And that's despite the sharp retrace over the past week and a half.

Plenti shares closed down 0.49% on Thursday, trading for $1.015 apiece.

While that leaves the Plenti share price down 20.7% from the recent closing highs posted on 20 January, shares remain up a market-beating 19% over the past 12 months.

And looking to the year ahead, the analysts at Moelis Australia expect an even stronger performance from the ASX All Ords tech stock.

Here's why.

Plenty to like about Plenti shares

Plenti released its December quarter update (Q2 FY 2026) last Wednesday, 28 January.

Highlights for the three months to 31 December included a 25% year-on-year increase in loan originations to $480 million. That marked the fifth consecutive quarter of new all-time loan origination for the ASX All Ords tech stock.

The company's loan portfolio increased by 24% from Q2 FY 2025 to $2.98 billion. And Plenti reported quarterly revenue of $79.9 million, up 22%.

Commenting on the quarterly results on the day, Plenti CEO Adam Bennett said, "Plenti has delivered another exceptional quarter, achieving a fifth consecutive quarterly loan originations record of $480 million."

Bennett added:

In addition to very strong third quarter results, it has been fantastic to hit our FY26 loan portfolio target of $3 billion, well ahead of our original anticipated timing. This was an ambitious strategic goal when we set it in early calendar 2025 and achieving it in January 2026 is a testament to the hard work of the entire Plenti team.

Why Moelis has a buy rating on the ASX All Ords tech stock

Following Plenti's quarterly update, Moelis reaffirmed its buy rating on the stock.

The broker noted:

PLT is executing strongly across its core verticals. This was confirmed with today's announcement that PLT has surpassed its $3.0bn total loan book target (incl. NAB) in Jan'26, ~2.5 months earlier than expected. Ex-NAB we expect ~18% total loan book growth in FY26. Acceleration of Horizon 2 should help sustain growth in FY27/28, and could provide upside to our estimates.

Better than expected credit performance gives us confidence in PLT's underlying loan book.

The ASX All Ords tech stock has partnered with National Australia Bank Ltd (ASX: NAB). At its December quarter results, the company reported, "The 'NAB powered by Plenti' car loan portfolio increased to $90.1 million."

Connecting the dots, Moelis said Plenti's valuation remains "undemanding".

The broker has a $1.87 price target on Plenti shares, representing a potential 83.3% upside from Thursday's closing price.

The post Top broker forecasts another 83% upside for this outperforming ASX All Ords tech stock appeared first on The Motley Fool Australia.

By almost any measure, the numbers looked good so why was the reaction muted today?

A strong quarter with record loan originations

Plenti's third-quarter update showed the business continuing to fire on most cylinders.

Loan originations reached $480 million, marking the fifth consecutive record quarter and representing 25% growth year on year, even with fewer business days in the quarter. The total loan portfolio climbed to $2.98 billion, up 24% from a year ago, and the company has already hit its $3 billion FY26 target ahead of schedule.

Revenue rose 22% year on year to $79.9 million, implying an annualised run-rate of around $320 million. Importantly for a lender operating in a higher-rate environment, credit quality remained strong, with net credit losses falling to 91 basis points and arrears staying low.

On the funding side, Plenti completed its largest-ever automotive ABS transaction during the quarter, securing its tightest pricing since 2021. This is a good mark of confidence from debt markets.

So why did the shares fall?

The likely explanation isn't the headline numbers, but the developing narrative around interest rates, changes in management, and broader share price consolidation.

Management flagged that rising market funding costs during the quarter led to a temporary compression in margins on new loan originations.

While Plenti has already clawed back some of that margin through repricing (and volumes have remained robust), the update served as a reminder that funding costs remain a key swing factor for lenders.

It doesn't help that today's inflation/CPI update strengthened the case for the RBA to increase the cash rate, which could increase funding costs.

Another possible explanation for today's dip in Plenti shares was the confirmation that the Chief Financial Officer will depart, with a replacement announcement expected shortly.

While the transition appears orderly, CFO changes can sometimes introduce short-term uncertainty.

In other words, today's dip looks less like a reaction to weak execution and more like a bout of near-term caution after a strong run.

Foolish bottomline

Despite today's pullback, Plenti's underlying trajectory appears to be largley intact.

Investors who zoom out will likely still see some positive signs of Plenti's progress, and the market verdict over the last 12 months has been flattering with Plenti shares up roughly 56% over that period.

That comfortably outperforms the ASX All Ords, but what comes next is more important.

Plenti Group is scaling rapidly, hitting major portfolio milestones earlier than planned, maintaining disciplined credit standards, and continuing to improve profitability as it grows.

With shares already up more than 50% over the past year, some consolidation along the way shouldn't come as a surprise.

The post This ASX small-cap stock is up 56% in a year, so why did shares fall after today's update? appeared first on The Motley Fool Australia.

The fast-rising stock in question is technology-led consumer lending and investment company Plenti Group Ltd (ASX: PLT).

In afternoon trade today, Plenti shares are up 0.4%, changing hands for $1.29 apiece. That sees the Plenti share price up an impressive 89.7% since 2 January.

And investors who bought at 6 January's 52-week lows will be sitting on gains of 101.6% today.

After that kind of blistering run, you might think this ASX All Ords stock is due for a breather. But according to the analysts at Moelis Australia, it still has plenty of growth potential to fuel further outsized gains.

Here's why.

ASX All Ords stock on the growth path

Plenti shares closed up 6.8% on 18 November after the company released its half-year results covering the six months through to 30 September.

Highlights included a 20% year-on-year increase in revenue to $149.5 million.

And the company's loan originations of $912 million were up 46% on the prior corresponding period, with Plenti reporting a closing loan portfolio of $2.83 billion, up 24%.

On the bottom line, the ASX All Ords stock achieved a 133% year-on-year increase in cash net profit after tax (NPAT) to $12.8 million.

The company highlighted that it had successfully delivered on Horizon 1 – "GROW by doing what we do but better" – of its breakout growth strategy, and said it remains on track for a $3 billion loan portfolio by March 2026

"Plenti delivered an exceptional first half, underpinned by continued operational execution and the compounding effect of our technology-led model," Plenti CEO Adam Bennett said on the day.

