

But, it's not only celebrities that can run into bankruptcy-causing problems. Normal people can easily get into financial difficult.

As long as you pay your debts you should always be okay because it's not paying debt that causes the creditor to go after the borrower. Sometimes that debt is an unpaid mortgage from a bank like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC). Other times it might be another form of unpaid loan from something like FlexiGroup Limited (ASX: FXL) or Cash Converters International Ltd (ASX: CCV).

How to avoid bankruptcy

The easiest advice to avoid bankruptcy is: pay all your bills on time and avoid as many forms as debt as possible. Even credit cards can be a bad idea unless you pay the entire balance on time every time. Don't get into too much debt for your house, get a sensible loan which isn't too much of a stretch for your income.

But, sometimes there can be unexpected circumstances that cause people to get into debt. To use a very cliché phrase, you have to expect the unexpected. Your fridge, car, air con unit or anything else may need replacing at any time, so keep a good emergency fund of at least three months of basic living expenses. Maybe up to six months would be a smart idea. At the very least have $1,000 cash sitting in a separate savings account. 

A lot of people know to spend less than they earn, but a loss of earnings can be particularly devastating for a household reliant on one main breadwinner. An emergency fund helps here. But your earnings are the most important wealth builder and protector. So you need to make yourself as indispensable as you can at your current role – work hard and be kind to your boss, colleagues and clients. Take additional education to improve yourself, your ability and CV where possible. It can be okay if you lose/leave your current job as long as you can be employed elsewhere.

Foolish takeaway

Australia is one of the most indebted nations in the world. The quicker we can pay down non-mortgage debt the more secure we will be and increase our net worth. There's a reason why many investors look for businesses with a balance sheet that's in a net cash position or has no debt at all – they're much less risky.

The post How to avoid going bankrupt appeared first on The Motley Fool Australia.

Four shares that have not let that hold them back are listed below. Here's why they have raced higher:

The Cash Converters International Ltd (ASX: CCV) share price has rocketed 30% higher to 19.5 cents. Investors have been buying the company's shares after it announced the settlement of the Lynch class action. This class action related largely to excessive brokerage fees that were charged to vulnerable Queensland customers between 2009 to 2013. Cash Converters has agreed to pay $42.5 million into a fund for distribution to members of the class action.

The Inghams Group Ltd (ASX: ING) share price is up 5.5% to $3.08. The poultry producer's shares have started the week strongly thanks to a broker note out of Citi. This morning the broker upgraded its shares to a buy rating with a $3.40 price target. It made the move largely on valuation grounds after a period of share price weakness. It also sees value in its shares for income investors in this low interest rate environment.

The Lynas Corporation Ltd (ASX: LYC) share price is up 3% to $2.60 following the release of its first quarter update. During the quarter Lynas' production was managed in line with the calendar year production limit applied by the Malaysian government. This led to NdPr production of 1,242 tonnes and total REO production of 3,926 tonnes. The rare earths producer finished the period with a closing cash balance of $119.1 million, up from $89.7 million at the end of the last quarter.

The Stockland Corporation Ltd (ASX: SGP) share price has raced almost 7% higher to $4.93. This morning Stockland released its first quarter update which revealed that it has started FY 2020 in a positive fashion. Management advised that it experienced an improvement in residential sales, an increase in comparable retail MAT growth, continued up-weighting in logistics, and progress in its commercial property development pipeline. It also revealed that it expects its distribution to be largely flat on last year's 27.6 cents per security.

The post Why Cash Converters, Inghams, Lynas, & Stockland shares raced higher appeared first on The Motley Fool Australia.

The retail and personal loans company's shares rocketed as much as 43% higher this morning to 21.5 cents.

They have since dropped back a touch, but are still up 27% at 19 cents at the time of writing.

Why is the Cash Converters share price on fire today?

Investors have been scrambling to buy the company's shares after it provided an update on the Lynch class action.

This class action, which commenced over four years ago, was on behalf of Queensland borrowers who took out personal loans from the company's subsidiaries between 2009 and 2013.

It related largely to excessive brokerage fees that were charged to vulnerable customers.

This morning the company announced that it has settled the class action and a Deed of Settlement has been exchanged by the parties.

What are the terms?

According to the release, the Lynch Settlement will see Cash Converters pay $42.5 million into a fund for distribution to members of the class action.

The payment will be made in two tranches. The first tranche of $32.5 million is to be paid within 21 days of execution of the deed of settlement. This payment will be made from its available cash.

After which, the second tranche of $10 million is to be paid on or before September 30 2020. 

The company advised that it "is pleased to bring this litigation to a close." It also explained that the settlement "is without any admission of liability by Cash Converters." The Lynch Settlement remains subject to court approval.

Should you invest?

I believe this was the last remaining class action the company was facing. So this is a positive day for it and will allow management to focus purely on the future at long last.

However, I wouldn't be in a rush to invest just yet. I'd like to see a couple of years of solid profit growth before I'd consider an investment.

In the meantime, I see more value in retailers such as Accent Group Ltd (ASX: AX1) and Super Retail Group Ltd (ASX: SUL).

The post Why the Cash Converters share price rocketed 43% higher today appeared first on The Motley Fool Australia.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) higher 0.48% to 6,825.80
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) higher 0.47% to 6,911.40
• AUD/USD at US 69 cents
• Gold at US$1,414.84 an ounce
• Brent Oil at US$63.10 a barrel

The best-performing ASX 200 share today was the share price of buy now, pay later company Afterpay Touch Group Ltd (ASX: APT) which rose around 4% after announcing who would be doing its AUSTRAC audit.

However, at the bottom of the ASX 200 performance table was Credit Corp Group Limited (ASX: CCP) which reported its FY19 result and guided for more growth in FY20, yet the share price fell 6.2%.

The AFR made reference today to allegations regarding links between criminals and the junket operators Crown Resorts Ltd (ASX: CWN) uses to funnel gamblers to its casinos, sending the share price down 3.2%.

The share price of Bubs Australia Ltd (ASX: BUB) climbed almost 6% as the infant formula company revealed an impressive quarter.

Lynas Corporation Ltd (ASX: LYC) suffered a share price fall of over 2% after the resource business announced its quarterly numbers.

The EML Payments Ltd (ASX: EML) share priced increased by 2.2% as it acquired the last 25% of PerfectCard.

The share price of Cash Converters International Ltd (ASX: CCV) fell another 6.7% after releasing some preliminary numbers for FY19.

Finally, the share price of National Veterinary Care Ltd (ASX: NVL) climbed over 7% after announcing another acquisition to the market.

Here are some of today's top stories:    

• Take stock: Why Barnaby Joyce is struggling to make ends meet
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• Are these alternative ASX banking shares the best dividend stocks for yield?
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The post ALL ORDINARIES finishes higher Monday: 8 shares you missed appeared first on The Motley Fool Australia.

• Full year loss between $2m – $4m
• Revenue around $283m
• EBITDA (operating income) $22m – $23m
• EBITDA before FY19 adjustments $45m – $47m
• Net profit before adjustments $18m – $20

As we can see there's a big difference (around $16m) between the accounting net profit and what Cash Converters describes as net profit before one offs or 'adjustments'. 

The adjustments it flags include "accelerated amortisation and depreciation" worth $3.5m, a written off UK IT investment worth $1.6m, $5 million worth of debts being classed as doubtful due to credit risks, $1.4m worth of "restructuring costs", $0.5m of other miscellaneous costs thrown in as adjustments, and $3.2m of legal costs in defending another class action. 

Judging by the share price reaction this backing out of costs is not washing with investors and it must be said these costs are of varying legitimacy in terms of how an investor should view them in analysing the true performance of a business.

Writing off investments in IT businesses or backing out restructuring costs does not really seem credible, although in fairness a lot of companies will present numbers shorn off depreciation or amortisation. 

As you can probably guess I wouldn't suggest buying Cash Converters shares on the basis they look cheap or for some other reasons. 