Why Moelis is bullish on the outlook for Plenti shares

Commenting on their buy rating on the ASX All Ords stock, Moelis said, "Outlook remains positive as Horizon 2 provides the next leg of growth medium-term."

The broker added:

PLT flagged maintenance of its 2Q26 loan origination rate would see its $3.0bn loan book target achieved in 4Q26, a modest upgrade on previous guidance. The company also expect acceleration of origination growth into Horizon 2, while keeping cost to net margin below 57%, driving meaningful cash NPAT.

Moelis noted Plenti's half-year results confirm Plenti "are executing strongly, with several initiatives we expect to continue strong loan origination growth going forward".

According to the broker:

Management can balance NIM [net interest margin] through pricing levers plus its diversified funding mix (ABS, warehouse, retail platform). Accelerated loan book growth, below average credit losses and a step-change in growth medium-term from Horizon 2 could provide upside to our estimates.

Connecting the dots, Moelis retained its buy rating on the ASX All Ords stock with a $1.87 price target.

That's 45% above current levels.

The post This ASX All Ords stock has more than doubled investors' money since January. Here's why it's tipped to surge another 45%! appeared first on The Motley Fool Australia.

Shares in the technology-led consumer lending and investment company closed yesterday trading at $1.215. As we head into the Tuesday lunch hour, shares are changing hands for $1.23 apiece, up 1.2%.

This sees the Plenti share price up an impressive 83.6% so far in 2025.

And according to the team at Moelis Australia, the ASX stock, which focuses on automotive loans, personal loans, and renewable energy financing, is well placed to keep outperforming in the year ahead.

Here's why.

ASX stock primed for more growth

The first reason Moelis is bullish on Plenti is the historic and expected growth of its high-quality loan book.

"Plenti has demonstrated impressive annual loan book growth," the broker noted of the ASX stock. "Its loan book closed at $614 million in FY21 and has since grown to over $2.5 billion in FY25."

That represents a compound annual growth rate (CAGR) of around 42%.

Moelis said:

The company is on track to meet an accelerated $3.0bn loan book target by Mar'26, with a medium-term target of $5.0bn by ~Q2FY29. Our estimates broadly reflect this with loan book growth of 13.8% p.a. (ex-NAB) to FY28. Further upside is expected from expanding into adjacent products, developing new verticals, and partnerships with entities like government bodies.

The second reason Moelis said it expects more outperformance from the ASX stock in the year ahead is that Plenti's "diversified and competitive funding platform supports scalable origination."

Moelis noted, "With straight-through processing for personal loans, including instant decisioning and high throughput at low cost, the company is well positioned to efficiently scale originations as loan demand grows."

The third reason the ASX stock could keep charging higher into 2026 is its sector-leading cost discipline, which is accelerating its profitability.

According to Moelis:

With a FY25 cost-to-income ratio of 23.9%, Plenti demonstrates near industry-leading cost management. Continued investment in automation and technology is expected to drive further efficiency gains.

The fourth reason the broker said Plenti shares look well placed to keep on giving is that its technology platform and National Australia Bank Ltd (ASX: NAB) partnership are delivering "strategic optionality."

"Plenti's proprietary technology enables rapid credit decisioning and robust credit assessment, enhancing user experience and operational efficiency," Moelis noted.

The broker added:

The strategic partnership with NAB for auto and renewable energy loans is a major opportunity, offering distribution scale, funding leverage, and balance sheet protection via NAB bearing credit risk.

Should you buy Plenti shares today?

Moelis has a buy rating on the ASX stock with a 12-month target price of $1.53 a share.

That's more than 24% above the Plenti share price at the time of writing.

The post 4 reasons this fast-rising ASX stock could surge another 24% this year appeared first on The Motley Fool Australia.

The listed investment company (LIC) WAM Microcap Ltd (ASX: WMI) aims to look for the "most exciting undervalued growth opportunities in the Australian micro-cap market".

Of course, there's no guarantee that a small business will become a medium-sized one. But, I'd say it's easier for a small company to grow by 10% than it is for a $100 billion business.

Let's take a look at two ASX small-cap stocks that WAM highlighted in the WAM Microcap portfolio.

Qoria Ltd (ASX: QOR)

WAM describes Qoria, previously called Family Zone, as a business that develops cloud-based cybersecurity and child protection software for schools and families worldwide.

The Qoria share price jumped 20% in July thanks to its financial performance and strategic developments, according to the fund manager.

WAM noted the ASX small-cap stock reported growth of $29 million of annual recurring revenue (ARR) in the three months to 30 June 2025, meaning a 55% increase compared to the fourth quarter of FY24, assisting the 25% rise in total ARR to $145 million in the year.

The fund manager highlighted that Qoria's management increased FY26 guidance to 20% ARR growth, signalling "confidence in the ongoing expansion and market adoption of its cyber safety platform which provides strong visibility into future year revenues and operating leverage."

Plenti Group Ltd (ASX: PLT)

The other ASX small-cap stock that WAM pointed out was Plenti, a fintech platform that provides consumer and renewable energy loans digitally across personal, automotive, and sustainability lending.

This business recently reported a record quarter in the three months to 30 June 2025, with loan originations reaching $437 million, which represented a 44% increase year over year. The loan portfolio is close to $2.7 billion, a rise of 21% year over year.

The fund manager pointed out that Plenti has secured the management of the government-backed Western Australia residential battery scheme, an initiative that will "open new revenue channels and likely generate a steady stream of income through financing and rebate administration fees", according to the investment team.

WAM said the rapid development of a technology solution "showcased operational and technological capabilities, reinforcing the company's leadership in clean energy finance."

The fund manager noted that Plenti's automotive loan partnership with National Australia Bank Ltd (ASX: NAB) saw the daily origination rise by 110% on the prior quarter, showing ongoing success working with a major bank.

WAM believes rate cuts will provide further tailwinds. Yesterday, the RBA cut the cash rate by 25 basis points (0.25%) to 3.60%.  

The post 2 ASX small-cap stocks to buy with big growth potential appeared first on The Motley Fool Australia.

Growth investing comes with significantly higher risk than other strategies, like value investing or dividend investing. When buying growth stocks, you're looking for the companies you think have the greatest future potential, and not necessarily the best historical performance. Many of these companies probably aren't even profitable yet – but if they promise to fill a gap in the market, big profits could be on the way.

Of course, the future is famously unpredictable, and nothing is ever guaranteed. It's a sad fact of life that not every company that promises the world is going to deliver. But the ones that do could net their loyal shareholders some astounding returns.

So, if you're searching for an ASX growth stock that could be the next diamond in the rough, you're in luck. Because in this article I'm going to reveal one company I think could be due for significant growth in years to come.

Plenti Group Limited (ASX: PLT)

Plenti is an Australian fintech that offers personalised consumer loans. It finances its lending activities by borrowing money from everyday investors and, in return, it pays them regular interest. While this might sound suspiciously like a bank, Plenti goes to great lengths to assure you that it is not a bank.

Instead, Plenti is a peer-to-peer lending platform. It offers loans of up to $65,000 to borrowers with strong credit ratings, with a focus on automative, renewable energy, and personal loans. Borrowers provide Plenti with details about their credit history and financial situation, and the platform offers them a personalised interest rate estimate within minutes, and funding within 24 hours.

On the other side of the ledger, Plenti borrows money from investors in order to write new loans. It offers them very generous returns depending on the term of their investment – if the investor is willing to commit to a longer term (say 3 to 7 years), Plenti rewards them with a higher interest rate (as high as 9% per annum).

So, in theory, everybody wins! Creditworthy borrowers get cheap financing on personal loans and investors can earn a healthy return. Plus, because Plenti relies on its own proprietary technology platform, it has significantly lower overheads than a big bank, allowing it to grow at scale.

What about the financials?

The company reported strong first-half FY25 results for the six months ending 30 September 2024. Loan originations were steady versus the prior comparative period, at $627 million. Revenues were up 28% to $124.2 million and cash net profit after tax (NPAT) surged 260% to $5.5 million.

This adds to an impressive string of half-yearly results, where revenues have grown at a compound annual growth rate (CAGR) of 49%, stretching back to the first half of FY22. And remember how I mentioned growing at scale? Well, its cost-to-income ratio for the half was just 24%, down from 29% in the first half of FY24.

But the biggest recent news out of Plenti is its strategic partnership with National Australia Bank Ltd (ASX: NAB). Under the arrangement – originally announced back in November 2023 – NAB markets and promotes the automotive and electric vehicle loan products that are provided via Plenti's lending platform.

Dubbed 'NAB powered by Plenti', the agreement is a significant endorsement of Plenti's technology platform by one of the country's largest banks. The partnership also gives NAB the right to purchase up to 15% of Plenti's share capital (another sign that the bank is impressed by Plenti's business model).

The first car and electric vehicle loans under the partnership were launched to NAB's personal banking customers in September 2024, however volumes are expected to remain moderate over the next six months as the product offering and customer experience are further refined. But significant sales growth could be on the horizon!

Plenti share price snapshot

Despite its solid recent financial performance and the launch of its first car loan products with NAB, the Plenti share price is still hovering around $0.67 (as at the time of writing). In fact, its share price has remained relatively unchanged since surging on the NAB partnership news back in late November 2023 – which means this year could be when this ASX growth stock finally breaks out!

The post Could this be a millionaire-maker ASX growth stock at 67 cents? appeared first on The Motley Fool Australia.

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

Boss Energy Ltd (ASX: BOE)

The Boss Energy share price is up 1.5% to $3.10. Investors have been buying this uranium producer's shares following the release of a drilling update. Management advised that the infill drilling campaign at the Gould's Dam and Jason's satellite deposits within the Honeymoon Project in South Australia is now complete. The two deposits have combined resources of 36.7Mlbs of contained U308. This is more than the 36Mlbs that its Honeymoon project is producing under its current mining licence. Managing director, Duncan Craib, said: "These satellite deposits have the potential to drive growth as well as enabling us to leverage existing infrastructure and further capitalise on the opportunity presented by growing global demand for uranium from tier-one locations."

Emeco Holdings Ltd (ASX: EHL)

The Emeco share price is up 4% to 79.5 cents. This follows the release of a trading update at the equipment rental company's annual general meeting. Emeco revealed that it expects operating EBITDA to be at least $300 million in FY 2025. This is up from $281 million in FY 2024. The company's CEO, Ian Testrow's said: "The operating environment and business conditions remain robust with the production outlook for gold and bulk commodities remaining positive, despite weaker market conditions for nickel and lithium. We have a strong competitive advantage in the market with our rental and equipment rebuild model, along with a national footprint in the key mining regions across Australia."

Mineral Resources Ltd (ASX: MIN)

The Mineral Resources share price is up over 1.5% to $35.42. This is despite there being no news out of the embattled mining and mining services company on Wednesday. However, with its shares down sharply this year, some investors may be swooping in on the belief that they are now in bargain territory.

Plenti Group Ltd (ASX: PLT)

The Plenti share price is up 5% to 75.5 cents. This morning, this fintech lender released its half year results and revealed a 28% increase in revenue to $124.2 million. This was driven by a 17% increase in the average loan portfolio and a 9% increase in average borrower interest rates. Things were even better on the bottom line, with Plenti reporting a 260% increase in cash net profit after tax to $5.5 million.

The post Why Boss Energy, Emeco, Mineral Resources, and Plenti shares are pushing higher today appeared first on The Motley Fool Australia.

Shares in the technology-led consumer lending and investment company closed yesterday trading for 65 cents. At the time of writing on Tuesday, shares are swapping hands for 76.5 cents apiece, up 17.7%.

As you can see on the chart below, the Plenti share price has risen by 118.6% since this time last year.

Much of that lift was achieved in November following news of a strategic partnership with National Australia Bank Ltd (ASX: NAB).

Here's what's spurring investor interest in the ASX financial stock today.

ASX financial stock soars on profit growth

Investors are bidding up the Plenti share price following the release of the ASX financial stock's second quarter update for the three months to 30 September (Q2 FY 2025).

(Note, Plenti's financial year starts on 1 April.)

Among the highlights, Plenti reported a 260% year on year increase in unaudited 1H FY 2025 cash net profit after tax (NPAT) of $5.5 million. This figure comes after the expensing of all technology investments over the six months.

Plenti's loan portfolio increased to $2.28 billion over the quarter, up 14% year on year and up 3% from the prior quarter.

Loan originations of $323 million were up 11% year on year and up 7% from the prior quarter.