The post Cash Converters shares sink on bad debts, write offs appeared first on The Motley Fool Australia.

This presentation comes roughly three weeks after the release of its half year results and at a time when its shares are trading at a decade-low.

What was in the presentation?

Today's presentation reminded the market that Cash Converters delivered an 11.6% increase in group revenue to $137.3 million during the first half.

This was driven by a 46.9% increase in Vehicle Finance revenue, a 21.5% lift in Personal Finance revenue, a 3.2% rise in Pawnbroking revenue, and a 2.1% increase in Retail revenue.

Adjusted first half EBITDA rose 9.2% on the prior corresponding period to $24.8 million. This excludes class action, legal, and restructuring costs and the impact of increased provisioning for bad debts due to the adoption of new accounting standards.

Normalised EBITDA came in at $21.4 million, which was down 6% on the prior corresponding, and Cash Converters reported a net loss after tax of $5.2 million. The latter compares to a net profit after tax of $9.4 million in the prior corresponding period and was driven largely the settling of the McKenzie Proceeding for $16.4 million.

The company finished the period with cash at the bank of $74.3 million.

What's next?

Management believes that Cash Converters is positioned for growth. It expects to achieve this through B2B and B2C business models that can be leveraged and expanded across distribution channels.

It also expects the improvement and expansion of its store distribution network and the development of its digital capabilities to be a driver of growth.

Another final growth catalyst could be its Green Light Auto (GLA). It is a specialist lender providing loans to consumers who may be excluded by other financial institutions' traditional lending criteria.

The GLA business was a solid performer in the first half, growing EBITDA by 80.7% to $1.6 million. Management believes the business is only scratching at the surface of a major opportunity. It currently has a vehicle loan book of approximately $60 million, but an addressable market worth $1.3 billion per annum.

Should you buy shares?

I think Cash Converters' shares could prove to be dirt cheap at current levels if management can make the most of its growth opportunities. But until there are signs that this is the case, I would suggest investors stick with traditional lenders such as Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA).

The post Should you buy Cash Converters shares or stick with ANZ and CBA? appeared first on The Motley Fool Australia.

Afterpay wasn't the only one having a tough day.

The Xero Limited (ASX: XRO) share price fell 5.3%.

The WiseTech Global Ltd (ASX: WTC) share price dropped 1.6%.

The Altium Limited (ASX: ALU) share price declined 1.2%.

Afterpay has been one of the most volatile businesses I've seen worth more than $2 billion.

It's generating excellent underlying growth with Afterpay revenue and other income up 302% to $116.8 million in FY18.

The Afterpay expansion is going very well with over $115 million of underlying sales to the end of October 2018. It has transacted with over 300,000 consumers and 900 retailers in the US with a further 1,300 retailers in the pipeline having agreements to go on the platform.

I was particularly pleased to see that Afterpay was expanding into other categories in Australia beyond retailing such as dentistry and optometry. This materially increases Afterpay's addressable market.

However, Afterpay faces two problems. Rising interest rates hurt high-valued growth shares like Afterpay.

The other problem is that Labor has created an inquiry to look into short-term debt businesses. Investors worried over shares like Cash Converters International Ltd (ASX: CCV) and Credit Corp Group Limited (ASX: CCP).

Afterpay management has argued that it is unique compared to its competitors in that it is a free product for customers if payments are made on time, it doesn't charge interest and it doesn't charge setup or account-keeping fees.

Foolish takeaway

I agree with Afterpay that it is different. Indeed, its competitors may be hurt more and therefore it could bet a net beneficiary.

However, as the banking Hayne Royal Commission that hasn't finished and the Aged Care Royal Commission which hasn't even started has shown, investors are quick to sell on bad news.

Until the inquiry is over I don't think it's worth investing in Afterpay because it's still trading at 89x FY20's earnings. There is a lot of optimism still built into the price.

The post The Afterpay Touch Group Ltd (ASX:APT) share price fell almost 9% today appeared first on The Motley Fool Australia.