Quarterly revenue also increased, up 25% from the prior quarter to $63 million. The company attributed the revenue improvement to loan portfolio growth and increased customer interest rates.

There was also good news regarding annualised net credit losses. This came in at 0.93%, down from 1.30% last quarter.

The half-year also saw the ASX financial stock commence the roll-out of the 'NAB powered by Plenti' car loan to NAB customers.

And Adam Bennett successfully transitioned into the CEO role.

Commenting on the quarterly performance, Bennett said:

Plenti continues to demonstrate strong momentum across origination growth, credit performance, and profitability, whilst continuing to build seamless technology-based integrations with its key business partners. I'm very excited by the numerous opportunities ahead of us.

Looking ahead

Looking at what could impact the ASX financial stock in the months ahead, Plenti said for the year to 31 March 2025, it aims to drive growth in loan originations and loan portfolio.

On the profitability front, the company aims to deliver full-year and half-on-half cash NPAT growth, noting that "a more balanced profile is now expected between 1H 2025 and 2H 2025 than in the last two years".

Plenti also intends to reduce its cost-to-income ratio to less than 24%.

The ASX financial stock is scheduled to release its full half-year results on 20 November.

The post Up 119% in a year, here's why this ASX financial stock is rocketing again on Tuesday appeared first on The Motley Fool Australia.

You'd be feeling aggrieved that the ASX small-cap stock had lost almost half your money since January. The money-lending business is seeing growing revenue but keeps burning cash.

But look what's happened in the three weeks since.

The Plenti share price has rocketed 128%.

Not only has it made up all the losses since January, it's 21% up above that peak.

What is going on here?

'Decent' annual result

The team at Forager Australian Shares Fund, which is invested in Plenti, reported that the company's financial result was announced last month.

"The company's financial result was decent, delivering $1.5 million of cash net profit after tax," it stated in a report to clients.

"Its $2 billion loan book was 29% higher than the prior year. And bad debts, while rising, are still within expectations at just under 1% of portfolio value."

Pleasant enough, but is that really worth a doubling of the stock price in 20 days?

Of course not. The major catalyst was a new deal with National Australia Bank Ltd (ASX: NAB).

"The behemoth will use Plenti to underpin the technology for its auto loan offering, including loan applications, credit assessments and loan management. 

"Importantly, Plenti does not put its balance sheet to work in the deal, instead making a fee for each loan written and serviced."

Forager analysts calculate that if the loan book from NAB grows to $1 billion, it would be worth $20 million of "high-margin revenue" for Plenti.

"With NAB's brand name and marketing, this looks likely."

The boost that this small cap badly needed

Plenti listed on the ASX in 2020, but it's been a bumpy ride since. The NAB partnership brings the small-cap stock much needed credibility, according to the Forager memo.

"The deal is a big validation for Plenti's lending technology and the company's value."

The $134 million company is sparsely covered by professionals, but CMC Invest shows at least Wilsons Corporate Finance agrees with Forager's bullishness.

The post Up 128% in 3 weeks: ASX small-cap to buy after massive catalyst appeared first on The Motley Fool Australia.

At the time of writing, the ASX financial stock is up 120% to 74 cents.

Why is ASX financial stock Plenti jumping?

Investors have been buying the company's shares after a positive announcement offset the release of a weak half-year result.

In respect to the latter, the ASX financial stock reported a 51.8% increase in revenue to $96.8 million but a 75.7% decline in profit to just $0.6 million. This reflects a significant jump in loan funding costs compared to the prior corresponding period.

What was the good news?

The good news that is driving Plenti shares higher today is that it has formed a partnership with banking giant National Australia Bank Ltd (ASX: NAB).

According to the release, Plenti and NAB have entered into a strategic partnership under which Plenti will provide "NAB powered by Plenti" and Plenti own-branded finance solutions to NAB's large personal banking customer base.

Management highlights that the strategic partnership combines NAB's trusted brand and deep customer relationships with Plenti's award-winning consumer finance experiences, efficiency, and technology.

The initial focus will be car and electric vehicle (EV) loans and then making Plenti renewable energy finance available to NAB customers.

As part of the deal, the two parties have entered an equity investment agreement, which allows NAB to acquire or subscribe for up to 15% of Plenti's share capital, based on the achievement of certain milestones.

The first 5% may be bought on market, whereas the remaining 10% will be via two 5% placements at up to 90 cents and $1.20 per share, respectively.

The ASX financial stock's founder and CEO, Daniel Foggo, said:

This strategic partnership makes sense – it brings together one of Australia's largest and most trusted financial institutions with one of Australia's most innovative and awarded financial technology companies. Together we see an opportunity to better serve new and existing customers with car and renewable energy lending products and we're excited about the potential for future expansion of the strategic partnership over time. This strategic partnership is expected to have a meaningfully positive impact on Plenti's growth and profitability in future years.

The post ASX financial stock Plenti rockets 120% on NAB partnership appeared first on The Motley Fool Australia.

The S&P 500 Index (SP: .INX) rose a modest 0.73% whilst the Nasdaq Composite (NASDAQ: .IXIC) index gained just over 1%. The ASX 200 is making headway in afternoon trade on Wednesday, with Block (ASX: SQ2) shares the biggest gainer, up 8.3%, but still down 41% over the past 12 months. 

The softer-than-expected US inflation print gives the green light to US Federal Reserve chair Jerome Powell to raise interest rates by 50 basis points overnight Wednesday.

The main game in town now for stock market watchers is predicting the terminal interest rate and when the Fed will start cutting interest rates.

Quoted on Bloomberg, Jason Katz, managing director and private wealth adviser at UBS, expects interest rates will stay higher for longer.

If they cut rates in the latter part of next year, that's going to be because they broke things along the way and things are ugly. So it's our view that the terminal rate lands anywhere between 5%-5.25% and remains there for the full calendar year.

Such an outcome would likely continue to put pressure on global stock markets, certainly for the first half of next year. Although the ASX 200 has had a good year, certainly when compared to the double-digit losses widely seen on Wall Street, you'd imagine there would be some comeuppance should US markets continue to fall.

2) Of course, not everyone shares the same views as Jason Katz – the divergence of opinion and thoughts is what makes a market.

"The coming year for investing may turn out to be better than many expect for stocks even though a recession appears likely," pros at Natixis Investment Management said Wednesday on MarketWatch.

"I'm bullish because everybody is bearish," said Jack Janasiewicz, portfolio manager and lead portfolio strategist at Natixis Investment Management Solutions. "The downside is already reflected in the market."

Simple is often best, especially given how hard it is to predict what might happen to the economy, to the consumer, to interest rates, to unemployment, to inflation, and more.

3) Writing in their November monthly update, the Surrey Australian Equities Fund said they "are positive on the outlook for Australian equities over the medium term".

Our view remains that inflation has been materially impacted by supply chain issues and as these normalise and higher interest rates take effect, inflation could ease and with it the recent sharpness of interest rate increases… Should rates increases start to slow and the US 10-year bond yield settles, we are positive on equity valuations.

The fund also notes, when it comes to small-cap stocks, positive recoveries often follow down years. 

In 2022, huge gains in resources stocks have helped offset massive losses in growth stocks, such that the S&P/ASX Small Ordinaries Index (ASX: XSO) is down "only" 19% so far this year. Adopting the simple technique of being bullish because everyone else is bearish, I'd guess a basket of beaten-down small-cap growth stocks will outperform in 2023.

I own more than my fair share of small-cap "dogs of 2022", although thankfully I haven't owned them all year, somewhat limiting my losses. 

Moving into 2023, I'm holding out recovery hopes for these dogs, with their one-year share price performance noted. In alphabetical order…

BlueBet Holdings Ltd (ASX: BBT) – down 73%

Field Solutions Holdings Ltd (ASX: FSG) – down 51%

Marley Spoon (ASX: MMM) – down 81%

Plenti Group Ltd (ASX: PLT) – down 64% 

RPM Automotive Group Ltd (ASX: RPM) – down 44%

Swoop Holdings Ltd (ASX: SWP) – down 77%

Hydration Pharmaceuticals Co Ltd (ASX: HPC) – down 72%

Touch Ventures Ltd (ASX: TVL) – down 64%

It's a motley group of companies, with little in common, apart from the devastating falls experienced by shareholders over the past 12 months.

That said, apart from Touch Ventures, which is an investment vehicle trading at a significant discount to its net asset value, they are all growing quickly, mostly have cash or little to no debt, and are either profitable or trade around break-even.

Here's hoping for a happier 2023 and beyond for these dogs, and to the micro-cap (and fun but risky, so please don't try this at home) portion of my portfolio. I look forward to reporting back on progress come this time next year. 

The post "Bullish because everybody is bearish" – here are 8 dogs of 2022 I'm backing for the win in 2023  appeared first on The Motley Fool Australia.

Once again, as has been the case for most of the year, materials and energy stocks are getting the job done today, with the Fortescue Metals Group (ASX: FMG) share price leading the way higher. It's up 7.67% on the day so far after the iron ore price posted a hefty one-month gain. 

The ASX 200 index has fallen just 3.3% so far in 2022, an outstanding return given the Reserve Bank of Australia (RBA) has hiked the cash rate from just 0.1% in April to its current level of 2.85%. 

By contrast, although they've enjoyed a nice bounce since the beginning of October, US markets have endured a painful year, the S&P 500 Index down 15% and the Nasdaq Composite plunging almost 28%.

2) Local eyes are on the RBA's final meeting of the year, with consensus expectations the central bank will tomorrow raise the cash rate by another 25 basis points as it continues the fight against inflation.

Financial markets are pricing a peak in the cash rate of about 3.6% early in the second half of 2023, although Bank of America expects the RBA to follow up tomorrow's rise with four consecutive 25 basis point hikes, bringing the terminal rate to 4.1%.

According to the AFR, Bank of America thinks "the RBA is underestimating wage pressures and that its slow hiking pace means more work will need to be done to rein in inflation."

Whichever way you look at it, we're closer to the end of the heavy lifting on interest rates than the start. That's good news for equity markets.

The bad news for equity markets is higher interest rates will put the brakes on economic growth. According to Rate City, monthly repayments on a $500,000 mortgage have increased by $834 since May. 

That's a LOT less money that can be spent on discretionary items such as clothing, gadgets, and couches. It explains why the share price of JB Hi-Fi (ASX: JBH) trades on a fully franked dividend yield of 7% and a price-to-earnings (PE) multiple of just nine times profits. 

3) Although inflation may have peaked, a mild recession is the base case scenario for the US economy. It's going to be hard for many companies to grow their profits, with many going into reverse as profit margins also come under pressure. 

It's why investing into the teeth of a bear market is so hard. Companies like JB Hi-Fi might look cheap today, but less so based on next year's earnings. As predicting the near-term future is virtually impossible, investing in individual companies today means taking a leap of faith.

Buying quality companies with strong balance sheets and minimal debt – and JB Hi-Fi certainly fits that bill – is one way to mitigate the risk. But will that stop you bailing out if/when: a) a bout of stock market volatility hits and b) a subdued trading statement smacks the share price lower?

Many investors fail to enjoy the attractive long-term returns on offer from investing in the stock market because they interrupt the effects of compounding. They may buy a stock with the intention of holding it for five years or longer, but there's a heck of a lot that can happen to a company and its share price over that time period, likely including a peak-to-trough fall of around 50%.

Investing regularly into a few low-cost index-tracking exchange-traded funds (ETFs) is a great option for most stock market investors. It takes stock picking out of the equation, and volatility is greatly reduced. 

My favoured option is the Vanguard MSCI Index International Shares ETF (ASX: VGS). If you want to throw in a local flavour, consider adding the Vanguard Australian Shares Index ETF (ASX: VAS). You'll get exposure to the big miners, the big banks, and the big supermarkets.

4) If you are a stock junkie like me, and you have ambitions of outperforming the market, investing in individual companies can be interesting, fun, and rewarding.

That said, it can also be very challenging, as it has been for many investors over the past 15-odd months. 

The very best stock pickers only get it right six times out of ten, because when they do pick a big winner, the upside is unlimited. Imagine putting $5,000 into one stock and 10 years later, look back and see it has appreciated 2000%, turning that one investment into over $100,000. 

Fun, right? 