However, there are several well known shares tumbling for different reasons today, so let's take a look at what may be behind their price falls.

The Xero Limited (ASX: XRO) share price is down 3% to $40.73 today despite the online accounting business providing no specific news to the market. Xero shares are still up 33% over the past year and today's price weakness is probably related to the recent heavy sell off on the tech-heavy NASDAQ index in the US. Xero recently announced the GBP5.25 million acquisition of online accounting business Instafile in the UK and recently raised US$300 million to fund further acquisitions as it sees fit.

The Afterpay Touch Group Ltd (ASX: APT) is down 7% to $12 this morning and continues on a volatile ride ever since it became apparent that the buy-now-pay-later consumer credit provider may face stricter regulation in its core Australian market. AfterPay also trades on a large valuation relative to historical revenues and earnings, which means much future success is baked into its current share price.

The Cash Converters Ltd (ASX: CVV) share price is down 5.4% to 26.5 cents today potentially as it operates in a similar consumer credit space to AfterPay. An impending Senate inquiry is set to look at whether tighter regulations need to be put on lenders that exist outside some of the protections already afforded to consumers under existing credit laws.

The Viva Energy Group Ltd (ASX: VEA) share price is down 13% to $12.78 after the petrol refiner and supplier to Shell garages among others, delivered a big profit downgrade today. It now expects underlying EBITDA and NPAT for FY 2018 to be $543 million and $280 million respectively, compared to prior forecasts for $605 million and $324 million respectively. The downgrade was blamed on weaker-than-expected margins and lost production over August in particular.

The post Why Viva Energy Group Ltd is among 4 ASX shares falling today appeared first on The Motley Fool Australia.

But what is contrarian investing?

In his book 'Contrarian Investment Strategies' David Dreman explains that contrarian investing is about buying those companies that are so unloved by the market that the likelihood of a positive surprise (and subsequent increase in the share price) is far higher than with other companies. In the long run, Dreman argues that this means that the returns on contrarian strategies are likely to be higher than the market return.

Dreman explains that the limitations of investors in forecasting the future earnings of companies means that surprises are inevitable. The basic premise of contrarian investment strategies is that when one buys companies that are priced as if they are going out of business, forecasting mistakes are most likely to be those that underestimate future earnings.

How do you find a contrarian investment?

According to Dreman, the best way to measure the extent to which a company is out of favour with the market is to use the price-to-earnings, price-to-cashflow, or price-to-book ratios. Investors should buy solid companies with low ratios. These could be companies with low absolute ratio values (i.e., the lowest price-to-earnings ratio of all companies) or low relative ratio values (e.g., the lowest price-to-earnings ratio of all companies in a particular industry).

Tobias Carlisle (in his book The Acquirers Multiple), Joel Greenblatt (in his book The Little Book that Beats the Market) and Dreman himself (in his book Contrarian Investment Strategies) have all reported tests of versions of this contrarian investment strategy with strong returns.

At any given time, investors will find companies that are out of favour with the market.

For example, companies with low price-to-earnings ratios on the ASX currently include:

• Retail Food Group Limited (ASX: RFG),
• The Reject Shop Ltd (ASX: TRS)
• Cash Converters International Ltd (ASX: CCV)

Companies with low price-to-book values include:

• Thorn Group Ltd (ASX: TGA)
• Shine Corporate Ltd (ASX: SHJ)
• United Overseas Australia Limited (ASX: UOS)

Lastly, those with low price-to-cashflow include:

• Collection House Limited (ASX: CLH)
• Qantas Airways Limited (ASX: QAN)
• Shaver Shop Group Ltd (ASX: SSG)
• Air New Zealand Limited (ASX: AIZ)

Foolish Takeaway

Contrarian investment strategies can be profitable because investors systematically underestimate the potential for upside surprises. A basket of low price-to-earnings, low price-to-book value, or low price-to-cashflow companies have been shown to produce strong returns over the long run.

The post Contrarian Investing and the ASX appeared first on The Motley Fool Australia.