Not so much fun are the inevitable losers, the four out of ten you'll get wrong. Although a few of the stocks I highlighted a month ago have had good recent runs, I'm still in the hole on a number of my small and microcap holdings, including Plenti Group (ASX: PLT) shares and Bluebet (ASX: BBT) shares.

On those latter two, hopefully, it's a case of waiting for the market to appreciate their growth prospects and modest valuations. Although it could also be a case of me being wrong and their share prices never recovering, or worse, declining further, ultimately potentially leaving me sitting on losses of around 80%. 

5) It's why portfolio sizing is key. I try not to chase my losers, especially ones whose share price is declining at the same time as the growth of the underlying business is slowing. That's the case with Plenti and Bluebet, and why I'm not adding to my holdings despite the share price weakness. 

It took me many years to realise I'm no investing genius like Warren Buffett, someone who takes huge high conviction bets on a very small number of companies. For mere mortals, hedge your bets by spreading your bets across 20 or 30 different stocks. The winners will inevitably rise to the top, the losers slowly disappearing into tiny, inconsequential holdings.  

I also realise I'm no Warren Buffett when it comes to investing returns. He's compounded at an average annual return of 20% for 56 years. If you can do between 8% and 12% for 20 or 30 years – including regularly adding money to the market over that period – you'll do very well as an investor.

The post It took me years to realise I'm no investing genius like Warren Buffett appeared first on The Motley Fool Australia.

In hindsight, any of us (like me), who were holding onto fast-growing yet loss-making growth stocks as inflation started spiking upwards, wished they could turn back the clock and sell at the (now) obviously inflated valuations.

Fast forward to now, where the S&P/ASX 200 Index (ASX: XJO) is down 10% year to date and the S&P/ASX Small Ordinaries Index (ASX: XSO) has lost 25% over the same period. In the US, it's worse, with the Nasdaq off 33% so far this year.

At the individual stock level, some of the falls have been absolutely brutal so far in 2022…

City Chic Collective Ltd (ASX: CCX) – down 79%

EML Payments Ltd (ASX:EML) – down 79%

Kogan.com Ltd (ASX:KGN) – down 64%

Megaport Ltd (ASX:MP1) – down 58%

If I were a betting man, I'd wager, over the next 12-24 months, small companies will out-perform the ASX 200 index. 

And although the bell isn't ringing for the bottom of this bear market, I think now will prove a good time to steadily put money to work in stocks that I think have asymmetric upside potential. 

An asymmetric bet, trade, or investment is when the potential upside of a position is much greater than its potential downside.

Rather than investing now in coal producers Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC), up 314% and 208% respectively so far this year, I'd far rather be betting on some ASX micro-cap stocks who, from ultra-depressed levels, have the potential to rise three to five times in value in the coming years. 

Putting my money where my mouth is

I'm putting my money where my mouth is, investing in a portfolio of companies that generally have little to no debt, are growing quickly, are either on the cusp of profitability or are indeed profitable, yet their share prices have fallen up to 70% in this brutal sell-off.

I'm not stupid enough or confident enough to say some won't fall in a screaming heap. These are often very small companies operating in very competitive markets. A diversified portfolio is essential – 15 to 30 stocks – as is lashings of patience and the ability to withstand short to medium term volatility.

It's worth reminding readers that a company that has already seen its share price fall 70% can easily see it halve again, especially in a market that's incredibly nervous, and one where liquidity for many micro-cap stocks has virtually disappeared.

But that's the stock picking game, right? Otherwise, we just stick with low-cost index-tracking Exchange Traded Funds (ETF), like the Vanguard Australian Shares Index ETF (ASX: VAS) and/or the Vanguard MSCI Index International Shares ETF (ASX: VGS).

In return for enduring the volatility and the uncertainty, you have the opportunity to earn out-sized returns by picking your own stocks. 

Yet heed this warning from legendary investor Charlie Munger from 2009, also a period of high uncertainty and volatility…

"… if you're not willing to react with equanimity to a market decline of 50% two or three times a century you're not fit to be a common shareholder and you deserve the mediocre result you're going to get compared to the people who do have the temperament…"

Two ASX stocks with asymmetric upside potential 

The Plenti Group Ltd (ASX: PLT) share price has slumped 64% so far this year as the online auto and personal lending business has been buffeted by a re-rating of tech stocks, higher interest rates and the threat of increasing bad debts in a slowing economy as those interest rates start to bite.

The risks are very real. Yet, the company is growing like gangbusters as it and other "challenger" lenders take market share from the less nimble big four banks. Its loan portfolio at 30th June 2022 was $1.44 billion, up 90% from the prior year, with ambitions to grow it to $5 billion in 2025.

The Bluebet Holdings Ltd (ASX: BBT) share price is down 70% so far this year as the online bookmaker has largely been a victim of the vicious sell-off in tech stocks. 

Bluebet is growing quickly, has plenty of cash and no debt, and cash from operations is running around breakeven, despite its up-front investment in marketing and in the nascent yet lucrative US market.

With a market cap of just $86 million, and its cash balance providing downside protection. For me, Bluebet is an asymmetric bet on its 'Capital Lite' US strategy, starting in four states. Macquarie expects online sports betting to be available to 96% of the US population by 2025.

In a diversified portfolio, with plenty of large-cap ballast and a healthy cash balance, I hold modestly sized positions in both Plenti and Bluebet, amongst other small and microcap stocks I think offer asymmetric outcomes.

The post Two ASX microcap stocks with asymmetric upside potential in today's market appeared first on The Motley Fool Australia.

So it's an excellent time for buying up some bargains. 

But investors do need to be selective.

They need to think about whether a particular stock is cheap for legitimate reasons or if the sell-off has been excessive.

It is crucial to avoid the cognitive trap of anchoring. That is, thinking a stock could rise from $2 to $10 just because it previously reached a high of $10.

Shares have no memory. The current and future performance of the underlying business is all that matters. 

Fortunately for The Motley Fool readers, one expert has nominated two ASX shares to buy that he believes are cheaper than they should be.

'Focus on increasing profitability'

With the Reserve Bank just raising interest rates four consecutive months, it's a tough time for lenders.

But Wilsons investment advisor Peter Moran told The Bull he feels like Plenti Group Ltd (ASX: PLT) has much going for it.

"The online lender has generated solid loan growth in recent years, driven by its personal and automotive lending divisions."

Plenti shares have halved in value so far in 2022.

Moran admitted conditions have been challenging for the business, but reckons it is adapting.

"Plenti's level of new originations in the first quarter of fiscal year 2023 fell by 10% on the prior quarter," he said.

"However, this reflects its focus on increasing profitability at a time of rising interest rates."

Analyst coverage is sparse for the small cap. However, according to CMC Markets, at least Shaw and Partners agrees with Wilsons that Plenti shares are a buy at the moment.

Sell-off of this stock has been 'overdone'

Silk Laser Australia Ltd (ASX: SLA) shareholders have also had a stressful time, watching their investment halve since October.

Moran reckons the stock price weakness doesn't fairly reflect its prospects.

"The share price of this laser clinic operator reflects a weak outlook, but we believe it's been overdone," he said.

"Although consumer spending is likely to fall in response to higher interest rates, we expect personal service providers, such as Silk, to benefit as consumers focus on what's most important to them."

Will customers of the cosmetic services provider stay loyal through an economic downturn?

At least a couple of Moran's peers agree that they will. Two analysts surveyed on CMC Markets rate the stock as a buy.

Silk Laser's last update in April pleased investors, pushing the stock 12% higher that morning. It will report its full-year results on 24 August.

The post 2 ASX shares to buy that have halved this year appeared first on The Motley Fool Australia.

The big banks, certainly, enjoy rate rises as they have both borrowers and depositors as customers.

When the Reserve Bank cash rate increases, they often pass on the full change to its borrowers while only awarding a partial amount to the depositors.

This fattens up what is known as their net interest margin, which is the difference between what they pay out to depositors and the income they receive from borrowers. 

But for those smaller players that are loan-only businesses, it's a different picture.

Forager Funds, in a memo to clients, noted that rising interest rates "can affect customers' ability to repay their loans" and inflate the cost of funding for the lenders. 

"Fear of growing problems in this sector has sent share prices plummeting," read the memo.

"The fund has small investments in both Wisr Ltd (ASX: WZR) and Plenti Group Ltd (ASX: PLT), whose respective share prices have fallen 42% and 35% this calendar year alone."

Performance 'exceeded expectations'

Despite the stock price drop, the Forager team noted that the performance of the businesses has "exceeded expectations".

The lending business is a race for scale.

"The expectation is for a small number of healthily profitable players to emerge over time and Wisr and Plenti look like two of them," read the memo.

"March quarter reports showed Plenti's loan book is already north of $1 billion and Wisr isn't far away. They will both hit $2 billion over the next few years without dramatically increasing the rate of progress and that should enable them to be nicely profitable."

'Fear is overdone' for Wisr and Plenti

The anxiety among investors for shares like Wisr and Plenti is, not so much the growth rate, but the hit to profitability from bad debts arising out of rising rates.

The Forager team acknowledged this "healthy scepticism is warranted".

"But the fear is overdone," read the report.

"Both these businesses are specifically targeting safer borrowers with a proven capacity to repay their loans. The March quarterly reports still showed default rates well below our long-run expectations."

Forager also noted both Wisr and Plenti have indicated they will raise charges to customers.

"In any case, savings rates in Australia remain high and jobs plentiful," the memo read.

"Economic conditions are absolutely going to deteriorate. But, while the portfolio weightings need to remain modest, we expect both businesses to successfully navigate and prove that their current share prices are far too low."

The post 2 ASX shares with prices 'far too low' right now: Forager appeared first on The Motley Fool Australia.

Plenti closed yesterday at 91 cents and leapt 16.9% higher to $1.06 at open.

Shares are currently trading for $1.00, up 10.5%, in morning trade.

So why are ASX investors bidding up the Plenti share price today?

Profit forecast upgraded

Investor interest looks to have been piqued this morning after the ASX fintech lender upgraded its profit forecast.

The Plenti share price is charging higher on the report that the company expects to be Cash NPAT profitable for the full year to 31 March 2022. That's the date when Plenti marks its full 2022 financial year (FY22).

The company's previous Cash NPAT forecast for FY22 had been to reach at least $1.0 million in the 6-month period ending 31 March (2H22). It's now boosted that forecast, with expectations to deliver at least $2.2 million in 2H22.

The fintech lender also said it had reached its $1.25 billion loan book growth target for FY22, with the current loan portfolio standing at roughly $1.28 billion.

Commenting on the upgraded financial numbers, Plenti CEO Daniel Foggo said:

We are pleased to be upgrading the forecast for our key profitability metric, as we believe profitability is the critical yardstick against which any business should be measured. Our proprietary technology platform is delivering operating leverage as we scale while continuing to provide exceptional customer experiences, helping us take market share.

Foggo's bullish outlook for the year ahead could also be helping boost the Plenti share price today.

"Having moved to a positive Cash NPAT position, combined with the attractive corporate debt facility announced last week, Plenti is well-placed to continue its growth into the next financial year," he said.

Plenti share price snapshot

With today's intraday gains factored in, the Plenti share price has erased its 1-year losses and is trading right where it was 12 months ago. For some context, the All Ordinaries Index (ASX: XAO) has gained 9.6% over that time.

The post The Plenti (ASX:PLT) share price is surging 11% today. Here's why appeared first on The Motley Fool Australia.

However, the ASX still offers up some gems if you know where to look (or who to ask).

Wilsons investment advisor Peter Moran this week nominated a couple of ASX tech shares that he likes the look of:

ASX share with 'recurring revenue and strong margins'

ReadyTech Holdings Ltd (ASX: RDY) is a maker of people management software with clients in many industries, although it rakes in much of its revenue from the education sector.

Its shares have risen 82% this year and the business has a market capitalisation of more than $400 million.

But it doesn't seem to attract much attention. The last we heard on The Motley Fool, the stock was charging higher back in September after a strategic acquisition.

Moran reckons the software maker deserves more kudos, according to The Bull.

"This software-as-a-service business is attractive for its high levels of recurring revenue and strong margins. Both are driven by the quality of its software."

He is rating the stock as overweight while forecasting further growth.

"ReadyTech recently highlighted a potential opportunity to move existing payroll customers to a new superior product that's more profitable."

According to CMC Markets, 3 of 4 analysts rate ReadyTech as a strong buy, with the other broker labelling it as a moderate buy.

Tech business that'll be cash flow positive this year

Shares for fintech Plenti Group Ltd (ASX: PLT) struggled initially after floating in September last year.

But in 2021, the stock has steadily headed up to show a return of 22% so far.

This is another ASX tech share that's gone under the radar somewhat, with just 3 analysts covering the business.

According to CMC Markets, 2 of them rate Plenti as a strong buy with the third analyst rating it as a moderate buy.

Moran agrees that it's a tempting purchase at the moment.

"We expect Plenti to reach a $1 billion loan book and become cash flow positive by the end of December this year," he said.

"Our rating is overweight."

Last month's performance update for the second quarter showed encouraging signs, according to Moran. Plenti shares actually headed up 7% on the day.

"The second quarter update confirmed continuing strong loan origination across all three of its lending segments. Loan origination increased from $3.3 million a day in the first quarter to $3.9 million a day in the second quarter."

The Sydney company now has a market capitalisation of $238.5 million.

The post 2 ASX tech shares I'd buy right now: expert appeared first on The Motley Fool Australia.

Below we take a look at the ASX fintech lender's trading update for the quarter ended 30 September 2021 (Q2 FY22).

(Note that different companies abide by different financial year calendars.)

What were the growth figures for Q2 FY22?

The Plenti share price is soaring today after the company reported a 140% increase in quarterly loan originations compared to Q2 FY21.

The record high $256.4 million of loan originations also represented an 18% boost from the previous quarter (Q1 FY21).

September, with $95.5 million, proved to be another record month for Plenti's loan originations. That figure was up 159% from September 2020 which the company said was a record month for loan originations at that time.

With another strong quarter behind it, Plenti reported its first half of the 2022 financial year (H1 FY22) loan originations leapt to $473 million. That's up 183% from the previous corresponding period and up 56% from the previous half year.

The Plenti share price may also be getting a lift from the 110% year-on-year increase in the company's loan portfolio which stood at $915 million as at 30 September.

Commenting on the results, Plenti's CEO Daniel Foggo said:

I am delighted to report yet another outstanding quarter for Plenti, with record quarterly loan originations across each lending vertical. By continuing to take market share, Plenti has achieved strong growth despite COVID-induced lockdowns.

This strong growth along with the high level of operational leverage from our technology-led business model has accelerated our targeted timeframes for achieving a one-billion-dollar loan book and reaching Cash NPAT profitability, now targeted by end December 2021.

Plenti share price snap shot

The Plenti share price is up 23% in 2021, well outpacing the 9% gains posted by the All Ordinaries Index (ASX: XAO) over that same time.

Over the past month, Plenti's shares are trading flat.

The post Why the Plenti (ASX:PLT) share price is soaring 7% today appeared first on The Motley Fool Australia.

Below we take a look at the ASX fintech lender's trading update for the quarter ending 30 June.

What quarterly update did Plenti report?

Plenti's share price is gaining after the company reported that loan originations for the past quarter increased 260% year-on-year. The record quarterly loan originations of $216.4 million were up 26% from the previous quarter. The company noted that the big year-on-year leap was in part due to COVID-19 related issues negatively impacting loan originations at that time.

June was also a record month for the fintech lender. June's $83.4 million of loan originations work out to a "$1 billion annual run-rate".

Plenti's loan portfolio grew 96% year-on-year and 23% from the previous quarter to reach $757 million.

Commenting on the record quarter, Daniel Foggo, Plenti's CEO said:

Reaching a one-billion-dollar loan origination run-rate in June shows we are successfully taking market share and accelerating towards our ambition of achieving a one-billion-dollar loan book during this financial year.

Pointing to the achievement that Plenti had doubled its renewable energy and personal loan warehouse facility in May (from $100 million to $200 million), Foggo also today announced a $100 million increase in Plenti's automotive warehouse facility.

"This additional $200 million in funding capacity across our three verticals is another important step towards executing on our growth priorities," Foggo said.

The company also reported that it is progressing towards its "first capital markets asset-backed securitisation of loans from its automotive loan warehouse facility" in the second quarter of the 2022 financial year. Plenti forecast that this will be around a $300 million transaction.

Plenti share price snapshot

The Plenti share price has seen plenty (sorry, couldn't resist) of ups and downs over the past full year, with shares currently up 9%. By comparison the All Ordinaries Index (ASX: XAO) has gained 26% over the last 12 months.

The Plenti share price has picked up some momentum in 2021, up 18% year-to-date.

The post Why the Plenti (ASX:PLT) share price is rocketing higher today appeared first on The Motley Fool Australia.

Melbourne broker Shaw and Partners is bullish on the technology stock. We examine why below.

But first, a quick look at the company

Plenti is a technology-led consumer lending and investment company that has three revenue streams.

Firstly, it provides automotive lending for the hire or purchase of new vehicles. Secondly, it provides renewable energy lending for the purchase and installation of renewable energy products such as solar panels and batteries.

And finally, it also focuses on personal lending, providing fixed-term, unsecured, interest-bearing loans used for a wide variety of purposes.

Broker expects big things

Shaw and Partners is bullish on the Plenti Group share price, yesterday issuing a buy recommendation and a price target of $1.74.

"Plenti presents a compelling opportunity to invest in a fintech lender with a premium quality loan book," the broker said in its report to investors yesterday.

Shaw and Partners also pointed to favourable net interest margins (NIM) and high return on equity (ROE) metrics.  A NIM is the difference between the interest income earned and the interest paid by the financial institution.

Further, the broker points to Plenti Group's diversified loan book approaching $1.0bn. The business posted record quarterly loan originations in each lending vertical, across automotive, renewable energy and personal loans. Its total loan portfolio increased to $615 million, 61% above the prior corresponding period.

Despite the positive reports, Shaw and Partners did warn of risk in the report.

Specifically, it sees Plenti's Venus Platform as technologically superior to other offerings in the fintech market. However, as technology evolves, this may not always be the case. "These changes may lead to a requirement for Plenti to redevelop its lending platform in order to remain competitive," the broker said.

With the Plenti Group share price currently at $1.21 and a price target at $1.74, the broker is tipping plenty of room for more growth in the company.

The post Broker tips Plenti Group (ASX:PLT) share price to shoot higher appeared first on The Motley Fool Australia.